<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
[_] Filed by the Registrant
[_] Filed by a Party other than the Registrant
Check the appropriate 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
MAPICS, INC.
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO OF MAPICS, INC. APPEARS HERE]
December , 1998
Dear Shareholder:
On behalf of the Board of Directors and management of MAPICS, Inc., I
cordially invite you to the Annual Meeting of Shareholders to be held on
Wednesday, February 10, 1999 at 9:00 a.m. at the Sheraton Colony Square Hotel,
188 14th Street, N.E., Atlanta, Georgia.
At the Annual Meeting, shareholders will be asked to (a) approve an
amendment to the Company's Articles of Incorporation to increase the number of
authorized shares of Common Stock from 50,000,000 to 90,000,000 shares, (b)
elect two directors for a three year term, (c) approve an amendment to the
Company's long-term incentive plan to increase the number of shares of Common
Stock available for awards under the plan from 1,000,000 to 2,000,000 shares,
and (d) ratify the appointment of independent accountants. These matters are
described in the accompanying Notice of Annual Meeting and Proxy Statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. You are encouraged to specify your voting
preferences by so marking the enclosed proxy card. Please then sign and date
the proxy card and return it in the enclosed envelope whether or not you plan
to attend the meeting. If you do attend and wish to vote in person, you may
revoke your proxy at the meeting.
If you plan to attend the meeting, please check the card in the space
provided. This will assist us with meeting preparations and will enable us to
expedite your admittance. If your shares are not registered in your own name
and you would like to attend the meeting, please ask the broker, trust, bank
or other nominee which holds the shares to provide you with evidence of your
share ownership, which will enable you to gain admission to the meeting.
Sincerely,
/s/ Richard C. Cook
Richard C. Cook
President and Chief Executive
Officer
<PAGE>
MAPICS, INC.
5775-D GLENRIDGE DRIVE
ATLANTA, GEORGIA 30328
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 10, 1999
--------------
NOTICE HEREBY IS GIVEN that the 1999 Annual Meeting of Shareholders of
MAPICS, Inc. (the "Company") will be held at the Sheraton Colony Square Hotel,
188 14th Street, N.E., Atlanta, Georgia, on Wednesday, February 10, 1999 at
9:00 a.m. for the purposes of:
1. Approving an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of the Company's Common Stock,
$.01 par value per share ("Common Stock"), from 50,000,000 to 90,000,000
shares;
2. Electing two directors to serve until the 2002 Annual Meeting of
Shareholders;
3. Approving an amendment to the Company's 1998 Long-Term Incentive Plan
to increase the number of shares of Common Stock available for awards
thereunder from 1,000,000 to 2,000,000 shares;
4. Ratifying the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending September 30, 1999;
and
5. Transacting such other business as properly may come before the Annual
Meeting or any adjournments thereof.
Information relating to the foregoing matters is set forth in the attached
Proxy Statement. Shareholders of record at the close of business on December
14, 1998 are entitled to receive notice of and to vote at the Annual Meeting
and any adjournments thereof.
By Order of the Board of Directors.
/s/ Martin D. Avallone
Martin D. Avallone
Vice President, General Counsel
and Secretary
Atlanta, Georgia
December , 1998
PLEASE READ THE ATTACHED PROXY STATEMENT AND PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE
PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
<PAGE>
MAPICS, INC.
--------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 10, 1999
This Proxy Statement is furnished to the shareholders of MAPICS, Inc., a
Georgia corporation ("MAPICS" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at
the Annual Meeting of Shareholders of the Company and at any adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held on Wednesday,
February 10, 1999 at 9:00 a.m. at the Sheraton Colony Square Hotel, 188 14th
Street, N.E., Atlanta, Georgia.
The approximate date on which MAPICS is first mailing this Proxy Statement
and the accompanying proxy card to shareholders is December , 1998.
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of (a) Common
Stock of the Company, $.01 par value per share ("Common Stock"), (b) Series D
Convertible Preferred Stock, $1.00 par value per share ("Series D Preferred
Stock"), and (c) Series E Convertible Preferred Stock, $1.00 par value per
share ("Series E Preferred Stock"). Holders of Common Stock are entitled to
cast one vote for each share held on the record date on each matter submitted
to the shareholders at the Annual Meeting. Holders of the Series D Preferred
Stock and the Series E Preferred Stock are entitled to vote on an as converted
basis with the holders of the Common Stock as a single class and are entitled
to cast 10 votes for each share of Series D Preferred Stock and 10 votes for
each share of Series E Preferred Stock held on the record date on each matter
submitted to the shareholders at the Annual Meeting.
The record date for the determination of shareholders who are entitled to
receive notice of and to vote at the Annual Meeting has been fixed by the
Board of Directors as the close of business on December 14, 1998. On the
record date, shares (on an as converted basis) of Common Stock were
outstanding and eligible to be voted at the Annual Meeting.
QUORUM AND VOTE REQUIRED
For each proposal to be considered at the Annual Meeting, the presence, in
person or by proxy, of a majority of the votes entitled to be cast on the
proposal is necessary to constitute a quorum for action on that matter.
Abstentions and votes withheld from any nominee will be considered to be
"votes entitled to be cast" and therefore will be counted as present for
purposes of determining the presence or absence of a quorum with regard to any
proposal at the Annual Meeting. Broker non-votes will not be considered to be
"votes entitled to be cast" and will not be counted as present for quorum
purposes as to any proposal. Broker non-votes are votes that brokers holding
shares of record for their customers are not permitted to cast under
applicable stock exchange rules because the brokers have not received specific
instructions from their customers as to certain proposals and as to which the
brokers have advised the Company that they lack voting authority. Although
there are no controlling precedents under Georgia law regarding the treatment
of broker non-votes, the Company intends to apply the principles set forth
herein.
The following shareholder votes will be required for approval of the four
proposals to be submitted by management at the Annual Meeting:
. The proposal to amend the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 50,000,000
to 90,000,000 shares (Proposal 1) must be approved by a
<PAGE>
majority of the votes entitled to be cast on the proposal. Because, as
noted above, abstentions will be considered to be "votes entitled to be
cast" but broker non-votes will not be considered to be "votes entitled
to be cast," abstentions will have the same effect as a vote against the
proposal, but broker non-votes will not affect the outcome of the vote.
. With regard to the proposal to elect two directors to serve until the
2002 Annual Meeting of Shareholders (Proposal 2), each director must
each be elected by a majority of the votes represented at the Annual
Meeting and entitled to be cast on the proposal. As a result, shares
that are withheld from voting as to any nominee will have the same
effect as a vote against the nominee, but broker non-votes will have no
effect.
. The proposal to amend the Company's 1998 Long-Term Incentive Plan to
increase the number of shares of Common Stock available for awards
thereunder from 1,000,000 to 2,000,000 shares (Proposal 3) must be
approved by a majority of the votes represented at the Annual Meeting
and entitled to be cast on the proposal . As a result, abstentions will
have the same effect as a vote against the proposal, but broker non-
votes will have no effect.
. The proposal to ratify the appointment of independent accountants
(Proposal 4) must be approved by a majority of the votes represented at
the Annual Meeting and entitled to be cast on the proposal. As a result,
abstentions will have the same effect as a vote against the proposal,
but broker non-votes will have no effect.
PROXIES; OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The accompanying proxy card is for use at the Annual Meeting if a shareholder
is unable to attend in person or is able to attend but does not wish to vote in
person. Shareholders should specify their choices with regard to each proposal
on the enclosed proxy card. All properly executed and dated proxy cards
delivered by shareholders to the Company in time to be voted at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the instructions given. If no specific instructions are given, the shares
represented by a signed and dated proxy card will be voted "FOR" the election
of the two director nominees named in Proposal 2 and "FOR" each of Proposals 1,
3 and 4.
The Board of Directors is not aware of any other business to be presented to
a vote of the shareholders at the Annual Meeting. As permitted by Rule 14a-4(c)
of the Securities and Exchange Commission, the persons named as proxies on the
proxy cards will have discretionary authority to vote in their judgment on any
proposals presented by shareholders for consideration at the Annual Meeting
that are submitted to the Company after November 11, 1998. Such proxies also
will have discretionary authority to vote in their judgment upon the election
of any person as a director in place of a nominee named in Proposal 2 who is
unable to serve or for good cause will not serve as a director, and upon
matters incident to the conduct of the Annual Meeting.
The giving of a proxy does not affect the right to vote in person should the
shareholder attend the Annual Meeting. Any shareholder who has given a proxy
has the power to revoke it at any time before it is voted by giving written
notice of revocation to MAPICS, Inc., 5775-D Glenridge Drive, Atlanta, Georgia
30328, Attention: Martin D. Avallone, Vice President, General Counsel and
Secretary, by executing and delivering a proxy card bearing a later date to Mr.
Avallone, or by voting in person at the Annual Meeting. If a shareholder will
not be attending the Annual Meeting, any proxy or notice should be returned in
time for receipt no later than the close of business on the day preceding the
Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy
materials to the beneficial owners of shares held of record by them. The
Company also may solicit proxies through its directors, officers and employees
in person and by telephone and facsimile, without payment of additional
compensation to such persons. All expenses incurred in connection with the
solicitation of proxies will be borne by the Company.
2
<PAGE>
STOCK OWNERSHIP
The following table sets forth certain information as of November 1, 1998
(unless otherwise indicated) regarding the beneficial ownership of the
Company's voting stock by (a) each person who is known by the Company to own
more than 5% of any class of the Company's voting securities, (b) each
director and nominee for director, (c) each executive officer named in the
Summary Compensation Table herein and (d) all directors and executive officers
as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1)
- ------------------------------------ ------------ --------
<S> <C> <C>
General Atlantic Partners, LLC, William E. Ford and
Stephen P. Reynolds(2)................................. 4,010,000 17.60%
Clover Capital Management, Inc.(3)...................... 1,981,545 10.55
Morgan Stanley, Dean Witter, Discover & Co.(4).......... 1,031,900 5.50
The Kaufmann Fund, Inc.(5).............................. 1,010,000 5.38
FMR Corp.(6)............................................ 980,800 5.22
George A. Chamberlain 3d(7)............................. 101,440 *
Richard C. Cook(8)...................................... 97,000 *
Roger J. Heinen, Jr.(9)................................. 5,720 *
Edward J. Kfoury(10).................................... 27,541 *
Terry H. Osborne........................................ 1,296 *
H. Mitchell Watson, Jr.(11)............................. 15,712 *
Thomas F. Aery(12)...................................... 32,385 *
William J. Gilmour(13).................................. 28,650 *
All directors and executive officers as a group (9
persons)(14)........................................... 4,295,315 18.65
</TABLE>
- --------
* Less than one percent.
(1) The named persons have sole voting and investment power with regard to
all shares shown as beneficially owned by them, except as noted below.
Pursuant to the rules of the Securities and Exchange Commission, the
number of shares of Common Stock beneficially owned by a specified person
or group includes shares issuable pursuant to convertible securities,
warrants and options held by such person or group which may be converted
or exercised within 60 days after November 1, 1998. Such shares are
deemed to be outstanding for the purpose of computing the percentage of
the class beneficially owned by such person or group but are not deemed
to be outstanding for the purpose of computing the percentage of the
class beneficially owned by any other person or group.
(2) Includes 176,058 shares of Series D Preferred Stock held by General
Atlantic Partners 21, L.P. ("GAP 21"), 23,942 shares of Series D
Preferred Stock and 13,681 shares of Series E Preferred Stock held by GAP
Coinvestment Partners, L.P. ("GAP Coinvestment") and 86,319 shares of
Series E Preferred Stock held by General Atlantic Partners 32, L.P. ("GAP
32"). Each share of Series D Preferred Stock and Series E Preferred Stock
is convertible at any time into 10 shares of Common Stock. Also includes
863,190 and 136,810 shares of Common Stock underlying warrants held by
GAP 32 and GAP Coinvestment, respectively. As a result of the foregoing,
GAP Coinvestment, GAP 21, GAP 32 and General Atlantic Partners, LLC ("GAP
LLC"), the sole general partner of GAP 21 and GAP 32 (collectively, the
"GA Entities"), own beneficially 4,000,000 shares of Common Stock. On
November 20, 1998, (i) GAP 21 converted 88,029 shares of Series D
Preferred Stock into 880,290 shares of Common Stock, (ii) GAP
Coinvestment converted 11,971 shares of Series D Preferred Stock and
6,841 shares of Series E Preferred Stock into an aggregate of 188,120
shares of Common Stock and (iii) GAP 32 converted 43,160 shares of Series
E Preferred Stock into 431,600 shares of Common Stock (collectively, the
"GAP Conversions"). After giving effect to the GAP Conversions, the GA
Entities own beneficially 1,500,010 shares of Common Stock, 100,000
shares (80.0%) of the outstanding Series D Preferred Stock, 49,999 shares
(100%) of the outstanding Series E Preferred Stock and 100% of the
warrants for the purchase of a total of 1,000,000 shares of Common Stock
referred to above. Mr. Ford, Mr. Reynolds, William O. Grabe, Steven A.
Denning, David C. Hodgson, Peter L. Bloom, Franchon M. Smithson and J.
Michael Cline (the "GA Members") are the managing members of GAP LLC and
are the general partners of GAP Coinvestment. The GA Members disclaim
beneficial ownership of such shares, except to the extent of each
member's pecuniary interest therein. Also includes 5,000 shares of Common
Stock held of record by Mr. Ford and 5,000 shares issuable to Mr. Ford
upon the exercise of outstanding options. The Company expects that Mr.
Ford, an incumbent director who is the designee of GAP 21, will resign
from the Board of Directors on or about the date of the Annual Meeting
and that GAP 21 will designate Mr. Reynolds as a director of the Company
for a term commencing on or about the date of the Annual Meeting and
expiring at the 2000 Annual Meeting of Shareholders. The address of GAP
LLC and Messrs. Ford and Reynolds is 3 Pickwick Plaza, Greenwich,
Connecticut 06830.
(3) According to Amendment No. 5 to Schedule 13G dated November 10, 1998.
Clover Capital Management, Inc., a registered investment adviser, has
shared voting and investment power with respect to all of the shares of
Common Stock shown. The address of Clover Capital Management, Inc. is 11
Tobey Village Office Park, Pittsford, New York 14534.
(4) According to Schedule 13G dated February 12, 1998. Morgan Stanley, Dean
Witter, Discover & Co., a registered investment advisor, has shared
voting and investment power with respect to all of the shares of Common
Stock shown. The address of Morgan Stanley, Dean Witter, Discover & Co.
is 1585 Broadway, New York, New York 10036.
3
<PAGE>
(5) According to Amendment No. 3 to Schedule 13G dated February 17, 1998. The
Kaufmann Fund, Inc., a registered investment company, has shared voting
and investment power with respect to all of the shares of Common Stock
shown. The address of The Kaufmann Fund, Inc. is 140 E. 45th Street, New
York, New York 10017.
(6) According to Schedule 13G dated February 14, 1998. Consists of 591,400
shares of Common Stock held by Fidelity Management & Research Company
("Fidelity"), a registered investment advisor, and 389,400 shares of
Common Stock held by Fidelity Management Trust Company ("FMT"), an
investment manager for various institutional accounts, each of which is a
wholly-owned subsidiary of FMR Corp. FMR Corp. has sole investment power,
and the Board of Trustees of the Fidelity Funds has sole voting power,
with respect to the 591,400 shares of Common Stock held by Fidelity. FMR
Corp. has sole voting and investment power with respect to the 389,400
shares of Common Stock held by FMT. The address of FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109.
(7) Includes 101,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(8) Consists of 96,800 shares of Common Stock issuable upon the exercise of
outstanding stock options and 200 shares of Common Stock held by Mr.
Cook's wife.
(9) Includes 5,000 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(10) Includes 11,950 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(11) Includes 5,000 shares of Common Stock issuable upon the exercise of
outstanding stock options and 5,000 shares of Common Stock held by Mr.
Watson's wife.
(12) Consists of 32,385 shares of Common Stock issuable upon the exercise of
outstanding stock options. In November 1998, Mr. Aery exercised options
for 10,000 shares of Common Stock and, immediately following such
exercise, sold 9,000 of such shares of Common Stock.
(13) Includes 28,477 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(14) Includes 259,477 shares of Common Stock which the directors and executive
officers as a group have the right to acquire upon the exercise of
outstanding stock options granted under the Company's stock plans. Also
includes a total of 1,000,000 shares of Common Stock underlying warrants
held by GAP 32 and GAP Coinvestment and a total of 3,000,000 shares of
Common Stock issuable to GAP 21, GAP 32 and GAP Coinvestment upon
conversion of the Series D Preferred Stock and Series E Preferred Stock.
After giving effect to the GAP Conversions on November 17, 1998, an
aggregate of 1,499,990 shares of Common Stock remain issuable to GAP 21,
GAP 32 and GAP Coinvestment upon conversion of the Series D Preferred
Stock and Series E Preferred Stock, and GAP 21, GAP 32 and GAP
Coinvestment own directly 1,500,010 shares of Common Stock.
4
<PAGE>
PROPOSAL 1
AMENDMENT OF THE ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company recommends that the shareholders
approve an amendment to the Articles of Incorporation to increase the number
of authorized shares of Common Stock from 50,000,000 to 90,000,000 shares.
Specifically, the Company's Articles of Incorporation will be amended by
deleting the first sentence of Article Two thereof and substituting the
following for such sentence:
"The corporation shall have authority, to be exercised by the Board
of Directors, to issue not more than 90,000,000 shares of Common Stock,
$.01 par value per share, and not more than 1,000,000 shares of
Preferred Stock, $1.00 par value per share."
In all other respects, the terms and provisions of the Company's Articles of
Incorporation will remain unaltered.
As of December 14, 1998, the record date for the Annual Meeting, shares
of Common Stock were outstanding, 1,749,990 shares were issuable upon the
conversion of outstanding shares of Preferred Stock, 1,526,309 shares were
issuable upon the exercise of outstanding warrants, and shares were
reserved for issuance under the Company's various benefit plans, leaving only
shares available for issuance for other purposes. If the proposed amendment
is adopted, up to 40,000,000 additional shares of Common Stock will be
available for future issuance or sale without further shareholder approval.
However, shareholder approval of particular transactions may at the time be
required by law or by the rules or policies of any exchange or market on which
shares of the Common Stock may be traded or quoted. The Common Stock is
presently traded on the Nasdaq National Market.
The Company has no present plans to issue additional shares of Common Stock,
except for issuances for which shares have already been reserved. Upon
approval of the proposed amendment by the shareholders, the additional shares
of Common Stock would be authorized but unissued and unreserved and could be
issued for various general corporate purposes including, without limitation,
stock splits, stock dividends, benefit plans, financing transactions or
acquisitions. The Board of Directors believes that the additional authorized
Common Stock would give the Company greater flexibility by allowing the
Company to issue shares of Common Stock without the expense and delay of a
shareholders' meeting to authorize additional shares if and when the need
arises. However, the issuance of the additional shares of Common Stock may
have a dilutive effect on the Company's earnings per share and, for a
shareholder that does not purchase additional shares to maintain such
shareholder's pro rata interest in the Company, on such shareholder's
percentage of voting power.
In addition, the issuance of the additional shares of Common Stock
authorized by the proposed amendment may render more difficult or discourage a
merger, tender offer or proxy contest involving the Company, the assumption of
control of the Company by the holder of a large block of the Company's
securities or the removal of incumbent management. For example, the issuance
of the additional shares of Common Stock could discourage a potential acquiror
by (i) increasing the number of shares of Common Stock necessary to gain
control of the Company; (ii) permitting the Company, through the public or
private issuance of shares of Common Stock, to dilute the stock ownership of
the potential acquiror; and (iii) permitting the Company to privately place
shares of Common Stock with purchasers who would side with the Board of
Directors in opposing a takeover bid. The proposed amendment is not being
recommended in response to any specific effort of which the Company's
management is aware to accumulate shares or obtain control of the Company. In
addition, the proposed amendment is not part of a plan by management to adopt
a series of amendments to the Company's Articles of Incorporation that have
anti-takeover effects, and management does not presently intend to propose
other measures in future proxy solicitations that will have anti-takeover
effects.
If the proposed amendment is approved by the shareholders, the amendment to
the Articles of Incorporation will become effective upon the filing of
Articles of Amendment thereto with the Secretary of State of Georgia,
5
<PAGE>
which will occur as soon as practicable following the approval of the proposed
amendment by the shareholders. Shareholders of the Company have no dissenters'
rights with respect to the proposed amendment and will have no preemptive
rights in connection with the issuance of any new shares of Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 50,000,000 TO 90,000,000
SHARES.
PROPOSAL 2
ELECTION OF DIRECTORS
NOMINEES
Pursuant to the Company's Articles of Incorporation and Bylaws, the number
of directors of the Company may not be less than three nor more than eleven,
with the precise number to be determined by resolution of the Company's
shareholders or Board of Directors from time to time. Currently, the Board is
comprised of seven directors. The Company's Board of Directors is divided into
three classes, which are as nearly equal in number as possible. The directors
in each class are elected by the shareholders for a term of three years and
until their successors are elected and qualified. The term of office of one of
the classes of directors expires each year at the Annual Meeting of
Shareholders, and a new class of directors is elected by the shareholders each
year at that time.
At the Annual Meeting, the terms of the two Class II directors, George A.
Chamberlain 3d and Richard C. Cook, will expire, and the Board of Directors
has nominated each of these individuals to stand for re-election as directors
at the Annual Meeting. If elected by the shareholders, each of the nominees
will serve a three-year term which will expire at the 2002 Annual Meeting of
Shareholders. If either of the nominees should be unavailable to serve for any
reason (which is not anticipated), the Board of Directors may designate a
substitute nominee or nominees (in which case the persons named as proxies on
the enclosed proxy card will vote the shares represented by all valid proxy
cards for the election of such substitute nominee or nominees), allow the
vacancy or vacancies to remain open until a suitable candidate or candidates
are located and nominated by resolution of the Board of Directors, or by
resolution thereof provide for a lesser number of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO RE-ELECT GEORGE A. CHAMBERLAIN 3D AND RICHARD C. COOK AS
DIRECTORS OF THE COMPANY FOR A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL
MEETING OF SHAREHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND
QUALIFIED.
INFORMATION REGARDING NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information regarding the two
nominees for director, the four incumbent directors whose terms as directors
will continue following the Annual Meeting and Stephen P. Reynolds, whom the
Company expects will be designated by GAP 21 as a director in place of its
current designee to the Board, William E. Ford. The Company anticipates that
Mr. Ford will resign from the Board of Directors on or about the date of the
Annual Meeting. Mr. Reynolds would then serve the remaining portion of Mr.
Ford's term, which expires at the 2000 Annual Meeting of Shareholders.
6
<PAGE>
CLASS II DIRECTORS NOMINATED TO SERVE UNTIL THE 2002 ANNUAL MEETING OF
SHAREHOLDERS
George A. Chamberlain 3d.... Mr. Chamberlain, age 63, has been a director of
the Company since August 1997. Mr. Chamberlain
has served as the Chief Financial Officer of
Radnet, Inc., a computer software company, since
September 1997. From September 1994 until July
1997, he served as the Company's Chief Financial
Officer. Prior to joining the Company, Mr.
Chamberlain was an Executive Vice President with
Capital Technologies, Inc., a consulting and
venture capital company, during 1993 and 1994.
Mr. Chamberlain retired from Digital Equipment
Corporation in 1992, after 23 years of service,
where his last position was Vice President of
Finance.
Richard C. Cook............. Mr. Cook, age 51, has been the Company's
President and Chief Executive Officer and a
director of the Company since August 1997. From
July 1996 to August 1997, Mr. Cook served as the
Company's Senior Vice President and General
Manager, MAPICS Business Group. From October
1994 to July 1996, he served as the Company's
Vice President and General Manager, MAPICS
Business Group. Mr. Cook served as the
President, Chief Executive Officer and Chairman
of the Board of Mapics, Inc., a former
subsidiary of the Company, from February 1993 to
September 1994. Mr. Cook was employed by
International Business Machines Corporation
("IBM") as Director of its Atlanta Software
Development Laboratory from March 1990 to
February 1993 and as Director of its Corporate
Computer Integrated Manufacturing Project Office
from March 1988 to April 1990.
CLASS I DIRECTORS TO SERVE UNTIL THE 2001 ANNUAL MEETING OF SHAREHOLDERS
Roger J. Heinen, Jr......... Mr. Heinen, age 47, has been a director of the
Company since September 1997. From January 1993
until March 1996, he served as a Senior Vice
President of Microsoft Corporation. Prior
thereto, he was a Senior Vice President of Apple
Computer, Inc. from January 1990 until January
1993. Mr. Heinen is also a director of ANSYS,
Inc., Avid Technology, Inc., Radnet, Inc. and
Glassbrook, Inc.
Edward J. Kfoury............ Mr. Kfoury, age 60, has been a director of the
Company since May 1993. He was initially
appointed to the Board of Directors of Marcam as
a designee of IBM. Mr. Kfoury is no longer a
designee of IBM. Mr. Kfoury served as a division
President and as a Vice President of IBM until
June 1, 1993, the effective date of his
retirement. Mr. Kfoury is also a director of
Dendrite, Inc.
CLASS III DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF SHAREHOLDERS
Stephen P. Reynolds......... Mr. Reynolds, age 46, is expected to be appointed
to the Board of Directors on or about the date
of the Annual Meeting as a designee of GAP 21
pursuant to the terms of its purchase of Series
D Preferred Stock. Mr. Reynolds is a managing
member of GAP LLC and has been associated with
GAP LLC or its predecessors since April 1980.
Mr. Reynolds is also a director of Computer
Learning Centers, Inc., Brigham Exploration
Company, Inc., Solo Serve Corporation and SS&C
Technologies, Inc.
Terry H. Osborne............
Mr. Osborne, age 60, was elected a director of
the Company in January 1998. Mr. Osborne served
as President and Chief Operating Officer
7
<PAGE>
of System Software Associates, Inc. ("SSA"), a
computer software company, from November 1994 to
October 1996, the date of his retirement. From
October 1987 to November 1994, he served as SSA's
General Manager and Vice President--Europe. Prior
to joining SSA, he was employed by IBM in various
capacities since 1961, including Vice President
level positions in both the United States and
Europe. Mr. Osborne is Chairman of Cimax
International and is a director of Prime Response
Group, Inc., Firepond Inc. Dendrite Inc. and
Eyretel, Ltd.
H. Mitchell Watson, Jr..... Mr. Watson, age 61, has been a director of the
Company and Chairman of the Board of Directors
since September 1997. Mr. Watson has served as
the President of Sigma Group of America, a
consulting company, since June 1992. From January
1989 until June 1992, he was President and Chief
Executive Officer of Rolm Co., a joint venture of
IBM and Siemen's AG. In addition, he is a retired
Vice President of IBM. Mr. Watson is also a
director of Praxair Inc. and Vice Chairman of
Helen Keller International.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through meetings
of the full Board and through committees of the Board, including the Audit
Committee and the Compensation Committee. During the fiscal year ended
September 30, 1998 ("fiscal 1998"), the Board of Directors held seven
meetings, the Compensation Committee held six meetings and the Audit Committee
held four meetings. Each director of the Company attended at least 75% of all
meetings of the full Board of Directors and of each committee of the Board of
which such director was a member.
The Audit Committee is responsible for reviewing with the Company's
independent accountants their audit plan, the scope and results of their audit
engagement and the accompanying management letter, if any, consulting with the
independent accountants and management with regard to the Company's accounting
methods and the adequacy of its internal accounting controls, approving
professional services provided by the independent accountants, reviewing the
independence of the independent accountants, and reviewing the range of the
independent accountants' audit and nonaudit fees. The Audit Committee is
comprised of William E. Ford (Chairman), George A. Chamberlain 3d, Roger J.
Heinen, Jr. and H. Mitchell Watson, Jr. The Company expects that Mr. Ford, an
incumbent director who is the designee of GAP 21, will resign from the Board
of Directors on or about the date of the Annual Meeting, that GAP 21 will
designate Stephen P. Reynolds as a director of the Company to serve the
remaining portion of Mr. Ford's term and that Mr. Reynolds will replace Mr.
Ford on the Audit Committee.
The Compensation Committee is responsible for making relevant compensation
decisions of the Company and for administering and interpreting the Company's
employee benefit plans, which includes, among other things, determining which
directors, officers and employees will receive awards under the plans, when
the awards will be granted, the type of awards to be granted, the number of
shares or cash involved in each award, the time or times when any options
granted will become exercisable and, subject to certain conditions, the price
and duration of such options. The Compensation Committee is comprised of
Edward J. Kfoury (Chairman), H. Mitchell Watson, Jr. and Terry H. Osborne.
The Board of Directors as a whole functions as a nominating committee to
select management's nominees for election to the Board. The Board of Directors
will also consider nominees recommended by shareholders. For a description of
requirements regarding shareholder nominations and other proposals, see
"Shareholders' Proposals for 2000 Annual Meeting" and "Voting--Proxies; Other
Matters That May Come Before the Annual Meeting."
8
<PAGE>
DIRECTOR COMPENSATION
As compensation for services as a director, the Company grants to each
member of the Company's Board of Directors who is not an employee of the
Company (a "Non-Employee Director"), upon the commencement of service as a
director, a one-time grant under the Company's 1998 Non-Employee Director
Stock Option Plan (the "DSOP") of an option to purchase 20,000 shares of
Common Stock and thereafter an annual grant under the DSOP of an option to
purchase 3,000 shares of Common Stock. Options granted under the DSOP vest 25%
on each anniversary of the grant date so that on the fourth anniversary they
are fully vested.
In addition, from October 1, 1997 until January 1, 1998, Board members who
were not employees received $1,000 for each Board meeting attended and for
each committee meeting attended on a day other than one on which the Board of
Directors met. During the remainder of fiscal 1998, Non-Employee Directors
received, in lieu of such cash compensation, (a) an annual cash retainer of
$3,000 and (b) $1,000 for each Board meeting or committee meeting attended (or
$500 if such meeting was attended by telephone). Beginning January 1, 1999,
the annual cash retainer will increase to $8,000. Effective as of February 3,
1998, the Company's shareholders adopted the 1998 Non-Employee Directors Stock
Incentive Plan (the "DSIP"). Pursuant to the DSIP, Non-Employee Directors are
required to take 50% of their annual retainer and meeting fees, and may elect
to take the remaining 50% of their annual retainer and meeting fees, in the
form of (a) Common Stock, (b) deferred rights to receive Common Stock or (c)
options to acquire Common Stock.
Under the Company's Deferred Compensation Plan for Non-Employee Directors
(the "Deferred Compensation Plan"), Non-Employee Directors may elect to defer
all or any part of their fees for services as a director. Pursuant to the
Deferred Compensation Plan, eligible directors of the Company may elect to
defer receipt of all or a specified portion of their compensation in the form
of cash with an interest rate tied to United States treasury bills. The
Deferred Compensation Plan provides that any director's compensation which is
deferred thereunder will be paid in cash after the termination of such
director's service as a director. Participating directors may elect to have
such deferred compensation paid in a lump sum or in up to ten annual
installments. Payment of compensation which has been deferred under the
Deferred Compensation Plan commences in January of the year following the year
in which service as a director terminates, except that earlier or accelerated
distributions may be made in certain events of unforeseeable emergency. No
directors currently have elected to participate in the Deferred Compensation
Plan, and it is anticipated that the Company will terminate the Deferred
Compensation Plan during fiscal 1999.
Under the Company's current Directors as Consultants policy, the Board of
Directors may, upon the request of the Company's President and Chief Executive
Officer, retain its directors as consultants from time to time. The Company
will pay such a consultant $3,000 per day for each day that he provides
services to the Company in his capacity as a consultant or, if such services
are provided for less than a full day, the Company will pay the consultant
$375 for each hour that such services are provided. However, the aggregate
amount of such compensation paid to any single consultant may not exceed
$45,000 per year. In addition, the Company will reimburse each consultant's
reasonable travel and living expenses incurred in connection with the
provision of such services. During fiscal 1998, Mr. Chamberlain earned $45,000
for his services as a consultant to the Company.
Directors who are employees of the Company receive no directors' fees. In
addition, pursuant to an agreement with the Company, Messrs. Ford and Reynolds
have waived any and all rights to receive all cash compensation, stock options
and stock grants given to other members of the Board of Directors.
9
<PAGE>
PROPOSAL 3
AMENDMENT OF THE 1998 LONG-TERM INCENTIVE PLAN
TO INCREASE THE AVAILABLE SHARES OF COMMON STOCK
The Company currently maintains its 1998 Long-Term Incentive Plan (the
"Incentive Plan"), under which stock options and other incentive awards may be
granted to employees, officers, consultants and directors of the Company. As
of December 14, 1998, there were shares remaining available for awards
under the Incentive Plan. On November 4, 1998, the Board of Directors
recommended that the Incentive Plan be amended, subject to the approval of the
shareholders, to increase the number of shares of Common Stock available for
awards under the Incentive Plan to 2,000,000, an increase of 1,000,000 shares.
A summary of the Incentive Plan, as proposed to be amended, is set forth
below. The summary is qualified in its entirety by the full text of the
Incentive Plan. The Company will provide, upon request and without charge, a
copy of the full text of the Incentive Plan to each person to whom a copy of
this Proxy Statement is delivered. Requests should be directed to MAPICS,
Inc., 5775-D Glenridge Drive, Atlanta, Georgia 30328, Attention: Martin D.
Avallone, Vice President, General Counsel and Secretary.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO AMEND THE INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AVAILABLE FOR AWARDS THEREUNDER FROM 1,000,000 TO 2,000,000
SHARES.
GENERAL
The purpose of the Incentive Plan is to promote the success and enhance the
value of the Company by linking the personal interests of employees, officers,
consultants and directors to those of the shareholders and by providing such
persons with an incentive for outstanding performance. As of November 30,
1998, there were approximately 400 persons eligible to participate in the
Incentive Plan.
The Incentive Plan authorizes the granting of awards ("Awards") to
employees, officers, consultants and directors of the Company or its
affiliated companies in the following forms: (a) options to purchase shares of
Common Stock ("Options"), which may be incentive stock options or non-
qualified stock options; (b) stock appreciation rights ("SARs"); (c)
performance units ("Performance Units"); (d) restricted stock ("Restricted
Stock"); (e) dividend equivalents ("Dividend Equivalents"); and (f) other
stock-based awards.
Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company may not deduct compensation in excess of $1 million
paid to its chief executive officer and the four next most highly compensated
executive officers of the Company. The Incentive Plan is designed to comply
with Section 162(m) of the Code so that the grant of Options and SARs under
the plan, and other Awards, such as Performance Units, that are conditioned on
the performance goals described in Section 13.13 of the plan, will be excluded
from the calculation of annual compensation for purposes of Section 162(m) of
the Code and will be fully deductible by the Company.
NUMBER OF SHARES
Subject to adjustment as provided in the Incentive Plan, the aggregate
number of shares of Common Stock reserved and available for Awards or which
may be used to provide a basis of measurement for or to determine the value of
an Award (such as with a SAR or Performance Share) is 1,000,000, of which no
more than 20% may be granted in the form of restricted or unrestricted stock
awards. The aggregate number of shares available for Awards under the Plan is
proposed to be increased to 2,000,000, of which no more than 20% may be
granted in the form of restricted or unrestricted stock awards. The maximum
number of shares of Common Stock with respect to one or more Options and/or
SARs that may be granted during any one calendar year under the Incentive Plan
to any one participant is 300,000. The maximum fair market value (measured as
of the date of grant) of any Awards other than Options and SARs that may be
received by a participant (less any consideration paid by the participant for
such Award) during any one calendar year under the Incentive Plan is
$2,000,000.
10
<PAGE>
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee. The
Compensation Committee has the power, authority and discretion to designate
participants; determine the type or types of Awards to be granted to each
participant and the terms and conditions thereof; establish, adopt or revise
any rules and regulations as it may deem necessary or advisable to administer
the Incentive Plan; and make all other decisions and determinations that may
be required under, or as the Compensation Committee deems necessary or
advisable to administer, the Incentive Plan.
AWARDS
Stock Options. The Compensation Committee is authorized to grant Options,
which may be incentive stock options ("ISOs") or non-qualified stock options
("NSOs"), to participants. All Options will be evidenced by a written Award
Agreement between the Company and the participant, which will include such
provisions as may be specified by the Compensation Committee, provided that
the exercise price for any Option shall not be less than the fair market value
of the underlying Common Stock as of the date of grant, and the terms of any
ISO must meet the requirements of Section 422 of the Code. The Compensation
Committee may provide in an Award Agreement for the automatic grant of
additional Options to the participant equal to the number of shares of Common
Stock, if any, surrendered in payment of the exercise price of the original
Option (a "Reload Feature"). The exercise price for the new Option would be
equal to the Fair Market Value of the surrendered Common Stock on the date of
exercise of the original Option, and the term of the new Option would be co-
extensive with the term of the original Option. During fiscal 1998, the
Company did not grant any Options having a Reload Feature.
Stock Appreciation Rights. The Compensation Committee may grant SARs to
participants. Upon the exercise of a SAR, the participant has the right to
receive the excess, if any, of the fair market value of one share of Common
Stock on the date of exercise, over the grant price of the SAR as determined
by the Compensation Committee, which will not be less than the fair market
value of one share of Common Stock on the date of grant. All awards of SARs
will be evidenced by an Award Agreement, reflecting the terms, methods of
exercise, methods of settlement, form of consideration payable in settlement,
and any other terms and conditions of the SAR, as determined by the
Compensation Committee at the time of grant.
Performance Units. The Compensation Committee may grant Performance Units to
participants on such terms and conditions as may be selected by the
Compensation Committee. The Compensation Committee will have the complete
discretion to determine the number of Performance Units granted to each
participant and to set performance goals and other terms or conditions to
payment of the Performance Units in its discretion which, depending on the
extent to which they are met, will determine the number and value of
Performance Units that will be paid to the participant.
Restricted Stock Awards. The Compensation Committee may make awards of
Restricted Stock to participants, which will be subject to such restrictions
on transferability and other restrictions as the Compensation Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends, if any, on the Restricted
Stock). In May 1998, the Compensation Committee amended the Incentive Plan to
include minimum vesting restrictions on awards of Restricted Stock in excess
of 10% of the total shares authorized to be granted under the Incentive Plan.
The Company did not grant any Restricted Stock Awards during fiscal 1998.
Dividend Equivalents. The Compensation Committee is authorized to grant
Dividend Equivalents to participants subject to such terms and conditions as
may be selected by the Compensation Committee. Dividend Equivalents entitle
the participant to receive payments equal to dividends with respect to all or
a portion of the number of shares of Common Stock subject to an Award, as
determined by the Compensation Committee. The Compensation Committee may
provide that Dividend Equivalents be paid or distributed when accrued or be
deemed to have been reinvested in additional shares of Common Stock, or
otherwise reinvested.
11
<PAGE>
Other Stock-Based Awards. The Compensation Committee may, subject to
limitations under applicable law, grant to participants such other Awards that
are payable in, valued in whole or in part by reference to, or otherwise based
on or related to shares of Common Stock, as deemed by the Compensation
Committee to be consistent with the purposes of the Incentive Plan, including
without limitation shares of Common Stock awarded purely as a "bonus" and not
subject to any restrictions or conditions, convertible or exchangeable debt
securities, other rights convertible or exchangeable into shares of Common
Stock, and Awards valued by reference to book value of shares of Common Stock
or the value of securities of or the performance of specified affiliated
companies of the Company. The Compensation Committee will determine the terms
and conditions of any such Awards.
Performance Goals. The Compensation Committee may determine that any Award
will be determined solely on the basis of (a) the achievement by the Company
or a parent or subsidiary of a specified target return, or target growth in
return, on equity or on assets, (b) the Company's stock price, (c) the
achievement by an individual or a business unit of the Company or a parent or
subsidiary of a specified target, or target growth in, revenues, net income or
earnings per share, (d) the achievement of objectively determinable goals with
respect to product delivery, product quality, customer satisfaction, meeting
budgets and/or retention of employees or (e) any combination of the goals set
forth in (a) through (d) above. If an Award is made on such basis, the
Compensation Committee must establish goals prior to the beginning of the
period for which such performance goal relates (or such later date as may be
permitted under Code Section 162(m)), and the Compensation Committee may for
any reason reduce (but not increase) any Award, notwithstanding the
achievement of a specified goal. Any payment of an Award granted with
performance goals will be conditioned on the written certification of the
Compensation Committee in each case that the performance goals and any other
material conditions were satisfied.
Limitations on Transfer; Beneficiaries. No unexercised or restricted Award
will be assignable or transferable by a participant other than by will or the
laws of descent and distribution or, except in the case of an ISO, pursuant to
a qualifying domestic relations order; provided, however, that the
Compensation Committee may (but need not) permit other transfers where the
Compensation Committee concludes that such transferability (a) does not result
in accelerated taxation, (b) does not cause any Option intended to be an ISO
to fail to be described in Code Section 422(b), and (c) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, any state or federal tax or securities laws or
regulations applicable to transferable Awards. A participant may, in the
manner determined by the Compensation Committee, designate a beneficiary to
exercise the rights of the participant and to receive any distribution with
respect to any Award upon the participant's death.
Acceleration Upon Certain Events. Upon the participant's death, all
outstanding Options, SARs and other Awards in the nature of rights that may be
exercised will become fully exercisable and all restrictions on outstanding
Awards will lapse. Upon the participant's disability, all Awards will continue
to vest and will lapse in accordance with the Incentive Plan or the applicable
Award Agreement. Any Options or SARs will thereafter continue or lapse in
accordance with the other provisions of the Incentive Plan and the Award
Agreement. In the event of a Change in Control (as defined in the Incentive
Plan) of the Company, all outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised will become fully vested and all
restrictions on all outstanding Awards will lapse. In the event of the
occurrence of any circumstance, transaction or event not constituting a Change
in Control but which the Board of Directors deems to be, or to be reasonably
likely to lead to, an effective change in control of the Company, the
Compensation Committee or the Board of Directors may, in their respective sole
discretion, declare all outstanding Options, SARs and other Awards in the
nature of rights that may be exercised to become fully vested and/or all
restrictions on all outstanding Awards to lapse, in each case as of such date
as the Compensation Committee or the Board of Directors may, in their
respective sole discretion, declare, which may be on or before the
consummation of such transaction or event.
TERMINATION AND AMENDMENT
The Board or the Compensation Committee may amend, modify or terminate the
Incentive Plan without shareholder approval; provided, however, that the Board
or Committee may condition any amendment on the
12
<PAGE>
approval of shareholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No termination, amendment, or modification of the
Incentive Plan may adversely affect any Award previously granted under the
Incentive Plan, without the written consent of the participant. The
Compensation Committee may amend, modify or terminate any outstanding Award
without approval of the participant; provided, however, that such amendment,
modification or termination may not, without the participant's consent, reduce
or diminish the value of such Award determined as if the Award had been
exercised, vested, cashed in or otherwise settled on the date of such
amendment or termination; and provided further that, except as otherwise
permitted in the Plan, the exercise price of any Option may not be reduced and
the original term of any Option may not be extended.
CERTAIN FEDERAL INCOME TAX EFFECTS
Non-qualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Common Stock acquired upon the
exercise of such option over the exercise price, and the Company will receive
a corresponding deduction (subject to the provisions of Section 162(m) of the
Code). A subsequent sale or exchange of such shares will result in gain or
loss measured by the difference between (a) the exercise price, increased by
any compensation reported upon the participant's exercise of the option, and
(b) the amount realized on such sale or exchange. Such gain or loss will be
capital in nature if the shares were held as a capital asset and will be long-
term if such shares were held for the applicable long-term capital gain
holding period.
Incentive Stock Options. Under present federal income tax regulations, there
will be no federal income tax consequences to either the Company or the
participant upon the grant of an ISO or the exercise thereof by the
participant. If the participant holds the shares of Common Stock for the
greater of two years after the date the Option was granted or one year after
the acquisition of such shares of Common Stock (the "required holding
period"), the difference between the aggregate exercise price and the amount
realized upon disposition of the shares of Common Stock will constitute a
capital gain or loss, and the Company will not be entitled to a federal income
tax deduction. If the shares of Common Stock are disposed of in a sale,
exchange or other "disqualifying disposition" during the required holding
period, the participant will realize taxable ordinary income in an amount
equal to the excess (if any) of the fair market value of the Common Stock
purchased at the time of exercise (or, if less, the amount realized on the
disposition of the shares) over the aggregate exercise price, and the Company
will be entitled to a federal income tax deduction equal to such amount
(subject to the provisions of Section 162(m) of the Code). Upon exercise of an
ISO, the participant may be subject to alternative minimum tax on certain
items of tax preference. If an ISO is exercised at a time when it no longer
qualifies as an incentive stock option, the option will be treated as an NSO.
SARs. Under present federal income tax regulations, a participant receiving
a non-discounted SAR will not recognize income, and the Company will not be
allowed a tax deduction, at the time the Award is granted. When a participant
exercises the SAR, the amount of cash and the fair market value of any shares
of Common Stock received will be ordinary income to the participant and will
be allowed as a deduction for federal income tax purposes to the Company
(subject to the provisions of Section 162(m) of the Code).
Performance Units. Under present federal income tax regulations, a
participant receiving Performance Units will not recognize income and the
Company will not be allowed a tax deduction at the time the Award is granted.
When a participant receives payment of Performance Units, the amount of cash
and the fair market value of any shares of Common Stock received will be
ordinary income to the participant and will be allowed as a deduction for
federal income tax purposes to the Company (subject to the provisions of
Section 162(m) of the Code).
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to
the date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award
13
<PAGE>
is granted. When the restrictions lapse, the participant will recognize
ordinary income equal to the fair market value of the Common Stock, and the
Company will be entitled to a corresponding tax deduction at that time (subject
to the provisions of Section 162(m) of the Code).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of December 14, 1998, Options had been granted under the Incentive Plan to
the following persons and groups. Any future Awards will be made at the
discretion of the Compensation Committee. Therefore, it is not presently
possible to determine the benefits or amounts that will be received by such
persons or groups pursuant to the Incentive Plan in the future.
OPTIONS GRANTED UNDER THE INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS
NAME AND POSITION DOLLAR VALUE($)(1) GRANTED
- ----------------- ------------------ --------------------
<S> <C> <C>
Richard C. Cook........................ 10,500
President, Chief Executive Officer and
Director Nominee
Thomas F. Aery ........................ 3,000
Vice President of Worldwide Customer
Support
William J. Gilmour .................... 4,600
Chief Financial Officer, Vice
President of Finance and Treasurer
All Executive Officers as a Group...... 67,800
George A. Chamberlain 3d .............. -- --
Director Nominee
All Non-Employee Directors as a Group
(including the above)................. -- --
All Employees (other than Executive
Officers) as a Group.................. 263,700
</TABLE>
- --------
(1) The dollar value of the Options is equal to the difference between the
option exercise price and the closing price of $ per share of Common
Stock on the Nasdaq National Market on December 14, 1998 multiplied by the
number of shares underlying the Options.
14
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth the compensation earned by (a) each person
who served as the Chief Executive Officer of the Company during any part of
the fiscal year ended September 30, 1998, (b) each other executive officer of
the Company who served as an executive officer at September 30, 1998 and whose
annual compensation and bonus was $100,000 or more and (c) any person for whom
disclosure would have been provided pursuant to clause (b) but for the fact
that the person did not serve as an executive officer at September 30, 1998
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
--------------------- ------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS(#) COMPENSATION($)(3)
- --------------------------- ------ --------- ----------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Richard C. Cook(4)....... 1998 $201,690 $311,443 10,500 $4,926
President and Chief
Executive 1997 167,649 156,734 176,600 4,611
Officer 1996 162,437 189,801 -- 3,018
Thomas F. Aery(5)........ 1998 111,690 75,250 3,000 4,926
Vice President of
Worldwide Customer 1997 110,418 62,577 72,192 4,534
Support 1996 99,875 41,054 5,000 4,424
William J. Gilmour(6) ... 1998 110,000 114,121 4,600 4,926
Chief Financial Officer,
Vice President of 1997 96,538 44,427 99,160 5,547
Finance and Treasurer 1996 78,678 23,954 1,000 1,665
</TABLE>
- --------
(1) The annual compensation data exclude perquisites the aggregate annual
amount of which for each officer was less than 10% of his total reported
salary and bonus.
(2) The data reflect bonuses earned in a fiscal year, even if payment occurred
in the subsequent fiscal year.
(3) Consists of matching contributions made by the Company to the Company's
401(k) Plan based on a percentage of the individual's contributions to the
401(k) Plan and amounts paid by the Company on behalf of the Named
Executive Officers in connection with the Company's group life insurance
policy.
(4) Mr. Cook served as Senior Vice President and General Manager, MAPICS
Business Group of the Company from October 1994 until July 1997, when he
was elected as the Company's President and Chief Executive Officer.
(5) Mr. Aery served as Vice President of Customer Support, MAPICS Business
Group of the Company from May 1995 until July 1997, when he was elected as
the Company's Vice President of Worldwide Customer Support.
(6) Mr. Gilmour served as Controller, MAPICS Business Group of the Company
from October 1994 until July 1997, when he was elected as the Company's
Chief Financial Officer, Vice President of Finance and Treasurer.
EMPLOYMENT AGREEMENTS
The Company is party to (a) a Change of Control Employment Agreement dated
as of March 24, 1998 with Richard C. Cook, (b) a Change of Control Employment
Agreement dated as of March 31, 1998 with Thomas F. Aery and (c) a Change of
Control Employment Agreement dated as of March 31, 1998 with William J.
Gilmour (collectively, the "Change of Control Agreements"). Messrs. Cook, Aery
and Gilmour are collectively referred to below as the "Executives."
15
<PAGE>
Each Executive's Change of Control Agreement provides that if a Change of
Control (as defined below) occurs during the Change of Control Period (as
defined below), the Company will employ the Executive from the date of the
Change of Control (the "Effective Date") until the third anniversary thereof
(the "Employment Period") on the terms set forth in the Change of Control
Agreement. "Change of Control" is generally defined to mean: (a) subject to
certain exceptions, the acquisition by any individual, entity or group of
beneficial ownership of 25% or more of the combined voting power of the
outstanding voting securities of the Company entitled to vote in the election
of directors; (b) subject to certain exceptions, if the individuals who
constitute the Board of Directors as of the date of the Change of Control
Agreements cease to constitute at least a majority of the Board; (c) the
consummation of certain reorganizations, mergers or consolidations or sales or
other dispositions of all or substantially all of the Company's assets; or (d)
the approval by the Company's shareholders of a complete liquidation or
dissolution of the Company. "Change of Control Period" is generally defined to
mean the period commencing on the date of each Change of Control Agreement and
ending three years thereafter, provided that on each anniversary of a Change
of Control Agreement, the "Change of Control Period" for each Executive is
automatically extended so as to terminate three years after such anniversary,
unless the Company provides timely notice to the Executive that no such
extension shall occur.
In exchange for an Executive's services under his Change of Control
Agreement, during the Employment Period, the Executive will: (a) receive an
annual base salary, which shall be paid at a monthly rate, at least equal to
12 times the highest monthly base salary paid or payable to him by the Company
during the twelve month period prior to the Effective Date ("Annual Base
Salary"); (b) be awarded an annual cash bonus at least equal to his highest
annual bonus for the last three full fiscal years prior to the Effective Date
("Annual Bonus"); and (c) be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs provided by the
Company, and the Executive and his family will be eligible for and receive all
benefits under all welfare benefit plans, practices, policies and programs
provided by the Company ("Welfare Benefits"), in each case that are applicable
to other peer executives of the Company. In addition, subject to certain
limitations, the Change of Control Agreements of Messrs. Cook and Gilmour
provide that if a payment by the Company to or for the benefit of Mr. Cook or
Mr. Gilmour would be subject to the excise tax imposed by Section 4999 of the
Code, then Mr. Cook or Mr. Gilmour, as the case may be, will be entitled to
receive an additional payment in an amount such that after payment by him of
all taxes (including, without limitation, such excise tax, income taxes and
interest and penalties payable in connection therewith), he will retain an
amount of such additional payment equal to such excise tax.
During the Employment Period, each Executive's employment will terminate
upon his death or disability, may be terminated by the Company with or without
Cause (as defined in his Employment Agreement) and may be terminated by such
Executive for Good Reason (as defined in his Employment Agreement) or for no
reason. If, during the Employment Period, an Executive's employment is
terminated by the Company other than for Cause or disability, or an Executive
terminates his employment for Good Reason, then: (a) the Executive will
receive a lump sum cash payment equal to the sum of (1) to the extent unpaid,
the Executive's Annual Base Salary through the date of termination, (2) the
product of (x) the Executive's Annual Bonus for the most recently completed
fiscal year during the Employment Period ("Most Recent Bonus") and (y) a
fraction, the numerator of which is the number of days in the then current
fiscal year through the date of termination and the denominator of which is
365, (3) to the extent unpaid, any compensation previously deferred by the
Executive and any accrued vacation pay (collectively, "Accrued Obligations")
and (4) for Mr. Aery, two and one-half times the sum of his Annual Base Salary
and Most Recent Bonus, and for Messrs. Cook and Gilmour, three times the sum
of their respective Annual Base Salary and Most Recent Bonus; (b) for three
years after the date of termination or such longer period specified in the
applicable plan or program, the Company will continue to provide the Welfare
Benefits to the Executive and his family, subject to certain limitations; and
(c) the Company will pay or provide any other amounts or benefits required to
be paid or provided to the Executive under any plan, program, policy, practice
or contract of the Company ("Other Benefits"). However, each Executive will
forfeit his right to receive, or shall repay, the lump sum payment referred to
in clause (a)(4) above if, at any time during two years after the date on
which his employment terminates, he violates the post-employment restrictive
covenants described in the next paragraph. If, during the Employment Period:
(i) an Executive's employment is terminated
16
<PAGE>
for Cause, the Company will be obligated to pay the Executive's Annual Base
Salary through the termination date, the amount of any deferred compensation
owing to the Executive and the Executive's Other Benefits; (ii) an Executive
voluntarily terminates his employment other than for Good Reason, the Company
will be obligated to pay the Executive his Accrued Obligations and provide his
Other Benefits; or (iii) an Executive shall die or become disabled, the
Company will be obligated to pay the Executive or his estate a lump sum
payment for the Executive's Accrued Obligations and shall provide the
Executive's Other Benefits. In addition, each Executive's Change of Control
Agreement provides that the Executive is not required to seek other employment
or take other actions to mitigate amounts payable thereunder, and such amounts
will not be reduced if the Executive obtains other employment following the
termination of his employment with the Company.
Each Executive's Change of Control Agreement further provides that during
the two year period following the termination of the Executive's employment,
subject to certain limitations, the Executive may not disclose or otherwise
use the Company's confidential information, solicit or induce an employee of
the Company to terminate his employment to enter into employment with another
person, solicit the Company's customers for the purpose of selling services to
such customers which compete with the services offered by the Company or
engage in the provision of services within the State of Georgia which compete
with the services offered by the Company.
OPTION GRANTS
The following table provides information with regard to stock option grants
to the Named Executive Officers pursuant to the Incentive Plan during fiscal
1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------------
NAME GRANTED(#)(1) YEAR(2) ($/SH) DATE 5%($) 10%($)
- ---- ------------- ---------- -------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Cook......... 10,500 3.46% $18.00 3/31/2008 $ 118,861 $ 301,217
Thomas F. Aery.......... 3,000 0.99 18.00 3/31/2008 33,960 86,063
William J. Gilmour...... 4,600 1.52 18.00 3/31/2008 52,072 131,961
</TABLE>
- --------
(1) The indicated options expire ten years from the date of grant and become
exercisable at the rate of 25% per year, beginning on the first
anniversary of the grant date.
(2) Options to purchase a total of 303,100 shares of Common Stock were granted
to employees in fiscal 1998 under the Company's 1994 Stock Plan and the
Incentive Plan, the purpose of which is to provide incentive to, and to
retain, key employees who are in a position to make significant
contributions to the Company.
(3) Amounts reported in these columns represent hypothetical amounts that may
be realized upon exercise of options immediately prior to the expiration
of their term assuming the specified compounded rates of appreciation of
the Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercises and the future
performance of the Common Stock. There can be no assurances that the rates
of appreciation assumed in this table can be achieved or that the amounts
reflected will be received by the individuals. This table does not take
into account any appreciation of the price of the Common Stock from the
date of grant to the current date.
17
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding (a) the number of
shares of Common Stock received upon exercise of options by the Named
Executive Officers during fiscal 1998, (b) the net value realized upon such
exercise, (c) the number of unexercised options held at September 30, 1998 and
(d) the aggregate dollar value of unexercised options held at September 30,
1998.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES UNDER- IN-THE-MONEY
SHARES LYING UNEXERCISED OPTIONS OPTIONS AT
ACQUIRED VALUE AT SEPTEMBER 30, 1998(#) SEPTEMBER 30, 1998($)(1)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------------- ----------- --------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard C. Cook......... -- -- 93,000/150,100 $1,216,347/$1,774,887
Thomas F. Aery.......... -- -- 28,086/58,189 352,851/690,545
William J. Gilmour...... -- -- 27,782/79,340 336,149/926,087
</TABLE>
- --------
(1) Value realized is equal to the difference between the option exercise
price and the closing sale price of $22 1/16 per share of Common Stock on
the Nasdaq National Market on September 30, 1998 multiplied by the number
of shares underlying the option.
LONG-TERM INCENTIVE PLAN AWARDS
During fiscal 1998, the Company provided long-term incentive compensation to
its senior executives pursuant to its Executive Growth Plan, which provides
for grants of Performance Units and stock options under the Incentive Plan.
The following table provides information with regard to the grants of
Performance Units to the Named Executive Officers. For information with regard
to the grants of stock options to the Named Executive Officers and for a
description of the Company's Executive Growth Plan, see "--Option Grants" and
"Report of the Compensation Committee of the Board of Directors--Executive
Compensation Program--Long-Term Incentive Pay," respectively.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS(2)
SHARES, UNITS PERIOD UNTIL ----------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET EXCELLENT MAXIMUM
NAME RIGHTS PAYOUT (#) (#) (#) (#)
- ---- ------------- ------------------- --------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Cook......... (1) 10/1/97 - 9/30/2000 7,097 14,193 21,290 42,579
Thomas F. Aery.......... (1) 10/1/97 - 9/30/2000 1,996 3,992 5,988 11,976
William J. Gilmour...... (1) 10/1/97 - 9/30/2000 3,105 6,209 9,314 18,627
</TABLE>
- --------
(1) Under the Executive Growth Plan, Performance Units represent the right to
receive a number of shares of Common Stock which will be determined by the
cumulative growth in the Company's earnings per share ("EPS") during the
performance period. The terms of the indicated Performance Units vary
based on the provisions of each grantee's award agreement.
(2) Payouts are in shares of Common Stock. If, at the end of the performance
period, cumulative EPS growth is greater than the level which would result
in a threshold payout and less than the level which would result in a
maximum payout but is not precisely equal to the target or excellent
payout levels, the number of shares of Common Stock to be received by a
grantee of Performance Units will be determined by interpolation between
the two closest specified payout levels on a straight line basis.
18
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
INTRODUCTION
The Compensation Committee is responsible for developing the Company's
executive compensation policies and advising the Board of Directors with
respect to such policies. The members of the Committee are Edward J. Kfoury
(Chairman), H. Mitchell Watson, Jr. and Terry H. Osborne. William E. Ford
served on the Compensation Committee until January 1, 1998, when he was
replaced by Mr. Osborne.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program for fiscal 1998 was designed to
(a) attract and retain a highly qualified and motivated management team, (b)
reward individual performance, and (c) link the interests of the senior
executives directly with those of shareholders through the use of Company
stock options and Performance Units as a compensation vehicle. The program
consists of three elements: salary (base pay); annual variable incentive pay
(cash bonus); and long-term incentive pay (stock options and Performance
Units). This program applies to the Company's key management personnel,
including the Chief Executive Officer. All of the Company's executives also
are eligible for employee benefits offered to all Company employees, including
life, health, disability and dental insurance and the Company's savings plan
and employee stock purchase plan.
Salary. Base salary of top management for fiscal 1998 was set by the
Compensation Committee prior to the Distribution after review of salary levels
in the software industry for various executive positions. The Compensation
Committee reviewed salary information presented in independent surveys as a
guide for setting salaries for the Company's top management positions.
Annual Incentive Pay. Annual incentive pay in the form of cash bonuses for
executive officers of the Company in fiscal 1998 was based on a combination of
the Company's financial performance and the achievement of other individual or
group performance factors. Following the Distribution, the Compensation
Committee established the bonus criteria, targets and formulas for determining
annual incentive pay after reviewing similar information presented in
independent surveys. The Compensation Committee's review ranged from broad-
based overviews of the entire software industry to information regarding
entities more similar to the Company: software companies with over $50 million
in revenue. "Median" levels were used as a guide for setting annual incentive
pay for the Company's top management positions, based on such comparative
information. During fiscal 1998 incentive pay was payable only if performance
exceeded 85% of targeted levels. From 85% to 100% of targeted performance, the
executive received an amount ranging from 5% to 10% of the budgeted amount for
each 1% of performance achieved. For performance exceeding 100%, the executive
received an amount ranging from 5% to 8% of the budgeted amount for each 1%
increase in performance. Incentive pay received by all executives for fiscal
1998 ranged from $23,547 to $311,443.
Long-Term Incentive Pay. Long-term incentive pay is provided through the
Company's Executive Growth Plan, which is a multi-year incentive program for
senior executives of the Company. For each participant, the Compensation
Committee establishes an annual long-term incentive compensation amount based
on publicly available comparative data. The Executive Growth Plan consists of
two components: stock options and Performance Units.
Stock Options. Stock options are granted annually to participants in the
Executive Growth Plan. Such options are granted under the Incentive Plan, have
an exercise price equal to the fair market value of the underlying stock on
the date of grant, vest in 25% increments over four years, and have a ten-year
term.
Performance Units. Performance Units represent the right to receive
shares of Common Stock at the end of the performance period based on the
attainment of targeted cumulative growth in earnings per share ("EPS"). Such
Performance Units are designed to reward senior executives for achievement of
long-term financial objectives, such as increasing long-term shareholder
value, and to provide a means of increasing Company stock ownership by senior
executives. For each performance period, each participant is assigned a
19
<PAGE>
target performance share award, expressed in terms of a number of shares.
Participants can earn from 50%, at threshold, to 300%, at maximum, of their
target awards based on cumulative growth in EPS during the performance period.
Performance below threshold will earn 0%. The initial performance period for
the Executive Growth Plan is October 1, 1997 through September 30, 2000, for
which Performance Units were granted on April 1, 1998. For such performance
period, the achievement of a specified level of cumulative EPS growth would
result in payout at the threshold (50%), target (100%), excellent (150%) or
maximum (300%) award level, in each case depending on the actual cumulative
EPS growth. If, at the end of the performance period, cumulative EPS growth is
greater than the level which would result in a threshold payout and less than
the level which would result in a maximum payout, but is not precisely equal
to the target or excellent payout levels, the number of shares of Common Stock
to be received by a grantee of Performance Units will be determined by
interpolation between the two closest specified payout levels on a straight
line basis. The Compensation Committee may institute additional performance
periods from time to time. If additional performance periods are instituted,
new performance goals will be set at the beginning of such new periods.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Richard C. Cook served as Chief Executive Officer and President of the
Company during fiscal 1998. Mr. Cook's fiscal 1998 base salary was $200,000.
Based on the Company's financial performance in fiscal 1998, including
exceeding targeted EPS, Mr. Cook earned an annual incentive bonus of $311,443
(which represented 195% of his target annual incentive pay). As a participant
in the Executive Growth Plan, Mr. Cook was granted an option to purchase
10,500 shares of Common Stock and a target award of 14,193 Performance Units.
The level of the various components of Mr. Cook's compensation were based upon
the comparative information reviewed by the Compensation Committee as
described above. Mr. Cook's total compensation for fiscal 1998 is provided in
detail in the Summary Compensation Table set forth above.
POLICY WITH RESPECT TO DEDUCTIBILITY OF COMPENSATION EXPENSE
Section 162(m) of the Code limits the tax deduction that the Company may
take with respect to the compensation of certain executive officers, unless
the compensation is "performance based" as defined in the Code. The Incentive
Plan is designed to comply with Internal Revenue Service requirements for
deductibility of performance-based compensation.
CONCLUSION
The Company's executive compensation program described above is designed to
closely link pay with performance and the creation of shareholder value. If
the Company reaches targeted performance levels, the Company's executives will
be compensated at "median levels" for comparable companies. If the Company's
performance exceeds targeted levels, executive compensation will exceed such
"median levels." The Compensation Committee believes that the program has been
and will continue to be successful in supporting the Company's financial,
growth and other business objectives.
COMMITTEE MEMBERS:
Edward J. Kfoury
H. Mitchell Watson, Jr.
Terry H. Osborne
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal 1998, Edward J. Kfoury (Chairman), H. Mitchell Watson, Jr.,
Terry H. Osborne and William E. Ford, all Non-Employee Directors, served on
the Compensation Committee. Mr. Ford served on the Compensation Committee
until January 1, 1998, when he was replaced as a member by Mr. Osborne.
20
<PAGE>
The Company expects that Mr. Ford, an incumbent director who is the designee
of GAP 21, will resign from the Board of Directors on or about the date of the
Annual Meeting and that GAP 21 will designate Stephen P. Reynolds as a
director of the Company to serve the remaining portion of Mr. Ford's term,
which expires at the 2000 Annual Meeting of Shareholders. Messrs. Ford and
Reynolds are managing members of GAP LLC, which is the sole general partner of
GAP 21 and GAP 32, and have shared voting and investment control with the
other managing members of GAP LLC over securities held by GAP Coinvestment.
After giving effect to the GAP Conversions (as defined in "Stock Ownership"),
the GA Entities (as defined in "Stock Ownership") own beneficially 1,500,010
shares of Common Stock, and GAP 21 and GAP Coinvestment together own 100,000
shares of the Series D Preferred Stock, which represents 80.0% of the
outstanding shares of Series D Preferred Stock. The Northwestern Mutual Life
Insurance Company owns 25,000 additional outstanding shares of Series D
Preferred Stock. Additionally, following the GAP Conversions, GAP 32 and GAP
Coinvestment together own 49,999 shares of Series E Preferred Stock and hold
warrants which entitle GAP 32 and GAP Coinvestment to acquire 1,000,000 shares
of Common Stock. Each share of Series D Preferred Stock and each share of
Series E Preferred Stock is currently convertible at any time into 10 shares
of Common Stock, subject to adjustment in the event of a subdivision or
combination of the Common Stock or certain reorganizations or
reclassifications of the capital stock of the Company. The warrants are
exercisable at any time on or before July 23, 2003 at an exercise price of
$11.53 per share of Common Stock.
As long as the GA Entities (together with their affiliates) own in the
aggregate shares of Common Stock, Series D Preferred Stock, Series E Preferred
Stock or other securities of the Company convertible into or exchangeable for
shares of voting capital stock of the Company that represent at least 10% of
the total number of shares of Common Stock outstanding on an as converted
basis, the GA Entities will be entitled to elect, or designate one person for
election as, a director of the Company. Pursuant to the Company's Articles of
Incorporation, the holders of the Series D Preferred Stock, voting as a
separate group, are entitled to elect one director if, in addition to meeting
the 10% voting stock ownership requirement specified above, GAP 21 and GAP
Coinvestment (together with their affiliates, including GAP 32) own in the
aggregate at least a majority of the outstanding shares of Series D Preferred
Stock. Further, if GAP 32 and GAP Coinvestment (together with their
affiliates, including GAP 21) own (a) less than a majority of the outstanding
shares of Series D Preferred Stock, (b) at least a majority of the outstanding
shares of Series E Preferred Stock and (c) in the aggregate shares of Common
Stock, Series D Preferred Stock, Series E Preferred Stock or other securities
of the Company convertible into or exchangeable for shares of voting capital
stock of the Company that represent at least 10% of the total number of shares
of Common Stock outstanding on an as converted basis, the holders of the
Series E Preferred Stock, voting as a separate group, are entitled to elect
one director of the Company. Finally, if GAP 21 and GAP Coinvestment (together
with their affiliates, including GAP 32) own (x) less than a majority of the
outstanding shares of Series D Preferred Stock and (y) in the aggregate shares
of Common Stock, Series D Preferred Stock, Series E Preferred Stock or other
securities of the Company convertible into or exchangeable for shares of
voting capital stock of the Company that represent at least 10% of the total
number of shares of Common Stock outstanding on an as converted basis, GAP 21
will be entitled to designate one person for election as a director of the
Company.
Because GAP 21 and GAP Coinvestment currently own an aggregate of 100,000
shares of Series D Preferred Stock representing 80.0% of the outstanding
shares of Series D Preferred Stock, the holders of the Series D Preferred
Stock, voting as a separate group, currently have the right to elect one
director, and the holders of the Series E Preferred Stock, voting as a
separate series, do not currently have the right to elect a director. In 1997,
the holders of the Series D Preferred Stock, voting as a separate group,
elected Mr. Ford, a managing member of GAP LLC, as GAP 21's designee and a
Class III director. As noted above, the Company expects that on or about the
date of the Annual Meeting, Mr. Reynolds, also a managing member of GAP LLC,
will replace Mr. Ford as GAP 21's designee and a Class III director. Holders
of the Series D Preferred Stock and the Series E Preferred Stock also are
entitled to vote together with all other classes of stock of the Company,
voting together as a single class, with respect to the election of all the
other directors of the Company. GAP 21's designee is required to waive any
rights to compensation and relinquish any compensation received in connection
with the designee's Board membership.
21
<PAGE>
STOCK PERFORMANCE GRAPHS
The following performance graph and accompanying table compare the
shareholders' cumulative return on the Common Stock from September 30, 1993 to
September 30, 1998 with the cumulative total return of the Nasdaq Stock Market
Index (U.S.) (the "NSMI") and the Nasdaq Computer and Data Processing Index
(the "NCDPI") over the same period.(/1/) The comparative data assumes $100.00
was invested on September 30, 1993 in the Common Stock and in each of the
indices referred to above and assumes that dividends, if any, were reinvested.
However, the performance graph and table do not reflect the dividend of one
share of common stock of Marcam Solutions, Inc. for every two shares of Common
Stock of the Company which was distributed to the Company's shareholders on
July 29, 1997 (the "Distribution").
[GRAPH APPEARS HERE]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
The Company $100 $ 78 $123 $ 97 $164 $278
Nasdaq Stock
Market Index $100 $101 $139 $165 $227 $232
Nasdaq Computer and
Data Processing
Index (U.S.) $100 $111 $178 $221 $299 $390
22
<PAGE>
The following performance graph and accompanying table compare the
shareholders' cumulative return on the Common Stock from July 29, 1997, the
date of the Distribution, to September 30, 1998 with the cumulative total
return of the NSMI and the NCDPI over the same period.(/1/) The comparative
data assumes $100.00 was invested on July 29, 1997 in the Common Stock and in
each of the indices referred to above and assumes that dividends, if any, were
reinvested.
[GRAPH APPEARS HERE]
July 29, 1997 September 30, 1997 September 30, 1998
------------- ------------------ ------------------
The Company $100 $130 $222
Nasdaq Stock
Market Index $100 $106 $108
Nasdaq Computer and
Data Processing
Index (U.S.) $100 $ 99 $129
- ----------
- --------
(1) The stock price performance shown in the two tables set forth above is not
necessarily indicative of future stock price performance. Information used
in the tables was obtained from the Nasdaq Stock Market, a source believed
to be reliable, but the Company is not responsible for any errors or
omissions in such information.
23
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require the
Company's directors and executive officers and any persons who beneficially
own more than 10% of the Common Stock, as well as certain affiliates of such
persons, to file initial reports of their ownership of the Common Stock and
subsequent reports of changes in such ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Directors, executive officers and persons beneficially owning more than 10% of
the Common Stock are required by applicable regulations to furnish the Company
with copies of all Section 16(a) reports they file. Based solely on its review
of the copies of such reports received by it and written representations that
no other reports were required of those persons, the Company believes that
during fiscal 1998, all of its directors, executive officers and beneficial
owners of more than 10% of the Common Stock complied with applicable Section
16(a) filing requirements.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of PricewaterhouseCoopers LLP
to serve as independent accountants of the Company for the fiscal year ending
September 30, 1999. The Board has directed that such appointment be submitted
to the shareholders of the Company for ratification at the Annual Meeting.
PricewaterhouseCoopers LLP has served as independent accountants of the
Company since 1995 and is considered by management of the Company to be well
qualified. If the shareholders do not ratify the appointment of
PricewaterhouseCoopers LLP, the Board of Directors will reconsider the
appointment.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER
30, 1999.
24
<PAGE>
SHAREHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Nominations by shareholders for director elections and other proposals of
shareholders intended to be presented at the 2000 Annual Meeting of
Shareholders, together with certain related information specified in Rule 14a-
8 of the Securities and Exchange Commission, must be submitted in writing to
the Company on or before August , 1999 in order for such matters to be
included in the Company's proxy materials for the 2000 Annual Meeting of
Shareholders. Nominations and other proposals of shareholders that are
submitted to the Company after such date may be excluded from the Company's
proxy materials for the 2000 Annual Meeting of Shareholders and will otherwise
be subject to Rule 14a-4(c) of the Securities and Exchange Commission. See
"Voting--Proxies; Other Matters That May Come Before the Annual Meeting." All
nominations, proposals and related information with regard to the 2000 Annual
Meeting of Shareholders should be submitted by certified mail, return receipt
requested, to MAPICS, Inc., 5775-D Glenridge Drive, Atlanta, Georgia 30328,
Attention: Martin D. Avallone, Vice President, General Counsel and Secretary.
By Order of the Board of Directors.
/s/ Martin D. Avallone
Martin D. Avallone
Vice President, General Counsel and
Secretary
Atlanta, Georgia
December , 1998
--------------
The Company's 1998 Annual Report and the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1998, which includes audited
financial statements, have been mailed to shareholders of the Company with
these proxy materials. Such materials do not form any part of the material for
the solicitation of proxies.
25
<PAGE>
Amendment No. 2
TO THE
MAPICS, INC. 1998 LONG-TERM INCENTIVE PLAN
This Amendment No. 2 ("Amendment") to the MAPICS, Inc. 1998 Long-Term
Incentive Plan is made and executed this 4th day of November, 1998, to be
effective as of the date of approval hereof by the shareholders of MAPICS, Inc.
(the "Corporation") at the 1999 annual meeting of shareholders.
WHEREAS, the Board of Directors of the Corporation deems it to be in the
best interests of the Corporation and its shareholders to effect certain
amendments to the MAPICS, Inc. 1998 Long-Term Incentive Plan (the "Plan")
pursuant to Section 15.1 of the Plan, and to submit such amendment to the
shareholders of the Corporation for approval;
NOW, THEREFORE, in accordance with Section 15.1 of the Plan, subject to
approval of the Corporation's shareholders at the 1999 annual meeting, the Plan
is hereby amended as follows:
1. NUMBER OF AUTHORIZED SHARES. The current Section 5.1 of the Plan is
hereby deleted in its entirety and the following is substituted therefor:
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 14.1,
----------------
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 2,000,000, of which not more than 20% may be granted as Awards
of Restricted Stock or unrestricted Stock Awards.
2. EFFECT OF AMENDMENT. As modified hereby, the provisions of the Plan,
as heretofore amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be duly
executed as of the date first above written.
MAPICS, INC.
/s/ Martin D. Avallone
-----------------------------
By: Martin D. Avallone
Title: Vice President, General Counsel
and Secretary
<PAGE>
[LOGO OF MAPICS,INC. APPEARS HERE]
<PAGE>
PROXY
MAPICS, Inc.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Martin D. Avallone and William J. Gilmour, and
each of them, proxies, with full power of substitution, to act for and in the
name of the undersigned to vote all shares of Common Stock of MAPICS, Inc. (the
"Company") which the undersigned is entitled to vote at the 1999 Annual Meeting
of Shareholders of the Company, to be held at the Sheraton Colony Square Hotel,
188 14th Street, N.E., Atlanta, Georgia on Wednesday, February 10, 1999 at 9:00
a.m., local time, and at any adjournments thereof, as indicated below
and subject to the conditions specified below.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR" THE
ELECTION OF THE TWO NOMINEES NAMED IN PROPOSAL 2 AND "FOR" PROPOSALS 1, 3, AND
4. At the present time, the Board of Directors knows of no other business to be
presented to a vote of the shareholders at the Annual Meeting. However, the
proxies hereby are authorized to vote in their discretion on any matters
subsequently presented for a vote of the shareholders at the Annual Meeting, as
well as on the election of any person as a director if a director nominee named
in Proposal 2 is unable to serve or for good cause will not serve and on matters
incident to the conduct of the Annual Meeting.
If the undersigned notifies the Secretary of the Company at or prior to the
Annual Meeting or any adjournments thereof of the decision of the undersigned to
withdraw this proxy card, then the power of said proxies shall be deemed
terminated and of no further force and effect. If the undersigned withdraws this
proxy card in the manner described above and prior to the Annual Meeting or any
adjournments thereof does not submit a duly executed and subsequently dated
proxy card to the Company, the undersigned may vote in person at the Annual
Meeting all shares of Common Stock of the Company owned by the undersigned as of
the record date, December 14, 1998.
[SEE CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE
REVERSE REVERSE
SIDE] SIDE]
<PAGE>
PROPOSALS
1. The approval of an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of the Company's Common Stock
from 50,000,000 to 90,000,000 shares.
2. The election of George A. Chamberlain 3d and Richard C. Cook as Class II
directors to serve until the 2002 Annual Meeting of Shareholders and until
their successors are elected and qualified.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND WRITE THE NOMINEE'S NAME ON THE LINE NEXT TO
THAT BOX.
3. The approval of an amendment to the Company's 1998 Long Term Incentive Plan
to increase the number of shares of Common Stock available for awards
thereunder from 1,000,000 to 2,000,000 shares.
4. The ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending September 30,
1999.
<TABLE>
<CAPTION>
DETACH HERE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[X] Please mark
votes as in this
example.
FOR AGAINST ABSTAIN FOR WITHHELD FOR AGAINST ABSTAIN
----- ----- ----- ----- ----- ----- ----- -----
PROPOSAL 1 | | | | | | PROPOSAL 2 | | | | PROPOSAL 3 | | | | | |
----- ----- ----- ----- ----- ----- ----- -----
FOR ALL
EXCEPT
- --------------------------- ------- ----- ----- -----
| SEE ABOVE FOR | | | Proposal 4 | | | | | |
| EXPLANATION OF PROPOSALS | | | ----- ----- -----
- --------------------------- ------- ----------------------
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" EACH OF
THE LISTED PROPOSALS.
----- ----
MARK HERE FOR ADDRESS | | MARK HERE IF YOU PLAN TO | |
CHANGE AND NOTE AT LEFT ----- ATTEND THE MEETING ----
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY
CARD IN THE ENCLOSED PREPAID ENVELOPE.
Please sign exactly as your name appears on this
proxy card. When shares are held jointly, both
holders should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title. If the holder is a
corporation or a partnership, the full corporate or
partnership name should be signed by a duly
authorized officer.
Signature
(if shares
Signature: Date: held jointly): Date:
----------------------------------- ----------- --------------------------------- ----------
</TABLE>
