SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant __X__
Filed by a party other than the registrant ____
Check the appropriate box: ____ Confidential, for Use of the Commission
____ Preliminary proxy statement Only (as permitted by Rule 14a-6(e)(2))
_X__ Definitive proxy statement
____ Definitive additional materials
____ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MEDIWARE INFORMATION SYSTEMS, INC.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
_X__ No fee required.
____ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -----------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -----------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
- -----------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------
(5) Total fee paid:
___ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- -----------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -----------------------------------------------
(3) Filing party:
- -----------------------------------------------
(4) Date filed:
- -----------------------------------------------
<PAGE>
MEDIWARE INFORMATION SYSTEMS, INC.
1121 OLD WALT WHITMAN ROAD
MELVILLE, NEW YORK 11747-3005
(516) 423-7800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 10, 1999
Notice is hereby given that the Annual Meeting of the Shareholders of
Mediware Information Systems, Inc. will be held on February 10, 1999, at 140
East 45th Street, 43rd Floor, New York, NY 10017 (offices of The Kaufmann
Fund, Inc.), at 10:00 a.m., New York City time, for the following purposes:
1. To elect three Class I directors (Proposal No. 1 in the Proxy Statement).
2. To transact such other business as may properly come before the meeting.
Only holders of the Common Stock of record at the close of business on
January 7, 1999 are entitled to notice of, and to vote at, the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Melville, New York
January 11, 1999
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE
ENCLOSED, RETURN POSTAGE-PAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. IF YOU ATTEND THE MEETING IN PERSON AND VOTE, THE PROXY WILL BE OF
NO EFFECT.
Return proxies to:
Office of Lawrence Auriana
The Kaufmann Fund, Inc.
140 East 45th Street, 43rd Floor
New York, NY 10017
<PAGE>
MEDIWARE INFORMATION SYSTEMS, INC.
1121 OLD WALT WHITMAN ROAD
MELVILLE, NEW YORK 11747-3005
PROXY STATEMENT
JANUARY 11, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mediware Information Systems, Inc. (the
"Company") to be voted at the Annual Meeting of Shareholders of the Company
(the "Annual Meeting") to be held at 140 East 45th Street, 43rd Floor, New
York, New York 10017 (offices of The Kaufmann Fund) on February 10, 1999 at
10:00 am., New York City time, and any adjournment thereof. This Proxy
Statement and the related proxy card, together with the Company's Annual
Report on Form 10-KSB and the financial statements of the Company for the
fiscal year ended June 30, 1998, are first being sent to the Company's
shareholders on or about January 11, 1999.
Proxies are being solicited by the Company from the holders of Common
Stock with respect to the election of directors.
Please complete, sign, date and return the enclosed proxy. The proxy
solicited hereby may be revoked at any time by executing and delivering a
proxy of a later date, by delivering written notice of revocation to the
Secretary of the Company or by attending the meeting and giving oral notice
of the intention to vote in person. Properly executed, delivered and
unrevoked proxies in the form enclosed will be voted at the Annual Meeting or
any adjournment thereof in accordance with the directions thereon. In the
absence of such directions, the proxy will be voted in accordance with the
recommendations of management.
The only class of voting securities of the Company is its Common Stock,
par value $0.10 per share ("Common Stock"), of which 6,001,134 shares were
outstanding on January 7, 1999, each entitled to one vote. Only shareholders
of record on the close of business on January 7, 1999 shall be entitled to
vote at the Annual Meeting.
The holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. The
favorable vote of the holders of a plurality of the votes cast at the Annual
Meeting by the holders of shares entitled to vote is required for the election
of Directors. Therefore, the three nominees who receive the most votes will
be elected.
Abstentions will not constitute a vote cast. Brokers who hold shares in
street names for customers generally will not be entitled to vote on certain
matters unless they receive instructions from their customers ("broker
non-votes"), although they would be entitled to vote in this election. As
this election will be determined by a plurality, any broker non-votes will not
be taken into account in determining the outcome of the election. Unless
contrary instructions are given, all proxies received pursuant to this
solicitation will be voted in favor of the election of the nominees named
herein.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
As provided in the Restated Certificate of Incorporation of the Company
and the By-Laws, as amended, the Board has fixed the number of directors at
nine, which number is divided into three classes, with one class standing for
election each year for three-year terms. The classes of the Board are kept as
equal in size as practicable and each class has a minimum of three directors.
The favorable vote of the holders of a plurality of the votes cast at the
Annual Meeting by the holders of shares entitled to vote is required for the
election of Directors.
At the Annual Meeting, three Class I directors are to be elected to hold
office for a three-year term until the annual meeting following the 2001
fiscal year and until their successors have been elected and qualified.
Unless otherwise directed, the proxies named in the accompanying form of proxy
intend to vote FOR all of the nominees named below. If any such nominee
should not be available for election, the persons named as proxies may vote in
their discretion for another nominee designated by the Board of Directors in
such person's place.
The information about the nominees and the present directors of the
Company, and their security ownership, has been furnished by them to the
Company. There are no family relationships between any of the nominees.
All of the nominees are currently directors of the Company. Certain
information with respect to the three nominees, Roger Clark, Hans Utsch and
Les N. Dace, is as follows:
CLASS I DIRECTOR NOMINEES
Roger Clark, age 64, has been a director since 1983. From 1980 to 1987,
he held a series of managerial positions in the computer products area with
Xerox Corporation. In 1987, he became self-employed as a micro-computer
consultant and programmer. In June 1997 he acquired a half-ownership in a
recruitment advertising agency named R & J Twiddy Advertising (since re-named
Talcott and Clark Recruitment Advertising, Inc.), which is based in New
Canaan, Connecticut. Mr. Clark is the author of seven books on
micro-computing and a director of The Kaufmann Fund, Inc., a mutual fund which
invests in small and medium size growth companies.
Hans Utsch, age 60, has been a director since 1985. He has been
independently engaged in money management and investment banking for over 20
years. Since 1986, he has been President and, together with Mr. Lawrence
Auriana, Portfolio Co-Manager of The Kaufmann Fund, Inc. He received a B.A.
degree from Amherst College and an M.B.A. from Columbia University.
Les N. Dace, age 52, has been a director since 1995. Mr. Dace was
appointed Vice Chairman of the Board in charge of strategic planning and
business development in October 1998. Mr. Dace joined the Company in 1992, as
Vice President and General Manager for the Digimedics and Surgiware Product
Centers. He was appointed President and C.E.O. of the Company in 1995 and
held this post until October 1998. Prior to joining the Company, he was Vice
President of Sales and Marketing for PRX Pharmacy Systems, a Colorado-based
company providing hospital pharmacy management systems and home health
software solutions. From 1983 to 1987, he was employed by NBI, Inc. as
divisional President for its computer peripherals and office supplies company.
Mr. Dace has a B.S. degree in Electrical Engineering from the University of
Missouri.
DIRECTORS
The remaining current directors of the Company are as follows:
CLASS II DIRECTORS
(Term Expires at the Annual Meeting Following
the 1999 Fiscal Year)
Joseph Delario, age 64, has been a director since 1992. Mr. Delario was
President and Chief Executive Officer of Quadrocom, Inc., a business
consulting firm, until December 31, 1992, and since then has been a business
consultant and private investor in and active in the management of several
computer service companies. Mr. Delario renders management and financial
services to the Company. Mr. Delario received a B.A. degree from Fairleigh
Dickenson University in 1956.
Walter Kowsh, Jr., age 49, has been a director since 1990. He is a
consultant programmer specializing in Client/Server database systems. He was
a Senior Programmer Analyst with Brown Bros. Harriman & Co. from 1989 to 1992.
From 1986 to 1989, he was a computer consultant with Howard Systems
International. He received a B.A. degree from Queens College and an M.B.A.
from the New York Institute of Technology, and is a diplomat of New York
University in Computer Programming and Systems Design.
John C. Frieberg, age 63, was President, C.E.O. and Chief Financial
Officer of the Company from 1992 to July 1995, and has been a director since
1993. Mr. Frieberg joined Digimedics Corporation, which later became a wholly
owned subsidiary of the Company, as President in October 1989. Prior thereto,
he was President of Caleus, Inc., an information system company, from 1988 to
1989; President of Synergy Computer Graphics Corp., a computer peripheral
equipment company, from 1984 to 1988; and President of NCR/DPI Inc., a
computer systems manufacturing company, from 1972 to 1982. Mr. Frieberg
received a B.S. degree in Industrial Engineering from the University of
California at Los Angeles.
CLASS III DIRECTORS
(Term Expires at the Annual Meeting Following
the 2000 Fiscal Year)
Lawrence Auriana, age 54, has been Chairman of the Board of the Company
since 1986 and a director since 1983. He has been a Wall Street analyst,
money manager and venture capitalist for over 20 years. Since 1986, he has
been Chairman, a director and, together with Mr. Hans Utsch, also a director
of the Company, Portfolio Co-Manager of The Kaufmann Fund, Inc. He received a
B.A. degree from Fordham University, studied at New York University Graduate
School of Business, and is a senior member of The New York Society of
Securities Analysts.
<PAGE>
Jonathan H. Churchill, age 66, has been a practicing attorney in New York
City since 1958 and since May 1996 has been Counsel at Winthrop, Stimson,
Putnam & Roberts. He has been a director of the Company since 1992. Mr.
Churchill was a partner of Boulanger, Hicks, & Churchill, P.C., from January
1990 to May 1996. Winthrop, Stimson, Putnam & Roberts rendered legal services
to the Company during the last fiscal year, and the Company has retained and
proposes to retain Winthrop, Stimson, Putnam & Roberts during the current year.
Mr. Churchill received a B.A. from Harvard College and an L.L.B. from Harvard
Law School.
Clinton G. Weiman, M.D., age 73, has been a director since June 1996.
From 1961 to January 1993 he was Corporate Medical Director, Senior Vice
President of Citicorp/Citibank. Since 1994, Dr. Weiman has been independently
engaged as a consultant with the Federal Reserve. In 1998 Dr. Weiman became
associated with Executive Health Examiners as a physician. From 1956 to 1970
Dr. Weiman was engaged in private practice in New York, New York. Dr. Weiman
received a B.A. degree from Princeton University and a medical degree from
Cornell University Medical College. His appointments have included Clinical
Associate Attending Physician at New York Hospital and Associate Professor,
Clinical Medicine at Cornell University Medical College.
BOARD MEETINGS; COMMITTEES
The Board of Directors met four times during the fiscal year ended June
30, 1998.
The Company's Audit Committee is currently comprised of Messrs. Delario,
Clark and Weiman. The Audit Committee met two times during fiscal 1998. At
the present time, the Company does not have a nominating committee. The
Compensation Committee, which administers the 1982 Employee Stock Option Plan,
the 1992 Equity Incentive Plan and the 1997 Stock Option Plan for Non-Employee
Directors, consisting of Messrs. Delario, Clark and Weiman, took action two
times during fiscal 1998.
COMPENSATION OF DIRECTORS
It has been the Company's practice, starting in 1987, to conserve cash by
compensating directors for their services primarily through the grant of stock
options and shares of Common Stock. In 1991 a Stock Option Plan for
Non-Employee Directors (the "1991 Plan") was adopted. The 1991 Plan expired
in 1997 and was replaced by the 1997 Stock Option Plan for Non-Employee
Directors (the "1997 Plan"). A summary description of the 1997 Plan is set
forth below under the heading "Executive Compensation - 1997 Stock Option Plan
for Non-Employee Directors."
Under the 1997 Plan each director in office on July 1, 1997 received 3,600
options (10,800 in the case of the Chairman) for services as a director,
exercisable at $11.1875, which was the higher of the fair market value of the
Company's Common Stock on July 1, 1997, the date of grant, and January 6,
1998, the date of the shareholder approval of the 1997 Plan. These options
shall expire on July 1, 2005.
The 3,600 options (10,800 in the case of the Chairman) granted on July 1,
1998 under the 1997 Plan to each director in office on such date are
exercisable at $7.625, the fair market value of the Company's Common Stock on
July 1, 1998. These options shall expire on July 1, 2006.
<PAGE>
Each director in office on July 1, 1997 also became entitled to receive
for his services during fiscal 1998 shares of Common Stock valued at $10,000
($30,000 in the case of the Chairman) based on the average of the high and low
market prices per share on the first day of each month in fiscal year 1998,
which was $8.708. Therefore, the directors received 1,148 shares (3,445
shares in the case of the Chairman) for fiscal 1998.
Each director in office on July 1, 1998 is entitled to receive for his
services during fiscal 1999 shares of Common Stock value at $10,000 ($30,000
in the case of the Chairman) based on the average of the high and low market
prices per share on July 1, 1998, which was $7.625.
The members of the Compensation Committee and Audit Committee receive
$1,500 for each meeting attended.
SHARE OWNERSHIP
The following tables set forth the beneficial ownership of the Company's
Common Stock as of September 30, 1998 by (i) each person who is known by the
Company to own beneficially more than 5% of the Company's Common Stock, (ii)
each of the executive officers named in the Summary Compensation Table
included elsewhere herein, (iii) each current director of the Company, (iv)
each nominee for election as a director and (v) all directors and executive
officers as a group:
<TABLE>
<CAPTION>
PRINCIPAL SHAREHOLDERS
Number of Shares
Acquirable within Percentage of
Names and Addresses1 Number of Shares2 60 Days 3,4 Class Owned2
- -------------------------------------- ----------------- ------------------ -------------
<S> <C> <C> <C> <C>
<C> <C> <C>
Lawrence Auriana5 1,028,506 725,495 16.1%
Oracle Partners, L.P., 986,236 0 17.4%
Oracle Institutional Partners, L.P.,
GSAM Oracle Fund, Inc.
____________________
</TABLE>
1 Addresses are as follows: Lawrence Auriana: 140 East 45th Street, 43rd
Floor, New York, NY 10017. The Oracle shareholders: 712 Fifth Avenue,
45th Floor, New York, NY 10019.
2 Based on the numbers of shares outstanding at, plus for each shareholder
or group, shares acquirable within 60 days of, September 30, 1998.
3 Reflects the shares which may be acquired by the shareholder upon
exercise of options and warrants which are exercisable within 60 days of
September 30, 1998.
4 Includes 674,695 warrants granted to Mr. Auriana for his loans to the
Company in the bridge financings of the Company in fiscal 1995 and fiscal
1994.
5 Mr. Auriana is also Chairman and a director of the Company.
<PAGE>
<TABLE>
<CAPTION>
SHARE OWNERSHIP BY DIRECTORS, NOMINEES, NAMED EXECUTIVE OFFICERS
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
<S> <C> <C> <C>
<C> <C> <C>
Number of Shares
Acquirable within Percentage of
Names and Addresses1 Number of Shares2 60 Days3 Class owned2
- ---------------------------------- ----------------- ----------------- -------------
Lawrence Auriana 1,028,506 725,495 16.1%
Jonathan H. Churchill 36,130 12,630 *
Roger Clark 27,111 14,435 *
Les N. Dace 75,048 75,048 1.3%
Joseph Delario 226,094 62,630 4.0%
John Frieberg 48,870 42,157 *
Walter Kowsh, Jr. 47,658 14,435 *
Hans Utsch 114,861 14,435 2.0%
Clinton G. Weiman 9,243 5,267 *
George Barry 10,568 10,568 *
John Esposito 44,850 43,750 *
Thomas Mulstay 0 0 0%
Rodger Wilson 17,250 16,250 *
All Directors and
Executive Officers as
a group (15 persons) 1,758,238 1,058,541 26.2%
________________________
</TABLE>
1 Addresses are as follows: Lawrence Auriana: see previous chart.
Jonathan Churchill: One Battery Park Plaza, New York, New York 10004.
Roger Clark: 330 Elm Street, Unit #1, New Canaan, CT 06840. Les Dace:
11211 Quivas Loop, Westminster, Colorado. Joseph Delario: 77
Independence Way North, Edgewater, NJ 07020. John Frieberg: 4402 South
St. Andrew's Lane, Spokane, WA 99223. Walter Kowsh, Jr.: 64-08 136th
Street, Flushing, NY 11367. Hans Utsch: 140 East 45th Street, 43rd
Floor, New York, New York 10017. Clinton Weiman: 2 Roberta Lane,
Greenwich, CT 06830. George Barry: 11711 West 74th Street, Lenexa, KS
66214. John Esposito: 1121 Old Walt Whitman Road, Melville, NY
11747-3005. Thomas Mulstay: 1121 Old Walt Whitman Road, Melville,
NY 11747-3005. Rodger Wilson: 11711 West 79th Street, Lenexa, KS 66214.
2 Based on the number of shares outstanding at September 30, 1998, plus,
for each person or group, shares acquirable within 60 days of September
30, 1998.
3 Reflects the shares which may be acquired by the shareholders upon
exercise of options and warrants which are exercisable within 60 days
of September 30, 1998.
* Represents less than 1% of the Company's outstanding common stock.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Name Age Position
- ------------------- --- -------------------------------------------------------------
<S> <C> <C>
<C> <C> <C>
Lawrence Auriana 54 Chairman of the Board and Secretary
John Esposito 38 President and Chief Executive Officer
Les Dace 52 Vice Chairman of the Board in charge of strategic planning
and business development
Rodger Wilson 45 Vice President and General Manager - Pharmacy Division
John Tortorici 55 Vice President and General Manager - Blood Bank Division
Creighton Miller 46 Vice President and General Manager - Operating Room Division
Jill Suppes 31 Corporate Controller and Treasurer
</TABLE>
<PAGE>
Lawrence Auriana, 54, Chairman of the Board and Secretary. See above for
biographical information for Mr. Auriana.
John Esposito, 38, President and Chief Executive Officer. Mr. Esposito
joined the Company in 1990 and held the position of Vice President - Sales
from 1990 until October 1998, when he became President and Chief Executive
Officer. From 1986 to 1990, he was employed in various sales positions by the
Healthcare Division of Data General Corporation. Prior to joining Data
General, he worked in a technical capacity in the Information Systems
Department at the New York Public Library. He is a graduate of Syracuse
University, with a B.S. degree in Marketing and Management Information
Systems.
Les N. Dace, 52, Vice Chairman of the Board in charge of strategic
planning and business development. See above for biographical information for
Mr. Dace.
Rodger P. Wilson, R.Ph., 45, Vice President and General Manager - Pharmacy
Division. Mr. Wilson joined the Company in 1996 as Vice President/General
Manager of the Pharmacy Division. He was President and Chief Executive
Officer of PRX Pharmacy Systems, Inc., from 1982 to 1992. Mr. Wilson was Vice
President of Operations and Chief Information Officer of Concepts Direct,
Inc., from 1992 to 1994 and President of The Pawnee Group from 1994 to 1996.
Mr. Wilson received a B.S. degree from the University of Wyoming School of
Pharmacy and is a registered Pharmacist.
John Tortorici, 55, Vice President and General Manager - Blood Bank
Division. Mr. Tortorici joined the Company in September 1998. Mr. Tortorici
was serving as Chairman, President, Chief Executive Officer, Chief Financial
Officer and a director of Informedics, Inc. when it was merged into the
Company in September 1998. Mr. Tortorici founded Informedics in 1979 and was
a director from 1979 until the merger. He served as Informedics' President
from 1979 to 1996 and from 1997 until the merger. He served as its Chief
Financial Officer from 1985 to 1992 and from 1997 until the merger.
Creighton Miller, 46, Vice President and General Manager - Operating Room
Division. Mr. Miller joined the Company in 1980 as a software development
engineer. He held that position until 1983 when he became the Vice President
of Engineering. In 1998 he was promoted to Vice President and General Manager
of the Operating Room Division. Mr. Miller holds a B.S. degree in Computer
Science from Iowa State.
Jill Suppes, 31, Corporate Controller and Treasurer. Ms. Suppes joined
the Company in September 1997 and held the position of Assistant Controller
from then until December 1998, when she became Corporate Controller and
Treasurer. From 1994 to 1997, she was Assistant Controller for Propane
Continental, Inc. and from 1991 to 1994 she was employed with Sanofi Animal
Health, Inc. as an accountant. She is a graduate of University of Missouri
- - Columbia, with a B.S.A.C.C degree in accounting. Ms. Suppes has a Certified
Public Accounting Certificate.
<PAGE>
EXECUTIVE COMPENSATION
The following tables sets forth the compensation of the Chief Executive
Officer of the Company and each of the other most highly compensated executive
officers for the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C> <C> <C>
Other All
Annual Restricted Securities Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Fiscal Salary Bonus Sation Awards Options Payouts sation
Positions Year ($) ($) ($) ($) SARs (#) ($) ($)
- --------- --------- ------- ------- ------- -------- ---------- ----------- -------- ------
Les N. Dace 1998 110,000 136,650 6,000 - 30,193 - 441
President and CEO 1997 110,000 151,062 6,000 - - - 262
1996 75,000 60,731 6,000 - 50,000 - 262
Rodger Wilson 1998 80,000 73,129 6,000 - - - 385
Vice President and 1997 77,400 55,502 5,500 - 50,000 - 262
General Manager -
Pharmacy Division
John Esposito 1998 80,000 69,263 6,000 - - - 328
Vice President, Sales 1997 80,000 50,733 6,000 - 35,000 - 205
1996 70,000 71,795 6,000 - - - 250
George Barry* 1998 70,400 35,963 - - 42,271 - 385
Vice President and
Chief Financial
Officer
Thomas Mulstay** 1998 77,327 27,361 6,000 - 42,271 - 232
Former Vice President 1997 80,000 79,519 6,000 - - - 232
& General Manager, 1996 75,000 90,662 6,000 - - - 215
Hemocare
</TABLE>
_______________________________
* Mr. Barry resigned from the Company effective December 4, 1998.
** Mr. Mulstay resigned from the Company in March 1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options to
purchase Common Stock in fiscal 1998 granted to the individuals named in the
Summary Compensation Table. No stock appreciation rights were granted in
fiscal 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Base Price Date
- ---------------- ------------ ------------- ----------- --------------
Les Dace 30,193 (1) 19.8% $ 7.50 October 1, 2007
George Barry 42,271 (1) 27.8% 7.50 October 1, 2007
Thomas Mulstay 42,271 (1) 27.8% 7.50 October 1, 2007
</TABLE>
________________________
(1) Options become exercisable 25%, 50%, 75% and 100% on October 1, 1998,
1999, 2000 and 2001.
<PAGE>
FISCAL 1998 OPTION/SAR EXERCISES AND VALUE
OF OUTSTANDING OPTIONS AT END OF LAST FISCAL YEAR
The following table sets forth options exercised by the named executive
officers during fiscal 1998 and the number and value of options held by them
at June 30, 1998. No stock appreciation rights were granted and there were no
outstanding stock appreciation rights at June 30, 1998. The fair market value
on such date was $7.50 per share.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of
Shares Unexercised Unexercised
Acquired on Value Options at End In-the-Money Options
Name Exercise Realized Of Fiscal Year End of Fiscal Year
- -------------- ----------- --------- -------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Les N. Dace 15,000 $ 104,850 55,000 55,193 $ 357,500 $ 162,500
Rodger Wilson -- -- 12,500 37,500 57,063 171,188
John Esposito 15,000 86,513 43,750 26,250 264,825 123,375
George Barry -- -- 0 42,271 0 0
Thomas Mulstay 40,000 211,050 0 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
Messrs. Esposito, Dace and Wilson have employment agreements with the
Company providing for minimum compensation levels of $150,000, $110,000 and
$120,000, respectively. Mr. Esposito will receive a bonus (up to $120,000)
based upon the Company's achieving targeted fully diluted earnings per share
(exclusive of the financial results of the Informedics subsidiary and
exclusive of extraordinary events) and a bonus (up to $80,000) based on the
reduction of days sales outstanding. Mr. Dace will receive bonuses based upon
the Company's achieving targeted fully diluted earnings per share (up to
$20,000) and upon successful completion of stated projects (up to $55,000 in
the discretion of the chief executive officer). Mr. Wilson will receive
bonuses based upon the Company's achieving targeted earnings before interest
and provision for income taxes generated by the Pharmacy Division (up to
$52,800) and targeted corporate fully diluted earnings per share (up to
$19,200), and upon the reduction of the Pharmacy Division days sales
outstanding (up to $48,000). Mr. Creighton Miller will receive bonuses based
on the Company's achieving targeted earnings before interest and provision for
income taxes generated by the operating room division (up to $76,800), on the
Company's achieving targeted fully diluted earnings per share (exclusive of
the financial results of the Informedics subsidiary) (up to $19,200) and on
the reduction of the operating room division days sales outstanding (up to
$24,000). All agreements also provide for severance pay in case of
termination.
1982 EMPLOYEE STOCK OPTION PLAN AND 1992 EQUITY INCENTIVE PLAN
In 1982, the Company adopted an employee stock option plan (the "1982
Plan") for officers and other key employees, not including directors. No
options may currently be granted under this Plan. Options previously granted
and currently outstanding under the 1982 Plan generally vest and become
exercisable in monthly installments over a two or three-year period, with each
installment remaining exercisable for a five-year period after it vests. No
options intended to be incentive stock options under the Internal Revenue Code
of 1986 are currently outstanding.
<PAGE>
Awards granted under the 1992 Equity Incentive Plan (the "Equity Incentive
Plan") may include a wide range of Common Stock-based awards. Officers and
other management employees of the Company are eligible to participate in the
Equity Incentive Plan. The maximum number of shares of Common Stock which may
be issued under the Equity Incentive Plan at any time is 20% of the
outstanding shares of the Company's Common Stock, except that no more than
500,000 shares may be issued pursuant to incentive stock options. No awards
may be granted after the year 2002. The term of each stock option may not
exceed ten years from the date of grant. The option price of each stock
option is payable in cash, at the discretion of the option committee in shares
of the Company's Common Stock, or by a combination thereof. Certain options
under the Equity Incentive Plan held by former key employees of Informedics
are incentive stock options.
All options under the Equity Incentive Plan have provisions which,
generally speaking, accelerate vesting in the event of a change of control of
the Company. Options granted under the Equity Incentive Plan which accelerate
vesting upon a change in control could be an "anti-takeover defense" because,
as a result of these provisions, a change in control of the Company could be
more difficult or costly. This however, was not the Company's intention in
adopting the Equity Incentive Plan.
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors adopted the 1997 Plan in June 1997. The 1997 Plan
was approved by the Company's shareholders at the January 1998 Annual Meeting
for the 1997 fiscal year. The 1997 Plan is designed to maintain the Company's
ability to attract and retain the services of experienced and highly qualified
outside directors and to increase their proprietary interest in the Company's
continued success.
The 1997 Plan shall automatically provide grants of 3,600 options
annually, for the six fiscal years ending June 30, 2004, to each non-employee
director of the Company (10,800 options in the case of the Chairman), except
as noted below. Each grant shall become vested and exercisable on the first
day of the seventh month of each fiscal year and the first day of the next
fiscal year provided that the director is then in office or has retired or is
out of office by reason of ill health or death. New directors will be granted
options covering 1,800 shares for each six-month period remaining in the
fiscal year, effective as of the first day of the month following their
election to the Board. Except for the grant made on July 1, 1997, all options
are exercisable at 100% of fair market value of the Company's Common Stock on
the date of grant. All options shall expire eight years after their date of
grant.
An aggregate of 500,000 shares of Common Stock (subject to adjustment as
provided in the 1997 Plan) will be subject to the 1997 Plan. Shares subject
to options which terminate unexercised will be available for future option
grants. The options granted under the 1997 Plan shall be non-statutory
options not intended to qualify under Section 422 of the Code.
<PAGE>
All options shall become exercisable and vested on the seventh business
day before the scheduled date of a Change in Control, as defined in the 1997
Plan. An optionee may at his option require the Company to purchase his option
at its equivalent cash value, based on fair market value, as determined by the
1997 Plan committee as of the effective date of the Change in Control. The
provisions in the 1997 Plan accelerating vesting upon a Change in Control,
could be an "anti-takeover defense" because, as a result of these provisions,
a Change in Control of the Company could be more difficult or costly. This
however, was not the Company's intention in adopting the 1997 Plan, since the
purpose of the 1997 Plan, as stated above, is to compensate directors for
their services without the expenditure of cash and to increase their ownership
interest in the Company.
OTHER MATTERS
FINANCIAL ADVISORY SERVICES
In 1991, the Company agreed with Bowling Green Securities, Inc., an
investment banking firm owned by Mr. Utsch, a director, and in which Messrs.
Auriana, also a director, and Utsch are principals, that such firm would
render investment banking advice to the Company and that, if any merger,
acquisition, divestiture or analogous transaction is successfully consummated
as a result of its efforts, the Company would pay a total fee related to the
value of the company acquired or divested on the basis of 5% of the first $2
million, 4% of the second $2 million, 3% of the third $2 million, 2% of the
fourth $2 million and 1% of any additional amounts.
Mr. Delario, a director of the Company, holds an option to purchase
75,000 shares of the Company's Common Stock granted as payment for managerial
and financial advisory services to be rendered in connection with mergers and
acquisitions.
PROPOSED LINE OF CREDIT
In June 1996, the Company acquired the Pharmakon division and a United
Kingdom subsidiary of Continental Healthcare Systems, Inc. for cash and a
promissory note with a final maturity date, as amended, of November 30, 1998.
Although the Company was in a position to, and did, meet the final payment
obligation from its available general funds, it considers it preferable to
refinance this obligation through borrowings and thereby improve its cash
position. After investigating the institutional market for an appropriate
line of credit, the Company asked Mr. Lawrence Auriana, Chairman of the Board,
if he would be willing to make working capital funds available to the Company.
Mr. Auriana indicated that he would be willing to extend a line of credit of
up to $2,000,000 to the Company, at its option, to bear interest at the prime
rate plus 1/4% and to be secured by all of the Company's accounts receivable.
The remaining terms of the credit arrangement are currently being
negotiated. The principal terms currently being discussed are identified
below. Under the proposed arrangement, the Company would, at its option,
be able to borrow under the line of credit in four draw-downs totaling
$2,000,000 during fiscal 1999 and 2000, which may be prepaid at any time.
<PAGE>
The Company would only be able to draw-down funds if it satisfied certain
stated conditions as of the end of the preceding fiscal quarter, unless
the loan executor waives any conditions which have not been met. The
conditions to draw-down may include a net tangible assets test, a current
ratio test and a days sales outstanding requirement. Also, certain capital
expenditures may require the consent of the loan executor. The Company
believes that the terms being discussed are at least as favorable to the
Company as could be obtained from an unaffiliated third party.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be included in the proxy statement
for the next annual meeting of shareholders of the Company must be received by
the Company at its offices at 1121 Old Walt Whitman Road, Melville, New York
11747-3005, no later than September 12, 1999, and must satisfy the conditions
established by the Securities and Exchange Commission for shareholder
proposals to be included in the proxy statement of the Company at that
meeting. In accordance with a recent amendment to the proxy rules and
regulations of the Securities and Exchange Commission, if a shareholder does
not notify the Company by November 27, 1999, of a proposal, then the Company's
proxies may use their discretionary voting authority if the proposal is raised
at the meeting.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Year-end filings disclosing the grants of directors' options for the 1997
fiscal year to Messrs. Clark, Frieberg, Kowsh and Utsch were inadvertently
omitted. These omissions were discovered and reported on the Reports on Form
5 the following year. The exercise of options and the sales of the underlying
shares by Mr. Dace and Mr. Frieberg were filed eight months and one year late
on a Report on Form 5, respectively. The grant of an option to Mr. Barry was
reported eleven months late on a Report on Form 5. The exercise of options
and the sales of the underlying shares by Mr. Esposito were filed one month
late on a Report on Form 5. The Common Stock holdings of Mr. Wilson were
reported two years late on a Report on Form 5. A Report on Form 5 for Mr.
Miller, reporting his beneficial ownership of Company Common Stock and options
to purchase Company Common Stock, was filed three and one-half months late.
MISCELLANEOUS
A representative of Richard A. Eisner & Company, the Company's
independent auditors, is expected to be present at the meeting. The
representative will be afforded an opportunity to make a statement and will be
available to respond to questions by shareholders.
Officers and regular employees of the Company, without extra compensation,
may solicit the return of proxies by mail, telephone, telegram and personal
interview. Certain holders of record such as brokers, custodians and nominees
are being requested to distribute proxy materials to beneficial owners and to
obtain such beneficial owners' instructions concerning the voting of proxies.
The cost of solicitation of proxies (including the cost of reimbursing
banks, brokerage houses, and other custodians, nominees and fiduciaries for
their reasonable expenses in forwarding proxy soliciting material to
beneficial owners) will be paid by the Company.
<PAGE>
TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company knows of no business that will
be presented for consideration at the Annual Meeting other than as described
in this Proxy Statement. If any other matters are properly brought before the
meeting or any adjournment or postponement thereof, it is the intention of the
persons named in the accompanying form of Proxy to vote the Proxy on such
matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Lawrence Auriana, Secretary
Dated: January 11, 1999
<PAGE>
PROXY PROXY
MEDIWARE INFORMATION SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Lawrence Auriana and Les N.
Dace, and each of them, acting alone or jointly, as attorneys and agents, with
full power of substitution, to vote as proxy all of the shares of Common Stock
standing in the name of the undersigned at the Annual Meeting of the
Shareholders of Mediware Information Systems, Inc., to be held at 140 East
45th Street, 43rd Floor, New York, New York 10017 (the offices of The Kaufmann
Fund, Inc.) at 10:00 a.m. on February 10, 1999, and any adjournments thereof,
with respect to all matters as may properly come before the meeting or any
adjournments thereof. Receipt of Notice of Meeting dated January 11, 1999 is
hereby acknowledged.
The Board of Directors recommends a vote "FOR" the election of the three
nominees as Class I directors
1. ELECTION OF CLASS I DIRECTORS:
NOMINEES: ROGER CLARK, HANS UTSCH AND LES N. DACE
= FOR ALL LISTED NOMINEES (EXCEPT AS MARKED) = WITHHOLD AUTHORITY
______________________________________________________________________________
(To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided above.)
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN AND DATE ON THE REVERSE SIDE
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEE
DIRECTORS NAMED ON THE REVERSE SIDE.
<TABLE>
<CAPTION>
<S> <C>
<C>
Dated ____________________, 1999 ____________________________________
_____________________________________
(Signature(s)
_____________________________________
* Please sign exactly as name(s) appear(s) to the left. If
joint, all joint owners should sign. When signing as
attorney, trustee, administrator, executor, etc., state full
title.
</TABLE>
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO THE OFFICE OF
LAWRENCE AURIANA, 140 EAST 45TH STREET, 43RD FLOOR
NEW YORK, NY 10017
