COMPUTRAC, INC.
222 Municipal Drive
Richardson, TX 75080
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held July 24, 1996
To the Stockholders of CompuTrac, Inc:
Notice is hereby given that the 1996 Annual Meeting of
Stockholders of CompuTrac, Inc., a Texas corporation (the "Company"),
will be held on Wednesday, July 24, 1996, at the Company's offices, 222
Municipal Drive, Richardson, Texas 75080 beginning at 2:00 p.m. local
time for the following purposes:
1. To elect five (5) persons to the Company's Board of Directors
to hold office until their terms shall expire and until their
successors are duly elected and qualified.
2. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
Stockholders of record at the close of business on May 31,
1996, are entitled to notice of, and to vote at, the Annual Meeting and
any adjournment(s) thereof.
You are cordially invited to attend the meeting. Whether or
not you expect to be present at the meeting, please date and sign the
enclosed Proxy and return it promptly in the enclosed envelope.
Returning the proxy will not affect your right to revoke it and vote
your shares in person if you attend the meeting.
By Order of the Board of Directors
Dana E. Margolis
Secretary and Treasurer
Richardson, Texas
June 10, 1996
<PAGE>
COMPUTRAC, INC.
222 Municipal Drive
Richardson, TX 75080
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of CompuTrac, Inc., a Texas
Corporation (the "Company"), of proxies from the holders of the
Company's Common Stock, par value $.01 per share (the "Common Stock"),
for use at the 1996 Annual Meeting of Stockholders to be held on
Wednesday, July 24, 1996, at the Company's offices, 222 Municipal Drive,
Richardson, Texas 75080, beginning at 2:00 p.m. local time.
The approximate date that this Proxy Statement and the enclosed
form of Proxy are first being sent to stockholders is June 10, 1996.
Stockholders should review the information provided herein in
conjunction with the Company's Form 10-K Annual Report as filed with the
Securities and Exchange Commission (exhibits excluded) for the fiscal
year ended January 31, 1996 which accompanies this Proxy Statement. The
Form 10-K Annual Report does not form a part of this Proxy Statement and
is not intended to serve as soliciting material for the Proxy.
INFORMATION CONCERNING PROXY
The solicitation is made on behalf of the Board of Directors of the
Company. By executing and returning the enclosed Proxy card, you
authorize the persons named in the Proxy to represent you and vote your
shares in connection with the purposes set forth in the Notice of Annual
Meeting.
All shares represented by a valid Proxy received prior to the
meeting will be voted in accordance with any specification made on such
Proxy. Any stockholder giving a Proxy has the power to revoke it at any
time before it is exercised by submitting a notice of revocation to the
Company or by attending the meeting and voting in person.
The cost of preparing, assembling and mailing the enclosed material
will be borne by the Company. In addition to solicitation by mail,
employees of the Company may, without additional compensation, solicit
Proxies on behalf of the Board of Directors by telephone, telegraph or
personal interview. The Company may make arrangements with banks,
brokerage houses and other custodians, nominees and fiduciaries to send
Proxies and Proxy material to their principals and to request authority
for the execution of Proxies. The Company may reimburse such persons
for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
1. The election of five (5) persons to the Company's Board of
Directors to hold office until their terms shall expire or
until their successors are duly elected and qualified.
2. Such other business as may properly come before the meeting,
including any adjournment or postponements thereof.
Unless contrary instructions are indicated on the enclosed Proxy,
all shares represented by valid Proxies received pursuant to this
solicitation (and which have not been revoked in accordance with the
procedures set forth above) will be voted for the election of the five
nominees for director named below. In the event a stockholder specifies
otherwise by means of the enclosed Proxy, those shares will be voted in
accordance with the specification so made.
<PAGE>
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 31,
1996 as the record date (the "Record Date") for determining stockholders
of the Company entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were 6,288,008 shares of the Company's $.01
par value Common Stock issued and outstanding, all of which are entitled
to vote at the Annual Meeting. Only stockholders of record at the close
of business on the Record Date are entitled to vote at the meeting or
any adjournment thereof, each share being entitled to one (1) vote. All
shares of Common Stock will vote as a single class and there are no
cumulative voting rights.
The attendance, in person or by proxy, of the holders of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum. If less than a majority of
outstanding shares entitled to vote are represented at the Annual
Meeting, a majority of the shares so represented may adjourn the Annual
Meeting to another date, time or place, and notice need not be given of
the new date, time or place if the new date, time or place is announced
at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall
determine the number of shares of Common Stock represented at the
meeting, the existence of a quorum and the validity and effect of
proxies, and shall receive, count and tabulate ballots and votes and
determine the results thereof. Abstentions will be considered as shares
present and entitled to vote at the Annual Meeting and will be counted
as votes cast at the Annual Meeting, but will not be counted as votes
cast for or against any given matter.
The inspector or inspectors of election will treat shares referred
to as "broker or nominee non-votes" (shares held of record by brokers or
nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote and which the broker or
nominee has not voted because it does not have discretionary voting
power on a particular matter) as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. For purposes
of determining the outcome of any matter as to which the proxies reflect
broker or nominee non-votes, shares represented by such proxies will be
treated as not present and not entitled to vote on that matter and
therefore will not be considered by the inspectors when counting votes
cast on the matter (even though those shares are considered present for
quorum purposes and may be entitled to vote on other matters).
Directors will be elected by a plurality of the votes cast by
holders of shares of Common Stock represented in person or by proxy at
the Annual Meeting. Thus, any abstentions or broker non-votes will have
no effect on the outcome of the election of directors.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of May 31, 1996, information
with respect to the beneficial ownership of the Common Stock of the
Company by (a) the Company's Chief Executive Officer and each of the
other "Named Executive Officers" (as defined below in "Executive
Compensation - Summary Compensation Table"), (b) each person known by
the Company to own beneficially 5% or more of such outstanding Common
Stock, (c) each director or nominee who owns any shares, and (d) all
current executive officers and directors of the Company as a group.
Amount and
Nature of Percent
Name and Address of Beneficial of
Beneficial Owner (1) Ownership (2) Class
Harry W. Margolis (3) 1,946,177 30.3
Dana E. Margolis (4) 28,217 (5)
George P. McGraw (6) 75,919 1.2
Bruce E. Staffin (7) 352,810 5.6
c/o CompuTrac, Inc.
222 Municipal Drive
Richardson, TX 75080
Gerald D. Harris (8) 12,000 (5)
Kenneth R. Nicholas (9) 12,000 (5)
William Harris Investors,
Inc. (10) 451,300 7.2
Two North LaSalle Street
Suite 505
Chicago, IL 60602-3703
All current directors and
executive officers as a
group (8 persons) (11) 2,104,516 32.2
____________________________
(1) Unless otherwise indicated, each person's address is 222 Municipal
Drive, Richardson, TX 75080.
(2) Unless otherwise indicated, each person has sole voting and
investment power with respect to such shares.
(3) Includes 132,000 shares Mr. Margolis has the right to acquire
through the exercise of options.
(4) Dana E. Margolis may be deemed to be the beneficial owner of the
shares owned by her husband, Harry W. Margolis.
(5) Beneficial ownership is less than one percent (1%) of the Company's
outstanding shares.
(6) Includes 63,250 shares Mr. McGraw has the right to acquire through
the exercise of options.
(7) Bruce E. Staffin was an employee of the Company from 1977 until
1991.
(8) Represents 12,000 shares Mr. Harris has the right to acquire
through the exercise of options.
(9) Represents 12,000 shares Mr. Nicholas has the right to acquire
through the exercise of options.
(10) Information obtained from a Schedule 13G filed with the Company by
the beneficial owner dated February 12, 1996. The Schedule 13G
states that the holder is an investment advisor that shares with
its clients voting power, and has sole dispositive power, with
respect to all the shares.
(11) Includes 242,750 shares the directors and executive officers have
the right to acquire through the exercise of options.
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more
than ten percent of the Company's outstanding Common Stock, to file with
the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock. Such
persons are required by SEC regulations to furnish the Company with
copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company during the Company's last
fiscal year, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have
been complied with, except as follows: in fiscal 1996, Harry W.
Margolis filed 4 late reports and 2 amended reports covering an
aggregate of 23 transactions; Dana E. Margolis filed 4 late reports and
2 amended reports covering an aggregate of 94 transactions (91 of which
were transactions involving indirect ownership of stock previously
reported on forms filed by her husband, Harry W. Margolis); George P.
McGraw filed 2 late reports and 1 amended report covering an aggregate
of 8 transactions; Cheri L. White filed 2 late reports and 2 amended
reports covering an aggregate of 6 transactions; Lynda K. Thomas filed 5
late reports and 1 amended report covering an aggregate of 12
transactions; Irwin S. Arnstein filed 2 late reports for an aggregate of
4 transactions; Deborah S. Greening filed 2 late reports for an
aggregate of 2 transactions; and Michael R. Mueller filed 1 late report
covering 1 transaction.
ELECTION OF DIRECTORS
Directors are to be elected at the Annual Meeting to hold office
until the next Annual Meeting of Stockholders and until their successors
have been duly elected and qualified. The Company's Articles of
Incorporation provide that the number of directors constituting the
Company's Board of Directors shall not be less than two, but will be
fixed as determined in the manner provided by the Company's Bylaws. The
Company's Bylaws provide that the number of directors shall be fixed
from time to time by action of the Company's Board of Directors. The
Board of Directors has fixed the number of directors at five for the
ensuing year.
It is intended that the shares represented by the Proxies will be
voted for the election of the Company's nominees except where authority
to so vote is withheld. Each of the five current members of the Board
of Directors has been nominated by the Company to be reelected as a
director at the Annual Meeting. All of the nominees for directorship
have agreed to serve if elected. Should any of such nominees become
unwilling or unable to accept nomination or election, the shares
represented by the Proxies solicited hereby will be voted for any
substitute nominee or nominees designated by the present Board of
Directors or the number of directors will be reduced accordingly.
<PAGE>
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company at January 31,
1996 are as follows:
Position(s) Held
Name Age With the Company
Harry W. Margolis 53 Chairman of the Board &
Chief Executive Officer (1)
Dana E. Margolis 51 Secretary, Treasurer & Director (2)
George P. McGraw 48 President and General Manager -
Legal Division (3)
Cheri L. White 42 Vice President - Finance and Chief
Financial Officer (4)
Lynda K. Thomas 49 Vice President - Administration (5)
Kenneth R. Nicholas 54 Director (6)
Cesar L. Alvarez 48 Director (7)
Gerald D. Harris 40 Director (8)
_______________________
(1) Harry W. Margolis is a co-founder of the Company and has served as
Chairman of the Board of the Company since its organization in 1977.
After graduating from U.C.L.A. in 1964 with a degree in Political
Science, Mr. Margolis attended Southern Methodist University Law School
and upon graduation in 1967, placed first in the Bar Examination
administered in the State of Texas. Mr. Margolis founded his own law
firm in 1967, which increased to eight members through internal growth
and by merger with an older firm, and practiced law until the Company
was organized in 1977.
(2) Dana E. Margolis, a director since 1983, served as office manager
of the Company performing its accounting and purchasing functions from
1980 until 1983. In January 1984, Mrs. Margolis assumed the
responsibilities of Secretary and Treasurer of the Company. Mrs.
Margolis attended San Diego State University and is the wife of Harry W.
Margolis.
(3) George P. McGraw joined the Company as Director of Customer Support
in March 1985, was elected Vice President of Customer Support in
December 1987, and was elected Executive Vice President in May 1990.
Mr. McGraw has served as President and General Manager of the Company's
Legal Division since November 1993. Mr. McGraw is a 1970 graduate of
the electrical engineering department of Rochester Institute of
Technology. Prior to joining the Company, Mr. McGraw was self-employed.
From 1979 until 1982 he held a number of marketing and financial
positions with Phillips Information Systems, Inc. Prior to that time,
he held similar positions with the Xerox Corporation.
(4) Cheri L. White was elected Vice President of Finance in October
1993 and Chief Financial Officer in February 1995. Ms. White joined the
Company in February 1984, and served as the Company's Director of
Finance and Controller. Ms. White is also on the Board of Directors
for the Richardson Development Center and serves as its Assistant
Treasurer. Ms. White is a graduate of Christopher Newport University
and is a Certified Public Accountant in the State of Texas.
<PAGE>
(5) Lynda K. Thomas was elected Vice President of Administration in
December 1987. Ms. Thomas joined the Company in September 1981 as
executive assistant to the president and served as the Company's
business manager from August 1983 until her election to Vice President.
Previously, she was a corporate officer and director of public relations
for Republic Gypsum Company, a Dallas based manufacturer and supplier of
building materials. She attended the University of North Texas
(formerly North Texas State University), majoring in elementary
education.
(6) Kenneth R. Nicholas, a director of the Company since 1995, has been
the Managing Director of Nicholas, Flanagan & Bard, P.C., a Certified
Public Accounting firm in Dallas, Texas since January, 1987. Prior to
that time, Mr. Nicholas spent 22 years with Deloitte Haskins & Sells
(now Deloitte & Touche), including over ten years as a partner and seven
years as partner-in-charge of the Dallas tax practice. Mr. Nicholas
graduated from Southern Methodist University in 1964.
(7) Cesar L. Alvarez, a director of the Company since 1986, has been a
director of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
a law firm in Miami, Florida, since January 1983. Mr. Alvarez also
serves on the Board of Directors of FDP Corporation and Cosmo
Communications Corporation.
(8) Gerald D. Harris, a director of the Company since 1994, is the
owner and operator of Harris Typesetting Services, a graphics design and
printing business located in Plano, Texas. Prior to beginning his
business in 1990, Mr. Harris was the head golf professional at the
prestigious Stonebriar Country Club in Frisco, Texas. Mr. Harris
attended the University of Oklahoma majoring in finance.
Meetings of the Board of Directors
During the fiscal year ended January 31, 1996, the Board of
Directors held one meeting. No director attended less than 75% of the
aggregate of (a) the number of Board meetings held during the fiscal
year, and (b) the number of meetings of committees of the Board held
during the period he served on such committees.
Committees of the Board of Directors
The Company's Board of Directors has Compensation and Audit
Committees. The Compensation Committee consists of Messrs. Nicholas and
Alvarez. The Compensation Committee administers the Company's Incentive
Stock Option and Stock Purchase Plans, and makes recommendations to the
Board with respect to changes in officers' compensation and similar
matters. The Compensation Committee met once during fiscal year 1996.
The Company's Audit Committee consists of Messrs. Harris and
Nicholas. The Audit Committee reviews the Company's significant
accounting policies and operating controls, recommends independent
external auditors, and reviews audit reports prepared by the external
auditors. The Audit Committee met once during fiscal year 1996.
The Company does not have a standing nominating committee.
Director Compensation
The Company pays directors who are not executive officers of the
Company $750.00 for attendance at each meeting of the Board of Directors
and $300.00 for each committee meeting attended. Directors who are also
executive officers of the Company do not receive any remuneration for
their services as directors.
Directors are also eligible to be granted stock options under the
Company's 1990 Stock Option Plan. The plan provides for the grant of
options to employees and directors of the Company covering an aggregate
of 500,000 shares of Common Stock of the Company. Such options may be
incentive or nonqualified stock options, except that options granted to
directors who are not also employees of the Company may not be incentive
stock options. Options granted to directors under the plan may contain
<PAGE>
such terms as may be determined by the Compensation Committee, except
that (i) the maximum term of any option is 10 years, (ii) no director
may be granted options in any calendar year for a number of shares
exceeding 10% of the total number of shares for which options may be
granted under the plan, (iii) shares acquired by a director upon
exercise may not be sold for six months after the date of grant, and
(iv) the exercise price of any option granted to a director may not be
less than the fair market value of the Common Stock on the date of
grant. The exercise period of any option begins and ends on such dates
as may be determined by the Compensation Committee, provided that an
option will terminate upon the termination of the holder's service as an
employee or director, subject to certain grace periods. The vesting of
outstanding options is also subject to acceleration in the discretion of
the Compensation Committee or upon the occurrence of certain change-in-
control events. During fiscal year 1996, an option to purchase 12,000
shares of Common Stock at an exercise price of $1.1875 per share and a
term of 7 years was granted to Kenneth R. Nicholas, a non-employee
director of the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate compensation paid to
the Company's Chief Executive Officer and each of the Company's other
executive officers whose total annual salary and bonus for the 1996
fiscal year was $100,000 or more (the Chief Executive Officer and such
other executive officers are sometimes referred to herein as the "Named
Executive Officers") with respect to each of the three fiscal years
ended January 31, 1996.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation (1) Awards
Name and Number of Securities All Other
Principal Fiscal Underlying Options Compen-
Position Year Salary ($)Bonus ($) Granted (2) sation ($)
<S> <C> <C> <C> <C> <C>
Harry W. Margolis 1996 503,000 - 225,000 22,203 (3)
Chairman of the
Board and Chief 1995 490,000 - - 6,413 (4)
Executive Officer 1994 550,000 - - 6,413 (4)
George P. McGraw 1996 113,526 - - 1,443 (5)
President and 1995 106,964 5,000 55,000 -
General Manager-1994 109,172 - 5,000 -
Legal Division
</TABLE>
________________________
(1) The column for "Other Annual Compensation" has been omitted because
there is no compensation required to be reported in such column.
The aggregate amount of perquisites and other personal benefits
provided to each Named Executive Officer is less than the lesser of
$50,000 or 10% of the total of annual salary and bonus of such
officer.
(2) See "Option Grants Table" below for additional information about
the options granted in fiscal 1996.
(3) Includes $16,665 contributed by the Company on behalf of Mr.
Margolis for Company Common Stock purchases during the fiscal year
pursuant to the Company's Employee Stock Purchase Plan, and $5,538
attributable to the economic value of split-dollar life insurance
policies paid for by the Company naming Mr. Margolis' estate as the
beneficiary.
(4) The approximate economic value of split-dollar life insurance
policies paid for by the Company naming Mr. Margolis' estate as the
beneficiary.
(5) Amount represents the Company's contribution for the Named
Executive Officer for Company Common Stock purchases during the
indicated fiscal year pursuant to the Company's Employee Stock
Purchase Plan.
<PAGE>
Option Grants Table
The following table sets forth certain information concerning
grants of stock options made during the 1996 fiscal year to the Named
Executive Officers. All stock options are incentive stock options
granted pursuant to the Company's 1990 Stock Option Plan. Such grants
are reflected in the Summary Compensation Table.
Individual Option Grants During Fiscal Year 1996
<TABLE>
<CAPTION> Percent of
Number Total Options
of Securities Granted to
Underlying Employees in Exercise Price Expiration
Name Options Granted Fiscal Year 1996 Per Share Date
<S> <C> <C> <C> <C>
Harry W.
Margolis 225,000 (1) 65.3% $1.52 07-31-00
</TABLE>
_____________
(1) Option was granted on August 1, 1995, becomes exercisable with
respect to three annual increments of 66,000 shares each beginning
August 1, 1996, and with respect to 27,000 shares on August 1, 1999
and has a term of five years. Mr. Margolis was also granted an
option to purchase 150,000 shares during fiscal 1996, but such
option was canceled and replaced by the option set forth in this
table. See _Report on Option Replacement_ below.
Report on Option Replacement
The option to purchase 225,000 shares of Common Stock granted to
Harry W. Margolis on August 1, 1995, as reported in the Option Grants
table above, was granted in replacement of three options previously
granted to Mr. Margolis under the 1990 Stock Option Plan. The replaced
options, each of which was terminated on August 1, 1995, entitled Mr.
Margolis to purchase 40,000 shares at an exercise price of $2.45 per
share, 35,000 shares at $1.88 per share and 150,000 shares at $1.1875
per share, or an average exercise price of $1.52 per share. The
replacement was done to ensure compliance with the requirement that
incentive stock options granted to persons holding more than 10% of the
outstanding voting stock of the Company have exercise prices at least
equal to 110% of the fair market value of the Common Stock on the date
of grant. The new option has an exercise price equal to the average
exercise price of the three options replaced and covers the same number
of shares, and therefore provides Mr. Margolis essentially the same
economic value. Such exercise price is equal to 122% of the fair market
value of the Common Stock on the date of grant of the new option. We
believe that such replacement was appropriate and in the best interests
of the Company.
By the Members of the Compensation Committee:
Kenneth R. Nicholas Cesar L. Alvarez
<PAGE>
Aggregated Fiscal Year-End Option Value Table
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of the
end of the 1996 fiscal year. No stock options were exercised by any of
the Named Executive Officers during the 1996 fiscal year.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In the Money Options
1996 Fiscal Year-End at 1996 Fiscal Year-End
Exercisable (E) Exercisable (E)
Name Unexercisable (U) Unexercisable (U) ($)
<S> <C> <C>
Harry W. Margolis 132,000 (E) 63,360 (E)
93,000 (U) 44,640 (U)
George P. McGraw 63,250 (E) 42,338 (E)
17,750 (U) 18,563 (U)
</TABLE>
<PAGE>
Long-term Incentive and Pension Plans
The Company does not have any long-term incentive or pension plans.
Employment Agreements
On December 1, 1992, the Company entered into an Employment
Agreement with Harry W. Margolis, its Chairman of the Board and Chief
Executive Officer, which expires on January 31, 1998. Pursuant to the
Employment Agreement, Mr. Margolis was paid an annual base salary of
$550,000 during the fiscal year ended January 31, 1994. In conjunction
with the Company's fourth quarter fiscal 1994 reorganization, Mr.
Margolis elected to receive a voluntary pay adjustment, decreasing his
salary from $550,000 to $490,000 in fiscal 1995. During fiscal year
1996, Mr. Margolis was paid an annual base salary of $503,000. Mr.
Margolis is entitled to receive minimum annual raises equivalent to any
annual increase in the Consumer Price Index for Dallas, Texas during the
previous year. In addition, at the discretion of the Compensation
Committee of the Board of Directors of the Company, Mr. Margolis may
receive an annual bonus in an amount that does not exceed his salary.
No bonuses were granted to Mr. Margolis during fiscal 1996.
Additionally, the Company furnishes Mr. Margolis with certain fringe
benefits, including the use of an automobile and a membership in a
country club. The Company is obligated to provide Mr. Margolis and his
family with health and dental benefits and has purchased split-dollar
life insurance policies insuring Mr. Margolis' life and naming his
estate as the beneficiary. In the event that Mr. Margolis becomes
disabled or is otherwise incapacitated, the Company will be entitled to
reduce his pay to 50% of his base salary (less certain insurance
proceeds) for the remainder of the term of the Employment Agreement or
until such earlier time that he is able to resume his full duties under
the agreement. In the event of Mr. Margolis' death, his estate or
designated beneficiary is entitled to receive 50% of his annual salary,
less any insurance payments made to the estate or designated beneficiary
from the above-referenced life insurance policies, for the remaining
term of the agreement. Mr. Margolis is subject to certain restrictive
covenants under the agreement, including a noncompetition clause which
extends eighteen months beyond any termination of his employment other
than termination by Mr. Margolis for "Good Reason" (as defined in the
agreement) or termination due to the expiration of the agreement. The
Company may at any time terminate the Employment Agreement for "Cause"
(as defined in the agreement) with thirty days written notice, and, in
the event that the Company fails to earn a certain specified minimum
rate of return on equity for any fiscal years ending on or after January
31, 1995, the Company's Board of Directors may reduce the term of the
agreement to a date which is no earlier than one year from the date Mr.
Margolis receives written notice of such term reduction. If Mr.
Margolis' employment is terminated (a) other than for Cause, disability,
death or the expiration of the agreement, including a termination
attributable to a "Change in Control" (as defined in the agreement), or
(b) by Mr. Margolis for Good Reason, including any intentional failure
by the Company to comply with the agreement, Mr. Margolis will be
entitled to (i) a lump sum payment of three times (or two times if
termination occurs during the last year of the agreement) the sum of his
base salary and highest bonus paid during either of the prior two years,
(ii) all compensation earned or deferred through the date of termination
(including a pro-rated bonus, determined as a percentage of the prior
year's bonus) and (iii) continue to participate in the Company's benefit
plans for the remainder of the term of the agreement, as if the
agreement had not terminated.
On February 1, 1992, the Company entered into a one year employment
agreement with George P. McGraw, it's Legal Division President, which
renews automatically and extends for successive one year terms, each
February 1. This agreement provided for an initial base salary of
$102,500 and included provisions for annual base compensation and
eligibility requirements for any bonus programs, all of which were
directly tied to the financial performance of the Company. In
conjunction with the Company's fourth quarter fiscal 1994
reorganization, Mr. McGraw accepted a base salary reduction from
$109,172 in fiscal 1994 to $106,964 in fiscal 1995. During fiscal year
1996, Mr. McGraw was paid an annual base salary of $113,526.
Additionally, the agreement contains certain restrictive covenants
governing events upon the executive's termination from the Company,
including non-compete, non-disclosure, and non-solicitation clauses.
The agreement may be terminated by the Company for "Cause" (as defined
in the agreement), as a result of the executive's inability to perform
all or any material portion of his responsibilities as a result of
mental or physical incapacity, illness or disability, or otherwise with
written notice to the executive.
<PAGE>
OTHER MATTERS
Stockholder Proposals
Any stockholder intending to present any proposal to the 1997
Annual Meeting of Stockholders must submit such proposal in writing to
the Company at its principal executive offices on or before February 10,
1997.
Independent Public Accountants
The firm of Price Waterhouse served as independent public
accountants for the Company for the fiscal year ended January 31, 1996
and has been selected to serve in that capacity for the fiscal year
ending January 31, 1997. A representative of the firm is expected to be
present during the annual meeting. Such representative will be afforded
an opportunity to make a statement at the meeting if he so desires and
will be available to answer appropriate questions.
Other Business
The Board of Directors does not intend to present and does not have
any reason to believe that others in attendance will present at the
Annual Meeting any item of business other than those mentioned in the
Notice of Annual Meeting. If, however, any other business should
properly come before the Annual Meeting, the persons named in the
accompanying Proxy will vote the Proxy as in their discretion they may
deem appropriate, unless they are directed by the Proxy to do otherwise.
By Order of the Board of Directors
Dana E. Margolis
Secretary and Treasurer
Richardson, Texas
June 10, 1996
<PAGE>
The Company's Form 10-K Annual Report, as filed with the Securities
and Exchange Commission, provides certain additional information about
the Company. A copy of this report may be obtained without charge upon
written request to: Investor Relations, CompuTrac, Inc., 222 Municipal
Drive, Richardson, Texas 75080 or via: www.ctinc.com<PAGE>
