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:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission 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
PACE HEALTH MANAGEMENT SYSTEMS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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PACE HEALTH MANAGEMENT SYSTEMS, INC.
1025 ASHWORTH ROAD, SUITE 200
WEST DES MOINES, IOWA 50265
April 15, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of PACE
Health Management Systems, Inc. to be held on Friday, May 23, 1997, at 10:30
a.m., local time, at 1025 Ashworth Road, Suite 200, West Des Moines, Iowa. At
the meeting you will be asked to vote on the election of directors, and the
ratification of the appointment of independent auditors, all as set forth in the
accompanying Notice of Annual Meeting and Proxy Statement. Please read it
carefully. The Board of Directors recommends a vote "for" the election of all
nominees for director and the ratification of the appointment of McGladrey &
Pullen, LLP as independent auditors.
Holders of record of PACE Health Management Systems, Inc. Common Stock at the
close of business on April 8, 1997 will be entitled to one vote for each share
held. PACE Health Management Systems, Inc. has approximately 1,000 beneficial
holders of its Common Stock.
Your vote is important. Please make sure that your shares are represented at the
Annual Meeting whether or not you are personally able to attend. You are
encouraged to specify your choice by marking the appropriate box on the enclosed
proxy card. However, it is not necessary to mark any box if you wish to vote in
accordance with the Board of Directors' recommendations.
Please sign, date and return the proxy card in the enclosed postage paid
envelope.
A copy of the Company's 1996 Annual Report to Shareholders, including audited
financial statements, is enclosed.
Sincerely,
/s/ Roger D. Huseman
Roger D. Huseman
Secretary
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of PACE Health Management Systems, Inc. will
be held at 1025 Ashworth Road, Suite 200, West Des Moines, Iowa on Friday, May
23, 1997, at 10:30 a.m., local time, for the purpose of acting on the following
matters:
1. To elect two members of the Board of Directors;
2. To ratify the selection of McGladrey & Pullen, LLP as
independent auditors; and
3. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Holders of PACE Health Management Systems Common Stock at the close of business
on April 8, 1997 will be entitled to notice of and to vote at the meeting or at
any adjournment or postponement thereof. Even if you now expect to attend the
Annual Meeting, you are requested to please mark, sign, date and return the
accompanying proxy in the enclosed postage paid envelope. If you do attend you
may vote in person, if you wish, whether or not you have sent in your proxy.
Your continued interest and cooperation are greatly appreciated.
By order of the Board of Directors
/s/ Roger D. Huseman
Roger D. Huseman
Secretary
April 15, 1997
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
SHAREHOLDERS ARE URGED TO PROMPTLY MARK, SIGN, DATE AND RETURN THE PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
PACE HEALTH MANAGEMENT SYSTEMS, INC.
1025 ASHWORTH ROAD, SUITE 200
WEST DES MOINES, IOWA 50265
TELEPHONE NUMBER: (515) 222-1717
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
from the shareholders of PACE Health Management Systems, Inc. (the "Company") on
behalf of the Board of Directors of the Company for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at 1025 Ashworth Road, Suite 200,
West Des Moines, Iowa, on Friday, May 23, 1997, at 10:30 a.m., local time, and
at all adjournments or postponements thereof, for the purposes set forth in the
preceding Notice of Annual Meeting of Shareholders. This Proxy Statement and
accompanying notice and form of proxy are first being sent to the shareholders
of the Company on or about April 15, 1997.
VOTING RIGHTS AND PROCEDURES
Only shareholders of record at the close of business on April 8, 1997 are
entitled to vote at the meeting. As of the record date, there were outstanding
5,090,184 shares of Common Stock of the Company. Each share of Common Stock is
entitled to one vote on all matters presented to the meeting.
Any shareholder giving a proxy pursuant to this Proxy Statement may revoke it at
any time by filing with the Secretary of the Company an instrument revoking it
or a duly executed proxy bearing a later date, or, if the shareholder executing
the proxy is present at the meeting, by voting in person.
All shares represented by effective proxies will be voted at the meeting or any
adjournment or postponement thereof as specified therein by the person giving
the proxy. If no specification is made, the proxies will be voted in favor of
the nominees for director and in favor of the ratification of McGladrey &
Pullen, LLP as the Company's auditors. The Board knows of no other matter to
come before the Annual Meeting. However, if any other matter properly comes
before the Annual Meeting, the persons named in the proxies will vote them in
accordance with their judgment on such matters.
If a quorum is present, the affirmative vote of a majority of the votes cast in
the election of directors is required for the election of each director, and the
affirmative vote of a majority of the votes cast on the ratification of the
appointment of independent auditors is required for such ratification. For
purposes of determining the number of votes cast in the election of directors,
all votes cast "for" or to "withhold authority" to vote are included.
"Non-votes," including "broker non-votes" which occur when brokers are
prohibited from exercising voting authority for beneficial owners who have not
provided voting instructions, are not counted for the purpose of determining the
number of votes cast with respect to a matter but are counted as present for
purposes of determining a quorum.
The entire cost of solicitation of proxies will be borne by the Company. In
addition to the original solicitation by mail, some of the officers and regular
employees of the Company may solicit proxies by personal calls, telephone or
otherwise, but without compensation in addition to their regular salaries. The
Company will reimburse brokers and other custodians, nominees or fiduciaries for
reasonable expenses incurred in forwarding proxy material to beneficial owners.
PROPOSAL NUMBER 1 - ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board of Directors will
consist of no less than three and no more than seven members and that the Board
is divided into three classes, each class to be as nearly equal in number as
possible. Presently, the Company has six Directors, divided into three classes
of two Directors each.
The terms of Directors Bill W. Childs and R. David Spreng expire at the Annual
Meeting. The terms of Directors John Pappajohn and Gordon M. Derzon will expire
at the 1998 annual meeting of shareholders, and the terms of Directors Mark J.
Emkjer and Carl S. Witonsky will expire at the 1999 annual meeting of
shareholders.
The Board of Directors has nominated Messrs. Childs and Spreng for election to a
three-year term which will end at the Company's 2000 annual meeting of
shareholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF MESSRS. CHILDS AND SPRENG. Both of the nominees have consented to be
nominees and to serve as directors if elected. In the event that a nominee for
director should become unavailable, which is not anticipated, the Board of
Directors may, in its discretion, designate a substitute, in which event proxies
will be voted for such substitute.
DIRECTORS OF THE COMPANY
The following paragraphs set forth information concerning each of the current
Directors of the Company:
Mark J. Emkjer, age 41, joined the Company in March 1996 as President, Chief
Executive Officer and Director. From 1991 through February 1996 Mr. Emkjer
worked for Hospital Cost Consultants Inc. (HCC), an international provider of
managed care solutions, where he initially served as Vice President of Sales and
was then promoted to President and Chief Executive Officer in 1992. Prior to
joining HCC, Mr. Emkjer held positions with Tecxel Hospital Service Corporation
as an Executive Vice President from September 1988 through December 1990 and as
Vice President and General Manager with Foster Medical from June 1984 through
August 1988, most recently as Corporate Vice President.
Carl S. Witonsky, age 59, has been a Director of the Company since April 1994,
and Chairman of the Board of Directors since March 15, 1995. He is an
independent consultant to investment bankers and health care organizations on
health care information matters and a venture partner for St. Paul Venture
Capital. From 1989 to 1992, was the Chairman and Chief Executive Officer of
Gabrieli Medical Information Systems (GMIS). Prior to GMIS, he served as Vice
President of Systems & Operations of Shared Medical Systems from 1975 to 1988.
He is a director of Medicode, a Salt Lake City-based clinical informatics
company, and of International Medical Management and HealthWorks Alliance, two
Wayne, Pennsylvania-based health care informatics companies.
Bill W. Childs*, age 57, has been a director of the Company since February 1990.
He was a Senior Vice President of CyCare, an information systems company
providing physicians' office software, from April 1995 to September 1996. Prior
to that, he was the President and CEO of Health Data Analysis, Inc. from 1984
until May 1995. Mr. Childs was the founder and Editor-in-Chief of HEALTHCARE
INFORMATICS, a leading hospital information systems magazine published by Health
Data Analysis, Inc. He also is the founder or co-founder of several other
magazines, including COMPUTERS IN HEALTHCARE, HEALTHCARE COMPUTING &
COMMUNICATIONS CANADA, and R.F. DESIGN. He was also one of the founders of
Continental Healthcare Systems and TDS Healthcare Systems Corp.
John Pappajohn, age 68, has been a Director of the Company since January 1994.
Since 1969, Mr. Pappajohn has been the sole owner of Pappajohn Capital
Resources, a venture capital fund, and President of Equity Dynamics, Inc., a
financial consulting firm, both located in Des Moines, Iowa. Mr. Pappajohn also
serves as a director of the following public companies: Care Group, Inc.;
GalaGen, Inc.; Drug Screening Systems, Inc.; CORE, Inc.; OncorMed, Inc.; Fuisz
Technologies Ltd.; Health Desk Corporation; and Patient Infosystems, Inc.
R. David Spreng*, age 35, has been a director of the Company since January 1994.
He is the President of IAI Ventures, Inc., the venture capital arm of Investment
Advisers, Inc. ("IAI"), a $16 billion asset management firm based in
Minneapolis, Minnesota. Prior to joining IAI in 1989, Mr. Spreng was a member of
the Corporate Finance Departments of Salomon Brothers Inc., New York and Dain
Bosworth Incorporated, Minneapolis. Mr. Spreng also serves as a director of
GalaGen, Inc. and a number of privately held companies.
- --------------------
*Candidate for election at 1997 Annual Meeting.
Gordon M. Derzon, age 62, has been a Director of the Company since July 1995.
Since 1974, Mr. Derzon has been a faculty member at the University of Wisconsin
and Chief Executive Officer of the University of Wisconsin Hospital and Clinics.
Prior to that time he had served in several hospital Executive Director
positions, including seven years at Kings County Hospital in Brooklyn, New York.
Mr. Derzon serves on various committees for the University Hospital Consortium.
He has also served as past Chairman of both the Governing Council of the
Public-General Hospital Section and past Chairman of the University Hospital
Consortium Service Board.
EXECUTIVE OFFICERS
The current executive officers of the Company, in addition to Mr. Emkjer, are as
follows:
Roger D. Huseman, age 44, joined the Company as Chief Financial Officer in July
1994 and was appointed Secretary and Treasurer of the Company on January 31,
1995. From 1990 through June 1994, Mr. Huseman operated a financial consulting
firm specializing in assisting businesses with financial restructuring and
financing needs. For four years prior to that he served initially as Vice
President and CFO, then as President and a Director of NonInvasive Monitoring
Systems, Inc., a public company located in Sarasota, Florida. He is licensed as
a certified public accountant in Iowa.
Ronald F. Wunder, age 46, joined the Company in July 1995 as Vice President of
Technology. From 1989 through 1995 Mr. Wunder worked for First Data Corporation,
Health Systems Group, a healthcare information system company located in
Charlotte, North Carolina, where he served most recently as Vice President of
Systems Architecture and New Development. For the 10 years prior that time he
was employed by McDonnell Douglas Health Systems Company in St. Louis, which
acquired First Data Corporation in 1989.
Josh E. Wisham, age 38, joined the Company in July 1996 as Vice President of
Client Services. From 1993 to 1996, Mr. Wisham directed the Client Services
Organization at CliniCom, Inc., now a part of HBO & Company. Prior to that time,
he worked for Intermountain Health Care in Salt Lake City, Utah as Client
Services Director. Mr. Wisham has over 21 years of experience in the information
systems industry, which include 15 years experience specifically working with
healthcare information systems.
Alan C. Wittmer, age 39, serves as the Company's Vice President of Marketing. He
joined the Company in November 1989 and prior to that held various sales and
marketing management positions with other companies. Prior to joining the
Company, Mr. Wittmer worked for Digital Equipment Corporation from May 1987 to
November 1989, and for AT&T from September 1985 to May 1987.
ORGANIZATION OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit Committee to advise the Board of
Directors on questions, policies and general matters of accounting, financing
and operating controls, to review the audit of the Company's financial
statements, and to select auditors subject to the approval of the full Board and
ratification by the shareholders. The Audit Committee consists of Mr. Pappajohn,
Mr. Spreng and, since May 1996, Mr. Witonsky. The Audit Committee held one
meeting in 1996. The Compensation Committee proposes, reviews and approves
executive compensation and administers the Company's 1995 Stock Compensation
Plan. The Committee consists of Mr. Witonsky, Mr. Childs and, since May 1996,
Mr. Derzon. The Compensation Committee met three times during 1996. The
Company's Executive Committee was eliminated in May 1996 and did not meet during
the year.
The Board of Directors as a whole acts as a nominating committee for candidates
for the Board of Directors. Directors are selected without regard to race,
creed, color, sex or national origin, and must have demonstrated outstanding
business and civic accomplishments. The Board of Directors will consider all
candidates recommended by shareholders in accordance with the procedure to be
established in the Company's Bylaws which require recommendations to be
submitted in writing ninety days in advance of the annual meeting of
shareholders. Such recommendations should include the name and address of the
shareholder and the candidate pursuant to which the recommendation is being
made, such other information about the candidate pursuant to which the
recommendation is being made, such other information about the candidate as
required to be included in the Company's proxy statement and the consent of the
candidate to serve as a director if elected. Recommendations should be sent to
the Secretary, PACE Health Management Systems, Inc., 1025 Ashworth Road, Suite
200, West Des Moines, Iowa 50265.
The Board of Directors of the Company held four meetings in 1996. All Directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and Board Committees on which they served.
COMPENSATION OF DIRECTORS
Directors receive no compensation for serving on the Board of Directors other
than reimbursement of reasonable expenses incurred in attending meetings.
Nonemployee directors who are not affiliated with principal shareholders and who
began service as directors prior to February 1995 (only Mr. Childs and Mr.
Witonsky) have received nonqualified warrants to purchase Common Stock. Mr.
Childs and Mr. Witonsky were each granted warrants to purchase 27,274 shares of
Common Stock of the Company as consideration for serving on the Board of
Directors. The warrants have an exercise price of at least 85% of the fair
market value of the Common Stock, as determined by the Board of Directors, on
the date of grant.
Subsequent to February 10, 1995, under the 1995 Stock Compensation Plan, new
non-employee directors receive a nondiscretionary grant of nonqualified stock
options for 21,820 shares upon their election or appointment to the Board. The
Plan provides for automatic grants of nonqualified stock options to new
non-employee directors at an exercise price equal to 100% of the fair market
value of the shares on the date of grant. One-fifth of such options vest over
each of five years from the date of election or appointment of the new
non-employee director. The non-employee director options are exercisable for ten
years from the date of grant. The Compensation Committee has no discretion
regarding the grant or terms of non-employee director options. Mr. Derzon
received a nonqualified option to purchase 21,820 shares under the Plan upon his
appointment as a director in 1995.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of the
persons who served as Chief Executive Officer of the Company at any time during
the year ended December 31, 1996 and all other persons who served as executive
officers of the Company at December 31, 1996 and whose total annual salary and
bonus for the year exceeded $100,000 for services in all capacities to the
Company during such fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Awards
Compensation ------------
---------------------- Securities
Fiscal Underlying All Other
Name and Position Year Salary(1) Bonus Options Compensation
- ----------------- ---- --------- ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Mark J. Emkjer, President 1996 $130,625 $0 260,000(3) $135,147(4)
and Chief Executive Officer(2) 1995 --- --- --- ---
1994 --- --- --- ---
Michael J. Vasquez, President 1996 $20,625 $0 40,912(3) $72,675(7)
and Chief Executive Officer(5) 1995 $98,250 $0 0 $0
1994 $90,000 $0 40,912(6) $0
</TABLE>
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(1) Excludes certain perquisites and other benefits which did not exceed the
lesser of $50,000 or 10% of salary and bonus for any named executive in any
of the years shown.
(2) Mr. Emkjer became President and Chief Executive Officer of the Company in
March 1996 and was not employed by the Company prior to that time.
Therefore, no compensation is shown for prior years.
(3) For additional information, see "Stock Options/SARs/LTIPs."
(4) Consists of the signing bonus and moving expense reimbursements required by
Mr. Emkjer's employment agreement. See "Employment Agreement."
(5) Mr. Vasquez was President and Chief Executive Officer of the Company until
March 15, 1996.
(6) All such options were voluntarily terminated as of April 25, 1995.
(7) From March 1996 until March 1997, Mr. Vasquez provided consulting services
to the Company pursuant to a one-year consulting agreement entered into in
conjunction with Mr. Vasquez's termination.
STOCK OPTIONS/SARS/LTIPS
The following table provides certain information concerning stock options
granted during the year ended December 31, 1996 to the persons named in the
Summary Compensation Table set forth above.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1996
Individual Grants
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% of Total
Options Granted Exercise or
Number of to Employees Base Price Expiration
Name Options Granted in Fiscal 1996 ($/Share) Date
---- --------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Mark J. Emkjer 100,000 (1) 18.74% $2.50 January 23, 2006
110,000 (1) 20.61% $1.00 January 23, 2006
50,000 (2) 9.37% $3.25 September 16, 2006
Michael J. Vasquez 40,912 (3) 7.67% $3.75 June 15, 1997
</TABLE>
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(1) Nonqualified stock options granted pursuant to Mr. Emkjer's employment
agreement with the Company. See "Employment Agreement."
(2) Incentive stock options granted pursuant to the 1995 Stock Compensation
Plan.
(3) Nonqualified stock options granted pursuant to an option agreement dated
April 7, 1996.
No stock appreciation rights (SARs) were granted to any named executive officer
during the fiscal year ended December 31, 1996. No stock options or SARs were
exercised during 1996 by any named executive officer. No long term incentive
plan awards (LTIPs) were made during 1996 to any named executive officer.
EMPLOYMENT AGREEMENT
Effective as of March 15, 1996, Mark J. Emkjer was appointed President and Chief
Executive Officer and was appointed to the Board of Directors of the Company.
The employment agreement between the Company and Mr. Emkjer provides for base
compensation of $165,000 per year, a signing bonus of $10,000, and an annual
bonus of up to 50% of base compensation based on attainment of goals determined
by the Board of Directors with respect to financial performance, stock price
appreciation and operating objectives. Pursuant to the agreement Mr. Emkjer
received a nonqualified option to purchase 100,000 shares of common stock of the
Company which vest 20% on the first anniversary date of the grant and 20% on
each of the next four anniversary dates of grant, and are exercisable at the
price of $2.50 per share. He also received a nonqualified option for 110,000
shares of common stock of the Company with an exercise price of $1.00 per share,
of which 35,000 vested upon purchase by Mr. Emkjer of a house and relocation of
his family to the Des Moines area, and the balance vest at the rate of 15,000
per year for five years. In addition, Mr. Emkjer's employment agreement provided
for payment of the selling commission with respect to his home in California and
moving expenses. The Agreement also contains severance, change of control and
noncompete provisions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995, Mr. Witonsky had a month to month consulting agreement with the
Company to provide executive management and consulting services to the Company
for which he received annual compensation of $36,000. The agreement was
terminated effective December 31, 1995.
Mr. Spreng is President of IAI Ventures, Inc., the venture capital arm of
Investment Advisers Inc., which provides investment management services to
certain funds which, in the aggregate, beneficially own 1,047,038 shares of the
Common Stock of the Company, and shares voting and investment power with respect
thereto, and may be deemed to beneficially own such shares. Investment Advisers
Inc. had a one-year consulting agreement with the Company which commenced on
August 31, 1995. As consideration for this agreement, certain funds to which
Investment Advisers Inc. provides investment management services received
warrants to purchase a total of 70,000 shares of Common Stock exercisable at
$3.00 per share.
In September 1996 the Company completed an offering of 900,000 shares of its
Common Stock at a price of $3.25 per share. The shares were sold by the Company
without an underwriter or placement agent, and all shares sold in the offering
are subject to a 270-day lock-up agreement. In the offering, two funds of which
Mr. Spreng is an officer purchased a total of 261,539 shares, Mr. Pappajohn and
his affiliates purchased 169,231 shares, and Mutual Ventures of South Dakota and
Edgewater Private Equity Fund, L.P. (see "Securities Ownership of Certain
Beneficial Owners and Related Persons") purchased 61,539 and 169,231 shares,
respectively. The remaining shares in the offering were sold to unaffiliated
persons on the same terms and conditions.
From March 1996 to March 1997, Mr. Vasquez had a one-year consulting agreement
with the Company to provide consulting services for which he received
compensation in the amount of $72,675 for the period ended December 31, 1996.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 1997, the number and percentages
of outstanding shares of the Company's common stock beneficially owned by each
current director, by the executive officers named in the Summary Compensation
Table, by all directors and current executive officers as a group and by each
person known to the Company to be the beneficial owner of more than 5% of the
Company's outstanding shares. The Company is aware of no stockholder, other than
those listed below, claiming to hold more than five percent of the Company's
outstanding stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS(15)
- ------------------- --------------------- ------------
DIRECTORS AND OFFICERS
<S> <C> <C>
Mark J. Emkjer(5) 70,000(11) 1.3
John G. Pappajohn(5) 522,756(2) 10.2
R. David Spreng(7) 1,047,038(3) 20.1
Bill W. Childs(5) 24,001(9) *
Carl S. Witonsky(5) 30,001(16) *
Gordon Derzon(5) 7,364(10) *
Michael J. Vasquez(4) 113,626(12) 2.2
All present directors and executive officers
as a group (10 persons) 1,773,200(17) 32.8
OTHER FIVE PERCENT OR MORE
SHAREHOLDERS:
Simon Casady(6) 259,879(18) 5.1
IAI Investment Funds(7) 1,047,038(3) 20.1
FBL Investment Advisory Services, Inc.(8) 485,364(19) 9.5
Edgewater Private Equity Fund, L.P.(13) 531,327(20) 10.4
The Dreyfus Corporation(14) 400,000 7.9
</TABLE>
- ------------------
* Less than 1%.
(1) Unless otherwise noted, each person has sole investment and voting power
with respect to the shares indicated.
(2) Includes 100,000 shares held by Halkis, Ltd., an affiliate of Mr.
Pappajohn, and 408,519 shares and presently exercisable warrants to
purchase 14,237 shares held by Mr. Pappajohn.
(3) Includes 471,473 shares and presently exercisable warrants to purchase
56,820 shares held by IAI Investment Fund IV, 340,705 shares and presently
exercisable warrants to purchase 56,820 shares held by IAI Investment Fund
VI, and 121,220 shares held by IAI Investment Fund VII, each of which is an
affiliate of Mr. Spreng.
(4) Mr. Vasquez was President and Chief Executive Officer of the Company until
March 15, 1996. His address is 2909 Southern Hills Circle, Des Moines, Iowa
50321.
(5) Except as noted, the address of each officer and director of the Company is
1025 Ashworth Road, Suite 200, West Des Moines, Iowa 50265.
(6) Address: 1238 Fulton, Indianola, Iowa 50125.
(7) The address for R. David Spreng and each of the IAI Funds is 3700 First
Bank Place, P.O. Box 357, Minneapolis, Minnesota 55402-0357.
(8) Address: 5400 University Avenue, West Des Moines, Iowa 50266.
(9) Includes 24,001 shares issuable upon the exercise of presently exercisable
warrants.
(10) Includes 3,000 shares and 4,364 shares issuable upon the exercise of
presently exercisable options under the 1995 Stock Compensation Plan.
(11) Represents presently exercisable options held by Mr. Emkjer. See "Stock
Options/SARs/LTIPs."
(12) Includes 97,216 shares and presently exercisable options to purchase 16,365
shares.
(13) Address: 666 Grand Avenue, Suite 200, Des Moines, Iowa 50309.
(14) Address: c/o Mellon Bank Corporation, One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258. The shares are beneficially owned by The Dreyfus
Corporation, which is a subsidiary of Mellon Bank Corporation, the trustee
of the Company's employee benefit plan (the "Trustee"). The shares include
all shares held of record by the Trustee which have not been allocated to
the individual accounts of employee participants in the plan. The Trustee
disclaims beneficial ownership of all shares that have been allocated to
the individual accounts of employee participants in the plan for which
directions have been received and followed.
(15) Assumes exercise of options or warrants exercisable on or before May 1,
1997 by the named person or group, but by no other person.
(16) Includes 6,000 shares and 24,001 shares issuable upon the exercise of
presently exercisable warrants.
(17) Includes shares, options and warrants held by Messrs. Emkjer, Pappajohn,
Spreng, Childs, Witonsky and Derzon, as described in the notes above. Also
includes 1,000 shares and presently exercisable options to purchase 27,492
shares held by Roger Huseman, 7,000 shares and presently exercisable
options to purchase 8,000 shares held by Josh Wisham, and presently
exercisable options to purchase 28,548 shares held by Alan Wittmer.
(18) Includes 247,916 shares and presently exercisable warrants to purchase
11,963 shares.
(19) Includes 471,127 shares and presently exercisable warrants to purchase
14,237 shares, held on behalf of Mutual Ventures of South Dakota, Inc., a
South Dakota corporation, which is an investment advisory client of FBL
Investment Advisory Services, Inc. Does not include shares which may be
deemed to be owned indirectly by Mutual Ventures of South Dakota as a 7.51%
shareholder of Iowa Business Development Finance Corp., which owns
approximately 4.3% of the outstanding shares of the Company.
(20) Includes 517,090 shares and presently exercisable warrants to purchase
14,237 shares.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's common stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1996 through December 31, 1996, all filing requirements applicable to
its officers, directors, and greater than ten percent beneficial owners were
complied with.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed McGladrey & Pullen, LLP as
independent auditors for the year 1997, subject to ratification by the
stockholders. The Audit Committee recommended McGladrey & Pullen, LLP to the
full Board of Directors. McGladrey & Pullen, LLP because of its high standing in
its field, is considered to be eminently qualified to perform this important
function. A representative of McGladrey & Pullen, LLP is expected to be present
at the Annual Meeting and will have the opportunity to make a statement if
desired, and such representative is expected to be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF MCGLADREY & PULLEN, LLP.
In the event the stockholders fail to ratify the appointment, it will be
considered as a direction to the Board of Directors to select another
independent accounting firm. It is understood that even if the selection is
ratified, the Board of Directors, in its discretion, may direct the appointment
of a new independent accounting firm at any time during the year if the Board of
Directors feels that such a change would be in the best interests of the Company
and its stockholders.
PROPOSALS OF STOCKHOLDERS
The Company's next annual meeting of shareholders is expected to be held during
the second quarter (April, May, June) of fiscal 1998 at a time and date to be
determined by the Board of Directors. Proposals of shareholders to be presented
at that meeting must be received at the Company's executive offices no later
than December 16, 1998 and otherwise be in compliance with applicable securities
laws for inclusion in the proxy statement. In addition, the Company's Bylaws
provide certain procedures that a shareholder must follow to nominate persons
for election as directors or to introduce an item of business at the annual
meeting, even if such item is not to be included in the Company's proxy
statement for that meeting. A copy of the Bylaws may be obtained without charge
by any shareholder by contacting the Secretary of the Company at the address set
forth on the cover page of this Proxy Statement.
PACE HEALTH MANAGEMENT SYSTEMS, INC.
ANNUAL MEETING
1025 ASHWORTH ROAD, SUITE 200
WEST DES MOINES, IOWA 50265
MAY 23, 1997 10:30 A.M. LOCAL TIME
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 23, 1997
The undersigned hereby appoints Carl S. Witonsky and Roger D. Huseman, or
either of them ("Appointed Proxies"), with power of substitution to each, to
vote all shares of the undersigned at the Annual Meeting of Shareholders
("Meeting") of PACE Health Management Systems, Inc. to be held on Friday, May
23, 1997 at 10:30 a.m. local time, or at any adjournment(s) or postponement(s)
thereof, as follows:
1. ELECTION OF DIRECTORS
[ ] FOR electing Bill W. Childs and R. David Spreng for a term of three
years.
[ ] WITHHOLD AUTHORITY to vote for Bill W. Childs and R. David Spreng.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- -------------------------------------------------------------------------------
2. Proposal to ratify the appointment of McGladrey & Pullen, LLP as
independent auditors:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
If any other business is brought before the Meeting or any adjournment(s)
or postponement(s) thereof, this Proxy will be voted in the discretion of the
Appointed Proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTING EACH OF THE DIRECTORS AND
FOR PROPOSAL 2.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(CONTINUED FROM THE OTHER SIDE)
THIS PROXY, SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WILL BE VOTED AS
DIRECTED. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL BE VOTED FOR THE
ELECTION OF THE NAMED NOMINEES AS DIRECTORS AND FOR THE RATIFICATION OF THE
APPOINTMENT OF MCGLADREY & PULLEN, LLP.
The undersigned ratifies all that the Appointed Proxies, or their
substitutes, may lawfully do by virtue hereof, and revokes any proxies
previously given to vote at the Meeting or adjournment(s) or postponement(s)
Dated:__________________________________
________________________________________
(Signature)
________________________________________
(Signature)
Please sign exactly as name(s) appear to
the left. When signing in fiduciary or
representative capacity, please add your
full title. If shares are registered in
more than one name, all holders must
sign. If signature is for a corporation,
the handwritten signature and title of
an authorized officer are required,
together with the full corporate name.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
