SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropiate box:
|X Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SunRiver 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 is calculated
and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
P R E L I M I N A R Y C O P Y
PROXY STATEMENT
SUNRIVER CORPORATION
Echelon IV, Suite 200
9430 Research Boulevard
Austin, Texas 78759-6543
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement, which is first being mailed on or about October
21, 1996, is furnished to stockholders in connection with the solicitation by
the Board of Directors of SunRiver Corporation (the "Company") of proxies to be
voted at the Company's Annual Meeting of Stockholders to be held on Monday,
November 18, 1996, at 10:00 o'clock a.m. (Local Time) at the offices of the
Company, listed above, and at any adjournment thereof.
Voting Rights and Votes Required
The proxy may be revoked by the stockholder at any time prior to its
use by the Company by voting in person at the Annual Meeting, by executing a
later proxy, or by submitting a written notice of revocation to the Secretary of
the Company at the Company's office or at the Annual Meeting. If the proxy is
signed properly by the stockholder and is not revoked, it will be voted at the
meeting in accordance with the instructions given therein. Otherwise the proxy
will be voted FOR the election of the nominees for Director and FOR the other
matters listed in the accompanying Notice of Annual Meeting of Stockholders.
At the close of business on October 3, 1996, 47,918,145 shares of the
Company's common stock, $.01 par value ("Common Stock"), were outstanding and
eligible for voting at the meeting. Each stockholder of record is entitled to
one vote for each share held on all matters to come before the meeting. Only
stockholders of record at the close of business on October 3, 1996 are entitled
to notice of and to vote at the meeting.
Presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares as of the record date shall constitute a
quorum. Votes cast at the Annual Meeting will be tabulated by inspectors of
election appointed by the Company. Shares of stock represented by a properly
signed and returned proxy will be treated as present at the Annual Meeting for
purposes of determining a quorum, without regard as to whether the proxy is
marked as casting a vote or abstaining. Likewise, where the record holder has
indicated on the proxy card or has otherwise notified the Company that it does
not have power to vote shares represented by the proxy (a "broker non-vote"),
the shares will be treated as present at the Annual Meeting for purposes of
determining a quorum.
In the election of Directors, votes may be cast in favor or withheld.
Votes that are withheld will be excluded entirely from the vote count and will
have no effect. The required vote on the election of Directors will be the
plurality of the votes cast.
All other matters voted on at the Annual Meeting require an approval
of the majority of the shares of stock present and entitled to vote thereon.
Therefore, abstentions as to particular proposals will have the same effect as
votes against such proposals. Broker non-votes will be treated as shares not
entitled to vote and will not be included in the calculation of the number of
votes constituting a majority.
1
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of October 3, 1996, by
(i) each of the Company's directors and "named executive officers" (defined
below), (ii) directors and executive officers of the Company as a group and
(iii) each person believed by the Company to own beneficially more than 5% of
its outstanding shares of Common Stock. Except as indicated, each such person
has sole voting and investment powers with respect to his and her shares. The
address of SunRiver Group, Inc. ("SunRiver Group") is the address of the Company
set forth above. The address of Stephen Maysonave is Informix Software, Inc.,
1111 Broadway, Suite 2000, Oakland, CA 94607.
Number of Shares Percentage of
Name of Beneficial Owner Beneficially Owned Outstanding Shares
- ------------------------ ------------------ ------------------
SunRiver Group 30,614,084(1) 58.8%
Stephen Maysonave, Voting Trustee 30,614,084(1)(2) 58.8%
Gerald Youngblood 118,750(3) *
Ron Brittian 0 0%
Sam K. Smith 29,688(3) *
John Osborne 0 0%
Daniel Matheson 0 0%
William C. Long 59,583(3) *
Toni McElroy 99,479(3) *
Tony Giovaniello 63,979(3) *
Steve Kuntz 30,000(3) *
All directors and executive
officers as a group
(six individuals) 118,750 *
- --------------------------
* Less than 1%.
(1) Includes 4,174,704 shares underlying the warrant held by SunRiver Group
(the "SunRiver Group Warrant") to purchase shares of Common Stock at an
exercise price of $1.84 per share.
(2) Includes the shares beneficially owned by SunRiver Group, as a result of
Mr. Maysonave's beneficial ownership, as voting trustee, of 3,400,000
shares of Series B Preferred Stock of SunRiver Group (the "Series B
Preferred") pursuant to a voting trust expiring March 1997. Under a
stockholders agreement, the Series B Preferred has the power to elect three
of the five directors constituting SunRiver Group's entire board of
directors which has the sole voting power and, with the stockholders of
SunRiver Group, shares the investment power with respect to the Common
Stock owned by SunRiver Group. The 3,400,000 shares constitute 52.3% of the
6,500,000 outstanding shares of the Series B Preferred. Messrs. Jeffrey K.
Moore and Matthew R. Moore (the "Moore Brothers") together own a majority
of the outstanding shares of the Series B Preferred and a majority of the
shares in the voting trust, and, voting together, have the power under the
voting trust agreement to replace Stephen Maysonave as voting trustee at
any time for any reason. Each of the Moore Brothers disclaims beneficial
ownership of the other's shares of SunRiver Group's Series B Preferred. See
"Certain Transactions" under "Election of Directors (Proposal 1)" for legal
proceedings and pledges of Common Stock by SunRiver Group which may, at a
subsequent date, result in a change in control of the Company. All
information in this footnote is based upon filings made by the respective
beneficial owners with the Securities and Exchange Commission or
information provided by such beneficial owners to the Company and the
Company has not independently verified, and does not represent, the
accuracy of the information in this footnote.
(3) Mr. Youngblood, Mr. Smith, Mr. Long, Ms. McElroy and Mr. Giovaniello have
the right to acquire beneficial ownership of 118,750, 29,688, 39,583,
49,479 and 49,479 shares of Common Stock, respectively, through the
exercise of options. Mr. Kuntz is no longer employed by the Company and Mr.
Long and Ms. McElroy are no longer executive officers of the Company.
2
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
The Nominees
The Company's Board of Directors currently consists of five directors,
each of whom is a nominee listed below. The proxy will be voted as specified
therein and, in the absence of contrary instructions, will be voted for the
election of Gerald Youngblood, Ron Brittian, Sam K. Smith, John Osborne and
Daniel N. Matheson, to serve as directors until the 1997 annual meeting of
stockholders and until their respective successors are elected and qualify. If
any nominee is unable or unwilling to serve, which the Board of Directors does
not anticipate, the person named in the proxy will vote for another person in
accordance with his or her judgment. To be elected, a nominee must receive the
affirmative vote of a plurality of the votes cast by the shares present and
entitled to vote, in person or by proxy, at the Annual Meeting. Accordingly,
abstentions or broker non-votes as to the election of Directors will not affect
the election of the candidates receiving the plurality of the votes.
The information below with respect to the nominees is based on the
records of the Company and information furnished by them.
Other Positions with
the Company and Has served as a
Name Age Principal Occupation Director since
- ---- --- -------------------- ---------------
Gerald Youngblood 45 Chairman of the Board and December 1994
President of the Company
Ron Brittian 55 Chairman of the Board of July 1996
TradeWave Corporation
Sam K. Smith 64 Chairman of Landmark April 1996
Graphics Corporation
John Osborne 42 President and Chief Executive August 1996
Officer of Boundless
Technologies, Inc.
Daniel N. Matheson 47 Attorney with Locke Purnell August 1996
Rain Harrell, P.C.
Gerald Youngblood has been Chairman of the Board of Directors and President
of the Company since December 1994 and was President and Chairman of the
Company's subsidiary, Boundless Technologies, Inc. ("Boundless Technologies")
from December 1994 to September 1996. Mr. Youngblood has served as a Director of
the Company's subsidiary, TradeWave Corporation ("Tradewave"), since April 1995.
Since September 1991, Mr. Youngblood has also served as a Director of SunRiver
Group and from September 1991 to September 1996 as the President and Chief
Executive Officer of SunRiver Group.
Ron W. Brittian has been a director of the Company since July 1996 and
Chairman of the Board of Directors of TradeWave since August 1996. From 1992 to
1995, Mr. Brittian was Executive Vice President of Texas Instruments, Inc.,
where he provided strategic leadership for a business division with annual
revenues of more than $200 million. From 1987 to 1992, he was a partner at Sevin
Rosen Venture Capital Funds, where he identified high technology venture capital
investments and served as Chairman and Chief Executive Officer of three
venture-backed companies. Mr. Brittian co-founded, and was a Chairman and Chief
Executive Officer of, Citrix Systems, Inc. from 1987 to 1991 and Aristacom, Inc.
from 1988 to 1992. He was President of IBES Corporation from 1991 to 1992.
3
<PAGE>
Sam K. Smith has been serving as an advisor to the Company since
January 1995 and as a director since April 1996. Since 1988, he has been serving
as a director, and as chairman since 1993, of Landmark Graphics Corporation, a
supplier of workstation software for the petroleum industry. For six years, he
had served as a director of Convex Computer Corp., a super-computer
manufacturer, before it was sold to Hewlett-Packard in 1996. From 1984 to 1993,
Mr. Smith was a special limited partner of Sevin Rosen Venture Funds. He serves
as a director of Mizar, Inc., a supplier of digital signal processor boards, and
serves on the board of visitors of the schools of electrical engineering of the
University of Oklahoma and the University of Texas, Dallas. Mr. Smith is the
Chairman of Merit Technology, Inc., ("Merit") a military software company which
he co-founded in July 1984. On February 18, 1994, Merit filed for protection
under Chapter 11 of the Bankruptcy Code and on August 22, 1995, an order
confirming Merit's First Amended Plan of Reorganization, and ordering the
dissolution of Merit after all distributions are made to creditors and equity
holders, was entered by the bankruptcy court.
John Osborne has been Vice President of Sales, Marketing and Services
of the Company since June 1996 and a director of the Company since July 1996. He
has served as President and Chief Executive Officer of Boundless Technologies
since September 1996. From January 1993 to May 1996, he was Vice President of
IBM's Channel and Business Partner Sales Operations and directed sales,
marketing and operations of IBM and Lotus. Prior to joining IBM, from October
1991 to December 1992, Mr. Osborne was Vice President of Sales and Marketing for
the Commercial Division at Zenith Electronics Corporation.
Daniel N. Matheson was appointed to the Board of Directors of the
Company in August 1996. Since May 1993, he has been Executive Vice President and
General Counsel of Network System, Inc., a privately-held telecommunications
company, and Chairman of the Board of The Capital Network, Inc., a
not-for-profit economic development agency. In addition, Mr. Matheson is an
attorney with Locke Purnell Rain Harrell P.C. in Austin, Texas and has worked in
the general banking, corporate, securities and state government (legislative and
regulatory) areas for more than 20 years.
Executive Officers and Key Employees
Gerald Youngblood, Roger Hughes and John Osborne are the executive
officers of the Company.
Roger Hughes has been the Company's Chief Financial Officer and Vice
President and Treasurer since June 1996. He was the Chief Financial Officer
since March 1994 of Optical Data Systems, Inc., a manufacturer and marketer of
computer networking and internetworking products for application in LANs. Prior
thereto, Mr. Hughes was the President and Chief Executive Officer of Merit.
4
<PAGE>
Tony Giovaniello was elected Vice President - Chief Operating Officer
of Boundless Technologies in January 1996 and has been acting in such capacity
since May 1995. From December 1994 to May 1995, Mr. Giovaniello served as
Managing Director of Text Terminals of Boundless Technologies. Mr. Giovaniello
has been employed by Boundless Technologies since February 1986 where he has
served in various capacities including Assistant Vice President of Marketing,
Director of Sales and Director of Intercompany and International Sales of
Boundless Technologies Display's Business Unit.
Brian L. Hann has been Vice President of Manufacturing of Boundless
Technologies since December 1994. Mr. Hann has been employed by Boundless
Technologies since March of 1986 and has previously served as Assistant
Vice-President of Manufacturing and Customer Services.
Donald Hackett has served as President and Chief Executive Officer of
TradeWave since August 1996 and as a director of TradeWave since January 1996.
He was Chief Operating Officer of TradeWave from January 1996 to August 1996.
From 1988 to 1995, he was a founding partner, Corporate Vice President, and
Secretary of the Board of Physician Computer Network, Inc. ("PCN"), a publicly
held company and an applications developer and distributor of value-added
services in the healthcare market. During Mr. Hackett's tenure with PCN, it grew
from four employees to more than 800 employees and $100 million in revenue.
Other than incentive option grants, members of the Company's Board of
Directors do not receive any compensation for services rendered to the Company
as directors. The Company has granted Sam Smith non-qualified options to
purchase 75,000 shares of Common Stock at an exercise price of $1.35 per share.
His options expire on May 1, 2000 and vest 25% on May 1, 1996 and the remainder
pro rata on a monthly basis through May 1, 1999. The Company also granted Ron
Brittian non-qualified options to purchase 75,000 shares of Common Stock at an
exercise price of $2.13 per share. His options expire on April 23, 2001 and vest
25% on May 1, 1997 and the remainder pro rata on a monthly basis through May 1,
2000. The Company also granted Daniel Matheson non-qualified options to purchase
75,000 shares of Common Stock at an exercise price of $3.625 per share. His
options expire on August 31, 2001 and vest 25% on September 1, 1997 and the
remainder pro rata on a monthly basis through September 1, 2000. For their
services as officers of the Company, but not specifically as directors of the
Company, the Company has also granted Gerald Youngblood and John Osborne options
to purchase shares of Common Stock.
In 1995, the Board of Directors, which consisted of Mr. Youngblood,
William C. Long and Toni McElroy, acted by unanimous written consent 23 times
and they met and conferred prior to each such consent. Each director attended
over 75% of meetings of the Board.
Executive Compensation
The table below discloses all cash compensation paid to, earned by or
awarded to the executive officers of the Company, and the two highest paid
non-executive officers of the Company, who earned $100,000 or more for services
rendered in all capacities to the Company during the fiscal year ended December
31, 1995 (each, a "named executive officer"). In addition, it provides
information with respect to the compensation of such persons for 1994 and 1993.
5
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
---------------------------
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Annual Compensation Compensation
------------------- ------------
Common Stock
Name and Principal Other Annual Underlying Other Annual
Position Year Salary Bonus Compensation Options(#) Compensation
- ------------------ ---- ------ ----- ------------ ---------- ------------
Gerald Youngblood 12/31/95 $157,057 $128,600(2) - 300,000 -
Chairman of the 12/31/94 $80,985 $75,000 - - -
Board of Directors 12/31/93 $81,509 - - - -
and President(1)
Toni McElroy, 12/31/95 $107,969 $46,662(2) - 125,000 -
Executive Vice 12/31/94 $40,940 $25,000 - - -
President - Finance (1) 12/31/93 $23,407 - (1) - -
Tony Giovaniello, 12/31/95 $118,917 $47,930(2) - 125,000 -
Vice President of 12/31/94 $98,162 $54,708 - - -
Boundless 12/31/93 $76,801 $25,098 - - -
Technologies (1)
William Long, 12/31/95 $105,902 $17,283 - 100,000 -
Executive Vice 12/31/94 $79,447 - - - -
President(1) 12/31/93 80,910 - - - -
Steve Kuntz, Vice 12/31/95 $110,001 $30,187(2) $36,837 (3) 65,000 -
President - Sales 12/31/94 $76,170 $44,643 - - -
of Boundless 12/31/93 $80,000 $21,857 - - -
Technologies (1)
(1) Unless otherwise noted, compensation for 1995 and the period December
9 through December 31, 1994 is from Boundless Technologies and
compensation for the balance of 1994 and for 1993 is from SunRiver
Group (for Mr. Youngblood, Mr. Long and Ms. McElroy) and from
Boundless Technologies (for Messrs. Giovaniello and Kuntz). The
Company acquired the operating assets and business of SunRiver Group,
effective December 9, 1994 (the "SunRiver Group Acquisition"). Ms.
McElroy rejoined SunRiver Group on a part time basis in April 1993 and
began working full time in June 1993. In 1993, Ms. McElroy received
options for 90,000 shares of SunRiver Group common stock of which
15,000 shares were fully vested. Mr. Kuntz is no longer employed by
the Company.
(2) Includes bonuses for services in connection with the Company's
acquisition of certain assets of Digital Equipment Corporation (the
"Digital Acquisition") in October 1995 (Mr. Youngblood: $100,000; Mr.
Giovaniello: $25,000; Ms. McElroy: $25,000; and Mr. Kuntz: $10,000).
(3) Relocation reimbursements.
</TABLE>
6
<PAGE>
Employment Agreements
None of the named executive officers has an employment contract with
the Company.
1995 Plan
The following table sets forth information, as of December 31, 1995,
regarding the outstanding options granted under the 1995 Incentive Plan ("1995
Plan") and the holders thereof:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
<S> <C> <C> <C> <C> <C>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Total Price Appreciation for
Securities Options/SARs Option Term
Underlying Granted to Exercise or ----------------------
Options/SARs Employees in Base Price Expiration
Name Granted (#)(1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- -------------- ------------ ----------- ---------- ------ -------
Gerald Youngblood 300,000 11.8% $1.35 May 1, 2000 49,680 168,750
Toni McElroy 125,000 4.9% $1.35 May 1, 2000 20,700 70,313
Tony Giovaniello 125,000 4.9% $1.35 May 1, 2000 20,700 70,313
William Long 100,000 3.9% $1.35 May 1, 2000 16,560 56,250
Steve Kuntz 65,000 2.6% $1.35 May 1, 2000 10,764 36,563
- --------------------------
(1) Options are fully vested by May 1, 1999 as follows: 25 percent on
May 1, 1996 and the remainder pro rata on a monthly basis through May 1, 1999.
Options may be exercised by the payment of cash or the delivery of Common Stock
valued at fair market value (as defined in the 1995 Plan) on the date of
exercise. On December 29, 1995, the last sale price of the Common Stock on The
Nasdaq SmallCap Market was $2-15/16.
</TABLE>
7
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table provides information on the value of the named
executive officers' unexercised options to purchase shares of Common Stock as at
December 31, 1995.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1995 (#) December 31, 1995 ($)(1)
------------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares
Acquired on Value Shares
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Gerald Youngblood 0 $0 0 300,000 $0 $476,250
Toni McElroy 0 0 0 125,000 0 198,438
Tony Giovaniello 0 0 0 125,000 0 198,438
William Long 0 0 0 100,000 0 158,750
Steve Kuntz 0 0 0 65,000 0 103,188
(1) Fiscal year ended December 31, 1995. The last sale price of the
Company's Common Stock on December 29, 1995, as reported by The Nasdaq
SmallCap Market, was $2-15/16.
</TABLE>
Compensation Committee Report
The Company's executive compensation policy is designed with the goals
of ensuring that an appropriate relationship exists between executive pay and
corporate performance as well as an executive officer's past performance and
expected future contribution, while at the same time motivating and retaining
highly qualified executive officers, and providing total compensation that is
competitive with companies in comparable industries or other companies of
comparable growth and performance. The key components of the company's
compensation program are base salary, annual incentive bonus awards and equity
participation in the form of stock options. Executive officers are also entitled
to customary benefits generally available to all employees of the Company,
including group medical, disability, dental and life insurance and 401(k) plans.
Annual Cash Compensation. Compensation of the named executive officers
for fiscal 1995 was determined by the Company's Board of Directors and was based
on the executives' duties and responsibilities, financial performance of the
Company and other factors including the success of the named executive officers
in developing and executing the Company's acquisition, financing and strategic
plans.
Incentive Bonus Plan. The Company has adopted an incentive program for
all employees of the Company. The incentive program provides for annual cash
bonuses based upon the performance by the Company of specified financial
objectives. Financial objectives and target awards are determined on an annual
basis by the Board of Directors. Named executive officers participate in the
program on the same basis as do other management personnel. The Company is not
obligated to continue the program, and the program is reviewed by the Board of
Directors on an annual basis.
8
<PAGE>
Stock Options. Equity participation is a key component of the Company's
executive compensation program. Stock options are granted to named executive
officers primarily based on the officer's contribution to the Company's growth
and profitability. Option grants are designed to retain officers and motivate
them to enhance shareholder value by aligning the financial interests of the
named executive officers with those of the Company's stockholders. Stock options
provide an effective incentive for management to create stockholder value over
the long term since the option value depends on appreciation in the price of the
Common Stock over a number of years.
Grants of stock and options to purchase Common Stock have also been an
important feature of the compensation program for all employees. In 1995,
options to purchase an aggregate 2,476,912 shares of the Company's Common Stock,
and stock grants of 425,000 shares, were granted under the 1995 Plan.
Mr. Youngblood's compensation for 1995 was based on his experience in
the industry, the prospects of the Company and its subsidiaries, Boundless
Technologies and TradeWave, his responsibilities as the Company's President and
Chairman of the Board and the significant role he has played in the Company's
growth including through the Digital Acquisition and SunRiver Group Acquisition
and the acquisitions of Boundless Technologies and TradeWave.
In April 1996, the Board of Directors established a Compensation
Committee of the Board ("Compensation Committee"), consisting of Gerald
Youngblood and Sam Smith, which, in conjunction with the Board of Directors,
will determine executive officer compensation. Ron Brittian and Daniel Matheson
joined the Compensation Committee in July 1996 and September 1996, respectively.
It is the Compensation Committee's responsibility to review compensation levels
of members of management, evaluate the performance of management, consider
management succession and other related matters and, in conjunction with the
Board of Directors, administer the 1995 Plan.
Compensation Committee
Gerald Youngblood
Ron Brittian
Sam K. Smith
Daniel Matheson
Compensation Committee Interlocks and Insider Participation
Mr. Youngblood, William Long and Toni McElroy, who were officers of the
Company in 1995, also constituted the Company's Board of Directors and, during
1995, participated in deliberations concerning executive officer compensation
but none of them voted on his or her own individual compensation. However, their
joint deliberations gave rise to conflicts of interest which could have affected
their respective compensation and the number of stock options granted to them
individually and as a group.
Stock Price Performance Graph
The following graph presents a comparison of the cumulative total
stockholder return on the Common Stock with the NASDAQ Market Index and the
performance of the Office and Computing Machines Industry Index (SIC Code 357).
This graph assumes that $100 was invested on November 25, 1992 (or such later
date the applicable member of the industry index registered its common stock
under Section 12 of the Securities Exchange Act of 1934) in the Common Stock and
in the other indices, and that all dividends were reinvested and are weighted on
a market capitalization basis at the time of each reported data point. The stock
price performance shown below is not necessarily indicative of future price
performance.
[GRAPH APPEARS HERE.]
[The graph depicts the data points set forth below.]
9
<PAGE>
<TABLE>
<CAPTION>
1992 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SunRiver Corporation 100 75.68 70.27 36.49 63.51
(formerly, All-Quotes, Inc.)
Office and Computing 100 95.51 110.25 133.72 183.40
Machines Index
NASDAQ Market Index 100 102.56 123.02 129.17 167.54
</TABLE>
Certain Transactions
William Moore, the father of Jeffrey K. Moore and Matthew R. Moore,
has acted as a consultant for SunRiver Group from time to time and, during 1995,
was a key consultant to the Company in financing transactions and acquisitions
that resulted in the substantial growth of the Company, including the
acquisition of TradeWave in April 1995 and the Digital Acquisition in October
1995. Under an agreement between the Company and NAFCO Consulting, Inc.
("NAFCO"), a corporation wholly owned by William Moore, the Company paid NAFCO
$137,742 in 1995, including $10,000 for special assignments and $7,742 for
expenses. The Company believes that the agreement between the Company and NAFCO,
which terminated on December 31, 1995, was on terms as favorable to the Company
as obtainable from unaffiliated third parties. On August 16, 1995 and January
31, 1996, the Company issued 200,000 shares and 225,000 shares, respectively, of
Common Stock to William Moore (as stock grants under the 1995 Plan, which the
Company has valued at $905,000) in consideration for special consulting services
rendered in 1995. Reference is made to Note 2 to the table under the caption
"Security Ownership of Certain Beneficial Owners and Management," above,
regarding the shares of Series B Preferred of SunRiver Group owned by Messrs.
Jeffrey K. Moore and Matthew R. Moore, which, if voted together, have the power
to control SunRiver Group.
In April 1996, William Moore was convicted of felonies related to the
acquisition and operation of a Texas savings and loan from 1982 to 1984 and was
ordered to pay approximately $12 million in restitution to several federal
agencies. Although William Moore disclaims beneficial ownership of, or an
economic interest in, the controlling shares of SunRiver Group owned by his
sons, there can be no assurance that the federal government will not attempt to
attribute an economic interest in such shares to William Moore, or that his sons
will not sell such shares, in order to satisfy this restitution order. Either of
these outcomes could result in a change in control of SunRiver Group and,
therefore, the Company and its subsidiaries. Mr. Moore is appealing these
convictions and restitution order. It is not possible to predict whether or when
such a change of control will occur or the effect of any such change on the
Company.
In connection with the Digital Acquisition, SunRiver Group pledged
21,439,380 shares of Common Stock to The Chase Manhattan Bank, N.A. ("Chase")
and 5,000,000 shares of Common Stock to NCR Corporation ("NCR"). In
consideration of such pledge, the Company expects to issue to SunRiver Group
warrants to purchase such number of shares of Common Stock at $3.875 per share,
subject to adjustment, as the Board of Directors of the Company determines is
appropriate after obtaining independent advice regarding the fairness of such
warrants.
10
<PAGE>
AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 60,000,000 TO 70,000,000
(Proposal 2)
It is proposed that the Company's Certificate of Incorporation, as
amended ("Certificate of Incorporation"), be amended to increase the number of
shares of authorized Common Stock from 60,000,000 to 70,000,000. Such increase
will be effected by amending the first sentence of Article Fourth of the
Certificate of Incorporation to read as follows:
"FOURTH: The total number of shares of all classes of stock
which the corporation shall have authority to issue is
Seventy-One Million (71,000,000) which are divided into One
Million (1,000,000) shares of Preferred Stock, par value
$.01 per share, and Seventy Million (70,000,000) shares of
Common Stock, par value $.01 per share."
As described in the following items 1, 2 and 3, additional authorized
shares above the 60,000,000 current limit are required to reserve shares
issuable upon exercise of the SunRiver Group Warrant, previously granted stock
options and additional stock options to be granted under the 1995 Plan and an
option to be issued to SunRiver Group.
1. As of October 3, 1996, 47,918,145 shares of Common Stock and no
shares of Preferred Stock, $.01 par value ("Preferred Stock"), of the Company
were outstanding and 12,164,672 shares of Common Stock were issuable upon
exercise of outstanding options and warrants. In addition, the Company's
registration statement on Form S-1, declared effective on July 8, 1996 (the
"Shelf Registration Statement"), registered 14,444,210 shares of Common Stock
under the Securities Act of 1993, including 2,500,000 shares that may be issued
and sold by the Company from time to time. As of October 3, 1996, 2,140,000 of
such 2,500,000 shares remained unissued. The sum of such 47,918,145 shares
outstanding, 12,164,672 shares issuable upon exercise of outstanding options and
warrants and 2,140,000 shares which may be issued and sold by the Company,
exceeds the 60,000,000 Common Stock authorization by 2,222,817 shares. Until the
Certificate of Incorporation is amended to increase the authorized Common Stock
sufficiently to allow for the reservation of all 4,174,704 shares underlying the
SunRiver Group Warrant, SunRiver Group has agreed to refrain from exercising its
right to purchase up to 2,654,565 out of 4,174,704 shares upon exercise of the
SunRiver Group Warrant to the extent necessary to permit exercise by others of
their options and warrants and the offer and sale by the Company of newly issued
Common Stock under the Shelf Registration Statement.
2. Of the 6,000,000 shares of Common Stock issuable upon exercise of
options or stock grants made under the 1995 Plan previously approved by the
stockholders, as of October 3, 1996, options to purchase 3,802,492 shares had
been granted and 425,000 shares had been issued as stock grants and none of the
remaining 1,772,508 available shares have been reserved for future grants. The
Board of Directors did not reserve these additional shares for grants under the
11
<PAGE>
1995 Plan so that they would be available for other purposes. Before such
reservation can be made, an increase in the authorized number of shares of
Common Stock is necessary.
3. In connection with the Digital Acquisition, including the financing
for such acquisition through Chase and the related restructuring of the
Company's obligations to NCR, SunRiver Group pledged 21,439,380 shares of Common
Stock to Chase and 5,000,000 shares of Common Stock to NCR. In consideration for
such pledges and after authorized shares become available, the Company expects
to issue to SunRiver Group warrants to purchase such number of shares of Common
Stock at $3.875 per share, subject to adjustment, as the Board of Directors of
the Company determines is appropriate after obtaining independent advice
regarding the fairness of such warrants. The Board of Directors plans to seek
such independent advice shortly after authorized shares become available for
such warrants.
The Board believes that it is desirable to have up to approximately
6,000,000 additional shares of Common Stock available, as the occasion may
arise, for possible future financings and acquisitions, stock dividends, stock
issuances pursuant to employee benefit plans and other proper corporate
purposes. Having such additional shares available for issuance in the future
would give the Company greater flexibility by allowing shares to be issued
without incurring the delay and expense of a special stockholders' meeting.
Except as described in this Proxy Statement, the Company has no definitive plans
or commitments to issue additional Common Stock.
The additional shares of Common Stock, together with other authorized
and unissued shares, generally would be available for issuance without any
requirement for further stockholder approval, unless stockholder action is
required by applicable law, the Company's governing documents or by the rules of
the National Association of Securities Dealers, Inc. or any stock exchange on
which the Company's securities may then be listed.
Although the Board will authorize the issuance of additional shares of
Common Stock only when it considers doing so to be in the best interests of
stockholders, the issuance of additional shares of Common Stock may, among other
effects, have a dilutive effect on the earnings and equity per share of Common
Stock and on the voting rights of holders of shares of Common Stock. The
increase in the authorized number of shares of Common Stock also could be viewed
as having anti-takeover effects. Although the Board of Directors has no current
plans to do so, shares of Common Stock could be issued in various transactions
that would make a change in control of the Company more difficult or dilute the
stock ownership of a person seeking to obtain control. The Company is not aware
of any effort to accumulate shares of Common Stock or obtain control of the
Company by a tender offer, proxy contest, or otherwise, and the Company has no
present intention to use the increased shares of authorized Common Stock for
anti-takeover purposes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT
TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES
OF COMMON STOCK OF THE COMPANY FROM 60,000,000 TO 70,000,000.
12
<PAGE>
AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
TO BOUNDLESS CORPORATION
(Proposal 3)
It is proposed that the Certificate of Incorporation be amended to
change the name of the Company from SunRiver Corporation to Boundless
Corporation. The amendment will be effected by amending Article First of the
Certificate of Incorporation to read as follows:
"FIRST: The name of the corporation (hereinafter called the
"corporation") is Boundless Corporation."
Recently, the Company's wholly owned subsidiary, SunRiver Data Systems,
Inc., changed its name to Boundless Technologies, Inc. SunRiver Acquisition
Corp., a non-operating wholly owned subsidiary of the Company, intends to change
its name to Boundless Acquisition Corp. These changes arise out of the
settlement of the lawsuit brought in 1995 by Sun Microsystems, Inc. ("Sun
Microsystems") against the Company and its subsidiaries and SunRiver Group.
Sun Microsystems had alleged that the defendants infringed federally
registered and California registered SUN-based trademarks owned by Sun
Microsystems and violated California statutory and common laws of trademark and
tradename infringement, unfair competition, dilution and false advertising, all
based on allegations that the defendants' use of any SUNRIVER mark or name
creates a likelihood of confusion in violation of Sun Microsystems' rights. The
settlement requires the Company, its subsidiaries and SunRiver Group to stop
using any SunRiver-based mark or name except in limited circumstances.
The Board of Directors also believes that changing the Company's name
to Boundless Corporation will enhance the Company's business and prospects.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT
TO THE CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY FROM
SUNRIVER CORPORATION TO BOUNDLESS CORPORATION.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal 4)
Coopers & Lybrand L.L.P. have been the principal accountants of the
Company during 1995 and have been selected as the Company's principal
accountants for the current calendar year. A representative of Coopers & Lybrand
will be present at the Annual Meeting with an opportunity to make a statement,
if he desires to do so, and will be available to respond to appropriate
questions.
If, prior to the next annual meeting of stockholders, such firm shall
decline to act or otherwise becomes incapable of acting, or if its engagement
shall be otherwise discontinued by the Board of Directors, the Board of
Directors will appoint other independent auditors whose appointment for any
period subsequent to the next annual meeting will be subject to stockholder
approval at such meeting.
13
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR SUCH RATIFICATION.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at next
year's annual meeting of stockholders which the stockholder desires to be
presented in the Company's Proxy Statement with respect to such meeting should
submit such proposal to the Company at its principal place of business a
reasonable time prior to the Company's mailing of the Proxy Statement relating
to such 1997 annual meeting. It is currently anticipated that such Proxy
Statement will be mailed during the second or third quarter of 1997.
OTHER MATTERS
The Board of Directors did not know, within a reasonable time before
the commencement of this solicitation, of any other business to be presented at
the Annual Meeting, constituting a proper subject for action by the
stockholders, other than as set forth in this Proxy Statement. However, if any
such matter should properly come before the meeting, the persons named in the
enclosed proxy intend to vote such proxy in accordance with their best judgment.
The proxies named in the enclosed form of proxy and their substitutes,
if any, will vote the shares represented by the enclosed form of proxy, if the
proxy appears to be valid on its face and, where a choice is specified on the
form of proxy, the shares will be voted in accordance with each specification so
made.
A list of stockholders of record of the Company as of October 3, 1996
will be available for inspection by stockholders prior to the Annual meeting
during normal business hours at the offices of the Company at Echelon IV, Suite
200, 9430 Research Boulevard, Austin, Texas 78759 and at the Annual Meeting.
In addition to soliciting proxies by mail, the Company may make
requests for proxies by telephone, telegraph or messenger or by personal
solicitation by officers, directors, or employees of the Company, or by any one
or more of the foregoing means. The Company will also reimburse brokerage firms
and other nominees for their actual out-of-pocket expenses in forwarding proxy
material to beneficial owners of the Company's shares. All expenses in
connection with such solicitation are to be paid by the Company.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCLUSIVE
OF EXHIBITS, WILL BE MAILED WITHOUT CHARGE TO ANY STOCKHOLDER ENTITLED TO VOTE
AT THE MEETING, UPON WRITTEN REQUEST TO THE COMPANY AT ECHELON IV, SUITE 200,
9430 RESEARCH BOULEVARD, AUSTIN, TEXAS 78759, ATTENTION: SECRETARY.
By Order of the Board of Directors,
Gerald Youngblood
Chairman of the Board
Dated: October 21, 1996
14
<PAGE>
SUNRIVER CORPORATION
PROXY
Annual Meeting of Stockholders
November 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND UNLESS OTHERWISE
PROPERLY MARKED AND EXECUTED BY THE UNDERSIGNED STOCKHOLDER, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4 AS RECOMMENDED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints each of Gerald Youngblood and John
Osborne, each with full power to act without the other, and with full power of
substitution, as the attorneys and proxies of the undersigned and hereby
authorizes them to represent and vote all the shares of Common Stock of SunRiver
Corporation that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Stockholders, to be held on Monday, November 18, 1996
at 10:00 a.m. local time, or at any adjournment thereof, upon such business as
may properly come before the meeting, including the items set forth below.
1. ELECTION OF DIRECTORS.
FOR all nominees below
(except as marked to the contrary below) |_|
WITHHOLD AUTHORITY to vote for all nominees below |_|
NOMINEES: Gerald Youngblood, Sam K. Smith, Ron Brittian,
John Osborne and Daniel Matheson
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the
space provided below.
-------------------------------------
2. TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK FROM 60,000,000 TO 70,000,000 SHARES.
|_| For |_| Against |_| Abstain
3. TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME
OF THE COMPANY TO BOUNDLESS CORPORATION.
|_| For |_| Against |_| Abstain
4. TO RATIFY SELECTION OF COOPERS & LYBRAND L.L.P. AS CERTIFIED
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1996 CALENDAR YEAR.
|_| For |_| Against |_| Abstain
Please sign exactly as name appears on this card. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ------------------, 1996 -------------------------------
Signature
------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
15
