<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.1a-11(c) or Section 240.1a-12
MAXSERV, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MAXSERV, INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth amount on which the filing is calculated and state how it
was determined.
[ ] 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:
Notes:
<PAGE> 2
MAXSERV, INC.
8317 CROSS PARK DRIVE, SUITE 350
AUSTIN, TEXAS 78754
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 25, 1996
You are notified that the annual meeting of stockholders of MaxServ,
Inc., a Delaware corporation (the "Company"), will be held at the Company's
corporate headquarters at 8317 Cross Park Drive, Austin, Texas 78754, on
Friday, October 25, 1996, at 9:00 a.m., Central Standard Time, for the
following purposes:
1. To elect eight directors.
2. To ratify the selection of independent accountants.
To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Tuesday,
September 10, 1996 as the record date for the determination of stockholders
entitled to vote at the meeting.
We hope that you will be able to attend the meeting in person, but if
you are unable to do so, please fill in, sign and promptly mail back the
enclosed proxy form, using the return envelope provided. If, for any reason,
you should subsequently change your plans you can, of course, revoke the proxy
at any time before it is actually voted.
By Order of the Board of Directors
Neil A. Johnson
Secretary
Austin, Texas
September 16, 1996
<PAGE> 3
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 25, 1996
THE MEETING
This Proxy Statement is furnished to the stockholders of MaxServ,
Inc., a Delaware corporation, in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders to be held Friday, October 25, 1996. This Proxy Statement and the
accompanying proxy are being sent or given to the stockholders of the Company
on or about September 16, 1996. The Company's Annual Report to Stockholders
for the fiscal year ended May 31, 1996 is also being sent to the stockholders
of the Company with this Proxy Statement.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of the Company's common stock is necessary to constitute
a quorum at the Meeting. Only votes cast "for" a matter constitute affirmative
votes. Votes "withheld" or abstaining from voting are counted for quorum
purposes, but since they are not cast "for" a particular matter, they will have
the same effect as negative votes or votes "against" a particular matter. The
votes required with respect to the items set forth in the Notice of Annual
Meeting of Stockholders are set forth in the discussion of each item herein.
In deciding all questions, a holder of common stock is entitled to one vote, in
person or by proxy, for each share held in his name on the record date.
Proxies in the form enclosed will be voted at the Meeting, if properly
executed, returned to the Company prior to the Meeting and not revoked. A
proxy may be revoked at any time before it is voted by giving written notice of
revocation to the Secretary of the Company prior to the convening of the
Meeting, or by presenting another proxy card with a later date. If you attend
the Meeting and desire to vote in person, you may request that your previously
submitted proxy card not be used.
The record date for stockholders entitled to vote at the Meeting is
September 10, 1996. At the close of business on September 10, 1996, the
Company had issued and outstanding and entitled to vote at the Meeting
10,905,839 shares of common stock. As of September 10, 1996, the directors and
executive officers of the Company and their affiliates owned a total of
8,379,656 shares of the Company's common stock, or approximately 77% of the
total number of shares outstanding and entitled to vote at the Meeting. The
directors and executive officers and their affiliates have indicated to the
Company that they presently intend to vote all of the shares of common stock
owned by them for each of the items set forth in the Notice of Annual Meeting.
1
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning the
beneficial ownership of the Company's common stock as of August 27, 1996 by:
(i) each person known by the Company to be the beneficial owner of more than 5%
of its common stock, (ii) each named executive officer (see "Executive
Compensation" for definition), (iii) each director of the Company, and (iv) all
directors and executive officers as a group. Unless otherwise indicated, each
of the stockholders has sole voting and investment power with respect to the
shares beneficially owned.
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially
Beneficial Owner Owned Percent Class
------------------------------- ------------------- -------------
<S> <C> <C> <C>
Charles F. Bayless 420,124 (1) 3.7%
Thomas W. O'Brien 119,334 (2) 1.1%
Neil A. Johnson 121,667 (3) 1.1%
James F. Leary 1,280,533 (4) 11.7%
Nathaniel P. Turner 57,000 (5) *
Stephen J. Keane 38,000 (6) *
Daniel A. Mihalovich 7,033,333 (7) 64.4%
Thomas D. Overton III 7,033,333 (8) 64.4%
Patrick A. Rivelli 1,029,800 (9) 9.4%
Stephanie S. Springs 7,033,333 (10) 64.4%
Sunwestern Capital Ltd.,
Sunwestern Investment Fund II,
and Sunwestern Cayman 1984 Partners
Three Forest Plaza, Suite 1300
12221 Merit Drive
Dallas, Texas 75251 1,280,533 11.7%
Sears, Roebuck and Co.
3333 Beverly Rd.
Hoffman Estates, Illinois 60179 7,033,333 64.4%
All officers and directors as a group (10 persons) 9,087,991 (4)(7)(8)(9) 78.2%
(10)(11)
</TABLE>
*Less than 1%
2
<PAGE> 5
(1) Mr. Bayless owns 1,790 shares in an individual retirement account.
Includes 418,334 shares subject to presently exercisable options (or
those exercisable within sixty days). Excludes an additional 21,666
shares issuable pursuant to options which are not currently exercisable
(or exercisable within sixty days).
(2) Represents shares subject to presently exercisable options (or those
exercisable within sixty days). Excludes an additional 16,666 shares
issuable pursuant to options which are not currently exercisable (or
exercisable within sixty days).
(3) Mr. Johnson owns 10,000 shares of record. Includes 111,667 shares
subject to presently exercisable options (or those exercisable within
sixty days). Excludes an additional 13,333 issuable pursuant to options
which are not currently exercisable (or exercisable within sixty days).
(4) Mr. Leary owns no shares of record. As a general partner or an
executive officer of entities controlling Sunwestern Capital, Ltd.,
Sunwestern Investment Fund II and Sunwestern Cayman 1984 Partners, Mr.
Leary may be deemed to be the beneficial owner of shares owned by such
entities. Mr. Leary disclaims beneficial ownership of the shares held
by such entities.
(5) Mr. Turner owns 11,000 shares of record. Includes 46,000 shares
subject to presently exercisable options (or those exercisable within
sixty days). Excludes an additional 5,000 shares issuable pursuant to
options which are not currently exercisable (or exercisable within
sixty days).
(6) Mr. Keane owns 28,000 shares of record. Includes 10,000 shares subject
to presently exercisable options (or those exercisable within sixty
days). Excludes an additional 5,000 shares issuable pursuant to options
which are not currently exercisable (or exercisable within sixty days).
(7) Mr. Mihalovich owns no shares of record. As Vice President/GM of Sears
Product Services, a division of Sears, Roebuck and Co., Mr. Mihalovich
may be deemed to be the beneficial owner of shares owned by Sears,
Roebuck and Co. Mr. Mihalovich disclaims beneficial ownership of the
shares held by Sears, Roebuck and Co.
(8) Mr. Overton owns no shares of record. As Vice President, Strategy and
Business Development for Home Services, a division of Sears, Roebuck
and Co., Mr. Overton may be deemed to be the beneficial owner of shares
owned by Sears, Roebuck and Co. Mr. Overton disclaims beneficial
ownership of the shares held by Sears, Roebuck and Co.
(9) Mr. Rivelli owns 15,000 shares of record. As a general partner or an
executive officer of entities controlling Sunwestern Investment Fund II
and Sunwestern Cayman 1984 Partners, Mr. Rivelli may be deemed to be
the beneficial owner of shares owned by such entities. Mr. Rivelli
disclaims beneficial ownership of the shares held by such entities.
(10) Ms. Springs owns no shares of record. As Senior Systems Director,
Information Systems Shared Services for Sears, Roebuck and Co., Ms.
Springs may be deemed to be the beneficial owner of shares owned by
Sears, Roebuck and Co. Ms. Springs disclaims beneficial ownership of
the shares held by Sears, Roebuck and Co.
(11) Includes 705,335 shares subject to presently exercisable options (or
those exercisable within sixty days). Excludes an additional 61,665
shares issuable pursuant to options which are not currently
exercisable (or exercisable within sixty days).
3
<PAGE> 6
ITEM 1
ELECTION OF DIRECTORS
At the Annual Meeting pursuant to which this Proxy Statement is being
distributed, and assuming the presence of a quorum, eight directors are to be
elected by a plurality of the votes cast by the holders of shares entitled to
vote. A plurality means that the nominees with the largest number of votes are
elected as directors up to the maximum number of director positions to be
filled at the meeting. Votes withheld are not counted in the number of votes
cast in the election of directors. Under applicable Delaware law, in
tabulating the vote, broker non-votes will not be considered present and will
have no effect on the vote. Each outstanding share of common stock entitles
the holder thereof to one vote with respect to the election of the eight
director positions to be filled at this meeting. The nominees for director are
Charles F. Bayless, Nathaniel P. Turner, James F. Leary, Steven J. Keane,
Daniel A. Mihalovich, Thomas D. Overton III, Patrick A. Rivelli and Stephanie
S. Springs. All of the nominees except Ms. Springs are presently directors of
the Company. For information concerning the backgrounds of the nominees for
director, see "Directors, Executive Officers and Non-Director Nominee" below.
THE ENCLOSED PROXY, IF PROPERLY SIGNED AND RETURNED, AND UNLESS
AUTHORITY TO VOTE IS WITHHELD, WILL BE VOTED FOR THE ELECTION OF THESE EIGHT
NOMINEES. The Board of Directors has no reason to believe that any of such
nominees will be unable to serve if elected. In the event any of such nominees
become unavailable for election, votes will be cast, pursuant to authority
granted by the enclosed Proxy, for such substitute nominee as may be designated
by the Board of Directors. All directors serve for a term of one year and
until their successors are elected. THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE EIGHT NOMINEES.
DIRECTORS, EXECUTIVE OFFICERS AND NON-DIRECTOR NOMINEE
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------- --- ------------------
<S> <C> <C>
Charles F. Bayless 54 President, Chief Executive
Officer and Director
Thomas W. O'Brien 49 Executive Vice President
Neil A. Johnson 56 Senior Vice President, Finance,
Chief Financial Officer, Treasurer
and Secretary
Nathaniel P. Turner 58 Director
James F. Leary 66 Director
Stephen J. Keane 67 Director
Daniel A. Mihalovich 52 Director
Thomas D. Overton III 39 Director
Patrick A. Rivelli 59 Director
Stephanie S. Springs 47 Non-Director Nominee
</TABLE>
4
<PAGE> 7
Charles F. Bayless has served as President, Chief Executive Officer
and a director of the Company since May 1988. Mr. Bayless has been associated
with software and data processing service companies for over 28 years. Prior
to joining the Company, Mr. Bayless served in senior officer positions with
Louisiana National Bank, University Computing Company (presently UCCEL), Tres
Systems, Inc. (presently a Control Data subsidiary) and Execucom Systems
Corporation. Mr. Bayless has served as a director and President of the Texas
Computer Industry Council.
Thomas W. O'Brien has served as Executive Vice President of the
Company since June 1989. Prior to Mr. O'Brien's employment by the Company, he
provided services to the Company as a consultant. Prior to that, Mr. O'Brien
was employed by BPI Systems, a publicly traded PC accounting software company,
as its Senior Vice President of Operations. Responsibilities with BPI included
systems development, OEM relations, manufacturing, MIS and administration. Mr.
O'Brien was appointed by the Lt. Governor of Texas to two terms on the
Automated Information Systems Advisory Council. He holds a BBA in Industrial
Management from the University of Texas at Austin.
Neil A. Johnson has served as Senior Vice President, Finance, Chief
Financial Officer and Treasurer since March 1994. Since April 1995, he has
also served as Secretary. Previously, he served as Senior Vice President of
Finance and Administration and Chief Financial Officer of Shared Systems, an
application software company acquired in 1993 by Stratus Computer, Inc. Prior
to that, Mr. Johnson served as the Southwest Region Energy Industry Consulting
Partner with the accounting firm of Coopers & Lybrand. He has held financial
and operating management positions with Earth Resources Company, a diversified
petroleum refining and marketing and metals mining company, acquired by Mapco,
Inc. in 1981, with Dresser Industries, Inc. and other energy concerns. His
management and consulting experience includes significant international
business in the technology and energy industries. Mr. Johnson is a Certified
Public Accountant and holds a Bachelor of Business Administration degree in
Accounting from Texas Tech University.
Nathaniel P. Turner has served as a director since January 1990. Mr.
Turner is a founder of Paul & Turner, Inc., a management consulting firm
serving the computer and telecommunications industries. Paul & Turner's areas
of practice include process reengineering for the marketing, sales and customer
service functions as well as development of custom executive education
programs. Prior to employment with Paul & Turner, Mr. Turner served in senior
management positions with Cullinane Corporation, University Computing Company,
Louisiana National Bank, and Cameron Iron Works. Mr. Turner currently serves
as a director of the Flagship Group, Inc., a publisher of vertical market
application software for small systems. Mr. Turner has also served as a
director of two other software companies and as an officer and director of the
Texas Computer Industry Council. Mr. Turner holds undergraduate degrees from
Cornell University and the University of Texas as well as an M.B.A. from
Harvard University.
James F. Leary has served as a director of the Company from January
1986 through January 1990 and since March 1993. Mr. Leary currently serves as
Vice Chairman - Finance of Search Capital Group, Inc., traded on the Over the
Counter Bulletin Board, engaged in financial services. Mr. Leary is the
founding general partner of the Sunwestern Investment Group. He is a general
partner of Sunwestern Investment Fund and Sunwestern Investment Fund II. In
addition, Mr. Leary is a director or an executive officer of certain entities
affiliated with such Sunwestern Funds. Certain Sunwestern entities are
principal stockholders of the Company. Prior to founding the Sunwestern
Investment Group, Mr. Leary served as Senior Executive Vice President and Chief
Financial Officer of the Associates Corporation of North America, Dallas,
Texas, a multinational financial services company, where he was also in charge
of venture capital activities. Prior experience includes senior positions with
National Bank of North America (New
5
<PAGE> 8
York, New York) and CIT Financial Corporation (also in New York) where he was
in charge of venture capital activities. Mr. Leary received a B.S. from
Georgetown University, an M.B.A. in Banking and Finance from New York
University, and attended the Advanced Management Program at the Harvard
Graduate School of Business. Mr. Leary also serves as a director of PhaseOut
of America, Inc., a NASDAQ listed company engaged in the retail sale of smoking
cessation products.
Stephen J. Keane has served as a director of the Company since March
1993. Mr. Keane currently serves as a director of Novadyne Computer Systems, a
private company engaged in third party maintenance work primarily for
minicomputer and communication systems; and Storage Technology Corp., a public
company engaged in supplying memory system components for IBM and other
mainframe markets. Mr. Keane is a founding member of the Forum of Corporate
Directors, Orange County. Mr. Keane formerly served as President of Sorbus
Division; President of Basic Four Division; a member of the management
committee and a director for Management Assistance, Inc.; Vice President of
Mohawk Data Sciences; Founder, President and CEO of Bucode, Inc.; and various
corporate management positions with Potter Instrument, Sperry Corp. and Liberty
Products. Mr. Keane received a Bachelors of Mechanical Engineering from
Polytechnic Institute and an M.S. in Management from Columbia University.
Daniel A. Mihalovich has served as a director of the Company since
July 1993. Mr. Mihalovich currently serves as Vice President/GM, Product
Services of Sears, Roebuck and Co., a principal stockholder of the Company. He
joined Sears in 1966 and served in a number of merchandising positions and
retail store management positions before moving into general management in
1986. In March 1992 he transferred to headquarters in Chicago as national
general manager of store operations, South, serving in that position until he
was elected Vice President/GM, Product Services, in April 1993 where he is
responsible for service, repair parts and technical services. Mr. Mihalovich
is a graduate of Drake University.
Thomas D. Overton III has served as a director of the Company since
February 1996. Mr. Overton currently serves as Vice President, Strategy and
Business Development for the Home Services area of Sears, Roebuck and Co., a
principal stockholder of the Company. He joined Sears in March of 1993 and was
responsible for strategic planning for the apparel merchandising area prior to
joining Home Services in January 1996. From 1989 to 1993 Mr. Overton served as
vice president of a division of May Department Stores, where he was responsible
for strategic planning and revenue development. Prior to 1989 Mr. Overton
served for five years as a management consultant with McKinsey and Co. in their
Dallas office, managing strategic planning studies for clients in the financial
services, manufacturing, and information systems industries. Mr. Overton is a
graduate of Texas Tech University with a Bachelor of Business Administration
degree in Accounting, and holds a Master's degree in Management from the Sloan
School at MIT.
Patrick A. Rivelli has served as a director of the Company from
February 1993 to July 1993 and since January 1994. Mr. Rivelli is a founding
general partner of Sunwestern Investment Fund III and a general partner of
Sunwestern Investment Fund II. He has over 30 years experience in the computer
and electronics industry. Prior to joining Sunwestern he was a private
investor and consultant to numerous early-stage technology companies. He was
co-founder and senior vice president responsible for marketing, sales and
engineering for National Micronetics, Inc. In addition, Mr. Rivelli held the
position of Chief Engineer at the Ferroxcube Division of North American Philips
and various project management positions at Burroughs Corporation and UNIVAC
(now UNISYS). He graduated from Northeastern University with a B.S. in
Electrical Engineering and has an M.S. in Engineering from the University of
Pennsylvania. Mr.
6
<PAGE> 9
Rivelli also serves as a director of VISTA Information Solutions, Inc., a
NASDAQ listed company engaged in the provision of environmental information.
Stephanie S. Springs currently serves as Senior Systems Director, Information
Systems Shared Services at Sears, Roebuck and Co., a principal stockholder of
the Company. In this position she is responsible for Strategic Planning,
Systems Software Services, Training and Recruiting, and the Financial Planning
Offices for the systems organization. Ms. Springs has been with Sears since
1973 holding a variety of positions. From 1988 to 1995, she was Systems
Director of Marketing and Merchandising Systems. Preceding this position, 1987
to 1988, Ms. Springs was the Director of Corporate Contributions and Vice
President of the Sears Roebuck Foundation. Before 1987, Ms. Springs held a
variety of programming and management positions in the systems organization.
Ms. Springs is a graduate of the University of Illinois, Champaign with a
Bachelor of Science degree in math, and holds a Masters of Business
Administration degree from Loyola University in Chicago.
All directors serve for a term of one year and until their successors
are duly elected. See "EXECUTIVE COMPENSATION-Director Compensation" regarding
director fees and other compensation.
The Board of Directors met six times during fiscal 1996. Each nominee
for director attended at least 75% of the meetings of the Board of Directors of
the Company and Board committees of which he was a member during fiscal 1996 or
the period thereof during which he was a member except for Mr. Leary who
attended three of the six board meetings and Mr. Martin who attended four of
the six board meetings.
The Board of Directors has a compensation and stock option committee
which currently consists of James F. Leary, Chair, and Nathaniel P. Turner, an
audit committee which currently consists of James F. Leary, Chair, Stephen J.
Keane and Nathaniel P. Turner, a strategic planning committee which currently
consists of Stephen J. Keane, Chair, Nathaniel P. Turner, Daniel A. Mihalovich,
Patrick A. Rivelli and Charles F. Bayless, and a significant proposal review
committee which currently consists of Charles F. Bayless, Chair, Nathaniel P.
Turner, Stephen J. Keane and James F. Leary.
The compensation and stock option committee administers all stock
option and other compensation plans of the Company, determines all compensation
for corporate officers and other key employees and has the authority to
interview and hire prospective corporate officers and other key employees. The
compensation and stock option committee did not meet during fiscal 1996
although actions were taken by unanimous consent.
The audit committee considers the adequacy of the internal controls of
the Company and the objectivity of financial reporting; meets with the
independent certified public accountants, and appropriate Company financial
personnel about these matters; and recommends to the Board the appointment of
the independent certified public accountants. The audit committee met once
during fiscal 1996.
The strategic planning committee reviews strategy, allocation of
corporate resources, business development and capital resources. The strategic
planning committee met twice during fiscal 1996.
The significant proposal review committee is responsible for
reviewing, negotiating and approving certain significant customer (both
existing and prospective) proposals. The significant proposal review committee
did not meet during fiscal 1996.
7
<PAGE> 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires each director and executive officer of the Company,
and each person who owns more than 10% of a registered class of the Company's
equity securities to file by specific dates with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of change in
ownership of the Common Stock of the Company. Officers, directors and 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. The Company is required to report in
this report any failure of its directors, executive officers and 10%
stockholders to file by the relevant due date any of these reports during the
Company's fiscal year.
To the Company's knowledge, based solely on its review of the copies
of such reports furnished to it, the following person failed to file, on a
timely basis, a report required to be filed during the fiscal year ended May
31, 1996: Thomas D. Overton III filed his initial report on Form 3 one day
late, reporting his appointment as a director.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION.
Summary Compensation Table. The following table sets forth certain
information concerning the compensation earned during the Company's last three
fiscal years by the Company's Chief Executive Officer, Executive Vice
President, and Chief Financial Officer, the only executive officers of the
Company earning compensation in excess of $100,000 (collectively the "named
executive officers"):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------
Awards Payouts
Other ----------------------------------
Annual Restricted All Other
Compen- Stock LTIP Compen-
Name and Principal Fiscal Salary Bonus sation Award(s) Options Payouts sation
Position Year ($) ($) ($)(1) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles F. Bayless 1996 196,875 30,000 - - 90,000 - -
President and Chief 1995 170,700 60,000 - - 50,000 - -
Executive Officer 1994 148,158 50,000 - - 50,000 - -
- ---------------------------------------------------------------------------------------------------------------------
Thomas W. O'Brien 1996 122,163 - - - 35,000 - -
Executive Vice 1995 114,246 20,000 - - 20,000 - -
President 1994 100,913 16,000 - - 3,000 - -
- ---------------------------------------------------------------------------------------------------------------------
Neil A. Johnson 1996 137,500 20,000 - - 70,000 - -
Senior Vice 1995 118,333 40,000 - - 15,000 - -
President, Finance 1994 27,147(2) - - - 40,000 - -
and Chief Financial
Officer
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Certain of the Company's executive officers receive personal benefits
in addition to salary; however, the Company has concluded that the
aggregate amounts of such personal benefits do not exceed the lesser
of $50,000 or 10% of annual salary and bonus reported for any named
executive officer.
(2) Represents partial year compensation.
8
<PAGE> 11
Employment Agreements. The Company has written amended employment
agreements with Charles F. Bayless and Thomas W. O'Brien. Such amended
agreements have no stated term. Pursuant to Mr. Bayless' amended agreement, he
receives a base salary of not less than $115,000 per year. Pursuant to such
amended agreement, Mr. Bayless was also granted options to purchase 150,000
shares of common stock under the Company's 1988 stock option plan and options
to purchase 100,000 shares of common stock in accordance with the terms of the
amended employment agreement. Pursuant to Mr. O'Brien's amended agreement, he
receives a base salary of not less than $93,500 per year. Pursuant to such
amended agreement, Mr. O'Brien was also granted options to purchase 60,000
shares of common stock under the Company's 1988 stock option plan and options
to purchase 40,000 shares of common stock in accordance with the terms of the
amended employment agreement. Pursuant to such amended agreements, Messrs.
Bayless and O'Brien will have a reasonable opportunity to earn a minimum of 15%
and 10%, respectively, of their respective base salaries in bonuses pursuant to
annual bonus plans adopted by the Board of Directors.
Stock Option Grant Table. The following table sets forth certain
information concerning options granted to the named executive officers during
the Company's fiscal year ended May 31, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF TOTAL
COMMON STOCK UNDERLYING OPTIONS GRANTED TO EXERCISE OR BASE
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles F. Bayless 65,000(1) 13.87% $3.41 June 23, 2005
25,000(2) 5.34% $2.76 May 20, 2006
Thomas W. O'Brien 20,000(1) 4.27% $3.41 June 23, 2005
15,000(3) 3.20% $3.25 May 20, 2006
Neil A. Johnson 40,000(1) 8.54% $3.41 June 23, 2005
30,000(2) 6.40% $2.76 May 20, 2006
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All such incentive options were granted on July 23, 1995 for the
number of shares indicated at an exercise price equal to 100% of the
fair market value of the common stock on the date of grant. The
options become exercisable in three equal annual increments commencing
on the date of grant.
(2) All such nonqualified options were granted on May 20, 1996 for the
number of shares indicated at an exercise price equal to 85% of the
fair market value of the common stock on the date of grant of $3.25.
The options became exercisable on the date of grant.
(3) All such incentive options were granted on May 20, 1996 for the number
of shares indicated at an exercise price equal to 100% of the fair
market value of the common stock on the date of grant. The options
become exercisable in three equal annual increments commencing on the
date of grant.
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<PAGE> 12
Stock Option Exercises and Holdings Table. The following table
provides information concerning the exercise of options and the value of
unexercised options held by the named executive officers at May 31, 1996:
AGGREGATE OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SHARES
ACQUIRED
ON VALUE NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
EXERCISE REALIZED OPTIONS IN-THE-MONEY OPTIONS
NAME (#) ($) AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
- -------------------------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Bayless - - 380,001 59,999 $1,000,784 $25,567
Thomas W. O'Brien 11,000 $36,025 106,001 29,999 275,424 15,367
Neil A. Johnson - - 93,334 31,666 45,067 15,732
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------------------
(1) Values stated are based on the average of the high and low bid
quotations of $4.00 per share of the Company's common stock reported
by NASDAQ on May 31, 1996, the last trading day of the fiscal year,
and equal the aggregate amount by which the market value of the option
shares exceeds the exercise price of such options at the end of the
fiscal year.
Director Compensation. Outside directors of the Company, presently
consisting of Messrs. Turner and Keane, are reimbursed for all reasonable
expenses incurred in attending each Board or Board committee meeting.
In March 1993, as incentive to contribute to the Company's success,
and pursuant to the terms of two separate Agreements Regarding Compensation of
Outside Directors entered into with Messrs. Turner and Keane, the Company
granted to each such outside director nonqualified options to purchase up to
36,000 shares of common stock, at a purchase price of $1.00 per share. See
"EXECUTIVE COMPENSATION-Director Option Plans."
Each outside director automatically receives a grant of 5,000
nonqualified stock options each year on the fifth business day following the
first public release of the Company's audited earnings report on results of
operations for the preceding fiscal year. See "EXECUTIVE COMPENSATION-1988 and
1994 Option Plans."
Each outside director receives an annual fee of $7,500, $1,250 for
each board meeting attended (not to exceed $7,500 in a twelve-month period) and
$300 for each committee meeting attended.
Stock Option Plans.
1988 and 1994 Option Plans. Under the Company's 1988 Stock Option
Plan ("1988 Option Plan"), options to purchase up to 450,000 shares of the
Company's common stock may be granted to officers and other key employees of
the Company. Under the Company's 1994 Stock Option Plan (the "1994 Option
Plan"), options to purchase up to 1,500,000 shares of the Company's common
stock may be granted to
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<PAGE> 13
employees, outside directors, consultants and advisors of the Company. The 1988
and 1994 Option Plans are sometimes collectively referred to as the "Option
Plans." The Option Plans permit the award of incentive stock options and
nonqualified stock options. The Option Plans are administered by the
Compensation and Stock Option Committee, with sole discretion, subject to the
terms of the Option Plans, to set the specific terms and conditions of options
granted under the Option Plans.
Generally, stock options granted under the Option Plans will be
exercisable at such prices as the Committee establishes but not less than (i)
the market price of the Company's common stock on the date of grant in the case
of an incentive stock option (or 110% of the market price with respect to a
holder of 10% or more of the Company's common stock), and (ii) 85% of the
market price of the Company's common stock on the date of grant in the case of
a nonqualified stock option. In general, options may be exercised following
termination of employment only to the extent exercisable on the date of such
termination and only within three months of termination. A longer period may
apply if employment terminates because of disability or death or if the
optionee dies during the three-month period following termination of
employment. Options generally expire immediately upon termination of
employment for cause. In no event may an option be exercised more than 10
years after the date of grant (or five years with respect to a holder of 10% or
more of the Company's common stock in the case of an incentive option). Under
the Option Plans, stock options may be exercised by payment in cash of the
exercise price with respect to each share to be purchased, by delivering common
stock of the Company already owned by such optionee with a market value equal
to the exercise price, or by a method in which a concurrent sale of the
acquired stock is arranged with the exercise price payable in cash from such
sale proceeds.
Unless sooner terminated by the Board of Directors, the 1988 Option
Plan terminates on October 14, 1998, and the 1994 Option Plan terminates on
March 1, 2004. Stock options outstanding on a termination date, will remain
outstanding according to their terms. Shares covered by an option (or portion
thereof) which expires, terminates or is canceled for any reason other than
exercise of the option will again be available for awards under the Option
Plan.
The 1994 Option Plan provides that each outside director (as defined
therein) will automatically receive a grant of 5,000 nonqualified stock options
each year on the fifth business day following the first public release of the
Company's audited earnings report on results of operations for the preceding
fiscal year. Each such option will become exercisable in whole or in part on
the first anniversary of the award through the balance of its ten-year term.
Subject to availability of shares allocated to the 1994 Option Plan and not
already reserved for other outstanding stock options, outside directors who
join the Board in the future will in addition receive an initial grant of
options for 15,000 shares, which will become exercisable in five equal
increments beginning on the first anniversary of the award and on each of the
next four succeeding anniversary dates. Such options will be exercisable for a
term of ten years. Such options will be awarded upon their appointment or
election to the Board. Options, once granted and to the extent exercisable,
will remain exercisable throughout their term, regardless of whether the holder
continues as a director. The option exercise price of the options is equal to
100% of the fair market value of the covered shares of common stock at the time
of grant.
As of August 27, 1996 options for 1,003,966 shares of common stock had
been granted under the Option Plans and were outstanding, with a weighted
average exercise price of $2.81 per share, and an additional 860,500 shares
were available for issuance upon exercise of options which may be granted in
the future. As of August 27, 1996, options to purchase 78,200 shares and 5,834
shares had been exercised under the 1988 Option Plan and 1994 Option Plan,
respectively.
11
<PAGE> 14
Director Option Plans. In March 1993, as incentive to contribute to
the Company's success, and pursuant to the terms of two separate Agreements
Regarding Compensation of Outside Directors ("Compensation Contracts") entered
into with Messrs. Turner and Keane, the Company granted to each such outside
director nonqualified options to purchase up to 36,000 shares of common stock,
at a purchase price of $1.00 per share. The purchase price of the shares of
common stock issuable upon exercise of options granted under the Compensation
Contracts is payable in cash, an equivalent fair market value of common stock,
by cashless exercise procedures, or a combination of the foregoing, and must be
paid in full at the time of exercise of such options. The purchase price and
the number of shares issuable upon exercise of the options are subject to
adjustments in the event that certain changes in capitalization should occur.
Each option granted under the Compensation Contracts became
exercisable in three cumulative annual installments of 12,000 shares each,
commencing on the effective date of grant. Each such option, to the extent
exercisable remains exercisable until the tenth anniversary of its effective
date of grant. As of August 27, 1996 options to purchase 36,000 shares had
been exercised under the Compensation Contracts.
In the event an optionee dies, the options granted under the
Compensation Contracts may be exercised by the optionee's legal representative,
heir or legatee (as the case may be) at any time prior to the respective stated
expiration dates of the options, to the extent such options are exercisable
prior to the optionee's death. In the event an optionee ceases to serve as a
director of the Company for any reason other than the optionee's death, the
options granted under the Compensation Contracts may be exercised at any time
prior to the respective stated expiration dates of the options, to the extent
such options were exercisable prior to cessation of the optionee's service as a
director.
Options granted under the Compensation Contracts are not transferable
except by will or by the laws of descent and distribution. An option is
exercisable during the lifetime of an optionee only by the optionee. After the
death of an optionee, the option may be exercised prior to its termination by
the optionee's legal representative, heir or legatee. The terms of each option
granted under the Compensation Contracts may be amended only upon the written
consent of the Company and the optionee.
Officer Option Plans. Up to 140,000 shares of the Company's common
stock are issuable upon exercise of options to two executive officers of the
Company pursuant to two amended employment agreements entered into effective
February 20, 1991. See "EXECUTIVE COMPENSATION-Employment Agreements."
Pursuant to the terms of the options granted, one of the optionees was granted
nonqualified options to purchase up to 100,000 shares of common stock at $1.00
per share and the other optionee was granted nonqualified options to purchase
up to 40,000 shares at $1.00 per share.
Each option became exercisable as to all option shares upon the
effective date of grant, February 20, 1991, and will remain exercisable until
the optionee ceases to be employed by the Company. As of August 27, 1996, no
options had been exercised under these officer option plans. The options are
not transferable and are exercisable during the lifetime of an optionee only by
the optionee. The terms of each option granted may be amended only upon
written consent of the Company and the optionee.
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<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sunwestern Investment Fund, Sunwestern Capital Ltd., Sunwestern
Investment Fund II and Sunwestern Cayman 1984 Partners (collectively the
"Sunwestern Entities"), current or former principal stockholders of the
Company, hold certain demand and piggyback registration rights. Such rights
were granted to the Sunwestern Entities in connection with various prior
convertible debt financing transactions. The Company has agreed to indemnify
the holders of securities which are so registered against certain liabilities
under the Securities Act of 1933. Two of the Company's eight directors are
affiliates of the Sunwestern Entities.
Sears, Roebuck and Co. ("Sears"), the Company's principal customer and
a principal stockholder, holds certain demand and piggyback registration
rights. The Company has agreed to indemnify Sears against certain liabilities
in connection with any shares so registered.
On December 29, 1994, Sears acquired from the Company, in a private
transaction, 3,333,333 shares of the Company's newly issued common stock. The
stock acquisition was effected pursuant to a stock purchase agreement.
Consideration for the stock acquisition included: (i) $4.5 million in cash,
(ii) execution of a service agreement providing for a 10-year term, (iii) the
transfer of certain assets including furniture, fixtures, leasehold
improvements and equipment (valued at approximately $1,223,000), and (iv) the
transfer of leasehold interests for two facilities.
After consummation of the stock acquisition, Sears held approximately
65% of the Company's outstanding common stock as compared to approximately 49%
prior to consummation of the stock acquisition. The stock purchase agreement
provides Sears with the right to acquire additional shares of capital stock
upon the issuance by the Company of additional capital stock (except in certain
limited cases) in order to maintain the same proportion of voting power of the
Company as it owned prior to the issuance. Under such stock purchase agreement,
the Company has agreed to take reasonable steps not inconsistent with
applicable law or the fiduciary duties of its directors to cause three nominees
of Sears to be included in its authorized slate of nominees at all meetings of
stockholders for the election of directors. Two of the Company's directors,
both of which are nominees for director, are affiliates of Sears. The non-
director nominee for director is also an affiliate of Sears. Sears is and was,
prior to the stock acquisition, the Company's principal service customer.
Over 90% of the Company's revenues for fiscal 1996 were attributable
to services provided to Sears pursuant to two service agreements. The first
service agreement, entered into in May 1993, is for a seven year term and
covers consumer support, parts support, technical support, database
maintenance, home office center support and administrative services. The
second service agreement, entered into in December 1994, is for a ten year term
and covers parts sales order and repair technician scheduling services. After
the lapse of any applicable cure periods, each of the agreements is terminable
by either party in the event of non-compliance by the other party with certain
provisions relating to performance of services in accordance with specified
minimum standards, maintenance of required insurance and fulfillment of
indemnity and confidentiality obligations. Each agreement (or, in some cases,
only a service provided under such agreement) is also terminable by Sears, on
180 days' notice, in certain events as set forth in the respective agreements.
In specified termination situations under the ten-year agreement, during the
first three years of the term of such agreement, Sears is obligated to assume
certain leases and purchase certain assets from the Company, which obligations
abate during such three-year period.
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<PAGE> 16
The Company believes that the transactions referred to above are no
less favorable to the Company than transactions which could have been obtained
from unrelated third parties. Any future transactions between the Company and
related parties will be approved by disinterested directors and will be on
terms no less favorable than those which could have been obtained from
unrelated third parties.
ITEM 2
RATIFICATION OF SELECTION OF ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP as the
independent accountants of the Company for fiscal 1997. Price Waterhouse LLP
has served as the independent accountants of the Company since May 1993. A
representative of Price Waterhouse LLP will be present at the Meeting, will
have an opportunity to make a statement if he or she desires to do so and will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR FISCAL 1997. Assuming the presence of a quorum, the
affirmative vote of a majority of the votes cast by the holders of shares of
common stock present and entitled to vote is required to ratify the selection of
the Company's accountants. The enclosed form of Proxy provides a means for
stockholders to vote for the ratification of selection of independent
accountants, to vote against it or to abstain from voting with respect to it.
IF A STOCKHOLDER EXECUTES AND RETURNS A PROXY, BUT DOES NOT SPECIFY HOW THE
SHARES REPRESENTED BY SUCH STOCKHOLDER'S PROXY ARE TO BE VOTED, SUCH SHARES WILL
BE VOTED FOR THE RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS. Under
applicable Delaware law, in determining whether this item has received the
requisite number of affirmative votes, abstentions and broker non-votes will be
counted and will have the same effect as a vote against this item.
OTHER MATTERS
The Company's management knows of no other matters that may properly
be, or which are likely to be, brought before the meeting. However, if any
other matters are properly brought before the meeting, the persons named in the
enclosed proxy, or their substitutes, will vote in accordance with their best
judgment on such matters.
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<PAGE> 17
STOCKHOLDER PROPOSALS
The Company intends to conduct the next annual meeting of stockholders in
approximately October 1997. Stockholder proposals intended to be presented at
the annual meeting to be held in 1997 must be received by the Company by May
16, 1997 to be included in the Company's proxy statement and form of proxy
relating to that meeting. Such proposals should be addressed to the Secretary
of the Company at the address indicated in this Proxy Statement.
COST AND METHOD OF PROXY SOLICITATION
The accompanying Proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of Proxy and the material used in the solicitation thereof will be borne
by the Company. In addition to the use of the mails, proxies may be solicited
by personal interview, telephone, telegram, and facsimile by directors,
officers and employees of the Company. Arrangements may also be made with
brokerage houses and other custodians, nominees and fiduciaries for forwarding
of solicitation materials to the beneficial owners of stock held by such
persons, and the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
By Order of the Board of Directors
Neil A. Johnson
Secretary
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<PAGE> 18
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON FRIDAY,
OCTOBER 25, 1996 AT 9:00 A.M., C.S.T.
The undersigned hereby appoints Charles F. Bayless and Neil A.
Johnson, and each of them, proxies, with the powers the undersigned would
possess if personally present, and with full power of substitution, to vote, at
the annual meeting and at any adjournment thereof, all common shares of the
undersigned in MaxServ, Inc. held of record on the record date, upon all
subjects that may properly come before the meeting including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on this card. IF NO DIRECTIONS ARE GIVEN AND THE SIGNED PROXY CARD
IS RETURNED, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED NOMINEES FOR
DIRECTOR, FOR THE RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS AND
AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
[X] Please mark boxes like this.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD all nominees listed below
[ ] PLACE AN "X" IN THIS BOX TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
AND WRITE THAT NAME FROM THE LIST BELOW ON THE LINE BELOW.
-------------------------
NOMINEES
CHARLES F. BAYLESS NATHANIEL P. TURNER JAMES F. LEARY STEPHEN J. KEANE
THOMAS D. OVERTON III DANIEL A. MIHALOVICH PATRICK A. RIVELLI STEPHANIE S. SPRINGS
2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
The undersigned acknowledges receipt of the formal notice of such meeting and
the accompanying Proxy Statement.
Please sign exactly as name appears on the certificate. When shares are held
by joint tenants, both should sign. 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. When signing as
attorney, executor, administrator, trustee, guardian, officer or partner,
please give full title as such.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
---------------------------------------------
SIGNATURE
---------------------------------------------
SIGNATURE
DATE:
----------------------------------, 1996.
[ ] Please "x" here if you plan to attend the meeting and vote your shares.
