<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:
<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>
SULCUS COMPUTER 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (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:
/X/ No fee required
<PAGE> 2
November 25, 1996
Dear Shareholder:
The Annual Meeting of the Shareholders of our Company will be held
at 10:00 a.m. on December 20, 1996, at the Palm Beach Airport Hilton, 150
Australian Avenue, West Palm Beach, Florida. The enclosed notice of the
meeting, Proxy Statement and Annual Report contain detailed information about
the business to be transacted at the meeting.
The Board of Directors has nominated six of the present Directors
whose term of office expires this year to continue to serve as Directors. You
are also being asked to ratify the selection of Crowe, Chizek and Company as
the Company's independent auditors for 1996.
On behalf of the Board of Directors and management, I cordially
invite you to attend the Annual Meeting. Whether or not you plan to attend the
annual meeting, please complete, sign, date and return the enclosed proxy card
at your earliest convenience so that your shares will be represented at the
meeting. If you choose to attend the meeting, you may revoke your proxy and
cast your votes in person.
Sincerely,
Margaret Santone
Corporate Secretary
<PAGE> 3
SULCUS COMPUTER CORPORATION
41 North Main Street
Greensburg, Pennsylvania 15601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 20, 1996
TO THE SHAREHOLDERS OF SULCUS COMPUTER CORPORATION:
The Annual Meeting of the Shareholders of Sulcus Computer
Corporation (the "Company") will be held at 10:00 a.m. on Friday, December 20,
1996, at the Palm Beach Airport Hilton, 150 Australian Avenue, West Palm Beach
Florida, for the following purposes:
1. To elect six Directors to serve for a term of one year.
2. To ratify the selection by the Board of Directors of Crowe, Chizek
and Company as the Company's independent auditors for the year
ending December 31, 1996.
3 . To act upon such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on November 20, 1996, has been fixed as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
Greensburg, Pennsylvania
November 25, 1996
Margaret Santone
Corporate Secretary
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES
WILL BE REPRESENTED AT THE MEETING. IF YOU CHOOSE TO ATTEND THE MEETING, YOU
MAY REVOKE YOUR PROXY AND PERSONALLY CAST YOUR VOTES.
<PAGE> 4
SULCUS COMPUTER CORPORATION
41 NORTH MAIN STREET
GREENSBURG, PENNSYLVANIA 15601
PROXY STATEMENT
PROXIES, SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of proxies in the accompanying form to
be used at the Annual Meeting of Shareholders on December 20, 1996. Properly
executed and dated proxies received will be voted in accordance with
instructions thereon. If no instructions are given with respect to the matters
to be acted upon, the shares represented by the proxy will be voted for the
election of the nominees for Directors designated below and for approval of the
appointment of the auditors of Sulcus. This proxy soliciting material is being
mailed to shareholders on or about November 25, 1996.
A shareholder giving a proxy may revoke it at any time before it is
exercised by filing with the Secretary of the Company an instrument of
revocation or a duly executed proxy bearing a later date. The revocation will
not be effective until written notice thereof is given to the Secretary of the
Company.
The election of Directors requires a plurality of votes cast and the
approval of the appointment of Crowe, Chizek and Company as the Company's
auditors requires the affirmative vote of a majority of votes cast, at a
meeting at which the holders of a majority of the outstanding Common Stock are
present in person or by proxy. Abstentions and broker non-votes will be
included in determining the number of shares present at the Annual Meeting of
Shareholders but will not be included in determining the number of votes cast
and as a result will not be considered in determining the outcome of the vote.
The cost of printing and mailing proxy material will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers, and other employees of the Company by
personal interview, telephone, or facsimile. No additional compensation will be
paid for such solicitation. The Company will request brokers and nominees who
hold shares of Common Stock in their names to furnish proxy material to
beneficial owners of the shares and will reimburse such brokers and nominees
for their reasonable expenses incurred in forwarding solicitation materials to
such beneficial owners.
As of the record date, November 20, 1996, the Company had
outstanding and entitled to vote 15,702,155 shares of Common Stock. Each share
of Common Stock is entitled to one vote on each matter to be voted on at the
meeting. When voting for the election of Directors, no shareholder is entitled
to vote his or her shares cumulatively.
1
<PAGE> 5
ELECTION OF DIRECTORS [PROPOSAL NO. 1]
The persons named in the accompanying proxy will vote for the
election of the nominees named below as Directors, unless otherwise directed by
the shareholders giving proxies. All of the nominees are now Directors and all
have consented to be named and to serve if elected. The Company's By-laws
provide that the Board shall fix the number of directors (up to seven in
number). The Board has fixed the number of directors at seven, but has not
nominated a full slate of directors for election. One directorship will remain
vacant. The Board retains the power to fill this vacancy. If, for any reason, a
nominee should be unable to serve as Director at the time of the meeting, a
contingency which is not expected to occur, the persons designated herein as
proxies may not vote for the election of any other person not named herein as a
nominee for election to the Board of Directors. The election of the nominees to
the Board of Directors will be determined based on a plurality of votes cast
provided the holders of a majority of all shares of the Company's Common Stock
entitled to notice of and to vote at the meeting are present by proxy or in
person.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Jeffrey S. Ratner 53 Director and Chairman of the Board
Robert D. Gries 67 Director (1)
Herbert G. Ratner 88 Director
John W. Ryba 52 Director, General Counsel and Vice President, Administration
David H. Adler 51 Director (1)
Leon D. Harris 58 Director
- -----------------
</TABLE>
(1) Member of Audit Committee.
Each Director is elected for a period of one year at the Company's
Annual Meeting of Shareholders and serves until his successor is duly elected
by the shareholders. Officers are appointed and serve at the will of the Board
of Directors subject in certain cases to the terms of employment agreements.
Herbert G. Ratner is the father of Jeffrey S. Ratner.
JEFFREY S. RATNER is a co-founder of the Company and has served as
Chief Executive Officer and Chairman of the Board of Directors since the
Company's inception in 1979. In September 1995, Mr. Ratner vacated the Chief
Executive Officer position. Since 1975, Mr. Ratner has owned Ratner Real Estate
and Ratner Development Corporation and is the Chief Executive Officer and
Chairman of the Board of both companies. In 1992, he became Chief Executive
Officer and Chairman of the Board of City Rentals, Inc., and is its sole
shareholder. These companies purchase, develop, lease and manage commercial and
residential real estate. Mr. Ratner does not devote substantial time to these
companies. On May 2, 1996, Mr. Ratner entered into an agreement with the
Securities and Exchange Commission, without admitting or denying any
wrongdoing, which provides that he would not in the future violate certain
sections of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder. The agreement imposes no fines or other penalties.
ROBERT D. GRIES has been a Director of the Company since 1983. From
1964 through the present, Mr. Gries has been President of the Gries Companies
and has been engaged in venture capital financing. From 1966 to 1995 he was
Vice President, director and a major shareholder of the Cleveland Browns
Football Company, Inc., a professional National Football League team.
2
<PAGE> 6
HERBERT G. RATNER was elected as a Director of the Company in
October 1988. Until he retired in 1992, Mr. Ratner was the Chairman of the
Board and principal shareholder of City Industries, Inc., City Rentals, Inc.,
Supermarket Realty, Inc. and Key Motors, Inc., since founding these companies
in 1965. He is also a member of the Board of Directors of Holy Cross Hospital
in Florida.
JOHN W. RYBA joined the Company in September 1987 as its General
Counsel and is presently its General Counsel and Vice President,
Administration. Mr. Ryba was elected a Director in May 1989. Mr. Ryba was
engaged in the private practice of law in Pittsburgh, Pennsylvania from 1984
until joining the Company. His firm represented computer software and
hardware companies.
DAVID H. ADLER was appointed a Director of the Company in August
1993. Mr. Adler has been Chief Executive Officer and majority shareholder of a
group of privately-owned companies since 1985, including the Adler Financial
Group, David H. Adler Real Estate Enterprises and PEBECO (Pennsylvania Bedding
Incorporated) of Scranton, Pennsylvania, a manufacturer of King Koil and other
private labelled mattresses and sleep products.
LEON D. HARRIS was appointed a Director of the Company on November
13, 1996. Since August 1993, he has been President of Physalia Corporation, a
consulting group functioning in the computer systems/technology market. Prior
to Physalia, from 1985 to 1993, he was President/CEO of Olivetti USA
("Olivetti"), the American subsidiary of the Italian office equipment/systems
company. Prior to Olivetti, he held the positions of President/CEO of Olympia
USA (a division of AEG Corporation of Germany) and President of Commodore
Computer Corporation.
Jeffrey S. Ratner is the son of Herbert G. Ratner. There are no
other family relationships among officers and Directors nor, except as
hereinafter described, are there any arrangements or understandings between any
Director or another person pursuant to which he has been elected as or
nominated for election as a Director, except as may be described in this Proxy
Statement.
BOARD OF DIRECTOR AND COMMITTEE MEETINGS
The Board of Directors of the Company met five times during the year
ended December 31, 1995. The Board of Directors also has an Audit Committee
which reviews financial and audit issues, the scope and plan of the annual
audit, reviews the audit results and reports thereon, and makes recommendations
regarding the Company's independent auditors and the Company's internal
accounting practices and policies. The Company's Audit Committee sits for a
term of one year. The Audit Committee, composed of Directors who are not
officers or employees of the Company ("Outside Directors"), is formed each year
following the annual meeting. David H. Adler and Robert D. Gries currently
serve on the Audit Committee. The Audit Committee met twice during 1995. The
Company does not currently have a Nominating Committee or a Compensation
Committee. Each of the Directors, with the exception of Mr. Harris who was
appointed to the Board on November 13, 1996, attended at least 75% of the
aggregate number of Board and Committee meetings of which he was a member
during 1995.
COMPENSATION OF DIRECTORS
Outside Directors are reimbursed for their direct expenses incurred
in attending a meeting. In addition, pursuant to the Company's Amended and
Restated 1991 Stock Option Plan for Directors (the "Directors Plan"), the
Company has reserved 1,000,000 shares of its Common Stock to Directors
(including Directors who are officers or employees) of the Company or any of
its subsidiaries. A committee is charged with authority to
3
<PAGE> 7
administer the Directors Plan, to award options, determine the option exercise
price (at a price not less than the fair market value of the Common Stock when
granted) and fix the vesting schedule and other terms thereof. Jeffrey S.
Ratner and John W. Ryba serve on this committee. During 1995, no options were
awarded under the Directors Plan.
EXECUTIVE OFFICERS
Information concerning the current executive officers of the Company
is furnished in the Company's Annual Report on Form 10-K.
EXECUTIVE COMPENSATION
The following tables reflect the compensation paid by the Company
during 1995, 1994 and 1993 for services in all capacities to the Company by the
Chairman and each of the other five most highly compensated executive officers
of the Company at December 31, 1995 (collectively, the "Named Officers"). More
specific information regarding compensation is provided in the notes
accompanying the tables.
4
<PAGE> 8
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION
OPTIONS/
SALARY BONUS SARS
NAME AND POSITION YEAR ($) ($) (#)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey S. Ratner 1995 350,000 ---- ----
Chairman 1994 313,500 ---- ----
1993 325,600 ---- ----
Joel B. Nagelmann 1995 135,600 33,107 215,579
President 1994 ---- ---- ----
1993 ---- ---- ----
H. Richard Howie 1995 120,000 ---- ----
Chief Financial 1994 55,000 ---- 30,000
Officer 1993 ---- ---- ----
Frank Morrisroe(1) 1995 146,000 ---- ----
President of 1994 146,000 ---- 50,000
Sulcus Hospitality 1993 110,000 ---- ----
Group
William F. McLay 1995 120,000 ---- 20,000
Managing 1994 75,000 ---- 60,000
Director 1993 24,500 ---- ----
Gary Campbell(2) 1995 120,000 7,200 ----
V.P. of Sulcus 1994 120,000 ---- 40,000
Hospitality Group 1993 ---- ---- ----
</TABLE>
- ---------------------------
(1) Mr. Morrisroe joined Sulcus in February 1991 and resigned in January
1996.
(2) Mr. Campbell joined Sulcus in November 1993 and resigned in August
1996.
5
<PAGE> 9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes the aggregate amount of shares subject
to stock options granted for the period January 1, 1995 through December 31,
1995 to the Chairman and each of the Named Officers. No gain on these options
will be realized by the Named Officers without an increase in the price of
Company Common Stock from the date of grant, which will benefit all
shareholders proportionately.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN FISCAL YEAR 1995
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- -------------------------------------------------------------------------------------------------- -------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
NAME OPTION/SARS EMPLOYEES OR BASE PRICE EXPIRATION
GRANTED (#)1 IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- -------------------------------------------------------------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey S. Ratner 0 0% ---- ---- ---- ----
Joel B. Nagelmann 215,579 61% 2.50 01/01/01 148,901 329,033
H. Richard Howie 0 0% ---- ---- ---- ----
Frank Morrisroe(2) 0 0% ---- ---- ---- ----
Gary Campbell(3) 0 0% ---- ---- ---- ----
William F. McLay 20,000 6% 2.00 01/01/01 11,051 24,420
</TABLE>
(1) The calculation of potential realizable values are based on
theoretical and arbitrary rates of appreciation in the price of
Company Common Stock from the date of grant of five and 10 percent,
which terms are mandated by the rules of the United States Securities
and Exchange Commission and may or may not accurately reflect or
predict the actual values of the stock options.
(2) Mr. Morrisroe joined Sulcus in February 1991 and resigned in January
1996. He exercised options for 60,000 shares in 1995. All
unexercised options have expired and terminated.
(3) Mr. Campbell joined Sulcus in November 1993 and resigned in August
1996. He has not exercised any options.
6
<PAGE> 10
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR END (#) FISCAL YEAR END ($)
NAME SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) ($) UNEXERCISABLE(1) UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey S. Ratner 0 0 200,000/0 $0/$0
Joel B. Nagelmann 0 0 87,789/127,790 $0/$0
H. Richard Howie 0 0 6,000/24,000 $0/$0
Frank Morrisroe(2) 60,000 $45,000 20,000/30,000 $0/$0
Gary Campbell(3) 0 0 16,000/24,000 $0/$0
William F. MClay 0 0 28,000/52,000 $500/$2,000
- --------------------------
</TABLE>
(1) The value of unexercised, in-the-money options is the difference
between the exercise price and the fair market value of company common
stock at December 31, 1995, which was $2.125.
(2) Mr. Morrisroe joined Sulcus in February 1991 and resigned in January 1996.
(3) Mr. Campbell joined Sulcus in November 1993 and resigned in August 1996.
EMPLOYMENT ARRANGEMENTS
The Company entered into an Employment Agreement with Mr. Ratner in
August 1994, which was amended April 27, 1995 and August 28, 1995. Mr. Ratner's
Agreement provides, among other things, that if Mr. Ratner voluntarily
terminates his employment, is terminated without cause or after a change in
control of the Company, or is not renominated or re-elected a Director of the
Company, Mr. Ratner will receive twice his then-existing salary plus all
benefits and all stock options for thirty-six (36) months. If he is terminated
for cause as defined in the Agreement, Mr. Ratner receives the same salary and
benefits for thirty-six (36) months as he would receive if otherwise terminated
as described above, except for stock options. Upon termination, Mr. Ratner has
the option to take his salary in a lump-sum payment. Mr. Ratner's Agreement
provides for an annual salary of $345,000, subject to annual increases at the
discretion of the Board of Directors.
H. Richard Howie joined the Company in July 1994 as Chief Financial
Officer pursuant to an employment agreement providing for an annual salary of
$120,000. Mr. Howie was granted an option to purchase 30,000 shares of Company
Common Stock at a price of $3.375 per share. These options were canceled and
new options for 36,000 shares were granted on March 25, 1996 at a price of
$2.4375, of which 20 percent were immediately exercisable with the rest vesting
over four years at 20 percent per year beginning in March 1997. This employment
agreement can be terminated by the Company or Mr. Howie on 14 days notice
without cause.
7
<PAGE> 11
Joel B. Nagelmann joined the Company in April 1995, as President of
the Company pursuant to an employment agreement providing for an annual salary
of $200,000. Mr. Nagelmann is entitled to receive annual bonuses as of December
31 in each year of his employment, commencing in 1995, based upon a percentage
of after-tax earnings of from 3% to 5% (depending on total revenues), subject
to limits of from $200,000 to $343,200, to be paid one-half in cash and
one-half in stock options. These bonus options vest one-half on the date of
grant and one-half one year later. Mr. Nagelmann was also granted an option to
purchase 200,000 shares of Common Stock of the Company at $2.50 per share
vesting over five years at the rate of 20 percent per year beginning April
1995. Mr. Nagelmann may retain all options granted and all other rights for
two years if his employment is terminated without cause.
The Company's employment agreements impose non-competition and
confidentiality obligations and provide for the assignment to the Company of
all rights to any technology developed by the executive during the term of his
employment. The Company has obtained "key man" insurance policies in the face
amount of $200,000 on the life of Mr. Howie and $500,000 on the life of Mr.
Nagelmann under which the Company is, in each case, the beneficiary.
REPORT ON EXECUTIVE COMPENSATION
Compensation of Executive Officers
The salaries paid during 1995 to the Company's executive officers were
either (i) approved or ratified by the Board of Directors of the Company or
(ii) fixed pursuant to employment agreements approved by the Board. See
"Executive Compensation-Employment Arrangements." The Board's approvals were
based upon various subjective factors such as the executive's responsibilities,
position, qualifications, individual performance and years of experience. In no
such case did the Board undertake a formal survey or analysis of compensation
paid by other companies.
Certain executive officers received stock options during 1995 under
the Company's 1991 Stock Option Plan for Officers and Key Employees (the "Stock
Option Plan"). Options under the Stock Option Plan are either awarded by the
Stock Option Committee, whose members are outside Directors, or are fixed by
employment agreements approved by the Board. The Stock Option Committee awarded
options under the Stock Option Plans in 1995 based upon the terms of employment
agreements or upon various subjective factors such as the executive's
responsibilities, individual performance and anticipated contribution to the
Company's performance. The Stock Option Committee neither undertook a formal
survey or analysis of options awarded by other companies nor, except to the
extent provided for in employment agreements, established numerical targets or
goals in determining these option awards.
Compensation of the Chairman
The salary of the Chairman, Jeffrey S. Ratner, is fixed pursuant to his
employment agreement with the Company. See "Executive Compensation-Employment
Arrangements." This employment agreement was negotiated by the Board of
Directors. In the case of the salary negotiated under the employment agreement,
the Board considered various subjective factors such as Mr. Ratner's
responsibilities, qualifications and perceived contributions to the Company.
However, the Board did not undertake a formal survey or analysis of salaries
paid by other companies.
8
<PAGE> 12
Deductibility of Compensation
Effective January 1, 1994, the Internal Revenue Service under Section
162(m) of the Internal Revenue Code will generally deny the deduction of
compensation paid to executives to the extent such compensation exceeds $1
million per executive per year, subject to an exception for compensation that
meets certain "performance-based" requirements. Whether the Section 162(m)
limitation with respect to an executive will be exceeded and whether the
Company's tax deductions for compensation paid in excess of the $1 million
limit will be denied will depend upon the resolution of various factual and
legal issues that cannot be resolved at this time. As to options granted under
the Stock Option Plan, the Stock Option Committee intends to comply to the
extent practicable with the rules governing the Section 162(m) limitations so
that compensation attributable to such options will not be subject to
limitation under such rules. As to other compensation, while it is not expected
that compensation to executives of the Company will exceed the Section 162(m)
limitation in the foreseeable future (and no officer of the Company received
compensation in 1995 which resulted in the non-deductibility of such
compensation to the Company under Section 162(m)), various relevant
considerations will be reviewed from time to time, taking into account the
interests of the Company and its shareholders, in determining whether to
endeavor to cause such compensation to be exempt from the Section 162(m)
limitation.
Submission of Report
This report on Executive Compensation is submitted by the members of
the Board of Directors, Jeffrey S. Ratner, Robert D. Gries, Herbert G. Ratner,
John W. Ryba and David H. Adler, except for Leon D. Harris who did not join the
Board until November 13, 1996, and except with respect to options awarded under
the Stock Option Plan, the report of which is submitted by the members of the
Stock Option Committee, Robert D. Gries and David H. Adler.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons participated in compensation decisions made
during 1995: Jeffrey S. Ratner, John W. Ryba, Herbert G. Ratner, Robert D.
Gries and David H. Adler. There are no interlocking relationships, as defined
in the regulations of the Securities and Exchange Commission, involving any of
these individuals. See "Certain Transactions" for a description of certain
transactions entered into by the Company and Jeffrey S. Ratner.
PERFORMANCE INFORMATION
Set forth below in tabular form is a comparison of the total
shareholder return (annual change in share price plus dividends paid, assuming
reinvestment of dividends when paid) assuming an investment of $100 on the
starting date for the period shown for the Company, the S & P 500 Index (a
broad equity market index which includes the stock of companies traded on the
American Stock Exchange) and the S & P Computer Software and Services Index (an
index of manufacturers and distributors of and service providers for computer
software and software systems). The return shown is based on the percentage
change from December 31, 1990 through December 31, 1995.
9
<PAGE> 13
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Company/Index Dec 90 Dec91 Dec92 Dec93 Dec94 Dec95
- ------------------------------------------- ----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
SULCUS COMPUTER CORP 100 259.09 345.45 281.82 90.91 77.27
S&P 500 INDEX 100 130.47 140.41 154.56 156.60 215.45
S&P COMPUTER SOFTWARE & 100 152.45 180.54 230.42 272.37 382.77
SERVICES INDEX
</TABLE>
SECURITY OWNERSHIP
As of November 20, 1996, there were 15,702,155 shares of the Company's
Common Stock issued and outstanding. The following table sets forth the number
and percentage of the Company's Common Stock known by management of the Company
to be beneficially owned as of November 20, 1996 by (i) all shareholders who own
5% or more of the Company's Common Stock, (ii) all directors of the Company,
(iii) each current or former executive officer included in the Summary
Compensation Table and (iv) all directors and executive officers of the Company
as a group. Unless stated otherwise, each person so named exercises sole voting
and investment power as to the shares of Common Stock so indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP(1) PERCENTAGE OF CLASS
- ----------------------------------------------------- ----------------------- ------------------------
<S> <C> <C>
Jeffrey S. Ratner 1,050,000(2) 6.7%
Robert D. Gries 55,000(3) *
John W. Ryba 72,000(4) *
David H. Adler 69,250(5) *
Leon D. Harris 9,100(6) *
Herbert G. Ratner 40,500(7) *
Joel B. Nagelmann 108,079(8) *
H. Richard Howie 7,200(9) *
William F. McLay 63,175(10) *
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP(1) PERCENTAGE OF CLASS
- ----------------------------------------------------- ----------------------- ------------------------
<S> <C> <C>
Margaret Santone 7,220(11) *
Barry Logan 66,824(12) *
Gary Campbell 18,750(13) *
Jappe Kjaer 74,867(14) *
Thomas Caudill 16,000(15) *
Gerry Lau 0 *
All Directors and Executive Officers as a Group. 1,657,965 10.6%
(14 persons)
- ---------------------------------
</TABLE>
* Indicates that the percentage of shares beneficially owned does not
exceed 1% of the class.
(1) For purposes of this table, shares are considered "beneficially" owned
if the person directly or indirectly has the sole or shared power to
vote or direct the voting of the securities or the sole or shared
power to dispose of or direct the disposition of the securities. A
person is also considered to beneficially own shares that such person
has the right to acquire within 60 days.
(2) Mr. Ratner transferred 1 million of these shares in 1993 to an
Irrevocable Trust established by Mr. Ratner as Settlor for the
benefit of himself, his wife and his children. Mr. Ratner does not
have or share investment control but retains voting control with
respect to these shares of the Company. The Trustee is an independent
Trustee unaffiliated with Mr. Ratner or any other beneficiary and has
the discretionary power to allocate the shares of the Company in the
Trust, or any proceeds from the sale of any such shares, in an amount
to be determined by the Trustee in its sole discretion. Mr. Ratner
disclaims beneficial ownership with respect to any shares held in such
Trust which may be allocated by the Trustee for the benefit of any
beneficiary of the Trust other than Mr. Ratner. The amount also
includes 50,000 shares subject to an option, which is in the name of
Mr. Ratner. Mr. Ratner's address is 41 North Main Street, Greensburg,
Pennsylvania 15601.
(3) Includes 25,000 shares currently owned of record and 30,000 shares
subject to an option.
(4) Includes 72,000 shares subject to an option.
(5) Includes 18,000 shares owned of record and 51,250 shares subject to an
option.
(6) All 9,100 shares are owned of record.
(7) Includes 10,500 shares owned of record and 30,000 shares subject to an
option.
(8) Includes 12,500 shares currently owned of record and 95,579 shares
subject to an option.
(9) Includes 7,200 shares subject to an option.
(10) Includes 15,175 shares currently owned of record and 48,000 shares
subject to an option.
(11) Includes 20 shares currently owned of record and 7,200 shares subject
to an option.
(12) Includes 900 shares currently owned of record and 65,924 shares
subject to an option.
(13) Includes 2,750 shares currently owned of record and 16,000 shares
subject to an option which will expire on November 30, 1996.
(14) Includes 66,867 shares currently owned of record and 8,000 shares
subject to an option.
(15) Includes 16,000 shares subject to an option.
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<PAGE> 15
CERTAIN TRANSACTIONS
The Company has agreed, under certain circumstances, to provide loans
to Joel B. Nagelmann, its President, in a gross amount of up to $197,000 for up
to three years at the rate of 5% per annum. On October 27, 1995, the Company
made a loan to Mr. Nagelmann in the principal amount of $100,000 at 5% interest.
The principal amount of this loan and all accrued interest was paid in full on
August 1, 1996; however, in connection with the foregoing loan agreement, the
Company subsequently made an additional loan to Mr. Nagelmann, the outstanding
amount of which, as of November 20, 1996, is $65,168, including accrued and
unpaid interest. These loans were agreed to as part of Mr. Nagelmann's
employment arrangements in April 1995 and were the result of arms length
negotiations. The Company believes that the interest rate is on more favorable
terms than Mr. Nagelmann could obtain elsewhere.
In July 1994, the Company loaned $50,000 to Mr. Jappe Kjaer, pending the
registration of the stock of the Company issuable to Mr. Kjaer under the terms
of the agreement for the purchase of Lodgistix Scandinavia AS (now known as
Sulcus Scandinavia AS). Mr. Kjaer was the principal shareholder of Lodgistix
Scandinavia AS and remains its President. The note was repaid in May 1996
through the cancellation of 20,000 shares of the Company's stock issuable under
the purchase agreement. Prior to the Company's acquisition of Lodgistix
Scandinavia AS, Mr. Kjaer borrowed $20,000 from Lodgistix Scandinavia AS, all of
which remains outstanding. These loans do not bear interest. The $50,000 loan to
Mr. Kjaer was negotiated at arms length with Mr. Kjaer in connection with the
Company's obligations to register shares of stock issuable to him. The $20,000
loan was made to Mr. Kjaer when he was the principal owner of Lodgistix
Scandinavia, AS at a time prior to Sulcus' ownership of that company.
In September 1993, the Company loaned $500,000 to Mr. Bernhard Mantel in
exchange for a note bearing interest at 6% per annum, pending the registration
of the stock of the Company issuable to Mr. Mantel under terms of the agreement
for the purchase of Techotel, Inc. ("Techotel"). Mr. Mantel was the principal
shareholder of Techotel and remains its Managing Director. The note was intended
to be repaid upon the registration by the Company for the stock issuable to him.
Based upon the nature of the note, it has been reflected as a reduction of
equity. In May 1996, the Company and the former shareholder of Techotel agreed
to the repayment of the note through the cancellation of 200,000 shares issuable
under the purchase agreement.
Sulcus' principal executive, and administrative operations are located at
Sulcus Centre, 41 N. Main Street, Greensburg, Pennsylvania 15601, in a facility
containing approximately 10,000 square feet. Sulcus leases this building under
several leases, with a trust established by Sulcus' principal shareholder and
Chairman, Jeffrey S. Ratner, expiring on various dates through September 30,
2001. Rent expense under these agreements was $225,391; $185,251 and $161,700
for the years ended December 31, 1995, 1994 and 1993, respectively. The annual
rental commitment under these leases are $229,111 in 1996, $138,105 in 1997,
$85,860 in 1998 and $90,144 in 1999, $91,947 in 2000, and $91,947 thereafter.
The leases renew automatically for additional two-year terms at a minimum rental
rate of 2% over the prior year's amount, unless canceled by either party. While
these leases were not the result of arms length negotiations, the Company
believes that the aggregate rental commitment is similar to comparable
properties in the area.
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<PAGE> 16
RATIFICATION OF INDEPENDENT AUDITORS [PROPOSAL NO. 2]
The Board of Directors of the Company has appointed Crowe, Chizek and
Company as independent auditors to examine the financial statements of the
Company for the fiscal year ending December 31, 1996, and directed that such
appointment be submitted for ratification by the shareholders at the Annual
Meeting.
The affirmative vote of the majority of the shares represented at the
Annual Meeting and entitled to vote is required for ratification. Management
recommends the appointment of Crowe, Chizek and Company be ratified by
shareholders.
Representatives of Crowe, Chizek and Company are expected to be present
at the Annual Meeting. They will have the opportunity to make statements if
they desire to do so and will be available to respond to appropriate questions.
OTHER MATTERS TO COME BEFORE THE MEETING [PROPOSAL NO. 3]
No other matters are intended to be brought before the meeting by
Sulcus, nor does Sulcus know of any matters to be brought before the meeting by
others. If other matters properly come before the meeting, the persons named in
the proxy will vote the shares represented therein in accordance with the
judgment of management on any such matters.
Any shareholder of the Company wishing to submit a proposal for action
at the Company's Annual Meeting of Shareholders to be held in 1997 and desiring
the proposal to be considered for inclusion in the Company's proxy material
relating thereto must provide a written copy of the proposal to the management
of the Company at its principal executive office not later than July 15, 1997
and must otherwise comply with the rules of the Securities and Exchange
Commission relating to stockholder proposals.
UPON WRITTEN REQUEST TO THE COMPANY BY ANY SHAREHOLDER WHOSE PROXY IS
SOLICITED HEREBY, THE COMPANY WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO,
WITHOUT CHARGE TO THE SHAREHOLDER REQUESTING THE SAME. REQUESTS SHOULD BE
DIRECTED TO THE ATTENTION OF MARGARET SANTONE, SECRETARY, AT 41 NORTH MAIN
STREET, GREENSBURG, PENNSYLVANIA 15601.
By Order of the Board of Directors
Margaret Santone
Corporate Secretary
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<PAGE> 17
PROXY CARD
SULCUS COMPUTER CORPORATION
41 NORTH MAIN STREET, GREENSBURG, PENNSYLVANIA, 15601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 20, 1996.
The undersigned hereby appoints Jeffrey S. Ratner, Margaret Santone, and Robert
Sommer as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated below, all the shares of
common stock of Sulcus Computer Corporation, held of record by the undersigned
at the Annual Meeting of Shareholders to be held on December 20, 1996, or any
adjournments thereof.
1. ELECTION OF DIRECTORS
D. Adler R. Gries H. Ratner J. Ratner J. Ryba L. Harris
2. TO RATIFY the selection by the Board of Directors of CROWE, CHIZEK AND
COMPANY as the Company's independent public auditors for 1996.
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE PROPOSALS.
Signature(s): Date:
------------------------------------------ -----------------
Signature(s): Date:
------------------------------------------ -----------------
(Signature if held jointly)
NOTE: Please sign exactly as name appears above. 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.
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