<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
POWERCERV CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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 Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
April 30, 1998
Dear PowerCerv Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of PowerCerv Corporation (the "Company") on Tuesday, June 2, 1998. 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,
MARC J. FRATELLO,
Chief Executive Officer
<PAGE> 3
POWERCERV CORPORATION
400 NORTH ASHLEY DRIVE
SUITE 2700
TAMPA, FLORIDA 33602
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 2, 1998
The Annual Meeting of Shareholders (the "Meeting") of PowerCerv
Corporation (the "Company") will be held in the John Jackson Room of the Wyndham
Harbour Island Hotel, 725 South Harbour Island Boulevard, Tampa, Florida 33602,
on Tuesday, June 2, 1998 at 10:00 a.m. (local time), for the following purposes:
1. To elect five (5) directors, each to hold office until the 1999
Annual Meeting of Shareholders and until his successor is
elected and qualified or his earlier resignation, removal from
office or death.
2. To consider and vote upon a proposal to amend the Company's 1995
Stock Option Plan (the "Stock Option Plan") to increase the
number of shares available for issuance under the Stock Option
Plan from 2,250,000 shares to 3,675,000 shares and to modify
certain of the provisions of the Stock Option Plan relating to
its administration and other matters.
3. 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 28, 1998
are entitled to notice of and to vote at this Meeting and any adjournments
thereof. For ten days prior to the Meeting, a complete list of the shareholders
entitled to vote at the Meeting will be available for examination by any
shareholder for any purpose relating to the Meeting during ordinary business
hours at the executive offices of the Company in Tampa, Florida.
By Order of the Board of Directors,
Stephen M. Wagman,
Secretary
Tampa, Florida
April 30, 1998
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE, WHETHER OR NOT THEY
INTEND TO ATTEND THE MEETING. PROXIES ARE REVOCABLE, AND ANY SHAREHOLDER MAY
WITHDRAW THEIR PROXY AND VOTE IN PERSON AT THE MEETING.
<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 4, 1998, in connection with the solicitation of proxies by the Board of
Directors of PowerCerv Corporation, a Florida corporation (the "Company"), to be
voted at the Annual Meeting of Shareholders to be held on June 2, 1998, and at
any adjournment thereof (the "Meeting"). Only shareholders of record at the
close of business on April 28, 1998 (the "Record Date") are entitled to notice
of and to vote at the Meeting. There were 13,796,767 shares of the Company's
common stock, $0.001 par value (the "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 materials to beneficial owners of the Common Stock of the Company.
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.
4
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 15, 1998, 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>
DIRECTORS AND EXECUTIVE OFFICERS:
Marc J. Fratello (3).................................................... 2,818,933 20.3%
Roy E. Crippen, III (4)................................................. 2,371,833 17.1%
Michael J. Simmons (5) ................................................. 250,100 1.8%
Stephen M. Wagman (6)................................................... 96,250 *
Ronald D. Nall (7) ..................................................... 65,000 *
O. G. Greene (8)........................................................ 12,000 *
Stuart C. Johnson (9)................................................... 12,000 *
Harold R. Ross (10)..................................................... 2,489,500 18.0%
M.J.F. Limited Partnership.............................................. 2,761,600 20.0%
R.C.F. Company Limited Partnership...................................... 2,288,500 16.6%
H.R.R. Limited Partnership.............................................. 2,463,500 17.9%
All directors and executive officers as a group
(9 persons)(11) ..................................................... 8,129,353 56.7%
5% SHAREHOLDERS:
Dimensional Fund Advisors Inc. (12) .................................... 866,700 6.3%
</TABLE>
- --------
*Less than 1%
(1) The business address for Messrs. Fratello, Crippen, Simmons, Wagman, Nall,
Greene, Johnson and Ross is c/o PowerCerv Corporation, 400 North Ashley
Drive, Suite 2700, Tampa, Florida 33602. The business address for M.J.F.
Limited Partnership, R.C.F. Company Limited Partnership and H.R.R. Limited
Partnership is 3773 Howard Hughes Parkway, 3rd Floor South, Las Vegas,
Nevada 81909. The business address for Dimensional Fund Advisors Inc. is
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
(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.
5
<PAGE> 6
(3) Includes 2,735,600 shares 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, and 83,333 shares that are subject to
stock options that are exercisable within 60 days of April 15, 1998.
(4) Includes 2,288,500 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, and 83,333 shares
that are subject to stock options that are exercisable within 60 days
of April 15, 1998.
(5) Includes 248,600 shares that are subject to stock options that are
exercisable within 60 days of April 15, 1998.
(6) Includes 94,250 shares that are subject to stock options that are
exercisable within 60 days of April 15, 1998.
(7) Includes 65,000 shares that are subject to stock options that are
exercisable within 60 days of April 15, 1998.
(8) Includes 12,000 shares that are subject to stock options that are
exercisable within 60 days of April 15, 1998.
(9) Includes 12,000 shares that are subject to stock options that are
exercisable within 60 days of April 15, 1998.
(10) Includes 2,463,500 shares held by H.R.R. Limited Partnership, a Nevada
limited partnership in which Harold R. Ross and certain trusts, of
which he is trustee, are limited partners, and two separate custodian
accounts for Mr. Ross' sons totaling an additional 26,000 shares. Mr.
Ross has the voting power and the investment power on the custodian
accounts.
(11) Includes 2,489,500 shares beneficially owned by Harold R. Ross. Mr.
Ross retired as Chairman and Chief Executive Officer of the Company
effective December 31, 1997. In addition, Mr. Ross is not standing for
re-election at the upcoming Meeting. Also includes 598,516 shares held
by the Named Executive Officers and directors that are subject to stock
options exercisable within 60 days of April 15, 1998 (see footnotes 3-9
above), and 105,443 shares held by the other executive officers of the
Company that are subject to stock options exercisable within 60 days of
April 15, 1998.
(12) The number of shares shown is based upon a Schedule 13G filed with the
Securities and Exchange Commission on February 10, 1998. Dimensional
Fund Advisors Inc. ("Dimensional"), a registered investment advisor, is
deemed to have beneficial ownership of 866,700 shares of the Company,
all of which shares are held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of
the DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
6
<PAGE> 7
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of April 15, 1998, 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>
Marc J. Fratello................. Chairman, Chief Executive Officer and Director 40 1992
Roy E. Crippen, III.............. Vice Chairman, Chief Technology Officer and 39 1992
Director
Michael J. Simmons............... President, Chief Operating Officer and Director 51 1998
Stephen M. Wagman................ Chief Financial Officer, Treasurer and Secretary 37
Ronald D. Nall................... Senior Vice President of Services and Products 51
Karen L. Surplus................. Chief Accounting Officer 38
O. G. Greene..................... Director 56 1996
Stuart C. Johnson................ Director 55 1996
</TABLE>
MARC J. FRATELLO has served as President and a director of the Company
since its inception in 1992, as Chief Operating Officer from December 1995 until
December 1997, and as Chairman and Chief Executive Officer since January 1,
1998. 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, Acting President and Chief Operating Officer from January 1998 through
early March 1998, and Vice Chairman of the Company since March 1998. Prior to
founding the Company and from March 1991 to April 1992, Mr. Crippen was the
Florida Regional Manager for Spectrum Associates, an application and consulting
company.
MICHAEL J. SIMMONS has served as President and Chief Operating Officer
of the Company since March 1998. Mr. Simmons served as Chief Financial Officer
of Platinum Software Corporation, a financial applications software products
company located in Irvine, California, from May 1994 to March 1998. Mr. Simmons
served as Executive Vice President and Chief Financial Officer of Dynasty
Classics, a manufacturer of home lighting products, from April 1991 through
September 1993. From February 1990 through April 1991, Mr. Simmons served as
Chief Executive Officer and President of Pro-Tec Sports International, a
manufacturer of recumbent exercise bicycles. From August 1986 through May 1989,
Mr. Simmons served as Executive Vice President and Chief Financial Officer of
CPG, International, a privately held distributor of graphic and fine arts
supplies. From 1979 to 1986, Mr. Simmons was Chief Financial Officer and Senior
Vice President of Silicon Systems.
7
<PAGE> 8
STEPHEN M. WAGMAN has served as Chief Counsel of the Company since
August 1995, as Secretary since October 1995, as Senior Vice President and
Treasurer since December 1996, and as Chief Financial Officer since March 1998.
From July 1988 to August 1995, Mr. Wagman was Vice President, Treasurer and
Secretary of International Data Matrix, Inc., a developer of machine vision
technology. Mr. Wagman is licensed to practice law in Florida and Ohio.
RONALD D. NALL has served as Senior Vice President of Research and
Development for the Company since March 1997, and Senior Vice President of
Products and Services since November 1997. From December 1996 to March 1997, Mr.
Nall served as the Vice President of Research and Development for Oracle
Corporation in Valhalla, New York. From June 1995 to December 1996, Mr. Nall
served as the Vice President of Research and Development for Datalogix, Inc. in
Valhalla, New York. Mr. Nall served as Vice President and Applications Products
Owner of Computer Associates, Inc., a software developer located in Islandia,
N.Y., from June 1986 through June 1995.
KAREN L. SURPLUS (formerly 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. Surplus 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 financial
services subsidiary. Ms. Surplus is a Certified Public Accountant licensed to
practice accounting in Florida.
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 service provider in the telecommunications industry located in
Atlanta, since June 1995. From May 1992 to June 1995, Mr. Greene was the Senior
Executive Vice President and Chief Operating Officer of First Financial
Management Corporation, a firm providing payment systems services to the credit
card, check and health care industries in Atlanta. From February 1991 to May
1992, Mr. Greene was the President and CEO of National Data Corporation, a firm
providing payment systems services to the credit card, check and health care
industries in Atlanta. Mr. Greene also is a director of CSTI, a privately held
company located in Baltimore, Maryland.
STUART C. JOHNSON has served as a director of the Company since
November 1996. Mr. Johnson founded The Johnson Albright Group, an investment
banking firm located in Fairfax, Virginia, in August 1997, and has served as the
Chairman and Chief Executive Officer of Bright Light Network Solutions Company,
a network integration company aimed at taking mid-market companies into
electronic commerce, since January 1998. From June 1993 to June 1997, Mr.
Johnson served as the Group President of Large Business and Information Services
at Bell Atlantic Corporation in Arlington, Virginia. 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 six members. In addition
to the directors listed in this "Directors and Executive Officers" section,
Harold R. Ross has served on the Company's Board of Directors. Mr. Ross is not
standing for re-election to the Board of Directors.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1997, 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 one time during 1997 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 four
times during 1997, consists of Stuart Johnson, O.G. Greene and Roy Crippen. Mr.
Johnson serves as Chairman of this Committee. 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.
8
<PAGE> 9
Prior to January 1, 1998, the Company's Compensation Committee
consisted of O.G. Greene, Stuart Johnson and Harold R. Ross. On January 1, 1998,
Marc J. Fratello replaced Mr. Ross on this Committee. Mr. Greene serves as the
Chairman of this Committee. The Compensation Committee recommends to the Board
of Directors the base salary levels and annual discretionary bonuses for the
Company's executive officers. See "Report of the Compensation Committee of the
Board of Directors on Executive Compensation." The Compensation Committee met
two times during fiscal 1997. Certain compensation matters relative to Messrs.
Fratello, Crippen and Ross were addressed by the full Board of Directors.
The Company's Stock Option Committee consists of Messrs. Greene,
Fratello and Crippen. Mr. Greene serves as the Chairman of the Committee. The
Stock Option Committee administers the Company's 1995 Stock Option Plan (the
"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 39 times during
1997 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 "Executive
Compensation - Stock Option Plan."
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
COMPENSATION OF DIRECTORS
Effective June 3, 1997, directors who are not employees of the Company
were paid $2,000 for each Board meeting attended. In addition, each non-employee
director received an option to purchase 8,000 shares of the Common Stock
pursuant to the Stock Option Plan. These options vest ratably over a
twelve-month period and have an exercise price of $3.50 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 (the
"Commission"). Officers, directors, and ten-percent shareholders are required by
the Commission regulations to furnish the Company with copies of all Section
16(a) reports they file.
Other than as described below, and based solely on a review of the
copies of such forms furnished to the Company and written representations from
the Company's executive officers and directors, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten-percent shareholders were complied with for
fiscal 1997. On or about February 14, 1998, Stephen M. Wagman filed with the
Commission a Form 5, Annual Statement of Changes in Beneficial Ownership, to
report certain stock option grants received by him in fiscal 1996. The option
grants should have been reported on a Form 5 filed on or before February 14,
1997.
9
<PAGE> 10
EXECUTIVE COMPENSATION
The following table presents certain information concerning the
compensation earned during 1997, 1996 and 1995 by: (i) the current Chief
Executive Officer of the Company, and (ii) each of the four most highly
compensated executive officers of the Company who earned more than $100,000 in
salary and bonus in 1997 (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 (5)
- --------------------------------- ---- ---------- --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Marc J. Fratello 1997 $192,000 -- $3,655 -- $ 2,450
Chairman and 1996 177,000 $36,000 3,710 -- 3,100
Chief Executive Officer 1995 115,625 -- -- -- 2,376
Roy E. Crippen, III 1997 192,000 -- 4,005 -- 2,406
Vice Chairman and 1996 177,000 36,000 4,330 -- 3,100
Chief Technology Officer 1995 115,625 -- -- -- 2,376
Stephen M. Wagman (6) 1997 123,600 2,000 -- $36,000 3,600
Chief Financial Officer, 1996 100,683 5,072 -- 13,500 900
Treasurer and Secretary 1995 26,503 -- -- 12,500 --
Ronald D. Nall (7) 1997 158,592 -- -- 60,000 1,313
Senior Vice President, 1996 -- -- -- -- --
Services and Products 1995 -- -- -- -- --
Harold R. Ross (8) 1997 208,250 -- 3,330 -- 302,450
Retired Chief Executive Officer 1996 177,000 36,000 3,775 -- 3,100
1995 115,625 -- -- -- 2,376
</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 Officers 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.
10
<PAGE> 11
(5) Except as further described below, "all other compensation" represents
matching contributions made by the Company to the Named Executive
Officers under the Company's 401(k) Plan. In the case of Harold R.
Ross, "all other compensation" includes severance as further described
in footnote 8 below.
(6) Mr. Wagman joined the Company on August 31, 1995.
(7) Mr. Nall joined the Company on March 10, 1997.
(8) Mr. Ross retired as Chairman and Chief Executive Officer of the Company
effective December 31, 1997. Mr. Ross' 1997 salary includes the payment
of $20,769 for unused, accrued vacation time. Pursuant to Mr. Ross'
employment termination agreement, as of December 31, 1997 the Company
was obligated to pay a severance of $300,000 in 24 bi-weekly
installments during 1998. The Company expensed this severance amount in
December 1997.
OPTION GRANTS IN 1997
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, 1997. 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 the shares of Common Stock.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES POTENTIAL REALIZABLE VALUE AT
OF COMMON STOCK ASSUMED ANNUAL RATES OF STOCK
UNDERLYING % OF TOTAL OPTIONS PRICE APPRECIATION FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION ----------------------------------
NAME GRANTED (1) IN FISCAL YEAR PER SHARE DATE 5% 10%
- ------------------- ---------------- -------------------- -------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Marc J. Fratello -- -- -- -- -- --
Roy E. Crippen, III -- -- -- -- -- --
Stephen M. Wagman 1,000 0.1% $3.25 2007 2,044 5,180
5,000 0.6% 2.68 2007 8,452 21,420
30,000 3.6% 2.25 2007 42,450 107,578
Ronald D. Nall 60,000 7.2% 3.06 2007 115,578 292,898
Harold R. Ross -- -- -- -- -- --
</TABLE>
(1) All options granted to the Named Executive Officers were granted in
fiscal 1997 pursuant to the Company's Stock Option Plan.
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, 1997. No stock options were exercised by the Named Executive
Officers during fiscal 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME AT DECEMBER 31, 1997 AT DECEMBER 31, 1997 (1)
- ---------------------- ------------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Marc J. Fratello -- -- -- --
Roy E. Crippen, III -- -- -- --
Stephen M. Wagman 30,875 31,125 -- --
Ronald D. Nall -- 60,000 -- --
Harold R. Ross -- -- -- --
</TABLE>
(1) The market value at December 31, 1997 was equal to or lower than the
option exercise price of all unexercised options held by the Named
Executive Officers at December 31, 1997.
11
<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 and June 1997, the Board of Directors and the shareholders
of the Company amended and restated the Stock Option Plan increasing the number
of shares available for issuance from 1,250,000 to 2,250,000, and modifying the
provisions of the Stock Option Plan relating to its administration and amendment
in order to reflect revisions to Securities and Exchange Commission regulations.
In April 1998, the Board of Directors amended the Stock Option Plan, subject to
shareholder approval, to increase by 1,425,000 the maximum aggregate number of
shares available for issuance under the Stock Option Plan and to modify the
provisions of the Stock Option Plan relating to its administration. At the
Meeting, the shareholders are being asked to vote for the approval of this
amended and restated Stock Option Plan. See "Proposal 2 - Proposal to Amend
PowerCerv Corporation 1995 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 "Code"). 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.
401(K) PLAN
On June 1, 1994, the Company's defined contribution plan (the "401(k)
Plan") became effective permitting employees to invest in a variety of funds on
a pre-tax basis. 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. Under the
Company match policy, the Company matches 50% of participant contributions to a
maximum matching amount of 6% of participant base
12
<PAGE> 13
compensation. Employee contributions vest immediately and Company contributions
vest over a six-year period. All Company matching contributions are used to
purchase shares of Common Stock of the Company on the open market.
Effective January 1, 1998, the Company's 401(k) Plan was amended and
the Company match policy was changed to a formula based upon the Company's
financial performance. Under the amended Company match policy, the Company will
match between 30%, 50% or 70% of participant contributions to a maximum matching
amount of 6% of participant base compensation. Based upon the Company's fiscal
1997 net income, the Company will match 30% of participant contributions to a
maximum matching amount of 6% of participant base compensation during fiscal
1998. Effective March 27, 1998, the Company amended its 401(k) Plan to address
certain temporary vesting provisions for Company matched funds.
EMPLOYMENT AGREEMENTS
Effective April 10, 1997, each of Messrs. Fratello, Crippen, and Ross
entered into an Employment, Non-competition, 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. These agreements also provide certain piggy-back registration rights
to each of these executives. 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) 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 non-compete provision
following its expiration or earlier termination. In an effort to reduce the
Company's operating expenses, both Mr. Fratello and Mr. Crippen reduced their
1998 annual base salaries from $180,000 to $80,000. In return, the Board
granted an option to each Mr. Fratello and Mr. Crippen for 200,000 shares of
Common Stock under the Stock Option Plan. The exercise price for these options
was the fair market value on the date of grant. In addition, these options,
which expire in February 2008, vest ratably through December 1998.
Effective December 31, 1997, Harold R. Ross retired as the Chairman and
Chief Executive Officer of the Company pursuant to an employment termination
agreement. Pursuant to such agreement, which superceded Mr. Ross' employment
agreement, the Company agreed to pay Mr. Ross a severance of $300,000 during
1998, and Mr. Ross agreed to certain non-compete provisions with the Company,
and further Mr. Ross agreed to provide his continuing assistance to the Company
on outstanding matters on an expense-only basis. The Company and Mr. Ross also
agreed that if the Company requested him to provide consulting services, Mr.
Ross will do so on an hourly fee plus expenses basis.
Effective April 7, 1998 and in connection with his assuming the
additional role as the Company's Chief Financial Officer, Stephen M. Wagman
entered into an employment agreement with the Company which superceded the terms
of his then existing employment agreement. Mr. Wagman's employment agreement is
for a period commencing April 7, 1998 and expiring December 31, 2000, plus
renewable one-year extensions subject to either the Company's or Mr. Wagman's
right of cancellation. The agreement provides for an annual base salary of
$150,000, an annual target bonus of $75,000, and certain other benefits. The
terms of Mr.
13
<PAGE> 14
Wagman's annual target bonus are consistent with other members of the Company's
executive management team. In addition, the Company agreed to pay Mr. Wagman
twelve months base salary and vest certain of his outstanding stock options as
follows: (i) upon a change of control where Mr. Wagman is not offered an equal
or better position and compensation package, (ii) if the Company terminated Mr.
Wagman without "cause," or (iii) if Mr. Wagman were constructively terminated by
the Company.
Also effective on April 7, 1998, Ronald D. Nall entered into an
employment agreement with the Company which superceded the terms of his then
existing employment agreement. The employment agreement is for a period
commencing April 7, 1998 and expiring December 31, 2000, plus renewable one-year
extensions subject to either the Company's or Mr. Nall's right of cancellation.
The agreement provides for an annual base salary of $175,000, an annual draw of
$20,000, an annual target bonus of $125,000, and certain other benefits. The
terms of Mr. Nall's annual target bonus are consistent with other members of the
Company's executive management team. In addition, the Company agreed to pay Mr.
Nall twelve months base salary and vest certain of his outstanding stock options
as follows: (i) upon a change of control where Mr. Nall is not offered an equal
or better position and compensation package, (ii) if the Company terminated Mr.
Nall without "cause," or (iii) if Mr. Nall were constructively terminated by the
Company. This employment agreement also contains a one-year non-compete
provision.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Director's Compensation Committee currently consists of
Messrs. Greene, Johnson and Fratello. Mr. Fratello is the Chairman and Chief
Executive Officer of the Company. Prior to January 1, 1998 and his retirement as
the Company's Chairman and Chief Executive Officer, Mr. Ross served on this
Committee in place of Mr. Fratello. Messrs. Greene and Johnson are outside
directors. In fiscal 1997, all compensation matters relative to Messrs.
Fratello, Crippen and Ross were addressed by the full Board of Directors.
Messrs. Fratello and Ross have certain relationships with respect to the
Company, described elsewhere herein under "Certain Transactions".
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 "Report of the Compensation
Committee of the Board of Directors on Executive Compensation" and the
"Performance Graph" shall not be incorporated by reference into any such
filings.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
GENERAL. The Compensation Committee (the "Committee") is currently
composed of the Company's Chief Executive Officer, Mr. Fratello and two outside
directors of the Company, O.G. Greene and Stuart C. Johnson. The Compensation
Committee, 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
senior management are intended to enable the Company to attract, motivate,
reward and retain the management talent required to achieve its corporate
objectives in a rapidly changing industry and thereby
14
<PAGE> 15
increase shareholder value. It is the Company's policy to provide incentives to
its senior management to achieve these objectives and to reward exceptional
performance and contributions to the development of the Company's business. To
attain these objectives, the Company's executive management team compensation
program includes cash compensation in the form of base salary, annual incentive
compensation in the form of discretionary cash bonuses, and long-term incentive
awards in the form of stock option grants. In addition, the compensation program
is comprised of various benefits, including medical and insurance plans, and the
401(k) Plan, which are generally available to all employees of the Company.
BASE SALARIES; ANNUAL DISCRETIONARY BONUSES. Base salaries and annual
discretionary bonus amounts have been established for the Chief Executive
Officer and several other executive officers in their respective employment
agreements. In April 1997, the Board of Directors approved the Employment,
Noncompetition, Development and Confidentiality Agreements between the Company
and each of Messrs. Fratello, Crippen and Ross. In addition, Messrs. Wagman and
Nall have entered into employment agreements with the Company which, among other
items, set their respective base salaries and annual discretionary bonus
amounts. See "Executive Compensation - Employment Agreements." Factors taken
into account for setting the amount of base salary and annual discretionary
bonus amounts include current compensation, financial performance of the Company
and qualitative factors bearing on an individual's experience, responsibilities,
management, leadership abilities and job performance.
During fiscal 1997, the Chief Executive Officer and other executive
officers participated in a compensation plan based upon the performance of the
Company. Generally, each participant was eligible to earn an annual bonus target
based upon the Company attaining the annual revenue and operating income levels
in the Company's financial plan for the year, and also based upon the Company's
and/or the executive's fulfillment of certain strategic business accomplishments
for the year. No portion of the annual discretionary bonuses were paid to the
Chief Executive Officers or the other executive officers of the Company in
fiscal 1997.
STOCK OPTIONS. Stock options are the principal vehicle used by the
Company for the payment of long-term compensation, to provide a stock-based
incentive to improve the Company's financial performance, and to assist in the
recruitment, motivation and retention of key professional and managerial
personnel. Long-term incentive compensation in the form of stock options enables
senior management to share in the appreciation of the value of the Common Stock
of the Company. The Board of Directors believes that stock option participation
aligns senior management's objectives with long-term stock price appreciation.
The Company's Stock Option Plan is administered by the Stock Option Committee.
Prior to February 1998, the three founders of the Company did not participate in
the Stock Option Plan.
OTHER BENEFITS. The Company also has various broad-based employee
benefit plans. Executive officers participate in these plans on the same terms
as eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans. The
Company offers a 401(k) Plan, maintains medical and insurance plans and other
benefits for its employees.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Compensation of the Company
Chief Executive Officer, Marc J. Fratello, was established in his April 1997
Employment, Noncompetition, Development and Confidentiality Agreement. The Board
of Directors approved this employment agreement on April 10, 1997. In 1997, Mr.
Fratello's compensation package consisted of the base salary, annual
discretionary bonus, and other employee benefit programs similar to other
executive officers of the Company. Prior to February 1998, Mr. Fratello did not,
however, participate in the Stock Option Plan. In February 1998 and in
connection with a salary reduction, Mr. Fratello (and separately, Mr. Crippen)
received a stock option to purchase 200,000 shares of Common Stock pursuant to
the Stock Option Plan. See "Executive Compensation - Employment Agreements."
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the
Code limits the tax deduction to $1 million for compensation paid to any of the
executive officers, unless certain requirements are met. The Compensation
Committee considered these requirements and the related regulations with
respect to 1997 compensation.
15
<PAGE> 16
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 12/31/97
AMONG POWERCERV CORPORATION, THE NASDAQ INDEX
AND THE COMPUTER & DATA PROCESSING INDEX
[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 plotted using the following data:
<TABLE>
<CAPTION>
POWERCERV COMPUTER & DATA
PERIOD ENDED CORPORATION NASDAQ INDEX PROCESSING INDEX
-------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
03/01/96 $ 100.00 $ 100.00 $ 100.00
03/31/96 106.36 101.70 102.74
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
3/31/97 25.89 113.08 112.44
6/30/97 24.10 133.81 144.19
9/30/97 23.21 156.45 157.67
12/31/97 16.07 146.71 148.81
</TABLE>
(1) The Company completed the initial public offering of its Common Stock
on March 1, 1996. The Company's 1996 and 1997 fiscal years ended on
December 31, 1996 and December 31, 1997, respectively. The "Performance
Graph" assumes that $100 was invested on March 1, 1996 in the 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.
16
<PAGE> 17
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. Fratello, Crippen
and Ross. See "Management." During fiscal 1997, the Company paid fees 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 1997, the
Company incurred approximately $319,000 in recruiting expenses payable to
PowerStaff.
In September 1996, Marc J. Fratello, currently the Chairman and Chief
Executive Officer of the Company and a member of the Board of Directors, 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. During
1997, the Company has provided approximately $8,300 of technical services to
SBT. In addition, the Company amended its June 1996 partnering agreement with
SBT by expanding the OEM license rights for a license fee of $250,000. This 1997
amendment also provides evaluation license rights to other application products
of the Company and reduces the total royalties due under the partnering
agreement to $1.75 million from $2 million.
17
<PAGE> 18
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six
members, one of which is not standing for re-election. At the Meeting, the five
remaining members of the Board of Directors will stand for re-election. 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 elected and qualified or earlier resignation, removal from office or death.
The nominees for election to the Board of Directors are Roy E. Crippen,
III, Marc J. Fratello, O.G. Greene, Stuart C. Johnson and Michael J. Simmons.
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 - PROPOSAL TO AMEND
POWERCERV CORPORATION 1995 STOCK OPTION PLAN
The Board of Directors and the stockholders approved the adoption of the
PowerCerv Corporation 1995 Stock Option Plan (the "Stock Option Plan") in June
1995. Amendments to the Stock Option Plan have been adopted by the Board of
Directors and approved by the stockholders from time to time. As of April 17,
1998, the maximum number of shares of the Common Stock of the Company ("Shares")
which may be issued upon the exercise of options granted pursuant to the Stock
Option Plan is 2,250,000, of which 2,130,884 Shares were outstanding and 59,349
Shares remained available for future stock option grants. The Board of Directors
has amended the Stock Option Plan, subject to stockholder approval to increase
by 1,425,000 the maximum aggregate number of Shares that may be issued under the
Stock Option Plan. The Board of Directors believes that approval of the
amendment to the Stock Option Plan is in the best interests of the Company and
its stockholders because the availability of an adequate number of Shares
reserved for issuance under the Stock Option Plan and the ability to grant stock
options is an important factor in attracting, motivating and retaining qualified
personnel essential to the success of the Company.
In addition, the Board of Directors adopted Stock Option Plan amendments
which relate to the administration of the Stock Option Plan and other matters.
These amendments (i) modify the list of events, such as a change of control of
the Company, that permit the Company to terminate the options or accelerate
vesting, and (ii) clarify that the maximum delay for the expiration of an
incentive stock option following an employee's termination of employment is 90
days. While the latter amendment was primarily a clarification of an
administrative matter, the former amendment was made to mitigate certain of the
potential impacts on the Stock Option Plan of the Company's management changes,
such as Mr. Ross' retirement and associated events.
SUMMARY DESCRIPTION OF THE STOCK OPTION PLAN.
The following discussion of the principal features and effects of the
Stock Option Plan is qualified in its entirety by reference to the text of the
Stock Option Plan set forth in Exhibit A attached hereto.
GENERAL. Awards under the Stock Option Plan consist of options to purchase
a specified number of Shares at a stated price per share (the "Options").
Generally, the exercise price per share of an Option may not be less than the
closing price of a share of Company Common Stock on the Nasdaq Stock Market's
National Market on the date the Option is granted. Options granted under the
Stock Option Plan may be Options that qualify as "incentive stock options"
("ISOs") pursuant Section 422 of the Code or nonqualified stock options
("NSOs"). The Board of Directors may amend the Stock Option Plan from time to
time without approval of the shareholders of the
18
<PAGE> 19
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. Currently, federal income
tax law requires that the shareholders must approve any amendment to increase
the maximum number of Shares that may be issued under the Stock Option Plan.
Each Option granted under the Stock Option Plan will be exercisable by the
Option recipient in accordance with the vesting schedule established by the
Stock Option Committee at the time of grant, during a term not to exceed ten
years fixed by the Stock Option Committee. Upon exercise of any Option, payment
for Shares as to which the Option is exercised shall be make in cash or by
check or wholly or partially in the form of Shares having a fair market value
on the date of exercise equal to the exercise price.
ADMINISTRATION. The Stock Option Plan is administered by the Stock Option
Committee appointed by the Board of Directors from among its members (the
"Committee"). With respect to Options granted to persons subject to Section 16
of the Securities Exchange Act of 1934, the Committee shall be the entire Board
of Directors. The Committee selects the recipients of Options, determines the
terms and conditions and number of Shares subject to each Option, and makes any
other determinations necessary or advisable for the administration of the Stock
Option Plan.
SHARES SUBJECT TO THE STOCK OPTION PLAN. The Stock Option Plan provides
that the total number of Shares that may be purchased pursuant to Options shall
not exceed 3,675,000 Shares, representing approximately 21% of the currently
outstanding Shares. Previously, the number of Shares issuable pursuant to
Options under the Stock Option Plan was limited to 2,250,000. Authority to grant
Options under the Stock Option Plan will continue until June 15, 2005, subject
to the continued availability of Shares for the granting of Options under the
Stock Option Plan. The Shares subject to Options which expire unexercised or are
terminated shall again become available for the granting of Options under the
Stock Option Plan. In the event of changes in the number or kind of outstanding
Shares or certain other events, an appropriate adjustment will be made with
respect to existing and future awards.
ELIGIBILITY. Any person that the Committee designates is eligible to
receive an Option under the Stock Option Plan. Only employees of the Company,
however, are eligible to receive grants of ISOs. Because the employees of the
Company who may participate in the Stock Option Plan and amount of their Options
are determined by the Committee in its discretion, it is not possible to state
the names or positions of, or the number of Options that may be granted to, the
Company's officers and employees.
TRANSFERABILITY; TERMINATION OF EMPLOYMENT. All Options granted under the
Stock Option Plan will be nontransferable and nonassignable except by will or by
the laws of descent and distribution.
An Option generally expires immediately following the last day that the
Option recipient is employed by or affiliated with the Company. The Committee,
however, may 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 90 days for an ISO and four years for an NSO. If an
Option recipient's employment is terminated for cause, any Option granted to the
Option recipient shall expire on the date his/her employment terminates. In the
event of an Option recipient's death, an unexercised Option shall expire within
12 months of the date of death.
CHANGE IN CONTROL AND OTHER EVENTS. Contingent upon the occurrence of one
of several events referred to in the Stock Option Plan as "Trigger Events," the
Board of Directors may terminate all Options outstanding under the Stock Option
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 of Directors may accelerate
the vesting of any Option in the event of a Trigger Event. If the Board
terminates the Options, it shall make, within sixty days after the date of the
Trigger Event, cash payments to the Option recipients equal to the difference
between the exercise price and the fair market value of the Shares that would
have been subject to each recipient's terminated Option on the date of the
Trigger Event. The difference under the proposed amendment to the Stock Option
Plan from the prior version of the Stock Option Plan is to reduce the
likelihood that potential sales of Common Stock by the Company's original
founders would cause a Trigger Event to occur.
FEDERAL INCOME TAX CONSEQUENCES.
INCENTIVE STOCK OPTIONS. An ISO results in no taxable income to the Option
recipient or deduction to the Company at the time it is granted or exercised. If
the Option recipient retains the stock received as a result of the
19
<PAGE> 20
exercise of an ISO for at least two years from the date of the grant and one
year from the date of exercise, then any gain on the sale of such stock will be
treated as long-term capital gain. If the Shares are disposed of during this
period, the Option recipient realize taxable ordinary income equal to the lesser
of (i) the gain realized by the Option recipient upon such disposition or (ii)
the difference between the exercise price and the fair market value of the
Shares on the date of exercise. The Company receives a tax deduction only if the
Shares are disposed of during such period. The deduction is equal to the amount
of taxable income to the Option recipient. To the extent that the aggregate
exercise price of the Shares subject to ISOs granted to a key employee under all
plans of the Company and any parent or subsidiary of the Company, and that
become exercisable for the first time during any calendar year, exceeds
$100,000, such ISOs shall be treated as NSOs.
NON-QUALIFIED STOCK OPTIONS. An NSO results in no taxable income to the
Option recipient or deduction to the Company at the time it is granted. Upon
exercising such an Option, the Option recipient will realize taxable ordinary
income in the amount of the difference between the Option exercise price and the
then fair market value of the Shares. Subject to the applicable provisions of
the Code, a deduction for federal income tax purposes will be allowable to the
Company in the year of exercise in an amount equal to the taxable ordinary
income realized by the Option recipient.
VOTE REQUIRED AND BOARD OF DIRECTOR RECOMMENDATION. The affirmative
vote of the holders of a majority of the Shares represented at the Meeting, at
which a quorum is present, is required to approve the Stock Option Plan
amendment to increase the maximum aggregate number of Shares that may be issued
under the Stock Option Plan and to modify the provisions of the Stock Option
Plan relating to the administration of the Stock Option Plan. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
STOCK OPTION PLAN.
PROPOSALS OF SHAREHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of shareholders intended for presentation at the 1999 Annual
Meeting of Shareholders must be received by the Company on or before December
30, 1998, 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.
20
<PAGE> 21
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.
21
<PAGE> 22
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, 1997, 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 M. 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, 1998
22
<PAGE> 23
EXHIBIT A
POWERCERV CORPORATION
1995 STOCK OPTION PLAN
AS AMENDED AND RESTATED APRIL 20, 1998
(A) 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.
(B) DEFINITIONS. The following definitions shall apply to this Plan:
(I) "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.
(II) "BOARD" means the board of directors of the Company.
(III) "CODE" means the Internal Revenue Code of 1986, as
amended.
(IV) "COMMITTEE" means the Stock Option Committee of
disinterested directors appointed by the Board in accordance with paragraph 3 of
the Plan.
(V) "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.
(VI) "COMPANY" means PowerCerv Corporation.
(VII) "CONTINUING DIRECTOR" means, as of any date of
determination, any member of the Board who was nominated for election or elected
to the Board with the approval of a majority of the Continuing Directors who
were members of the Board at the time of such nomination or election.
(VIII) "DATE OF GRANT" means the date on which the Option is
granted.
(IX) "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.
(X) "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.
(XI) "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
A-1
<PAGE> 24
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 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.
(XII) "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.
(XIII) "OPTION" means a stock option granted pursuant to the
Plan.
(XIV) "OPTION SHAREHOLDER" shall mean a Recipient who has
exercised his or her Option.
(XV) "OPTION SHARES" means Shares issued upon exercise of
an Option.
(XVI) "PERMITTED OWNERS" means as of the date of any
determination thereof any one or combination of the following (i) Roy E. Crippen
III, Marc J. Fratello, Harold R. Ross and any of their respective spouses,
estates, lineal descendants (including adoptive children), heirs, executors,
personal representatives, administrators and trusts for any of their benefit and
(ii) any other person, as defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act") (each such person, a "Person"), the
majority of whose Voting Stock is directly or indirectly owned by any Person
described in clause (i) above.
(XVII) "PLAN" means this PowerCerv Corporation 1995 Stock
Option Plan.
(XVIII) "RECIPIENT" means a person who receives an Option.
(XIX) "SHARE" means a share of the Common Stock, as adjusted
in accordance with paragraph 14 of the Plan.
(XX) "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.
(XXI) "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.
(XXII) "TRIGGER EVENT" means the occurrence of any of the
following:
(i) Any sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any Person or group, as defined in Sections
13(d)(3) and 14(d)(2) of the 1934 Act (a "Group"), other than the Permitted
Owners;
(ii) The adoption of a plan for the liquidation or dissolution
of the Company;
(iii) The Company consolidates with, or merges with or into,
another Person or Group, in a transaction
A-2
<PAGE> 25
or series of related transactions in which the Voting Stock of the Company is
converted into or exchanged for cash, securities or other property, other than
any transaction where (A) the outstanding Voting Stock of the Company is
converted into or exchanged for Voting Stock of the surviving or transferee
corporation and (B) the beneficial owners, as defined in Rules 13d-3 and 13d-5
under the 1934 Act (the "Beneficial Owners"), of the outstanding Voting Stock of
the Company immediately prior to such transaction own beneficially, directly or
indirectly through one or more Subsidiaries, not less than a majority of the
total outstanding Voting Stock of the surviving or transferee corporation
immediately after such transaction;
(iv) The consummation of any transaction or series of any
related transactions (including, without limitation, by way of merger or
consolidation) the result of which is that any Person or Group, other than
Permitted Owners, becomes the Beneficial Owner of more than 50 percent of the
voting power of the Voting Stock of the Company; or
(v) During any consecutive two-year period, the first day on
which a majority of the members of the Board who were members of the Board at
the beginning of such period are not Continuing Directors.
(XXIII) "VOTING STOCK" means any class or classes of corporate
stock or partnership interest pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the Board, managers or trustees of any Person (irrespective of whether or
not, at the time, stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency).
(C) 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 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.
(D) 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 3,675,000. 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.
(E) RECIPIENTS.
(I) 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.
(II) 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.
A-3
<PAGE> 26
(F) 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:
(I) 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.
(II) NUMBER OF SHARES. Each Agreement shall specify the
number of Shares that may be purchased by exercise of the Option.
(III) 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.
(IV) 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.
(V) VESTING OF OPTION AND EXERCISABILITY. Unless otherwise
provided for by the Committee in establishing the terms of the Option Agreement
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:
A-4
<PAGE> 27
<TABLE>
<CAPTION>
Anniversary of Date of Grant Percent Vested
---------------------------- --------------
<S> <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.
(VI) 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 90 days for an Incentive Stock Option and four years
for a Nonqualified Stock Option. 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.
(VII) 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 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.
(VIII) 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.
(IX) 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.
(X) 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
A-5
<PAGE> 28
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.
(G) 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.
(H) 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.
(I) 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 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.
(J) 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.
(K) 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.
(L) 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
A-6
<PAGE> 29
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.
(M) 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.
(N) 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.
(O) 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.
A-7
<PAGE> 30
(P) 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.
(Q) EXPENSES OF PLAN. The Company shall bear the expenses of
administering the Plan.
(R) DURATION OF PLAN. Options may be granted under this Plan only
during the ten years immediately following the effective date of this Plan.
(S) 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.
(T) 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.
A-8
<PAGE> 31
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 2, 1998
The undersigned hereby appoints Marc J. Fratello 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 28, 1998, at the annual meeting of
shareholders to be held on June 2, 1998 or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below). listed below.
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below.)
Roy E. Crippen, III, Marc J. Fratello, O.G. Greene, Stuart C. Johnson,
Michael J. Simmons
2. TO CONSIDER AND VOTE UPON A PROPOSAL TO AMEND THE COMPANY'S 1995 STOCK
OPTION PLAN (THE "PLAN") TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR
ISSUANCE UNDER THE PLAN FROM 2,250,000 SHARES TO 3,675,000 SHARES AND
TO MODIFY CERTAIN OF THE PROVISIONS OF THE PLAN RELATING TO ITS
ADMINISTRATION AND OTHER MATTERS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE
(continued and to be signed on reverse side)
<PAGE> 32
3. 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 AND 3.
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:___________________, 1998 ____________________________________
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
__________________________________ ____________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
