<PAGE> 1
SCHEDULE 14A
Information Required in Proxy Statement
Reg. ss. 240.14a-101
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 ss. 240.14a-11(c) or ss. 240.14a-12
POWERCERV CORPORATION
--------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) 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 0-11:1
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
- --------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LETTERHEAD OF POWERCERV CORPORATION]
April 30, 1997
Dear PowerCerv Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of PowerCerv Corporation (the "Company") on Tuesday, June 3, 1997. The meeting
will begin promptly at 10:00 a.m. local time, in the John Jackson Room of the
Wyndham Harbour Island Hotel, 725 South Harbour Island Boulevard, in Tampa,
Florida.
The notice of the meeting and proxy statement on the following pages
contain information on the formal business of the meeting. Whether or not you
expect to attend the meeting, please sign, date, and return your proxy promptly
in the enclosed envelope to assure your stock will be represented at the
meeting. If you decide to attend the annual meeting and vote in person, you
will, of course, have that opportunity.
The continuing interest of the shareholders in the business of the
Company is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
HAROLD R. ROSS,
Chief Executive Officer
<PAGE> 3
POWERCERV CORPORATION
400 NORTH ASHLEY DRIVE
SUITE 2700
TAMPA, FLORIDA 33602
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 3, 1997
The Annual Meeting of Shareholders of PowerCerv Corporation will be
held in the John Jackson Room of the Wyndham Harbour Island Hotel, 725 South
Harbour Island Boulevard, Tampa, Florida 33602, June 3, 1997 at 10:00 a.m.,
local time, for the following purposes:
1. To elect six directors to serve until the next annual meeting of
shareholders or until their successors are elected and qualified.
2. To amend the 1995 Stock Option Plan (the "Plan") to increase
the number of shares available for issuance under the Plan from
1,250,000 shares to 2,250,000 shares and to modify the
provisions of the Plan relating to administration and amendment
of the Plan.
3. To ratify the appointment of KPMG Peat Marwick LLP as the
independent auditors for the Company for the fiscal year ending
December 31, 1997.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 29, 1997
are entitled to notice of and to vote at the meeting.
Shareholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE MEETING.
By Order of the Board of Directors,
Stephen M. Wagman,
Secretary
Tampa, Florida
April 30, 1997
<PAGE> 4
POWERCERV CORPORATION
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This Proxy Statement is first being sent to shareholders on or about
May 2, 1997, in connection with the solicitation of proxies by the Board of
Directors of PowerCerv Corporation (the "Company"), to be voted at the Annual
Meeting of Shareholders to be held on June 3, 1997, and at any adjournment
thereof (the "Meeting"). Only shareholders of record at the close of business
on April 29, 1997 (the "Record Date") are entitled to notice of and to vote at
the Meeting. There were 13,845,267 shares of the Company's common stock, $0.001
par value ("Common Stock") outstanding and entitled to vote at the close of
business on the Record Date. Each share of Common Stock is entitled to one vote
on each matter properly brought before the Meeting.
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Meeting will be voted at the Meeting. If a
shareholder specifies in the proxy a choice with respect to any matter to be
acted upon, the shares represented by such proxy will be voted as specified. If
a proxy card is signed and returned without specifying a vote or an abstention
on any proposal, it will be voted according to the recommendation of the Board
of Directors on that proposal. The Board of Directors recommends a vote FOR the
election of directors and the other proposals described in this Proxy
Statement. The Board of Directors knows of no other matters that may be brought
before the Meeting. However, if any other matters are properly presented for
action, it is the intention of the named proxies to vote on them according to
their best judgment.
Shareholders who hold their shares through an intermediary must
provide instructions on voting as requested by their bank or broker. A
shareholder who signs and returns a proxy may revoke it at any time before it
is voted by taking one of the following three actions: (i) giving written
notice of the revocation to the Secretary of the Company; (ii) executing and
delivering a proxy with a later date; or (iii) voting in person at the Meeting.
Approval of the election of directors will require a plurality of the
votes cast at the Meeting, provided a quorum is present. Votes cast by proxy or
in person at the Meeting will be tabulated by one or more inspectors of
election appointed at the Meeting, who will also determine whether a quorum is
present for the transaction of business. Abstentions and broker non-votes will
be counted as shares present in the determination of whether shares of the
Common Stock represented at the Meeting constitute a quorum. With respect to
matters to be acted upon at the Meeting, abstentions and broker non-votes will
not be counted for the purpose of determining whether a proposal has been
approved.
The expense of preparing, printing, and mailing proxy materials to
shareholders of the Company will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may solicit proxies on
behalf of the Board of Directors in person or by telephone. The Company will
reimburse brokerage houses and other nominees for their expenses in forwarding
proxy material to beneficial owners of the Company's stock.
The executive offices of the Company are located at 400 North Ashley
Drive, Suite 2700, Tampa, Florida 33602, and the Company's telephone number is
(813) 226-2600.
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 15, 1997, information as
to the Company's Common Stock beneficially owned by: (i) each director of the
Company, (ii) each executive officer named in the Summary Compensation Table,
(iii) all directors and executive officers of the Company as a group, and (iv)
any person who is known by the Company to be the beneficial owner of more than
5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER (1) OWNERSHIP(2) PERCENT
-------------------------------------------------------- ------------ -----------------
<S> <C> <C>
Harold R. Ross (3)...................................... 2,821,200 20.4%
Marc J. Fratello (4).................................... 2,761,600 19.9%
Roy E. Crippen, III (5)................................. 2,288,500 16.5%
Stephen M. Wagman (6)................................... 9,500 *
Kenneth D. Barwick (7).................................. 2,324 *
O. G. Greene (7)........................................ 2,324 *
Stuart C. Johnson (8)................................... 1,992 *
H.R.R. Limited Partnership.............................. 2,821,000 20.4%
M.J.F. Limited Partnership.............................. 2,761,600 19.9%
R.C.F. Company Limited Partnership...................... 2,288,500 16.5%
All directors and executive officers as a group
(10 persons)(9)...................................... 9,170,065 66.2%
</TABLE>
- --------
*Less than 1%
(1) The business address for Messrs. Ross, Fratello, Crippen, Wagman, Barwick,
Greene and Johnson is c/o PowerCerv Corporation, 400 North Ashley Drive,
Suite 2700, Tampa, Florida 33602. The business address for H.R.R. Limited
Partnership, R.C.F. Company Limited Partnership and M.J.F. Limited
Partnership is 3773 Howard Hughes Parkway, 3rd Floor South, Las Vegas,
Nevada 81909.
(2) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as to
which a person has or shares voting power and/or investment power. The
Company has been informed that all shares shown are held of record with
sole voting and investment power, except as otherwise indicated.
(3) All shares are held by H.R.R. Limited Partnership, a Nevada limited
partnership in which Mr. Ross and certain trusts, of which he is trustee,
are limited partners.
(4) All shares are held by M.J.F. Limited Partnership, a Nevada limited
partnership in which Mr. Fratello and a trust, of which he is trustee, are
limited partners.
(5) All shares are held by R.C.F. Company Limited Partnership, a Nevada
limited partnership in which Mr. Crippen and a trust, of which he is
trustee, are limited partners
(6) The number of shares shown in the table above includes 7,500 shares that
are subject to options that are exercisable at April 15, 1997.
-2-
<PAGE> 6
(7) The number of shares shown in the table includes 2,324 shares that
are subject to options that are exercisable at April 15, 1997.
(8) The number of shares shown in the table includes 1,992 shares that are
subject to options that are exercisable at April 15, 1997.
(9) Includes 640,000 shares owned by ABS Capital Partners, L.P. ("ABS"),
627,200 shares owned by Summit Ventures III, L.P., and 12,800 shares owned
by Summit Investors II, L.P. (collectively, "Summit"). Donald B. Hebb,
Jr., who is currently a director of the Company, is Managing General
Partner of ABS Partners, L.P., the general partner of ABS, and may be
deemed to share voting and investment power with respect to all shares
held by ABS. Mr. Hebb disclaims beneficial ownership of these shares,
except to the extent of his pecuniary interest therein. Thomas S. Roberts,
who is currently a director of the Company, is a general partner of Summit
Investors and a general partner of Stamps, Woodsum & Co., III, the general
partner of Summit and may be deemed to share voting and investment power
with respect to all shares held by Summit. Mr. Roberts disclaims
beneficial ownership of these shares, except to the extent of his
pecuniary interest therein. Messrs. Hebb and Roberts are not standing for
re-election at the upcoming Meeting.
-3-
<PAGE> 7
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of April 15, 1997,
concerning the Company's executive officers, continuing directors, and nominees
for director.
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME POSITION(S) AGE DIRECTOR
------------------------- ----------------------------------------------- --- ----------
<S> <C> <C> <C>
Harold R. Ross........... Chief Executive Officer and Director 42 1992
Marc J. Fratello......... President, Chief Operating Officer and Director 39 1992
Roy E. Crippen, III...... Executive Vice President, Chief Technology 38 1992
Officer and Director
Stephen M. Wagman........ Senior Vice President, Chief Counsel, Secretary 36 ____
and Treasurer
Karen L. Jaderborg....... Chief Accounting Officer 37 ____
Kenneth D. Barwick....... Director 49 1996
O. G. Greene............. Director 55 1996
Stuart C. Johnson........ Director 54 1996
</TABLE>
HAROLD R. ROSS has served in various capacities, including Chief
Executive Officer and director of the Company since its inception in 1992.
Prior to founding the Company in 1992, Mr. Ross served in various capacities,
including Regional Manager, for more than three years at Powersoft Corporation.
Prior to 1989, Mr. Ross spent 13 years at Unisys Corporation (formerly
Burroughs Corporation), serving in various sales, marketing, and management
positions. Mr. Ross is certified at the Fellow Level by APICS.
MARC J. FRATELLO has served as President and a director of the Company
since its inception in 1992, and as Chief Operating Officer since December
1995. Prior to founding the Company in 1992, Mr. Fratello spent 10 years at
Unisys Corporation, the last position held being that of Director, CASE/4GL
Products. Mr. Fratello also is a director of Software Business Technologies,
Inc. and System One Corporation, privately-held companies located in San
Rafael, California and Tampa, Florida, respectively.
ROY E. CRIPPEN, III has served as Executive Vice President and Chief
Technology Officer of the Company and a director since the Company's inception
in 1992. Prior to founding the Company, Mr. Crippen was the Florida Regional
Manager for Spectrum Associates, an application and consulting company from
March 1991 to April 1992.
STEPHEN M. WAGMAN has served as Chief Counsel of the Company since
August 1995, as Secretary since October 1995, and as Senior Vice President and
Treasurer since December 1996. From July 1988 to August 1995, Mr. Wagman was
Vice President, Secretary and Treasurer of International Data Matrix, Inc., a
New Hampshire-based developer of machine vision technology. Mr. Wagman is
licensed to practice law in Florida and Ohio.
KAREN L. JADERBORG has served as Controller of the Company since June
1995, and Chief Accounting Officer since October 1996. Prior to joining the
Company, Ms. Jaderborg spent ten years at Florida Progress Corporation and its
subsidiaries, the last position held being that of Controller and Assistant
Treasurer of Progress Credit Corporation, a
-4-
<PAGE> 8
financial services subsidiary. Ms. Jaderborg is a Certified Public Accountant
licensed to practice accounting in Florida.
KENNETH D. BARWICK has served as a director of the Company since
October 1996. During 1995 and 1996, Mr. Barwick was the Senior Vice President
Americas Operations for Dunn & Bradstreet Software in Atlanta, Georgia. Mr.
Barwick was a Regional Manager for Oracle Corporation in Atlanta from 1992 to
1995.
O. G. GREENE has served as a director of the Company since October
1996. Mr. Greene has served as President and CEO of GridNet International LLC,
an enhanced Internet service provider located in Atlanta, since June 1995. From
May 1992 to June 1995, Mr. Greene was the Executive Vice President and Chief
Operating Officer of First Financial Management Corporation, a firm providing
credit card and health care claim processing services in Atlanta. From February
1991 to May 1992, Mr. Greene was the President and CEO of National Data
Corporation, a firm providing credit card and health care claim processing
services in Atlanta. Mr. Greene also is a director of Unicoil Corporation, a
privately-held company located in Atlanta.
STUART C. JOHNSON has served as a director of the Company since
November 1996. Mr. Johnson has served as the Group President of Large Business
and Information Services at Bell Atlantic Corporation in Arlington, Virginia,
since June 1993. From April 1992 to June 1993, Mr. Johnson served as the Group
President of Regional Services at Bell Atlantic Corporation. Mr. Johnson is
also a director of Anstec Corporation, a privately-held company located in
Fairfax, Virginia.
The Board of Directors currently consists of eight members. In
addition to the directors listed in this "Directors and Officers Section,"
Donald B. Hebb, Jr. and Thomas S. Roberts have served on the Company's Board.
Messrs. Hebb and Roberts are not standing for re-election to the Company's
Board.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1996, the Company's Board of Directors held ten meetings. Each
member of the Board of Directors attended at least 75% of the total number of
Board meetings and meetings of committees of which he is a member. In addition,
the Board of Directors took action six times during 1996 by written consent in
lieu of a meeting signed by all members of the Board of Directors then in
office, as permitted by applicable state law.
The Company's Board of Directors has an Audit Committee, a
Compensation Committee and a Stock Option Committee. The Audit Committee, which
met once during 1996, consists of Harold R. Ross, Donald B. Hebb, Jr. and
Thomas S. Roberts. The duties of the Audit Committee are to recommend to the
Board of Directors the selection of the independent certified public
accountants, to meet with the independent certified public accountants to
review the scope and results of the audit, and to consider various accounting
and auditing matters related to the Company, including its system of internal
controls and financial management practices.
The Company's Compensation Committee consists of Harold R. Ross, Marc
J. Fratello and Donald B. Hebb, Jr. The Compensation Committee recommends to
the Board of Directors the base salary levels and bonuses for the Company's
executive officers. See "Board Compensation Committee Report on Executive
Compensation." The Compensation Committee did not meet during 1996. Certain
compensation matters relative to Messrs. Ross, Fratello and Crippen were
addressed by the full Board of Directors.
The Company's Stock Option Committee consists of Messrs. Ross,
Fratello and Crippen. The Stock Option Committee administers the Company's
Stock Option Plan and makes determinations as to grants of options, provided,
however, with respect to options granted to persons subject to Section 16 of
the Securities Exchange Act of 1934, as amended, the entire Board of Directors
shall make such determinations. The Stock Option Committee took action 14 times
during 1996 by written consent in lieu of a meeting signed by all members of the
Committee then in office, as permitted by applicable state law. See
"Management-Stock Option Plan."
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
-5-
<PAGE> 9
COMPENSATION OF DIRECTORS
Effective October 1996, directors who are not employees of the Company
are paid $1,000 for each Board meeting attended. In addition, each non-employee
director received an option to purchase 4,000 shares of the Common Stock
pursuant to the Company's Stock Option Plan. These options vest ratably over a
twelve month period and have exercise prices ranging from $3.88 to $4.25 per
share. All non-employee directors also receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with attending meetings of the
Board of Directors. No director who is an employee of the Company receives
separate compensation for services rendered as a director.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors, and ten percent shareholders are required by the SEC regulations to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely on the Company's review of the copies of such reports
received by it, and written representations from certain reporting persons that
no SEC Forms 3, 4, or 5 were required to be filed by those persons, the Company
believes that during 1996, its officers, directors and ten percent beneficial
owners timely complied with all applicable filing requirements.
-6-
<PAGE> 10
EXECUTIVE COMPENSATION
The following table presents certain information concerning the
compensation earned during 1995 and 1996 by: (i) the Company's Chief Executive
Officer, (ii) each of those most highly compensated executive officers of the
Company who earned more than $100,000 in salary and bonus in 1996, and (iii) an
additional individual who would have been one of the four most highly
compensated executive officers of the Company but for the fact that the
individual was not serving as an executive officer of the Company at December
31, 1996 (collectively the "Named Executive Officers").
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION NUMBER OF
---------------------------------------- SECURITIES
OTHER OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) COMPENSATION(4) OPTIONS COMPENSATION
- ---------------------------------- ---- --------- ------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Harold R. Ross 1996 $ 177,000 $ 36,000 $ 3,775 -- $ 3,100
Chief Executive Officer 1995 115,625 -- -- -- 2,376
Marc J. Fratello 1996 177,000 36,000 3,710 -- 3,100
President and Chief Operating 1995 115,625 -- -- -- 2,376
Officer
Roy E. Crippen, III 1996 177,000 36,000 4,330 -- 3,100
Executive Vice President and 1995 115,625 -- -- -- 2,376
Chief Technology Officer
Stephen M. Wagman (6) 1996 100,683 5,072 -- 13,500 900
Senior Vice President, Chief 1995 26,503 -- -- 12,500 --
Counsel,
Secretary and Treasurer
Gerald R. Wicker (7) 1996 133,833 2,420 -- 10,000 3,063
Former Chief Financial Officer 1995 90,064 8,292 -- -- 1,781
</TABLE>
- ----------
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or
10 percent of the total of annual salary and bonus reported.
(2) Includes any amount deferred by the Named Executive Officer pursuant to the
Company's 401(k) Plan.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(4) Represents fees paid on the Named Executive Officers' behalf for
professional tax advice and other tax-related services.
(5) Represents matching contributions made by the Company to the Named
Executive Officers under the Company's 401(k) Plan.
(6) Mr. Wagman joined the Company on August 31, 1995.
(7) Mr. Wicker resigned effective October 7, 1996. In connection with his
resignation, Mr. Wicker received a $200,000 interest free loan from the
Company, collateralized by 50,000 shares of the Common Stock which he
owns. Mr. Wicker has the option to sell these shares to the Company prior
to November 1997. The table above does not include the actual dollar
value of the interest-free nature of this loan.
-7-
<PAGE> 11
OPTION GRANTS IN 1996
The following table sets forth certain information concerning grants
of stock options to each of the Named Executive Officers of the Company during
the year ended December 31, 1996. In accordance with the rules of the
Securities and Exchange Commission, the potential realizable values under such
options are shown based on assumed rates of annual compound stock price
appreciation of 5% and 10% over the full option term from the date the option
was granted. These assumed rates of appreciation do not represent the Company's
estimate or projection of the rate of appreciation of shares of Common Stock.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF POTENTIAL REALIZABLE VALUE AT
COMMON STOCK % OF TOTAL OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
- -------------------- ------------ ------------------- --------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Harold R. Ross - - - - - -
Marc J. Fratello - - - - - -
Roy E. Crippen, III - - - - - -
Stephen M. Wagman 1,000 0.2% $ 8.50 2006 $ 5,346 $ 13,547
4,000 0.8% 9.00 2006 22,640 57,375
1,500 0.3% 4.00 2006 3,773 9,562
7,000 1.5% 4.31 2006 18,985 48,111
Gerald R. Wicker (2) 10,000 2.1% 4.00 2006 22,156 63,750
4,000 - - - - -
</TABLE>
(1) All options granted to the Named Executive Officers were granted pursuant
to the Company's Stock Option Plan.
(2) The option for 4,000 shares of Common Stock was terminated in connection
with Mr. Wicker's October 7, 1996 resignation.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning exercisable
and unexercisable stock options held by the Named Executive Officers as of
December 31, 1996. No stock options were exercised during 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME AT DECEMBER 31, 1996 AT DECEMBER 31, 1996(1)
- ---------------------- ---------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Harold R. Ross - - - -
Marc J. Fratello - - - -
Roy E. Crippen, III - - - -
Stephen M. Wagman 7,500 18,500 $ 6,875 $ 13,188
Gerald R. Wicker 10,000 - 10,000 -
</TABLE>
(1) Represents the dollar value of the difference between the value at
December 31, 1996 and the option exercise price of unexercised options at
December 31, 1996.
-8-
<PAGE> 12
STOCK OPTION PLAN
The Company established its Stock Option Plan in June 1995 to provide
incentives to key employees who contribute significantly to the strategic and
long-term performance objectives and growth of the Company. In January 1996,
the Board of Directors and shareholders of the Company amended the Stock Option
Plan to increase the number of shares available for issuance from 800,000 to
1,250,000. In April 1997, the Board adopted an amended and restated Stock
Option Plan to increase the number of shares available for issuance from
1,250,000 to 2,250,000 and to modify the provisions of the Stock Option Plan
relating to its administration and amendment in order to reflect recent
revisions to Securities and Exchange regulations. At the Meeting, the
shareholders are being asked to vote for the approval of this amended and
restated Stock Option Plan. See "Proposal 2 - Approval of the Amendment to the
PowerCerv Corporation Stock Option Plan."
The Company's Stock Option Plan provides for the grant to employees of
both nonstatutory options and options intended to be treated as incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended. The Stock Option Plan is administered by the Stock Option Committee
of the Board of Directors. The exercise price per share of Common Stock
deliverable upon the exercise of each stock option granted under the Plan is
determined by the Stock Option Committee at the date the stock option is
granted and as provided in the terms of the Stock Option Plan. Stock options
are exercisable in whole or in part on such date or dates as are determined by
the Stock Option Committee at the date of the grant. The duration of options
granted under the Stock Option Plan is ten years from the date of grant, or
such shorter period as determined by the Stock Option Committee. The options
are non-transferable other than by will or by the laws of descent and
distribution.
The Company has also granted options outside of the Company's Stock
Option Plan to purchase a total of 100,000 additional shares of Common Stock at
an exercise price of $14.00 per share. These options were issued in November
1995 in connection with a certain acquisition made by the Company.
401 (K) PLAN
On June 1, 1994, the Company's defined contribution plan (the "401 (k)
Plan") became effective. In January 1997, the Company amended and restated its
401 (k) Plan. All current employees and future employees are eligible to
participate in the 401(k) Plan following six months of service to the Company.
Participants in the 401(k) Plan may not contribute more than the greater of a
specified statutory amount or 12% of his or her pre-tax total compensation. The
Company matches 50% of participant contributions to a maximum matching amount
of 6% of participant base compensation. Employee contributions vest immediately
and Company contributions vest over a six-year period.
EMPLOYMENT AGREEMENTS
Effective April 10, 1997, each of Messrs. Ross, Fratello and Crippen
entered into an Employment, Noncompetition, Development and Confidentiality
Agreement with the Company. Each of these agreements is for a period of one
year plus renewable one year extensions subject to either the Company's or the
executive's right of cancellation. These agreements provide for an annual base
salary of $180,000, target annual bonus of up to $120,000, and certain other
benefits. In addition, the Company agreed to pay the executives twelve months of
severance pay, including base salary and bonus, in the event their employment is
terminated (i) by mutual agreement of the executive and the Company, (ii) or by
either party after the agreements' twelve month term has elapsed, (iii) by the
Company following a disability determination of the executive, or following the
Company's early termination of the agreement on certain notice, or (iv) by the
executive if the Company breaches the agreement, upon certain changes of
control of the Company, or following the executive's formal notice of
termination during or after April 1998. Each of these agreements also contains a
one-year noncompete provision following it's expiration or earlier termination.
-9-
<PAGE> 13
Effective December 16, 1996, Mr. Wagman entered into an employment
agreement with the Company. The term of this agreement runs through December
31, 1998, plus renewable one-year extensions subject to either the Company's or
the executive's right of cancellation. The agreement provides for an annual
base salary of $120,000, a discretionary bonus and certain other benefits. In
addition, the Company agreed to pay the executive twelve months base salary and
vest his outstanding stock options if (i) the Company is merged or acquired
resulting in the elimination of his role, (ii) he is terminated without cause,
or (iii) he is constructively terminated.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board's Compensation Committee currently consists of Messrs. Ross,
Fratello and Hebb. Mr. Hebb is an outside director. During 1996, the
Compensation Committee did not meet. In 1996, all compensation matters relative
to Messrs. Ross, Fratello and Crippen were addressed by the full Board of
Directors. Set forth below is a description of certain transactions and
relationships between the Compensation Committee members, the Chief Executive
Officer and the Company.
Donald B. Hebb, Jr. is a general partner of ABS Partners, L.P., the
general partner of ABS Capital Partners, L.P. ("ABS"). Approximately $2.75
million of the proceeds from the Company's public offering of Common Stock in
March, 1996 was used to redeem the shares of Redeemable Preferred Stock held by
ABS.
Thomas S. Roberts, who is an outside director and participated in
compensation matters in connection with the full Board, is a general partner of
Summit Investor II, L.P. and a general partner of Stamps, Woodsum & Co., III,
the general partner of Summit Ventures III, L.P. Approximately $2.75 million of
the proceeds from the Company's public offering of Common Stock in March, 1996
was used to redeem the shares of Redeemable Preferred Stock held by Summit
Ventures III, L.P. and Summit Investors II, L.P.
-10-
<PAGE> 14
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following Board Compensation
Committee Report on Executive Compensation and the Performance Graph shall not
be incorporated by reference into any such filings.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is composed of the
Company's Chief Executive Officer, Mr. Ross, the Company's President and Chief
Operating Officer, Mr. Fratello, and one outside director of the Company, Mr.
Hebb. The Compensation Committe, or in its absence, the full Board of Directors
reviews, recommends, and approves changes to the Company's compensation
policies and programs. Compensation packages granted to the Company's Chief
Executive Officer and other officers are designed to provide executives with
competitive base salaries and incentive opportunities to earn additional
compensation based on corporate performance. The Committee did not meet
during 1996; the 1996 base salary and discretionary bonuses for Messrs. Ross,
Fratello and Crippen were set by the Board. Mr. Wagman's annual base salary and
discretionary bonuses were set by Messrs. Ross, Fratello and Crippen.
Messrs. Ross, Fratello and Crippen are eligible to receive an annual
bonus of up to $120,000 each at the discretion of the Board, based upon the
achievement of certain management targets and the Company's achievement of
certain financial targets. In 1996, the Board awarded them each a bonus of
$36,000 based on the achievement of certain management targets, such as the
successful completion of certain acquisitions and the Company's initial public
offering.
Mr. Wagman is eligible to receive an annual bonus at the discretion of
Messrs. Ross, Fratello and Crippen based upon the Company's achievement of
certain financial performance goals and Mr. Wagman's attainment of certain
management objectives. In 1996, Mr. Wagman received a bonus partially based on
the Company's financial performance in certain quarters and partially based
upon his attainment of other management goals established by Messrs. Ross,
Fratello and Crippen.
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<PAGE> 15
PERFORMANCE GRAPH
The following graph presents the Company's total shareholder return of
an investment of $100 in cash on March 1, 1996(1) for (i) the Company's Common
Stock, (ii) the Nasdaq Stock Market - U.S. Index (the "Nasadaq Index")(2), and
(iii) the Nasdaq Computer & Data Processing Services Stocks represented by
Companies in SIC code 737 (the "Computer & Data Processing Index")(2). All
values and returns assume reinvestment of the full amount of all dividends.
Comparison of Cumulative Total Return
For the Period From 3/1/96 Through 12/31/96
Among PowerCerv Corporation, the Nasdaq Index
and the Computer & Data Processing Index
[PERFORMANCE GRAPH]
The information presented in the graph above was obtained by the
Company from outside sources it considers to be reliable but has not been
independently verified by the Company.
The graph shown above was plotted using the following data:
<TABLE>
<CAPTION>
PowerCerv Computer & Data
Period Ended Corporation Nasdaq Index Processing Index
------------ ----------- ------------ ----------------
<S> <C> <C> <C> <C>
03/01/96 $ 100.00 $ 100.00 $ 100.00
03/31/96 105.36 101.70 102.74
06/30/96 87.50 110.00 114.19
09/30/96 29.46 113.91 116.47
12/31/96 35.71 119.51 121.18
</TABLE>
(1) The Company completed the initial public offering of its Common Stock on
March 1, 1996. The Company's 1996 fiscal year ended December 31, 1996.
This "Performance Graph" assumes that $100 was invested on March 1, 1996
in the Company's Common Stock at the Company's initial public offering
price of $14.00 per share and at the closing sales price for each index on
that date. No cash dividends have been declared on the Company's Common
Stock. Shareholder returns over the indicated periods should not be
considered indicative of future shareholder returns.
(2) The Nasdaq Index and the Computer & Data Processing Index are calculated
by the Center for Research in Securities Prices.
-12-
<PAGE> 16
CERTAIN TRANSACTIONS
The Company obtains many of its new technical employees through
placements from a professional recruiting firm named PowerStaff Corporation
("PowerStaff"). The stock of PowerStaff is owned by Messrs. Ross, Fratello and
Crippen. See "Management." The Company pays a fee to PowerStaff of
approximately $5,000 for each employee placed with the Company by PowerStaff.
The Company believes that the rates it pays to PowerStaff are below the rates
that it would pay to unaffiliated placement services. During fiscal year 1996,
the Company paid approximately $400,000 in fees to PowerStaff.
In September 1996, Marc J. Fratello, one of the Company's directors
and its President and Chief Operating Officer, joined the board of directors of
Software Business Technologies, Inc. ("SBT") following election at SBT's annual
meeting of shareholders. In December 1996, the Company purchased a five percent
ownership interest in SBT for $1.5 million. Since Mr. Fratello joined SBT's
board, the Company has provided approximately $42,000 of technical services to
SBT.
In May 1995, the Company made a $3,712,000 Subchapter S distribution
to its shareholders, then consisting solely of Messrs. Ross, Fratello and
Crippen which were repaid in March 1996 upon completion of the Company's
initial public offering of its Common Stock.
The Company has adopted a policy whereby all future transactions
between the Company and its officers, directors and affiliates will be on terms
no less favorable to the Company than could be obtained from unrelated third
parties and will be approved by a majority of the disinterested members of the
Company's Board of Directors.
-13-
<PAGE> 17
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight
members. The Company's bylaws currently authorize up to nine directors. All
directors hold office until the next annual meeting of shareholders or until
their successors are duly elected and qualified.
The nominees for election to the Board of Directors are Kenneth D.
Barwick, Roy E. Crippen, III, Marc J. Fratello, O.G. Greene, Stuart C. Johnson
and Harold R. Ross. All of the nominees are currently members of the Board of
Directors. See "Management - Directors and Executive Officers" for information
on such nominees. Unless otherwise indicated, votes will be cast pursuant to
the accompanying proxy FOR the election of these nominees. Should any nominee
become unable or unwilling to accept nomination or election for any reason, it
is intended that votes will be cast for a substitute nominee designated by the
Board of Directors, which has no reason to believe the nominees named will be
unable or unwilling to serve if elected.
PROPOSAL 2 - APPROVAL OF THE
AMENDMENT TO THE POWERCERV CORPORATION
STOCK OPTION PLAN
On April 10, 1997, the Company's Board of Directors amended the 1995
Stock Option Plan (the "Plan") and approved its submission to the shareholders
for their approval. The Plan was initially adopted in June 1995 and was amended
by the Board of Directors and by the shareholders in January 1996.
The amendment to the Plan increases the number of shares available for
purchase under the Plan from 1,250,000 to 2,250,000 and modifies the provisions
of the Plan relating to the administration and amendment of the Plan in order
to reflect recent revisions of Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Securities Exchange Act of 1934, as
amended ("Rule 16b-3"). Prior to the amendment, the Plan required shareholder
approval of an amendment to the Plan that would (i) materially increase the
benefits accruing to participants under the Plan, (ii) increase the aggregate
number of shares of the Company's stock that may be delivered under the Plan,
(iii) materially modify the eligibility requirements for participation in the
Plan, or (iv) amend the requirements described in (i), (ii) and (iii) of this
sentence. The purpose of this provision was to comply with the requirement of
former Rule 16b-3 that shareholders must approve such amendments. The recent
revisions to Rule 16b-3 included an elimination of requirement that
shareholders must approve such amendments. To reflect this revision to Rule
16b-3, the Board amended the Plan to provide that the Board may condition any
amendment on the approval of the shareholders of the Company if such approval
is necessary or advisable with respect to tax, securities or other applicable
laws to which the Company, the Plan, recipients or eligible persons are
subject.
As of April 10, 1997, options to acquire 1,040,480 shares had been
granted pursuant to the Plan. The Company's employees are currently eligible to
participate in the Plan. Accordingly, as of April 10, 1997, approximately
209,520 shares remained available. The Board of Directors, in order to ensure
that the Company has an adequate number of shares available to grant to its
employees to enable it to attract and retain individuals of training,
experience, and ability, believes an increase in the number of shares to be
necessary.
The Board of Directors recommends that the shareholders vote FOR this
proposal.
-14-
<PAGE> 18
PROPOSAL 3 - RATIFICATION OF
THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed KPMG Peat Marwick LLP,
independent certified public accountants, to audit the consolidated financial
statements of the Company for the year ending December 31, 1997. KPMG Peat
Marwick LLP has served as the Company's independent certified public
accountants since fiscal year 1995. Representatives of KPMG Peat Marwick LLP
are expected to be present at the Meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate questions posed
by shareholders.
The Board of Directors recommends a vote FOR the ratification of this
selection.
PROPOSALS OF SHAREHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of shareholders intended for presentation at the 1998 annual
meeting must be received by the Company on or before December 26, 1997, in
order to be considered for inclusion in the Company's proxy statement and form
of proxy for that meeting.
The Company's Articles of Incorporation also require advance notice to
the Company of any shareholder proposal and of any nominations by shareholders
of persons to stand for election as directors at a shareholders' meeting.
Notice of shareholder proposals and of director nominations must be timely
given in writing to the Secretary of the Company prior to the meeting at which
the directors are to be elected. To be timely, notice must be received at the
principal executive office of the Company not less than 60 days prior to the
meeting of shareholders; provided, however, that in the event that less than 70
days' notice prior to public disclosure of the date of the meeting is given or
made to the shareholders, notice by the shareholder, in order to be timely,
must be so delivered or received not later than the close of business on the
tenth day following the day on which such notice of the date of the annual
meeting was mailed or public disclosure of the date of the annual meeting was
made, whichever first occurs.
In addition to the matters required to be set forth by the rules of
the Securities and Exchange Commission, a shareholder's notice with respect to
a proposal to be brought before the annual meeting must set forth (a) a brief
description of the proposal and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Company's
books, of the shareholder proposing such business and any other shareholders
known by such shareholder to be supporting such proposal, (c) the class and
number of shares of the Company that are beneficially owned by such shareholder
on the date of such shareholder notice and by other shareholders known to such
shareholder to be supporting such proposal on the date of such shareholder
notice, and (d) any financial interest of the shareholder in such proposal.
A shareholder's notice with respect to a director nomination must set
forth (a) as to each nominee (i) the name, age, business address, and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of the Company that are
beneficially owned by such person, (iv) all information that would be required
to be included in the proxy statement soliciting proxies for the election of
the nominee director (including such person's written consent to serve as a
director if so elected), and (b) as to the shareholder providing such notice
(i) the name and address, as they appear on the Company's books, of the
shareholder, and (ii) the class and number of shares of the Company that are
beneficially owned by such shareholder on the date of such shareholder notice.
The complete Articles of Incorporation provisions governing these
requirements are available to any shareholder without charge upon request from
the Secretary of the Company.
-15-
<PAGE> 19
OTHER MATTERS
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented properly, it is intended that
the enclosed proxy will be voted in accordance with the judgment of the
individuals named in the proxy.
The Company will provide to any shareholder, upon the written request
of any such person, a copy of the Company's Annual Report on Form 10-K,
including the financial statements and the schedules thereto, for its fiscal
year ended December 31, 1996, as filed with the Securities and Exchange
Commission pursuant to Rule 13a-1 under the Securities Exchange Act of 1934.
All such requests should be directed to Stephen Wagman, Secretary, PowerCerv
Corporation, 400 North Ashley Drive, Suite 2700, Tampa, Florida 33602. No
charge will be made for copies of such annual report; however, a reasonable
charge for the exhibits will be made.
By Order of the Board of Directors,
Stephen M. Wagman,
Secretary
Tampa, Florida
April 30, 1997
-16-
<PAGE> 20
EXHIBIT A
POWERCERV CORPORATION
1995 STOCK OPTION PLAN
As Amended and Restated April 10, 1997
1. Purpose. The purpose of this Stock Option Plan (the "Plan") is
two-fold. First, the Plan will further the interest of PowerCerv Corporation, a
Florida corporation (the "Company"), any subsidiaries it may have and its
shareholders by providing incentives in the form of stock option grants to key
employees who contribute materially to the success and profitability of the
Company. The grants shall recognize and reward outstanding individual
performances and contributions and shall give such persons a proprietary
interest in the Company, thus enhancing their personal interest in the
Company's continued success and progress. This program shall also assist the
Company and any subsidiaries it may have in attracting and retaining key
persons. Second, the Plan will provide the Company flexibility and the means to
reward directors and other non-employees who render valuable contributions to
the Company. The Plan is an amended plan, in restated form, the original plan
being established effective as of June 15, 1995.
2. Definitions. The following definitions shall apply to this
Plan:
(a) "Agreement" means a written agreement entered into
between the Company and a Recipient that embodies the terms and restrictions of
the Option granted to the Recipient.
(b) "Board" means the board of directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Stock Option Committee of
disinterested directors appointed by the Board in accordance with paragraph 3
of the Plan.
(e) "Common Stock" means the Common Stock, par value $.001
per share, of the Company or such other class of shares or securities to which
the Plan may apply pursuant to paragraph 14 of the Plan.
(f) "Company" means PowerCerv Corporation.
(g) "Date of Grant" means the date on which the Option is
granted.
(h) "Dispose Of" means pledge, hypothecate, give, assign,
encumber, sell, grant an option with respect to, or otherwise transfer, to any
party whether or not such party is a shareholder of the Company.
(i) "Employee" means any person employed on an hourly or
salaried basis by the Company or any parent or Subsidiary of the Company that
now exists or hereafter is organized or acquired by or acquires the Company.
(j) "Fair Market Value" means the fair market value of the
Common Stock. If the Common Stock is not publicly traded on the date as of
which fair market value is being determined, the Board shall determine the fair
market value of the Shares using such factors as the Board considers relevant,
such as the price at which recent sales have been made, the book value of the
Common Stock, and the Company's current and projected earnings. If the Common
Stock is publicly traded on the date as of which fair market value is being
determined, the fair market value is the average of the high and low sale
prices of the Common Stock as reported by the National Association of
Securities Dealer Automated Quotations ("NASDAQ") on that date, if the Common
Stock is listed on a stock exchange, the average of the high and low sale
prices of the Common Stock on that date, as reported in The Wall Street
Journal. If
A-1
<PAGE> 21
trading in the stock or a price quotation does not occur on the date as of
which fair market value is being determined, the next preceding date on which
the stock was traded or a price was quoted shall determine the fair market
value.
(k) "Incentive Stock Option" means a stock option granted
pursuant to either this Plan or any other plan of the Company that satisfies
the requirements of Section 422 of the Code and that entitles the Recipient to
purchase stock of the Company or in a corporation that at the time of grant of
the option was a parent or subsidiary of the Company or a predecessor
corporation of any such corporation.
(l) "Option" means a stock option granted pursuant to the
Plan.
(m) "Option Shareholder" shall mean a Recipient who has
exercised his or her Option.
(n) "Option Shares" means Shares issued upon exercise of an
Option.
(o) "Plan" means this PowerCerv Corporation 1995 Stock Option
Plan.
(p) "Recipient" means a person who receives an Option.
(q) "Share" means a share of the Common Stock, as adjusted in
accordance with paragraph 14 of the Plan.
(r) "Subsidiary" means any corporation fifty percent or more
of the voting securities of which are owned directly or indirectly by the
Company at any time during the existence of this Plan.
(s) "Qualified Public Offering" means the closing of an
underwritten public offering by the Company pursuant to a registration
statement filed and declared effective under the Securities Act of 1933, as
amended, covering the offer and sale of Common Stock for the account of the
Company in which (i) the gross proceeds to the Company before deducting
underwriting commissions, discounts and offering expenses, equals or exceeds
$20,000,000 and (ii) the product obtained by multiplying the public offering
price per share of Common Stock by the total number of shares to be outstanding
immediately following the public offering equals or exceeds $60,000,000.
(t) "Trigger Event" occurs when:
(i) the Company, in good faith, believes that Marc
Fratello, Roy Crippen, Harold Ross, their estates, their wives, their parents,
their lineal descendants, or any trust created for the benefit of any one or
more of them during their lifetimes, or any combination of the foregoing, shall
have voting control, directly or indirectly, equal to less than fifty percent
but not less than thirty-three percent of the issued and outstanding capital
stock of the Company entitled to vote in the election of the Board of Directors
of the Company;
(ii) the Company, in good faith, believes that none
of Marc Fratello, Roy Crippen, Harold Ross, their estates, their wives, their
parents, their lineal descendants, or any trust created for the benefit of any
one or more of them during their lifetimes, or any combination of the foregoing,
shall have voting control, directly or indirectly, equal to at least
thirty-three percent of the issued and outstanding capital stock of the Company
entitled to vote in the election of the Board of Directors of the Company;
(iii) the approval by the shareholders of the Company
of a reorganization, merger, or consolidation, in each case, with respect to
which Marc Fratello, Roy Crippen, Harold Ross, their estates, their wives, their
parents, their lineal descendants, or any trust created for the benefit of any
one or more of them during their lifetimes, or any combination of the foregoing,
own less than fifty percent but not less than thirty-three percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's (or any successor entity's)
then outstanding securities;
A-2
<PAGE> 22
(iv) the approval by the shareholders of the Company
of a reorganization, merger, or consolidation, in each case, with respect to
which Marc Fratello, Roy Crippen, Harold Ross, their estates, their wives, their
parents, their lineal descendants, or any trust created for the benefit of any
one or more of them during their lifetimes, or any combination of the foregoing,
do not, immediately thereafter, own at least thirty-three percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's (or any successor entity's)
then outstanding securities; or
(v) a liquidation or dissolution of the Company or
the sale of all or at least eighty percent of the Company's assets.
3. Administration. This Plan shall be administered by a Committee
appointed by the Board from among its members; provided, however, that with
respect to options granted to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended, (the "1934 Act"), the Committee shall be the
entire Board. A majority of the full Committee constitutes a quorum for
purposes of administering the Plan, and all determinations of the Committee
shall be made by a majority of the members present at a meeting at which a
quorum is present or by the unanimous, written consent of the Committee.
4. Shares Subject to Plan. Subject to the provisions of paragraph
14 of the Plan, the maximum aggregate number of Shares that may be subject to
Options under the Plan shall be 2,250,000. If an Option should expire or become
unexercisable for any reason without having been exercised, the unpurchased
Shares that were subject to the Option shall, unless the Plan has then
terminated, be available for other Options under the Plan.
5. Recipients.
(a) Eligible Persons. Any person that the Committee in its
sole and absolute discretion designates is eligible to receive an Option under
this Plan. Only Employees of the Company shall be eligible to receive grants of
Incentive Stock Options. The Committee's award of an Option to a Recipient in
any year does not require the Committee to award an Option to that Recipient in
any other year. Furthermore, the Committee may award different Options to
different Recipients and has full discretion to choose whether to grant Options
to any eligible person. The Committee may consider such factors as it deems
pertinent in selecting Recipients and in determining the amount of their
Options, including, without limitation, (i) the financial condition of the
Company or its Subsidiaries; (ii) expected profits for the current or future
years; (iii) the contributions of a prospective Recipient to the profitability
and success of the Company or its Subsidiaries; and (iv) the adequacy of the
prospective Recipient's other compensation. Recipients may include persons to
whom stock, stock options, stock appreciation rights, or other benefits
previously were granted under this or another plan of the Company or any
Subsidiary, whether or not the previously granted benefits have been fully
exercised or vested.
(b) No Right of Employment. A Recipient's right, if any, to
continue to serve the Company and its Subsidiaries as an officer, Employee, or
otherwise shall not be enlarged or otherwise affected by his designation as a
Recipient under this Plan, and such designation shall not in any way restrict
the right of the Company or any Subsidiary, as the case may be, to terminate at
any time the employment or affiliation of any Recipient.
6. Option Requirements. Each Option granted to a Recipient under
the Plan shall contain such provisions as the Committee at the Date of Grant
shall deem appropriate. Each Option granted to a Recipient shall satisfy the
following requirements:
(a) Written Agreement. Each Option granted to a Recipient
shall be evidenced by an Agreement. The terms of the Agreement need not be
identical for different Recipients. The Agreement shall include a description
of the substance of each of the requirements in this paragraph 6 with respect
to that particular Option and shall state whether the Option is an Incentive
Stock Option.
(b) Number of Shares. Each Agreement shall specify the
number of Shares that may be purchased by exercise of the Option.
A-3
<PAGE> 23
(c) Exercise Price. Except as provided in subparagraph
6(i) of the Plan, the exercise price of each Share subject to an Incentive Stock
Option shall equal the Fair Market Value of the Share on the Option's Date of
Grant. The exercise price of each Share subject to an Option that is not an
Incentive Stock Option shall equal the exercise price designated by the
Committee on the Option's Date of Grant.
(d) Duration of Option. Except as provided in
subparagraph 6(i) of the Plan, each Option granted to a Recipient shall expire
on the tenth anniversary of its Date of Grant or, at such earlier date as is set
by the Committee in establishing the terms of the Option at grant. If the
Recipient's employment or affiliation with the Company terminates before the
expiration date of an Option, the Options owned by the Recipient shall expire on
the earlier of the date stated in this subparagraph or the date stated in
following subparagraphs of this paragraph. Furthermore, expiration of an Option
may be accelerated under subparagraph 6(g) of the Plan.
(e) Vesting of Option and Exercisability. Unless
otherwise provided for by the Committee in establishing the terms of the Option
at grant, a Recipient's interest in the Option shall vest according to the
schedule described in this subparagraph 6(e) and shall be exercisable as to not
more than the vested percentage of the Shares subject to the Option at any point
in time. To the extent an Option is either unexercisable or unexercised, the
unexercised portion shall accumulate until the Option both becomes exercisable
and is exercised, subject to the provisions of subsection 6(d) of the Plan.
Each Option granted under the Plan shall become vested according to the
following schedule based on the anniversary of the Date of Grant:
<TABLE>
<CAPTION>
Anniversary of Date of Grant Percent Vested
---------------------------- --------------
<S> <C> <C>
Prior to 1st anniversary 0%
1st 25%
2nd 50%
3rd 75%
4th 100%
</TABLE>
The Committee, in its sole and absolute discretion, may accelerate the vesting
of any Option at any time.
(f) Death or Termination of Service or Affiliation. In
the case of the death of the Recipient, all Options held by the Recipient shall
expire on the one year anniversary of the Recipient's death, or if earlier, the
date specified in subparagraph 6(d). If the Recipient ceases employment or
affiliation with the Company for any reason other than death, all Options held
by the Recipient shall lapse immediately following the last day that the
Recipient is employed by or affiliated with the Company. However, the Committee
may, in its sole and absolute discretion, either at grant of the Option or at
the time the Recipient terminates employment or affiliation with the Company,
delay the expiration date of the Option to a date after termination of
employment or affiliation with the Company. The maximum delay that may be
allowed, however, shall be four years. Unless otherwise provided for by the
Committee in its sole and absolute discretion, during any such delay of the
expiration date, the Option may be exercised only for the number of Shares for
which it could have been exercised on such termination date pursuant to
subparagraph 6(e), subject to any adjustment under paragraph 14 of the Plan.
Notwithstanding any provisions set forth herein or in the Plan, if the
Recipient shall (i) commit any act of malfeasance or wrongdoing affecting the
Company or any parent or Subsidiary, (ii) breach any covenant not to compete or
employment agreement with the Company or any parent or Subsidiary, or (iii)
engage in conduct that would warrant the Recipient's discharge for cause, any
unexercised part of the Option shall lapse immediately upon the earlier of the
occurrence of such event or the last day the Recipient is employed by or
affiliated with the Company.
(g) Trigger Event. Contingent upon the occurrence of a
Trigger Event, the Board may terminate all Options outstanding under the Plan
effective upon the date of the Trigger Event or may accelerate the expiration
of the Options to a date not earlier than the fifteenth day after the date of
the Trigger Event. Furthermore, the Board may accelerate the vesting of any
Option in the event of a Trigger Event. If the Board terminates the Options, it
A-4
<PAGE> 24
shall make, within sixty days after the date of the Trigger Event, a cash
payment to the Recipient equal to the difference between the Exercise Price and
the Fair Market Value of the Shares that would have been subject to the
terminated Option on the date of the Trigger Event.
(h) Conditions Required for Exercise. Options granted to
Recipients under the Plan shall be exercisable only to the extent they are
vested according to subparagraph 6(e) of the Plan. In addition, no Option
granted under this Plan may be exercised unless and until a Qualified Public
Offering occurs. Furthermore, each Option granted under the Plan is exercisable
only if the issuance of Shares pursuant to the exercise would be in compliance
with applicable securities laws, as contemplated by paragraph 12 of the Plan.
(i) Ten Percent Shareholders. An Incentive Stock Option
granted to an individual who, on the Date of Grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
either the Company or any parent or Subsidiary, shall be granted at an exercise
price of 110 percent of Fair Market Value on the Date of Grant and shall be
exercisable only during the five-year period immediately following the Date of
Grant. In calculating stock ownership of any person, the attribution rules of
Code Section 424(d) shall apply. Furthermore, in calculating stock ownership,
any stock that the individual may purchase under outstanding options shall not
be considered.
(j) Maximum Option Grants. The aggregate Fair Market
Value determined on the Date of Grant, of stock in the Company with respect to
which any Incentive Stock Options under the Plan and all other plans of the
Company or its Subsidiaries (within the meaning of Section 422(b) of the Code)
may become exercisable by any individual for the first time in any calendar
year shall not exceed $100,000.
7. Method of Exercise. An Option granted under this Plan shall be
deemed exercised when the person entitled to exercise the Option (a) delivers
written notice to the President of the Company (or his delegate, in his
absence) of the decision to exercise, (b) concurrently tenders to the Company
full payment for the Shares to be purchased pursuant to the exercise, and (c)
complies with such other reasonable requirements as the Committee establishes
pursuant to paragraph 12 of the Plan. Payment for Shares with respect to which
an Option is exercised may be made in cash, or by certified check or wholly or
partially in the form of Common Stock having a Fair Market Value on the date of
exercise equal to the exercise price. No person shall have the rights of a
shareholder with respect to Shares subject to an Option granted under this Plan
until a certificate or certificates for the Shares have been delivered to him.
An Option granted under this Plan may not be exercised in increments of less
than one hundred Shares, or, if less, one hundred percent of the full number of
Shares as to which it can be exercised. A partial exercise of an Option shall
not affect the holder's right to exercise the Option from time to time in
accordance with this Plan as to the remaining Shares subject to the Option.
8. Company's Right of First Refusal Regarding Option Shares. An
Option Shareholder who desires to Dispose Of any Option Shares shall first offer
the Option Shares to the Company. The Option Shareholder shall provide notice
signed by the Option Shareholder to the Company indicating the Option
Shareholder's desire to Dispose Of Option Shares. The notice shall also specify
the number of Option Shares. The Company shall have the irrevocable and
exclusive first option, but not the obligation, to purchase all or a portion of
the Option Shares, provided the Company provides notice of its election to
purchase the Option Shares within sixty days after the Company receives the
Option Shareholder's notice. The purchase price to be paid by the Company for
the Option Shares being offered by the Option Shareholder shall be the Fair
Market Value of the Option Shares on the date of the Option Shareholder's
notice, and payment shall be made in full in cash at closing. In the event of a
Qualified Public Offering, the provisions of this paragraph 8 shall cease to be
effective.
9. Company Right to Repurchase Option Shares. The Company shall
have the right to repurchase any Option Shares purchased by a Recipient
following such Recipient's termination of service or affiliation with the
Company for any reason. The price for repurchasing the Option Shares shall be
equal to the exercise price specified in the Option with respect to such Option
Shares. Should the Company fail to exercise such repurchase right within sixty
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days following the date of such Recipient's termination of service or
affiliation, the Company shall be deemed to have waived such right. In the
event of a Qualified Public Offering, the provisions of this paragraph 9 shall
cease to be effective.
10. Loan from Company to Exercise Option. The Committee may, in
its sole and absolute discretion and subject to the requirements of applicable
law, recommend to the Company that it lend the Recipient the funds needed by the
Recipient to exercise an Option. The Recipient shall make application to the
Company for the loan, completing the forms and providing the information
required by the Company. The loan shall be secured by such collateral as the
Company may require, subject to its underwriting requirements and the
requirements of applicable law. The Recipient shall execute a promissory note
and any other documents deemed necessary by the Committee.
11. Designation of Beneficiary. Each Recipient shall designate in
the Agreement he executes a beneficiary to receive Options awarded hereunder in
the event of both his death prior to full exercise of such Options and a delay
of the expiration date of such Options in accordance with subparagraph 6(f) of
the Plan; provided, that if no such beneficiary is designated or if the
beneficiary so designated does not survive the Recipient, the estate of such
Recipient shall be deemed to be his beneficiary. Recipients may, by written
notice to the Committee, change the beneficiary designated in any outstanding
Agreements.
12. Taxes; Compliance with Law; Approval of Regulatory Bodies;
Legends. The Company shall have the right to withhold from payments otherwise
due and owing to the Recipient (or his beneficiary) or to require the Recipient
(or his beneficiary) to remit to the Company in cash upon demand an amount
sufficient to satisfy any federal (including FICA and FUTA amounts), state,
and/or local withholding tax requirements at the time the Recipient (or his
beneficiary) recognizes income for federal, state, and/or local tax purposes as
the result of the receipt of Shares pursuant to the Plan as a condition to the
issuance of Shares upon Option exercise (whether to the Recipient or to his
beneficiary).
Options are exercisable, and Shares can be delivered under this Plan,
only in compliance with all applicable federal and state laws and regulations
and the rules of all stock exchanges on which the Company's stock is listed at
any time. An Option is exercisable only if either (a) a registration statement
pertaining to the Shares to be issued upon exercise of the Option has been
filed with and declared effective by the Securities and Exchange Commission and
remains effective on the date of exercise, or (b) an exemption from the
registration requirements of applicable securities laws is available. This Plan
does not require the Company, however, to file such a registration statement or
to assure the availability of such exemptions. Any certificate issued to
evidence Shares issued under the Plan may bear such legends and statements, and
shall be subject to such transfer restrictions, as the Committee deems
advisable to assure compliance with federal and state laws and regulations and
with the requirements of this paragraph and to reflect the provisions of
paragraphs 8 and 9 of the Plan. No Option may be exercised, and Shares may not
be issued under this Plan, until the Company has obtained the consent or
approval of every regulatory body, federal or state, having jurisdiction over
such matters as the Committee deems advisable.
Each person who acquires the right to exercise an Option or to
ownership of Shares by bequest or inheritance may be required by the Committee
to furnish reasonable evidence of ownership of the Option as a condition to his
exercise of the Option. In addition, the Committee may require such consents
and releases of taxing authorities as the Committee deems advisable.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the 1934 Act, as such rule may be amended from
time to time, or its successor under the 1934 Act. To the extent any provision
of the Plan or action by the Plan administrators fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Plan administrators.
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<PAGE> 26
13. Assignability. An Option granted under this Plan is not
transferable except by will or the laws of descent and distribution. During the
lifetime of a Recipient, all rights of the Options are exercisable only by the
Recipient.
14. Adjustment Upon Change of Shares. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock of the Company occurs, the number and class of
Shares for which Options are authorized to be granted under this Plan, the
number and class of Shares then subject to Options previously granted to
Recipients under this Plan, and the price per Share payable upon exercise of
each Option outstanding under this Plan shall be equitably adjusted by the
Committee to reflect such changes. To the extent deemed equitable and
appropriate by the Board, subject to any required action by shareholders, in
any merger, consolidation, reorganization, liquidation or dissolution, any
Option granted under the Plan shall pertain to the securities and other
property to which a holder of the number of Shares of stock covered by the
Option would have been entitled to receive in connection with such event.
15. Liability of the Company. The Company, its parent and any
Subsidiary that is in existence or hereafter comes into existence shall not be
liable to any person for any tax consequences expected but not realized by a
Recipient or other person due to the exercise of an Option.
16. Amendment and Termination of Plan. The Board may alter, amend,
or terminate this Plan from time to time without approval of the shareholders of
the Company. The Board may, however, condition any amendment on the approval of
the shareholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws to which the Company, the
Plan, Recipients or eligible persons are subject. Any amendment, whether with
or without the approval of shareholders, that alters the terms or provisions of
an Option granted before the amendment (unless the alteration is expressly
permitted under this Plan) shall be effective only with the consent of the
Recipient to whom the Option was granted or the holder currently entitled to
exercise it.
17. Expenses of Plan. The Company shall bear the expenses of
administering the Plan.
18. Duration of Plan. Options may be granted under this Plan only
during the ten years immediately following the effective date of this Plan.
19. Applicable Law. The validity, interpretation, and enforcement
of this Plan are governed in all respects by the laws of Florida and the United
States of America.
20. Effective Date. The effective date of this Plan, as amended,
shall be the earlier of (a) the date on which the Board adopts the amended Plan,
or (b) the date on which the Shareholders approve the amended Plan.
Adopted by the Board of Directors
on April 10, 1997 (original Plan adopted
by the Board of Directors on June 15, 1995;
amendment adopted by the Board of Directors
on January 10, 1996).
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<PAGE> 27
APPENDIX
POWERCERV CORPORATION
400 North Ashley Drive, Suite 2700
Tampa, Florida 33602
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON JUNE 3, 1997
The undersigned hereby appoints Harold R. Ross and Stephen M. Wagman,
or either of them, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them or their substitutes to represent and to vote, as
designated below, all the shares of stock of PowerCerv Corporation held of
record by the undersigned on April 29, 1997, at the annual meeting of
shareholders to be held on June 3, 1997 or any adjournment thereof.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below). nominees listed below.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below)
Kenneth D. Barwick, Roy E. Crippen, III, Marc J. Fratello, O.G. Greene,
Stuart C. Johnson, Harold R. Ross
2. PROPOSAL TO APPROVE AMENDMENT TO THE 1995 STOCK OPTION PLAN (THE "PLAN")
TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN
FROM 1,250,000 SHARES TO 2,250,000 SHARES AND MODIFY THE PROVISIONS OF THE
PLAN RELATING TO ADMINISTRATION AND AMENDMENT OF THE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR FISCAL YEAR 1997
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN, THEY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSALS IN ITEMS 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: , 1997
-------------------- -------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
- ----------------- -------------------------------------
Signature if held jointly
