Document:

ex10_1.htm

    
      

    

    Exhibit
10.1 

    

    EMPLOYMENT
AGREEMENT

    

    THIS
EMPLOYMENT AGREEMENT (hereinafter "this Agreement") is made effective as of
January 11, 2010 (the “Contract Date”), between Mediware Information Systems,
Inc., (hereinafter "the Company") and Michael Martens (hereinafter the
“Executive").  The Executive’s employment with the Company shall begin
on February 10, 2010 (the “Effective Date”).

    

    WHEREAS,
the Company and the Executive desire that the Executive become the Company’s
Chief Financial Officer.

    

    NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements herein set forth, the Company and the Executive hereby agree as
follows:

    

    1. Employment. The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve as the Company’s Chief Financial Officer, or in such other capacity as
the parties may mutually agree. The Executive agrees to perform such services
customary to such office as shall from time to time be assigned to him by the
Chief Executive Officer or his designee.  The Executive further agrees
to use his best efforts to promote the interests of the Company and to devote
his full energies to the business and affairs of the Company.

     

    2. Term of Employment.
The employment hereunder shall be for a term of thirty-six months commencing on
the Effective Date hereof and ending thirty-six months after the Effective Date
hereof (the "'Expiration Date"), unless terminated earlier pursuant to Paragraph
4 of this Agreement (the "Term of Employment"). This Agreement shall
automatically renew for successive terms of one (1) year (each a "Renewal Term")
commencing on the first day immediately following the Expiration Date, unless
such renewal is objected to by either the Company or the Executive by giving at
least 90 days prior written notice prior to the scheduled Expiration Date. In
the event of such renewal, the last day of each successive Renewal Term shall be
deemed the Expiration Date.

    

    3. Compensation and Other
Related Matters.

    

    (a) Salary. As
compensation for services rendered hereunder, the Executive shall receive an
Annual Base Salary of two hundred thousand dollars ($200,000), which salary
shall be paid in accordance with the Company's then prevailing payroll practices
for its executives and shall be subject to review annually by the Chief
Executive Officer of the Board of Directors.

    

    (b) Bonus.  For
the period from the Effective Date through June 30, 2010, the Executive shall be
eligible to receive an annual cash bonus of up to [$100,000*(N/366)] where N
equals the number of days from the Effective Date through June 30, 2010 (the
“First Annual Bonus”).  For each fiscal year, thereafter, the
Executive shall be eligible to receive an Annual Bonus of up to 50% of
Executive’s Annual Base Salary.  The bonus will be paid only if
Executive  for achieves objectives established by the Company, subject
to the discretion of the Chief Executive Officer and the Board of
Directors.  The bonus, if any, would be payable after the conclusion
of the annual audit. Executive shall only earn the bonus if he is an active
employee as of the date the bonus is to be paid.

     

    (c) Stock Options.
Subject to the approval of the Company's Board of Directors, the Executive shall
be granted 30,000 non-qualified options
(the "Options") to purchase shares of the Company's Common Stock, par value $.10
per share (the "Stock"), under a Company stock option plan. The Options shall be
subject to the terms of the applicable Company stock option plan and the
Executive's Stock Option Agreement (the "Option Agreement"), attached hereto as
Exhibit "A". In addition to the terms set forth in the Option Agreement
(provided that this Agreement shall govern the Options in the event of any
conflict between this Agreement and the Option Agreement), the Company and the
Executive agree as follows:

    

    
      	
               
      

            	
              (i)

            	
              Vesting.
      Subject to continued employment of the Executive, the Options shall vest
      and become exercisable as follows: Seven thousand five hundred (7,500)
      Options shall become exercisable on each of the first, second, third and
      fourth anniversary of the Effective
Date.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Exercise. The
      Options shall be exercisable at a price equal to Fair Market Value (as
      defined in the Plan) on the Effective Date of this Agreement. The Options
      shall be exercisable (after vesting) for five years from the Effective
      Date.

            

    

    

    (d) Performance
Options.  Subject to the approval of the Company's Board of
Directors, the Executive shall be granted 25,000 non-qualified
performance options (the "Performance Options") to purchase shares of the
Company's Common Stock, par value $.10 per share (the "Stock"), under a Company
stock option plan. The Options shall be subject to the terms of the applicable
Company stock option plan and the Executive's Stock Option Agreement (the
"Option Agreement 2"), attached hereto as Exhibit "B". In addition to the terms
set forth in the Option Agreement 2 (provided that this Agreement shall govern
the Options in the event of any conflict between this Agreement and the Option
Agreement), the Company and the Executive agree as follows:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (i)

            	
              Vesting.  Subject
      to the continued employment of the Executive, the Performance Options
      shall vest and become exercisable as
follows:

            

    

    

    
      	
               
      

            	
              a.

            	
              Up
      to 8,333 options (or a pro rata portion thereof) shall vest on the first
      anniversary of the Effective Date if, but only if, the Executive achieves
      performance objectives as established by the Chief Executive Officer and
      the Board of Directors;

            

    

    

    
      	
               
      

            	
              b.

            	
              Up
      to 8,333 options (or a pro rata portion thereof) shall vest on the second
      anniversary of  Effective Date if, but only if, the Executive
      achieves performance objectives as established by the Chief Executive
      Officer and the Board of Directors;
and

            

    

    

    
      	
               
      

            	
              c.

            	
              Up
      to 8,334 options (or a pro rata portion thereof) shall vest on the third
      anniversary of the Effective Date if, but only if, the Executive achieves
      performance objectives as established by the Chief Executive Officer and
      the Board of Directors.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Exercise. The
      Performance Options shall be exercisable at a price equal to Fair Market
      Value (as defined in the Plan) on the Effective Date of this Agreement.
      The Performance Options shall be exercisable (after vesting) for five
      years from the Effective Date.

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Forfeiture.  The
      Performance Options that are to vest pursuant to the terms of this
      Paragraph 3 shall vest upon approval by the Chief Executive and the Board
      of Directors of the performance objectives.  All Performance
      Options that do not vest as provided in subsections (i) a., (i) b. and (i)
      c above shall be forfeit.

            

    

    

    (e) Other Benefits. The
fringe benefits, perquisites and other benefits of employment, including four
(4) weeks vacation each year, to be provided to the Executive shall be
equivalent to such benefits and perquisites as are provided to other employees
of the Company as amended from time to time.

    

    (f) Reimbursement.
Subject to policies established from time to time by the Company, the Company
shall reimburse Executive for the reasonable expenses incurred by him in
connection with the performance of his duties hereunder, including but not
limited to, travel expenses and entertainment expenses, for which the Executive
shall account to the Company in a manner sufficient to conform to Company policy
and Internal Revenue Service requirements.

    

    4. Termination.

    

    (a) Disability. If, as a
result of the incapacity of the Executive due to physical or mental illness, the
Executive is unable to perform substantially and continuously the duties
assigned to him hereunder for a period of three (3) consecutive months or for a
non-consecutive period of nine (9) months during the Term of Employment, the
Company may terminate his employment for "Disability" upon thirty (30) days
prior written notice to the Executive.

    

    (b) Death. The
Executive's employment shall terminate immediately upon the death of the
Executive.

    

    (c) Cause. The Company
shall be entitled to terminate the Executive's employment for "Cause."
Termination by the Company of the employment of the Executive for "Cause" shall
mean termination based upon (i) the willful failure by the Executive to follow
directions communicated to him by the Chief Executive Officer or his designee;
(ii) the willful engaging by the Executive in conduct which is materially
injurious to the Company, monetarily or otherwise; (iii) a conviction of, a plea
of nolo contendere, a
guilty plea or confession by the Executive to an act of fraud, misappropriation
or embezzlement or to a felony; (iv) the Executive's habitual drunkenness or use
of illegal substances; (v) a material breach by the Executive of this Agreement;
or (vi) an act of gross neglect or gross misconduct which the Company deems in
good faith to be good and sufficient cause.  Executive hereby
represents and warrants that he has never been convicted of an act of fraud,
misappropriation, embezzlement or a felony, and Executive further warrants that
during the Term of this Agreement, he will give the Company immediate notice of
any charge against the Executive relating to any of the foregoing.

    

    (d) Termination Without
Cause. The Executive shall have the right to terminate the Executive's
employment without cause at any time upon one ninety days prior written
notice.  The Company shall have the right to terminate the Executive’s
employment without cause at any time upon written notice.  The giving
of notice by either party pursuant to Paragraph 2 to prevent the renewal of this
Agreement shall not be deemed a termination of Executive’s employment without
cause.

    

    5. Compensation Upon
Termination or During Disability

    

    (a) Disability. During
any period that the Executive fails to perform his full-time duties with the
Company for a three-month period as a result of incapacity due to physical or
mental illness (the "Disability Period"), the Executive shall continue to
receive his Annual Base Salary at the rate set forth in Paragraph 3(a) of this
Agreement, less any compensation payable to the Executive under the applicable
disability insurance plan of the Company during the Disability Period, until
this Agreement is terminated pursuant to Paragraph 4(a) hereof. Thereafter, or
in the event the Executive's employment shall be terminated by reason of his
death, the Executive's benefits shall be determined under the Company's
insurance and other compensation programs then in effect in accordance with the
terms of such programs and the Company shall have no further obligation to the
Executive under this Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) Death. In the event
of the Executive's death, the Executive's beneficiary shall be entitled to
receive the Executive's Annual Base Salary at the rate set forth in Paragraph
3(a) of this Agreement until the date of his death. Thereafter, the Company
shall have no further obligation to the Executive or the Executive's beneficiary
under this Agreement.

    

    (c) Cause. If the
Executive's employment shall be terminated by the Company for "Cause" as defined
in Paragraph 4(c) of this Agreement, the Company shall continue to pay the
Executive his Annual Base Salary at the rate set forth in Paragraph 3(a) of this
Agreement through the date of termination of the Executive's employment.
Thereafter, the Company shall have no further obligation to the Executive under
this Agreement.

    

    (d) Termination Without
Cause. If the Executive terminates his employment pursuant to Paragraph
4(d), the Executive shall be entitled to receive Executive’s Annual Base Salary
at the rate set forth in Paragraph 3(a) of this Agreement until the date
Executive’s employment ends.  Thereafter the Company shall have no
obligation to Executive.  If the Company voluntarily terminates the
Executive's employment with the Company pursuant to Paragraph 4(d) of this
Agreement, the Company shall until the earlier of the three month anniversary of
the termination of employment or the commencement of Executive’s employment at a
successor employer, pay the Executive an amount equal to three months of the
Executive's then current Annual Salary, payable in three equal monthly
installments. Additionally, until the earlier of the three month anniversary of
the termination of employment, or the commencement of the provision of health
benefits to the Executive by a successor employer, the Executive will continue
to receive the same coverage of health insurance as immediately before the date
of the termination, at the expense of the Company. Thereafter, the Executive
acknowledges that the Company shall have no further obligation to the Executive
under this Agreement.  Notwithstanding the foregoing, the Company
shall only be obligated to make the payments set forth in this section after the
Executive delivers to the Company an executed Release and Severance Agreement,
which shall be substantially in the form of Employer’s standard Release and
Severance Agreement for all employees, with such changes therein or additions
thereto as needed under then applicable law to give effect to its intent and
purpose.  After the Executive is no longer receiving benefits from
Mediware, the Executive shall be eligible for COBRA at Executive’s own expense
in accordance with applicable law.

    

    (e) Acquisition or Sale
of Company. If a third
party described in Paragraph 5(f) of this Agreement terminates the Executive due
to "an acquisition or sale of the Company", as described in Paragraph 5(f)
below, the Company shall pay the Executive an amount equal to six months of
Executive's Annual Base Salary at the rate in effect at the date of termination
of the Executive's employment during the period of the Executive's employment,
payable in six equal monthly installments. Until the earlier of the six months
after the termination of employment, or the commencement of the provision of
health benefits to the Executive by a successor employer, the Executive will
continue to receive the same coverage of health insurance as immediately before
the date of the termination, at the expense of the Company. Thereafter, the
Executive acknowledges that the Company shall have no further obligation to the
Executive under this Agreement.  Notwithstanding the foregoing, the
Company shall only be obligated to make the payments set forth in this section
after the Executive delivers to the Company an executed Release and Severance
Agreement, which shall be substantially in the form of Employer’s standard
Release and Severance Agreement for all employees, with such changes therein or
additions thereto as needed under then applicable law to give effect to its
intent and purpose; and after delivery to the Company of a resignation from all
offices, directorships and fiduciary positions with the Company, its affiliates
and employee benefit plans.

    

    (f) Definition. For
purposes hereof, "an acquisition or sale of the Company" to or by "a third
party" shall mean the occurrence of any transaction or series of transactions
which within a six (6) month period result in (i) greater than fifty percent
(50%) of the then
outstanding shares of Common Stock of the Company (for cash, property including,
without limitation, stock in any corporation or other third party legal entity,
indebtedness or any combination thereof) have been redeemed by the Company or
purchased by a third party not previously affiliated with the Company, or
exchanged for shares in any other corporation or other third party legal entity
not previously affiliated with the Company, or any combination of such
redemption, purchase or exchange, (ii) greater than fifty percent (50%) in book
value of the Company's gross assets are acquired by a third party not previously
affiliated with the Company (for cash, property including, without limitation,
stock in any corporation whether or not unaffiliated with the Company,
indebtedness of any person or any combination thereof), or (iii) the Company is
merged or consolidated with another private or public corporation or other third
party legal entity and the former holders of shares of Common Stock of the
Company own less than 25% of the voting power of the acquiring, resulting or
surviving corporation or other third party legal entity. For the purposes hereof
a director or officer of the Company shall be considered "affiliated with the
Company."

    

    6. Confidentiality and
Restrictive Covenants.

    

    (a) The
Executive acknowledges that:

    

    (i) the business in which the Company
is engaged is intensely competitive and his employment by the Company will
require that he have continual access to and knowledge of confidential
information of the Company, including, but not limited to, the nature and scope
of its products, the object and source code offered, marketed or under
development by the Company or under consideration by the Company for
development, acquisition, or marketing by the Company and the documentation
prepared or to be prepared for use by the Company (and the phrase "by the
Company" shall include other vendors, licensees or and resellers and value-added
resellers of the Company's products or proposed product) and the Company's plans
for creation, acquisition, improvement or disposition of products or software,
expansion plans, financial status and plans, products, improvements, formulas,
designs or styles, method of distribution, lists of remarketing and value-added
and other resellers customer lists and contact lists, product development plans,
rules and regulations, personnel information and trade secrets of the Company,
all of which are of vital importance to the success of the Company's business,
provided that Confidential Information will not include information which has
become publicly known otherwise than through a breach by Executive of the
provisions of this Agreement (collectively, "Confidential
Information");

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii)  the direct or indirect
disclosure of any Confidential Information would place the Company at a serious
competitive disadvantage and would do serious damage, financial and otherwise,
to the Company's business;

    

    (iii)  by his training,
experience and expertise, the Executive's services to the Company will be
special and unique; and

    

    (iv)  if the Executive leaves
the Company's employ to work for a competitive business, in any capacity, it
would cause the Company irreparable harm.

    

    (b)  Covenant Against
Disclosure. The Executive therefore covenants and agrees that all
Confidential Information relating to the business products and services of the
Company, any subsidiary, affiliate, seller or reseller, value-added vendor or
customer shall be and remain the sole property and confidential business
information of the Company, free of any rights of the Executive. The Executive
further agrees not to make any use of the confidential information except in the
performance of his duties hereunder and not to disclose the information to third
parties, without the prior written consent of the Company. The obligations of
the Executive under this Paragraph 6 shall survive any termination of this
Agreement. The Executive agrees that, upon any termination of his employment
with the Company, all Confidential Information in his possession, directly or
indirectly, that is in written or other tangible or readable form (together with
all duplicates thereof) will forthwith be returned to the Company and will not
be retained by the Executive or furnished to any third party, either by sample,
facsimile, film, audio or video cassette, electronic data, verbal communication
or any other means of communication.

    

    (c)  Non-competition. The
Executive agrees that, during the Term of Employment and for a period of one (1)
year following the date of termination of the Executive's employment with the
Company, the Executive will not own, manage,  or be connected as an officer, employee or
director with, or aid or assist anyone else in the conduct of, any entity or
business which competes with any business conducted by the Company or any of its
subsidiaries or affiliates, in the United States, Canada and the UK and any
other area where such business is being conducted on the date the Executive's
employment is terminated hereunder. Notwithstanding the foregoing the
Executive's ownership of securities of a public company engaged in competition
with the Company not in excess of five (5%) percent of any class of such
securities shall not be considered a breach of the covenants set forth in this
Paragraph 6.

    

    (d)  Further Covenant.
Until the date which is one (1) year after the date of the termination of the
Executive's employment hereunder for any reason, the Executive will not,
directly or indirectly, take any of the following actions, and, to the extent
the Executive owns, manages, operates, controls, is employed by or participates
in the ownership, management, operation or control of, or is connected in any
manner with, any business of the type and character engaged in and competitive
with that conducted by the Company or any of its subsidiaries or affiliates
during the period of the Executive's employment, the Executive
will  not encourage or participate in any of the following actions on
behalf of such business:

    

    (i) persuade or attempt to persuade any
customer of the Company or any seller, reseller or value-added vendor of the
Company or of its products to cease doing business with the Company or any of
its subsidiaries or affiliates, or to reduce the amount of business it does with
the Company or any of its subsidiaries or affiliates;

    

    (ii) solicit for himself or any entity
the business of (A) any customer of the Company or any of its subsidiaries or
affiliates, or (B) any seller, reseller or-value-added vendor of the Company, or
of its products, or (C) solicit any business from a customer which was a
customer of the Company or any of its subsidiaries or affiliates within six
months prior to the termination of the Executive's employment; and

    

    (iii) persuade or attempt to persuade
any employee of the Company or any of its subsidiaries or affiliates or any
individual who was an employee of the Company or any of its subsidiaries or
affiliates, at any time during the six-month period prior to the Executive's
termination of employment , to leave the employ of the Company or any of its
subsidiaries or affiliates.

    

    7. Intellectual
Property. The Executive hereby agrees that any and all (i) software,
object code, source code, and documentation, (ii) any improvements, inventions,
discoveries, formulae, processes, methods, know-how, confidential data, patents,
trade secrets, (iii) Food and Drug Administrative ("FDA") applications seeking
approval by the FDA, information contained in the Forms 510-k of the FDA and
approvals from FDA, and (iv) other proprietary information made, developed or
created by the Executive (whether at the request or suggestion of the Company or
otherwise, whether alone or in conjunction with others, and whether during
regular working hours of work or otherwise) during the period of his employment
with the Company, which may be directly or indirectly useful in, or relate to,
the business being carried out by the Company or any of its subsidiaries or
affiliates, shall be promptly and fully disclosed by the Executive to the Board
of Directors and shall be the Company's exclusive property as against the
Executive, and the Executive shall promptly deliver to the Board of Directors of
the Company all papers, drawings, models, data and other material relating to
any invention made, developed or created by him as aforesaid.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
Executive shall, upon the Company's request and without any payment therefor,
execute any documents necessary or advisable in the opinion of the Company's
counsel to direct issuance of patents, copyrights and FDA applications or
approvals of the Company with respect to such inventions or work product or
improvements or enhancements as are to be the Company's exclusive property as
against the Executive under this Paragraph 7 or to vest in the Company title to
such inventions as against the Executive, the expense of securing any such
patent or copyright, to be borne by the Company.

    

    8. Breach by Employee.
Both parties recognize that the services to be rendered under this Agreement by
the Executive are special, unique and extraordinary in character, and that in
the event of a breach by Employee of the terms and conditions of the Agreement
to be performed by him, then the Company shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enforce the specific performance thereof by the
Executive. Without limiting the generality of the foregoing, the parties
acknowledge that a breach by the Executive of his obligations under Paragraphs 6
or 7 would cause the Company irreparable harm, that no adequate remedy at law
would be available in respect thereof and that therefore the Company would be
entitled to seek injunctive relief with respect thereto.

    

    9. Arbitration. Without
precluding acting to obtain specific performance and/or injunctive relief
pursuant to Paragraph 9 above, in the event of any dispute between the parties
hereto arising out of or relating to this Agreement or the employment
relationship, including, without limitation, any statutory claims of
discrimination, between the Company and the Executive (except any dispute with
respect to Paragraphs 6 and 7 hereof), such dispute shall be settled by
arbitration in the City of Kansas City, State of Kansas, in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association. The parties hereto agree that the arbitral
panel shall also be empowered to grant injunctive relief to a party, which may
be included in any award. Judgment upon the award rendered, including injunctive
relief, may be entered in any court having jurisdiction thereof. Notwithstanding
anything herein to the contrary, if any dispute arises between the parties under
Paragraphs 6 or 7, neither the Executive nor the Company shall be required to
arbitrate such dispute or claim, but each party shall have the right to
institute judicial proceedings the courts located in the City of Kansas City and
the state of Kansas. If such judicial proceedings are instituted, the parties
agree that such proceedings shall not be stayed or delayed pending the outcome
of any arbitration proceeding hereunder.

    

    10. Miscellaneous.

    

    (a) Successors; Binding
Agreement. This Agreement and the obligations of the Company hereunder
and all rights of the Executive hereunder shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns, provided, however, that the duties of the Executive hereunder are
personal to the Executive and may not be delegated or assigned by
him.  By entering into this Agreement, the Executive’s prior
employment agreement with the company is hereby terminated.

    

    (b) Notice. All notices
of termination and other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when delivered by hand,
delivered by an express delivery (one day service), delivered by telefax and
confirmed by express mail or one day express delivery service, or mailed by
United States registered mail, return receipt requested, addressed as
follows:

    

    
      	
              If
      to the Company:

            
	
              Mediware
      Information Systems, Inc.

            
	
              11711
      West 79th
      Street

            
	
              Lenexa,
      KS  66214

            
	
               

              If
      to the Executive:

            
	
              Michael
      Martens

            

    

    

    or to
such other address as either party may designate by notice to the other, which
notice shall be deemed to have been given upon receipt.

    

    (c) Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Kansas without regard to the conflict of law rules
thereof.

    

    (d) Waivers. The waiver
of either party hereto of any right hereunder or of any failure to perform or
breach by the other party hereto shall not be deemed a waiver of any other right
hereunder or of any other failure or breach by the other party hereto, whether
of the same or a similar nature or otherwise. No waiver shall be deemed to have
occurred unless set forth in writing executed by or on behalf of the waiving
party. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than that specifically
waived.

    

    (e) Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall otherwise remain in full force and effect. Moreover, if any one or
more of the provisions contained in this Agreement is held to be excessively
broad as to duration, scope or activity, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same
instrument.

    

    (g) Entire Agreement.
This Agreement (including the applicable restricted stock agreements) sets forth
the entire agreement and understanding of the parties in respect of the subject
matter contained herein, and supersedes all prior agreements (including the
prior employment agreements), promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of either party in respect of said subject
matter.

    

    (i) Headings Descriptive.
The headings of the several paragraphs of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any of this Agreement.

    

    (j) Capacity. The
Executive represents and warrants that he is not a party to any agreement that
would prohibit him from entering into this Agreement or performing fully his
obligations hereunder.

    

    IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement as
of the date first written above.

    

    
      	
              EXECUTIVE:

            	 
      	MEDIWARE
      INFORMATION SYSTEMS, INC:
	 
      	 
      	 
      	 
      	 
	 
      	 
      	
              By:

            	 
      	 
	
              Michael
      Martens

            	 
      	
              Name:

            	
              T.
      Kelly Mann

            
	 
      	 
      	
              Title:

            	
              President
      & Chief Executive Officerex10_2.htm

    
      

    

    Exhibit
10.2

    

    2003
EQUITY INCENTIVE PLAN

    

    MEDIWARE
INFORMATION SYSTEMS, INC.

    

    STOCK OPTION
AGREEMENT

    

    THIS AGREEMENT, made as of the
Grant Date set forth below, by and between Mediware Information Systems, Inc., a
New York corporation having its principal place of business at the address set
forth below (hereinafter called the “Company”), and the individual whose name
and address appear below on the first page of this Agreement (hereinafter called
“Optionee”).

    

    WHEREAS, the terms and
conditions of the Options (the "Options") granted to Optionee and evidenced by
this Agreement are as follows:

    

    
      	
              Name
      of Optionee:

               

            	
              Grant
      Date:

               

            
	
              Address
      of Optionee:

              11711
      W. 79th
      Street

              Lenexa,
      KS  66214

            	
              Type
      of Option:

               

              Non-Qualified
      Stock Option

            
	 	 
	 
      	
              Number
      of Performance Option Shares:

               

            
	 
      	
              Expiration
      Date:

            
	 
      	
               

              Exercise
      Price Per Share: [TBD]

            
	 
      	
               

              Vesting
      Date Provisions (if performance metrics
  achieved):

            

    

    

    
      	 
      	 
      	
              Shares

            
	 
      	
              Vesting

            	
              Becoming

            
	 
      	
              Schedule

            	
              Exercisable

            

    

    

    
      	
               
      

            	
              Company
      Address:

            	
              11711
      W. 79th
      Street, Lenexa,
KS  66214

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    WHEREAS, Optionee is an
employee of the Company; and

    

    WHEREAS, as an incentive for
the Optionee and as compensation and a benefit to him or her for serving as an
employee, the Company has offered to issue, and the Optionee has agreed to
accept, options to purchase shares of common stock of the Company pursuant to
the Mediware Information Systems, Inc. 2003 Equity Incentive Plan (the
“Plan”).

    

    NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth and for other good
and valuable consideration, the parties hereto hereby agree as
follows:

    

    1.     
       Grant of
Options.  Pursuant to and subject in all respects to the
provisions of the Plan, the Company ­hereby grants to the Optionee, under
the terms and conditions set forth in this Agreement and the Plan, as of the
Grant Date, Options to purchase the aggregate number of shares of common stock,
par value $.10 per share, of the Company (“Common Stock”) set forth above on the
first page of this Agreement subject to adjustment in accordance herewith (which
shares are hereinafter called “Option Shares”).  The Option Shares may
be purchased by exercising the Options in accordance with the terms of this
Agreement, at the exercise price per share set forth on the first page of this
Agreement, which price is not less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant.  Terms defined in the Plan shall
have the same meaning in this Agreement unless the context requires
otherwise.

    

    2.       
     Vesting
of Options. The Options shall vest as set forth on the first page of this
Agreement and as described herein.  After vesting, the Options shall
remain exercisable until the “Expiration Date” set forth on the first page of
this Agreement unless earlier terminated as provided herein.  Subject
to the continued employment of the Executive, the Performance Options shall vest
and become exercisable as follows:

    

    
      	
               
      

            	
              a.

            	
              Up
      to 8,333 options (or a pro rata portion thereof) shall vest
      on  July  2010 if, but only if, the Executive achieves
      performance objectives as established by the Chief Executive Officer and
      the Board of Directors;

            

    

    

    
      	
               
      

            	
              b.

            	
              Up
      to 8,333 options (or a pro rata portion thereof) shall vest on July 2011
      if, but only if, the Executive achieves performance objectives as
      established by the Chief Executive Officer and the Board of Directors;
      and

            

    

    

    
      	
               
      

            	
              c.

            	
              Up
      to 8,334 options (or a pro rata portion thereof) shall vest on
      July  2012 if, but only if, the Executive achieves performance
      objectives as established by the Chief Executive Officer and the Board of
      Directors

            

    

    

    If a
Change of Control, as described in Section 9.6 of the Plan occurs, all Options
shall become fully vested and fully exercisable immediately upon the occurrence
of the Change of Control.  Performance Options that are to vest
pursuant to the terms of this Paragraph 3 shall vest upon approval by the Chief
Executive and the Board of Directors of the performance
objectives.  All Performance Options that do not vest as provided in
subsections a.,  b. and c above shall be forfeit

    

    3.       
     Transferability.  Subject
to the exceptions noted in Section 6.6 of the Plan, no Option shall be
transferable other than by will or the laws of descent and
distribution.

    

    4.       
     Exercisable
only during Employment; Death; Disability.  During the lifetime
of Optionee, the Options shall be exercisable only by such Optionee (or his or
her court-appointed legal representative) subject to the terms of the
Plan.

    

    5.         
   Confidential
Information; Forfeiture;.

    

    (a)           The
Optionee hereby acknowledges and agrees that any limitations and restrictions
relating to the Optionee’s receipt and use of any confidential information under
any other agreement between the Optionee and the Company shall be incorporated
into this Agreement, and any unexercised Options shall be forfeited immediately
upon a breach of such undertaking as determined reasonably by the Committee and
set forth in a notice given to the Optionee and Company, any such determination
to be final and binding on all parties.

    

    (b)           Any
unexercised Options that have been awarded to the Optionee shall be terminated
if the Committee determines that the Optionee’s employment has been terminated
for Cause, as stated in Section 9.4 of the Plan.

    

    (c)           Optionee
acknowledges and agrees that the Restrictive Covenants (as defined below) are
reasonable and necessary for the protection of the Company’s business
interests.  Nothing contained herein shall be construed as prohibiting
the Company from pursuing any other remedies available to it including equitable
relief and the recovery of any damages.

    

    (d)            If
any court of competent jurisdiction shall at any time deem any term of this
Agreement or any provision or provisions of any covenant, undertaking or
agreement on the part of the Optionee contained in this Section 5, or
incorporated by reference herein, (“Restrictive Covenants”) too lengthy or too
restrictive or the territory too extensive, the other terms and provisions of
Section 5 shall nevertheless stand, the restrictive periods shall be deemed to
be the longest periods permissible by law under the circumstances, the other
restrictive provisions and conditions shall be the most protective to the
Company as may be permissible under law in the circumstances, and the territory
in which activities are restricted shall be deemed to comprise the largest
territory permissible by law under the circumstances.  The court in
each case shall reduce the Restrictive Covenants, time period, territory and/or
other restrictions or provisions to the maximum permissible duration or size or
reasonable restriction.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6.      
      No Rights
as a Shareholder.  Optionee shall have no rights as a
shareholder with respect to any Shares covered by this Agreement until Optionee
becomes the holder of record of such Shares, and Optionee shall not be entitled
to any dividends or distributions or other rights in respect of such Shares for
which the record date is prior to the date on which Optionee shall have
become  the holder of record thereof.

    

    7.        
    Adjustment
in Option Shares; Change of Control.  Optionee shall be
entitled to appropriate adjustments to the number of Option Shares and/or their
Exercise Price, as determined by the Committee in accordance with Section 9.1 of
the Plan, in order to preserve the benefits or potential benefits intended to be
made under this Agreement  in the event of any stock dividend,
extraordinary cash dividend, reclassification, recapitalization, reorganization,
split-up, spin-off, combination, exchange of shares, warrants or rights offering
to purchase Shares,  or other corporate event (including mergers or
consolidations).

    

    8.            
Exercise.  The
exercise of an Option must be by written notice to the Company at its principal
place of business which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to Article VII of the Plan.
The written notice must be signed by the Optionee and must be delivered in
person, by certified or registered mail, return receipt requested, or by
confirmed facsimile transmission, to the Chief Financial Officer or other
authorized representative of the Company, prior to the termination of the
Option, accompanied by full payment of the exercise price for the number of
shares being purchased.  The Option Shares to be purchased upon each
exercise of any Option shall be paid for in full at the time of such exercise,
such payment to be made (i) cash, (ii) check, (iii) the tendering, by either
actual delivery or by attestation, of those shares of Stock, having a Fair
Market Value as of the day of exercise equal to the aggregate exercise price, or
(iv) through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions as provided
in Section 7.3 of the Plan.

    

    9.           
 Compliance
with Laws and Regulations.  The grant and exercise of the
Options, and the Company’s obligation to sell and deliver stock hereunder, are
subject to such approvals by any regulatory or governmental agency as may be
required and shall comply with all relevant provisions of applicable Federal and
state laws, rules and regulations, including, without limita­tion, the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended, state securities laws, the rules and
regulations promul­gated thereunder, and the require­ments of any stock
exchange or of any quotation association or organization upon which the Option
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such
compliance.  The Company may imprint any legends on the Option Shares
restricting their subsequent sale or transfer that may be required by state or
Federal law.

    

    Unless
the Option Shares shall be duly registered under the Securities Act and
registered, qualified or authorized under applicable state securities law, the
Optionee, by accepting these Options, represents and warrants for himself and
any other person or persons properly exercising these Options that any and all
shares purchased hereunder shall be acquired for investment and not with the
intention to sell or distribute such shares and agrees to deliver to the
Company, upon request, a written representation that the shares being purchased
are being acquired for investment and not with a present intention of sale or
with a view to distribution, and a consent that the certificate representing
such shares be endorsed to indicate such representation.  The Company
shall not be liable in the event it is unable to issue or sell shares of Common
Stock or other securities to the Optionee if such issuance or sale would be
unlawful, nor shall the Company be liable if the issuance or sale of shares of
Common Stock or other securities to an Optionee is subsequently
invalidated.

    

    So long
as is required, in the opinion of the Company’s general counsel, to avoid
adverse tax, legal or accounting consequences to the Company, Optionee may not
exercise an Option through the tendering, by either actual delivery or by
attestation, of whole Shares unless the Committee specifically authorized such a
transaction in the applicable Agreement.

    

    10.         
 Withholding.    Option
shall be required to pay the Company at the time of exercise of a Nonqualified
Option, such amount as the Company deems necessary to satisfy the Company’s
obligation to withhold federal or state income or other taxes incurred by reason
of the exercise or the transfer of Shares thereupon.  Optionee my
satisfy such withholding requirements by having the Company withhold from the
number of Shares otherwise issuable upon exercise of the Option that number of
shares having an aggregate Fair Market Value on the date of exercise equal to
the minimum amount required by law to be withheld  or such other
amount that may not be exceeded in the opinion of the Independent Auditor, to
avoid adverse financial accounting results.

    

    11.          
Employment
Rights.  Nothing contained in the Plan or in this Option
Agreement shall confer upon the Optionee any right to be employed by, or to be
continued in the employ of, the Company or of any of its subsidiaries or
interfere in any way with the right of the Company or any subsidiary by whom
such person may be employed to terminate his employment at any
time.

    

    12.           Notice of
Disposition.  If these Options shall be incentive stock options
the following shall apply:  Optionee or his estate or legal
representative shall immediately notify the Company in the event of any
disposition of any kind by him of Option Shares acquired pursuant to these
Options.  If the disposition shall be a “disqualifying” disposition
within the meaning of Section 422 of the Code, the Optionee or his estate or
legal representation shall immediately pay any federal, state or local taxes
owing by reason of the exercise or disposition and provide proof of payment to
the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    13.           Notices.  Any
notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally (including by courier or overnight
carrier), or sent by facsimile transmission, or by certified or registered first
class mail, postage prepaid.  Any such notice shall be deemed given
when so delivered personally; or if sent by facsimile transmission, when
transmitted; or, if mailed, forty-eight (48) hours after the date of deposit in
the mail, as follows:

    

    
      	
               
      

            	
              (i)

            	
              if
      to the Company, to Chief Financial Officer, Mediware Information Systems,
      Inc., 11711 W. 79th Street, Lenexa, KS 66214, telecopier (913) 307-1166
      and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              if
      to the Optionee, to the address set forth on the first page of this
      Agreement.

            

    

    

    14.           Interpretation
of this Agreement.  Any dispute regarding the interpretation of
this Agreement shall be resolved in accordance with the Plan and may be
submitted by the Optionee or by the Company forthwith to the Committee for
resolution, which shall review such dispute at the time of the next regular
meeting of the Board or such Committee, or earlier at the Committee’s
discretion.  The decision of the Committee, as the case may be, with
regard to such dispute shall be final and binding upon the Company and upon the
Optionee.

    

    15.          
Successors
and Assigns.  This Agreement shall be binding on all successors
and permitted assigns  as provided in the Plan.

    

    16.          
Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas, without giving effect to the
principles of conflicts of law.

    

    17.           Amendments.  No
provision of this Agreement shall be modified, amended, extended or waived
except in writing signed by the parties hereto or as otherwise be permitted or
con­templated by the Plan.

    

    IN WITNESS WHEREOF, the
Company has caused this Agreement to be duly executed by its duly authorized
officer, and Optionee has executed this Agreement, all as of the date and year
first above written.

    

    
      	 
      	
              MEDIWARE
      INFORMATION SYSTEMS, INC.

            
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              Name:

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              Optionee

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
               

            	 
      
	 
      	 
      
	 
      	
              Print
      Name:     Michael
      Martens

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