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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MAPICS, INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF MAPICS]
December 29, 2000
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
MAPICS, Inc., which will be held on February 13, 2001 at 9:00 a.m. at the Four
Seasons Hotel, 75 14th Street, Atlanta, Georgia.
At the annual meeting, shareholders will be asked to vote on the election of
one director to serve until the 2004 annual meeting of shareholders. This
matter is described in the accompanying proxy statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold and whether or not you plan to attend the
meeting. You can submit your proxy voting instructions via the Internet, by
touch tone telephone or by marking and returning the enclosed proxy card.
Please see the instructions on how to vote attached to the notice of proxy. The
method by which you vote by proxy now will not limit your right to vote at the
meeting if you decide to attend in person. If you do attend and wish to vote in
person, you may simply change your prior vote at the meeting.
If you plan to attend the meeting, please so indicate when you vote via the
Internet or by touch tone telephone or when you return your proxy card. If your
shares are not registered in your own name and you would like to attend the
meeting, please ask the broker, bank or other nominee holding the shares to
provide you with evidence of your share ownership so that you may be admitted
to the meeting.
Sincerely,
/s/ Richard C. Cook
Richard C. Cook
President and Chief Executive Officer
<PAGE>
MAPICS, Inc.
1000 Windward Concourse Parkway
Alpharetta, Georgia 30005
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 13, 2001
NOTICE HEREBY IS GIVEN that the 2001 annual meeting of shareholders of
MAPICS, Inc. will be held at the Four Seasons Hotel, 75 14th Street, Atlanta,
Georgia, on Thursday, February 13, 2001 at 9:00 a.m. The purposes of the
meeting is for the shareholders to consider and vote upon:
. the election of one director to serve until the 2004 annual meeting of
shareholders; and
. such other business as properly may come before the annual meeting or
any adjournments.
Information relating to these matters is set forth in the attached proxy
statement. Shareholders of record at the close of business on December 15, 2000
are entitled to receive notice of and to vote at the annual meeting and any
adjournments. We encourage you to vote using the Internet, by touch tone
telephone or by returning the enclosed proxy card in the envelope provided.
By order of the board of directors.
/s/ Martin D. Avallone
Martin D. Avallone
Vice President, General Counsel
and Secretary
Atlanta, Georgia
December 29, 2000
<PAGE>
HOW TO VOTE
Vote By Internet
You can submit your proxy voting instructions via the Internet at the
website identified on the enclosed proxy card. Internet voting is available 24
hours a day and will be accessible until midnight Eastern Standard Time on
February 12, 2001. You will be given the opportunity to confirm that your
voting instructions have been properly recorded. Our Internet voting procedures
are designed to authenticate shareholders' identities by using individual
control numbers. If you vote via the Internet, you do not need to return your
proxy card.
Vote By Telephone
You can submit your proxy voting instructions by touch tone telephone by
calling the phone number identified on the enclosed proxy card. Telephone
voting is available 24 hours a day and will be available until midnight Eastern
Standard Time on February 12, 2001. As with Internet voting, you will be given
the opportunity to confirm that your voting instructions have been properly
recorded. In addition, our telephone voting procedures are designed to
authenticate shareholders' identities by using individual control numbers. If
you vote via touch tone telephone, you do not need to return your proxy card.
Vote By Mail
If you choose to submit your proxy voting instructions by mail, please mark
the enclosed proxy card, date and sign it and return it in the enclosed
postage-paid envelope.
YOU CAN SPARE US THE EXPENSE OF FURTHER PROXY SOLICITATION BY VOTING PROMPTLY
BY PROXY IN ONE OF THE THREE WAYS DESCRIBED ABOVE.
Vote at the Annual Meeting
You can vote in person if you attend the annual meeting. However, we
encourage you to vote now by proxy in one of the three ways described above. If
you then attend the annual meeting and wish to vote in person at the annual
meeting, you can then simply change your prior vote at the meeting. If your
shares are not registered in your own name and you would like to attend the
meeting, please ask the broker, bank or other nominee holding the shares to
provide you with evidence of your share ownership so that you may be admitted
to the meeting.
<PAGE>
MAPICS, Inc.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 13, 2001
The board of directors of MAPICS, Inc. is furnishing this proxy statement to
solicit your proxy for the voting of your shares at the 2001 annual meeting of
shareholders and at any adjournments. The annual meeting will be held on
Thursday, February 13, 2001 at 9:00 a.m. at the Four Seasons Hotel, 75 14th
Street, Atlanta, Georgia.
We are mailing this proxy statement and the accompanying proxy card to
shareholders on or about December 29, 2000
VOTING
General
The securities that can be voted at the annual meeting consist of (a) common
stock, $.01 par value per share, (b) Series D convertible preferred stock,
$1.00 par value per share, and (c) Series E convertible preferred stock, $1.00
par value per share. 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. Series D preferred shareholders and
Series E preferred shareholders are entitled to cast 10 votes for each share of
Series D preferred stock or Series E preferred stock held on the record date on
each matter submitted to the shareholders at the annual meeting.
The record date for determining the 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 15, 2000. On the record date,
19,930,889 shares (on an as converted basis) of common stock were outstanding
and eligible to be voted at the annual meeting.
Quorum and Vote Required
The presence at the annual meeting, in person or by proxy, of the holders of
a majority of the votes entitled to be cast will constitute a quorum for the
transaction of business at the annual meeting. In determining whether a quorum
is present, we will treat votes withheld from any director nominee, as well as
abstentions with regard to any other proposal that may properly come before the
meeting, as "votes entitled to be cast" and will count then as present for
purposes of determining the presence or absence of a quorum.
The proposal to elect one director to serve until the 2004 annual meeting
must be approved by a plurality of the votes represented at the annual meeting
and entitled to be cast on the proposal, provided a quorum is present. As a
result, votes withheld will have no effect. Any broker non-votes will not be
considered to be "votes entitled to be cast." Broker non-votes are votes that
brokerage firms and banks holding shares of record for their customers are not
permitted to cast under stock exchange rules because the brokerage firms and
banks have not received specific instructions from their customers as to
certain proposals and as to which the brokerage firms and banks have advised us
that they lack voting authority. We believe that under applicable stock
exchange rules, brokerage firms and banks will be able to vote their customers'
unvoted shares with regard to the proposal to elect a director.
1
<PAGE>
Voting by Proxy
If you are unable to attend the annual meeting in person or will attend but
do not wish to vote in person, you may submit your proxy voting instructions
via the Internet or by touch tone telephone by midnight Eastern Standard Time
on February 12, 2001, or by completing and returning the enclosed proxy card in
time for receipt no later than the close of business on February 12, 2001. You
may submit your proxy voting instructions via the Internet by accessing the
website identified on the enclosed proxy card and following the instructions on
the website. If you choose to submit your proxy voting instructions by touch
tone telephone, please call the phone number identified on the enclosed proxy
card and follow the prompts. In addition, you may give your voting instructions
by specifying your choice with regard to the proposal on the enclosed proxy
card and returning it in the enclosed envelope.
If you submit your valid voting instructions to us via the Internet, the
telephone or by proxy card in time to be voted at the annual meeting and do not
revoke such voting instructions, the shares subject to your voting instructions
will be voted at the annual meeting in accordance with your instructions. If
you do not give specific instructions, the shares represented by a valid proxy
will be voted "FOR" the election of the director nominee named in the proposal.
If the nominee should become unable to serve for any reason and the board of
directors designates a substitute nominee, the persons named as proxies on the
proxy card will vote all valid proxies for the election of the substitute
nominee.
Your submission of a proxy via the Internet, by telephone or by mail does
not affect your right to vote in person should you attend the annual meeting.
However, the only way to revoke a proxy, whether it was given via the Internet,
the telephone or by mail, is by the following methods:
. giving written notice of revocation to MAPICS, Inc., 1000 Windward
Concourse Parkway, Alpharetta, Georgia 30005, Attention: Martin D.
Avallone, Vice President, General Counsel and Secretary;
. executing a proxy card bearing a later date and delivering it to Mr.
Avallone; or
. voting in person at the annual meeting.
We are not presently aware of any other matters that will be considered at
the annual meeting. However, if a matter that is not listed on the enclosed
proxy card is properly brought before the annual meeting, the persons named as
proxies on the enclosed proxy card will vote the shares represented by proxy in
accordance with their judgment of what is in the best interest of the Company.
Cost of Proxy Solicitation
We are soliciting your proxy on behalf of the board of directors, and we
will bear all of the related costs. Brokerage firms, banks and others holding
shares in their names or in the names of their nominees will forward copies of
the proxy solicitation materials to beneficial owners and will seek authority
for execution of proxies. We will reimburse them for their reasonable expenses
in so doing. Our employees may also communicate with you to solicit your proxy,
but we will not pay them any additional compensation for doing so.
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<PAGE>
STOCK OWNERSHIP
The following table sets forth information as of November 1, 2000 (unless
otherwise indicated) regarding the beneficial ownership of our common stock by
each person known by us to own more than 5% of any class of our voting
securities, each director and nominee for director, each executive officer
named in the Summary Compensation Table and all directors and executive
officers as a group.
Pursuant to Securities and Exchange Commission rules, 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 that may be converted or exercised within 60 days after
November 1, 2000. 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.
The persons named in the table gave us the stock ownership information about
themselves. Except as explained in the footnotes below, the named persons have
sole voting and investment power with regard to the shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
------------------------------------------------
Stock Options
Common Stock Exercisable
Beneficially Within 60 Total
Owned Days After Common Stock Percent
Excluding November 1, Beneficially of Class
Options 2000 Owned Owned
------------ ------------- ------------ --------
<S> <C> <C> <C> <C>
Principal Shareholders
----------------------
General Atlantic Partners,
LLC(1)....................... 4,000,000 -- 4,000,000 19.43%
Heartland Advisors, Inc.(2)... 3,119,900 -- 3,119,900 17.25
Liberty Wanger Asset Manage-
ment LP(3)................... 1,945,000 -- 1,945,000 10.75
Executive Officers and
----------------------
Directors
---------
Martin D. Avallone(4)(5)
Vice President, General
Counsel and Secretary...... 13,747 54,475 68,222 *
George A. Chamberlain 3d(6)
Director.................... 2,940 138,000 140,940 *
Richard C. Cook(4)(5)(7)
President, Chief Executive
Officer and Director....... 62,194 276,575 338,769 1.84
William J. Gilmour(4)(5)
Chief Financial Officer and
Treasurer.................. 25,850 99,157 125,007 *
Stephen C. Haley(5)(8)
Chief Operating Officer..... 19,250 50,000 69,250 *
Roger J. Heinen, Jr.
Director.................... 1,792 19,584 21,376 *
Edward J. Kfoury(9)
Director.................... 55,371 30,568 85,939 *
Terry H. Osborne
Director.................... 2,706 12,250 14,956 *
H. Mitchell Watson, Jr.(10)
Director.................... 42,017 20,372 62,389 *
All directors and executive
officers as a group
(9 persons).................. 225,867 700,981 926,848 4.93
</TABLE>
--------
* Represents beneficial ownership of less that 1% of our outstanding common
stock.
(1) Includes 880,290 shares of common stock and 88,029 shares of Series D
convertible preferred stock held by General Atlantic Partners 21, L.P.,
or GAP 21; 188,120 shares of common stock, 11,971 shares of
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<PAGE>
Series D convertible preferred stock and 6,840 shares of Series E
convertible preferred stock held by GAP Coinvestment Partners, L.P., or
GAP Coinvestment; and 431,600 shares of common stock and 43,159 shares of
Series E convertible preferred stock held by General Atlantic Partners
32, L.P., or GAP 32. Each share of Series D convertible preferred stock
and Series E convertible 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, or GAP LLC, the sole general
partner of GAP 21 and GAP 32, which we refer to collectively as the GA
Entities, own beneficially 4,000,000 shares of common stock. The GA
Entities own beneficially 1,500,010 shares of common stock, 100,000
shares, or 80.0%, of the outstanding Series D convertible preferred
stock, 49,999 shares, or 100%, of the outstanding Series E convertible
preferred stock and 100% of the warrants for the purchase of a total of
1,000,000 shares of common stock. William E. Ford, Stephen P. Reynolds,
William O. Grabe, Steven A. Denning, David C. Hodgson, Peter L. Bloom,
Franchon M. Smithson and J. Michael Cline, whom we refer to as 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.
The address of GAP LLC is 3 Pickwick Plaza, Greenwich, Connecticut 06830.
(2) According to Amendment No. 1 to Schedule 13G dated June 30, 2000,
Heartland Advisors, Inc., a registered investment advisor, and William J.
Nasgovitz, the president and principal shareholder of Heartland Advisors,
together have sole voting and investment power with respect to all of the
shares shown. The address of Heartland Advisors, Inc. and Mr. Nasgovitz
is 789 North Water Street, Milwaukee, Wisconsin 53202.
(3) Liberty Wanger Asset Management LP, a registered investment advisor, has
sole voting and investment power with respect to all of the common stock
shown. The address of Liberty Wanger Asset Management LP is 227 West
Monroe Street, Suite 3000, Chicago, Illinois, 60606.
(4) Includes the following shares of restricted common stock issued on April
14, 1999, for which the officer has voting rights but does not have the
right to dispose of the stock until April 14, 2002, provided the officer
is still employed by us:
. 7,059 shares for Mr. Avallone
. 47,059 shares for Mr. Cook
. 16,471 shares for Mr. Gilmour
(5) Includes the following shares of restricted common stock issued on March
31, 2000, for which the officer has voting rights but does not have the
right to dispose of the stock until March 31, 2003, provided the officer
is still employed by us:
. 3,750 shares for Mr. Avallone
. 11,000 shares for Mr. Cook
. 9,250 shares for Mr. Haley
. 3,750 shares for Mr. Gilmour
(6) Excludes 8,262 shares of common stock subject to options which Mr.
Chamberlain has gifted to his grandchildren and as to which he disclaims
beneficial ownership.
(7) Includes 200 shares of common stock owned by Mr. Cook's wife.
(8) Includes 10,000 shares of common stock owned by Mr. Haley's wife.
(9) Includes 2,500 shares of common stock held by the Patricia A. Kfoury
Revocable Trust u/d/t/ dated April 21, 1998 for the benefit of Mr.
Kfoury's wife.
(10) Excludes 4,701 shares of common stock subject to options which Mr. Watson
has gifted to his children and as to which he disclaims beneficial
ownership. Includes 5,000 shares of common stock owned by Mr. Watson's
wife and a right to receive 1,305 shares of common stock granted to Mr.
Watson under the 1998 Director Stock Incentive Plan which vest 30 days
after Mr. Watson's retirement from the Board.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
Pursuant to our Articles of Incorporation and Bylaws, our board of directors
must consist of at least three and no more than eleven persons, with the
precise number to be determined by resolution of our shareholders or the board
of directors from time to time. The board is now comprised of six directors and
is divided into three classes of two directors each. The shareholders elect the
directors in each class for a term of three years and until their successors
are elected and qualified. The term of office of one class of directors expires
each year at the annual meeting, and the shareholders elect a new class of
directors each year at that time.
At the annual meeting, the terms of the two Class I directors, Roger J.
Heinen Jr. and Edward J. Kfoury, will expire. Mr. Heinen has chosen not to seek
re-election. The board of directors has nominated Mr. Kfoury for re-election at
the annual meeting. If re-elected, Mr. Kfoury will serve a three-year term that
will expire at the 2004 annual meeting. If Mr. Kfoury should be unavailable to
serve for any reason, which is not anticipated, the board of directors may:
. designate a substitute nominee, in which case the persons named as
proxies will vote the shares represented by all valid proxies for the
election of such substitute nominee;
. allow the vacancy to remain open until a suitable candidate is located
and nominated; or
. adopt a resolution to decrease the authorized number of directors.
The board of directors currently intends to fill the board position
currently held by Mr. Heinen as soon as the board identifies a suitable
replacement.
The board of directors unanimously recommends that you vote "FOR" the
proposal to re-elect Edward J. Kfoury as a director for a three-year term
expiring at the 2004 annual meeting and until his successor has been duly
elected and qualified.
Information Regarding Nominee and Continuing Directors
Listed below is the name of the board's nominee for re-election, that
director who has chosen not to seek re-election, and each of the four incumbent
directors whose term of office will continue after the annual meeting, together
in each case with his age as of December 1, 2000, his business experience and
the year he first became a director.
Class I Director Nominated to Serve Until the 2004 Annual Meeting
Edward J. Kfoury..... Mr. Kfoury, age 62, has been a member of our board
since May 1993. He was initially appointed to the board
of directors as a designee of IBM, but he no longer
serves as an IBM designee. Mr. Kfoury served as a
division President and as a Vice President of IBM until
June 1, 1993, the date of his retirement. Mr. Kfoury is
also a director of Dendrite International, Inc.
Class I Director Who has Chosen Not to Seek Re-election
Roger J. Heinen, Mr. Heinen, age 49, has been a member of our board
Jr. ................. since September 1997. From January 1993 until March
1996, he served as a Senior Vice President of Microsoft
Corporation. Prior to that time, 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 Technologies, Inc., and Progress
Software, Inc.
5
<PAGE>
Class II Directors To Serve Until the 2002 Annual Meeting
George A.
Chamberlain 3d....... Mr. Chamberlain, age 65, has been a member of our board
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 August 1997, he served as our Chief
Financial Officer. During 1993 and 1994, Mr.
Chamberlain was an Executive Vice President with
Capital Technologies, Inc., a consulting and venture
capital company. 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 53, has been our President and Chief
Executive Officer and a member of our board since
August 1997. From October 1994 to July 1997, Mr. Cook
served as the Senior Vice President and General Manager
of our MAPICS Business Group. Mr. Cook served as the
President and Chief Executive Officer of Mapics, Inc.,
a former subsidiary, from March 1993 to October 1994.
Mr. Cook was employed by 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 III Directors Nominated To Serve Until the 2003 Annual Meeting
Terry H. Osborne..... Mr. Osborne, age 62, has been a member of our board
since January 1998. Mr. Osborne is a Special Advisor to
General Atlantic Partners LP and has served as
President and Chief Operating Officer of System
Software Associates, Inc., or SSA, a computer software
company, from October 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 also Chairman of Prime Response Group,
Inc. and is a director of Dendrite International, Inc.
and Eyretel PLC.
H. Mitchell Watson,
Jr. ................. Mr. Watson, age 63, has been a member of our board 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
telecommunications joint venture of IBM and Siemens AG.
In addition, he is a retired Vice President of IBM. Mr.
Watson is also a director of Praxair Inc., DDSPower.com
and Identrus LLC.
Meetings and Committees of the Board of Directors
The board of directors conducts its business through meetings of the full
board and through committees of the board. During the fiscal year ended
September 30, 2000, the board of directors held eighteen meetings, the
compensation committee held five meetings, the audit committee held three
meetings and the strategic relationship committee held one meeting. Each
director attended at least 75% of all meetings of the full board of directors
and of each committee on which he served.
The audit committee reviews with our independent accountants their audit
plan, the scope and results of their audit engagement and the accompanying
management letter, if any. Members also consult with the independent
accountants and management with regard to our accounting methods and the
adequacy of our internal accounting controls as well as review the range of the
independent accountants' audit and nonaudit
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<PAGE>
fees. The audit committee also reviews our audited year-end financial
statements and discusses them and the audit with our management and our
independent auditors. The audit committee also discusses with and receives
assurances from our independent auditors regarding their independence from the
Company and its management. The audit committee is comprised of George A.
Chamberlain 3d (Chairman), Roger J. Heinen, Jr. and H. Mitchell Watson, Jr.
The compensation committee evaluates and approves the compensation
arrangements of senior management and administers and interprets our employee
benefit plans. Administration of our benefit plans 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 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 strategic relationship committee reviews certain potential strategic
relationships that management is considering. The strategic relationship
committee is comprised of H. Mitchell Watson (Chairman), Edward J. Kfoury,
George A. Chamberlain 3d and Richard C. Cook.
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
also will consider nominees recommended by shareholders. For a description of
requirements regarding shareholder nominations and other proposals, see
"Shareholders' Proposals For 2002 Annual Meeting."
Director Compensation
Upon the commencement of their service as directors, we grant each of our
non-employee directors an option to purchase 20,000 shares of common stock
under our 1998 Non-Employee Director Stock Option Plan ("Director Option
Plan"). For each year they continue to serve, we historically have granted each
director an additional option to purchase 3,000 shares of common stock.
Beginning January 1, 2001, we now grant each director an additional option to
purchase 5,000 shares of common stock for each year they continue to serve. The
initial options to purchase 20,000 shares and the annual options to purchase
3,000 shares granted under the 1998 Director Option Plan vest at a rate of 25%
on each anniversary of the grant date so that on the fourth anniversary they
are fully vested. The subsequent annual options to purchase 5,000 shares will
vest in one full installment on the first anniversary of the grant date.
In consideration for their service, on December 13, 2000, each non-employee
director was granted an option to purchase 5,000 shares of common stock
pursuant to the terms of the 1998 Long Term Incentive Plan. Such options will
vest at a rate of 25% on each anniversary of the grant date so that on the
fourth anniversary they are fully vested, except that 50% of the options will
vest immediately if our share price increases to three times the exercise price
of the options and the remaining 50% will vest immediately if our share price
increases to four times the exercise price of the options.
Beginning on January 1, 2000, non-employee directors received an annual cash
retainer of $10,000 (increased from $8,000) and $1,000 for each board or
committee meeting attended in person, or $500 if such meeting was attended by
telephone. Beginning on January 1, 2001, non-employee directors who serve as
chairperson for a committee or the board will receive an additional $500 for
each committee or board meeting they chair. Pursuant to the 1998 Non-Employee
Directors Stock Incentive Plan ("Director Stock Incentive Plan"), 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 retainer and meeting fees, in
the form of common stock, deferred rights to receive common stock or options to
acquire common stock.
Under our current policy, the board of directors may, upon the request of
the President and Chief Executive Officer, retain a director as a consultant.
We pay directors serving as consultants $3,000 per day for
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<PAGE>
each day that they provide consulting services and, if less than a full day,
$375 per hour. However, the aggregate amount of compensation paid to any
director consultant may not exceed $45,000 per year. Directors serving as
consultants also are reimbursed for reasonable travel and living expenses while
working. During the fiscal year ended September 30, 2000, no director received
compensation as a consultant from us.
We also maintain a relationship with Radnet, Inc. for the licensing of
certain software developed by Radnet, Inc. and related services associated with
the software. Mr. Chamberlain is the Chief Financial Officer of Radnet, Inc.,
and Mr. Heinen is a director of Radnet, Inc. During fiscal 2000, we paid
Radnet, Inc. $323,530 in license fees and fees for services provided. This
information has been reviewed with our independent accountants.
We do not compensate directors who are also our employees for their service
as directors.
Benefits to Non-Employee Directors
As of December 1, 2000, there were five current non-employee directors
participating in the Director Option Plan and two former non-employee directors
holding options previously granted under the Director Option Plan. There are a
total of 222,250 options outstanding under the Director Option Plan. The
exercise price for these options range from $7.32 to $21.96. As of December 1,
2000, there were five current non-employee directors participating in the
Directors Stock Incentive Plan and a total of 23,532 options and a deferred
right to receive 1,305 shares of common stock outstanding under the Director
Stock Incentive Plan. The exercise price for these options range from $5.75 to
$16.50. The deferred right to receive common stock will be granted 30 days
after the director retires from the board. The value will reflect the excess of
the fair market value of the Common Stock on the date of exercise of the option
over the exercise price of the option. The closing price of the common stock as
reported on the Nasdaq National Market on December 1, 2000 was $6.53.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary of Compensation
The following table summarizes the compensation accrued by us in each of the
fiscal years ended September 30, 1998, 1999 and 2000 with regard to Richard C.
Cook, our President and Chief Executive Officer, and our other three executive
officers whose annual compensation and bonus was $100,000 or more for fiscal
2000. We refer to these four executive officers as the "named executive
officers."
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation Awards
------------------ --------------------------
Restricted Securities
Fiscal Stock Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Awards($)(1)(2) Options(#) Compensation($)(3)
--------------------------- ------ --------- -------- --------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Cook..................... 2000 $278,697 $213,750 $175,313 75,000 5,111
President and Chief Executive 1999 250,487 100,000 200,001 125,000 5,943
Officer 1998 201,690 311,443 -- 10,500 4,926
Stephen C. Haley(4)................. 2000 169,675 587,599 147,422 264,000 14,111
Chief Operating Officer
William J. Gilmour.................. 2000 141,995 70,131 59,766 30,000 5,111
Chief Financial Officer, Vice 1999 124,819 47,400 70,002 30,000 4,944
President of Finance and Treasurer 1998 110,000 114,121 -- 4,600 4,926
Martin D. Avallone(5)............... 2000 151,967 46,135 59,766 20,000 5,111
Vice President, General Counsel 1999 136,442 27,213 30,001 15,000 4,944
and Secretary
</TABLE>
--------
(1) On April 14, 1999, we issued the following number of shares of restricted
common stock to the following named executive officers: 47,059 shares to
Mr. Cook, 16,471 shares to Mr. Gilmour and 7,059 shares to Mr. Avallone.
The dollar amounts shown in the table represent the fair value of the
award on the grant date. The individuals can vote the stock and are
eligible for any dividends paid on the stock but may not dispose of the
shares before April 14, 2002, at which time the named executive officer
must be employed by us in order to gain the right to dispose of the
shares. As of September 30, 2000, the value of the restricted stock awards
were as follows: $317,648 for Mr. Cook, $111,179 for Mr. Gilmour and
$47,648 for Mr. Avallone.
(2) On March 31, 2000, we issued the following number of shares of restricted
common stock to the following named executive officers: 11,000 shares to
Mr. Cook, 9,250 shares to Mr. Haley, 3,750 shares to Mr. Gilmour and 3,750
shares to Mr. Avallone. The dollar amounts shown in the table represent
the fair value of the award on the grant date. The individuals can vote
the stock and are eligible for any dividends paid on the stock but may not
dispose of the shares before March 31, 2003, at which time the named
executive officer must be employed by us in order to gain the right to
dispose of the shares. As of September 30, 2000, the value of the
restricted stock awards were as follows: $74,250 for Mr. Cook, $62,438 for
Mr. Haley, $25,313 for Mr. Gilmour and $25,313 for Mr. Avallone.
(3) Consists of matching contributions of $5,100 made by us to our 401(k) Plan
for the benefit of each named executive officer based on a percentage of
the named executive officer's contributions to the 401(k) Plan and $11
paid by us on behalf of each of the named executive officers in connection
with our group life insurance and accidental death and dismemberment
policies. During fiscal 2000, we also paid $9,000 of Mr. Haley's moving
expenses.
(4) Mr. Haley served as President and Chief Executive Officer of Pivotpoint,
Inc. prior to its acquisition by us in January 2000. Bonus includes a
$500,000 additional bonus paid to Mr. Haley in connection with our
acquisition of Pivotpoint. Securities Underlying Options includes 14,000
shares subject to options granted to Mr. Haley's wife.
(5) Mr. Avallone was an attorney for IBM until July 1997. Mr. Avallone served
as our General Counsel and Secretary from July 1997 until October 1, 1998,
when he was elected Vice President, General Counsel and Secretary.
9
<PAGE>
Employment Agreements
We are a party to Change of Control Employment Agreements with Richard C.
Cook, William J. Gilmour and Martin D. Avallone. We are also party to a three
year employment agreement with Stephen C. Haley. Each Change of Control
Employment Agreement provides that if a change of control occurs during the
change of control period, we will employ the executive from the date of the
change of control until the third anniversary of that date on the terms set
forth in the agreement. "Change of control" is generally defined to mean:
. the acquisition by any individual, entity or group of beneficial
ownership of 25% or more of the combined voting power of our outstanding
voting securities entitled to vote in the election of directors;
. the failure of the individuals who constitute the board of directors as
of the date of the Change of Control Agreement to continue to constitute
at least a majority of the board;
. the consummation of certain reorganizations, mergers, consolidations, or
sales or other dispositions of all or substantially all of our assets;
or
. the approval by our shareholders of our complete liquidation or
dissolution.
"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 after that date; provided that on each anniversary of a Change of Control
Agreement, the "change of control period" is automatically extended so as to
terminate three years after such anniversary, unless we provide timely notice
to the executive that we will not extend the period.
In exchange for an executive's services under his Change of Control
Employment Agreement, during the employment period, the executive will: (a)
receive an annual base salary that is at least equal to 12 times the highest
monthly base salary paid or payable to him during the twelve month period prior
to the effective date; (b) be awarded an annual cash bonus that is at least
equal to his highest annual bonus for the last three full fiscal years prior to
the effective date; and (c) be entitled to participate in the same incentive,
savings and retirement plans, practices, policies and programs as our other
senior executives, and the executive and his family will receive the same
benefits under all of our welfare benefit plans, practices, policies and
programs as our other senior executives. In addition, subject to certain
limitations, the Change of Control Agreements of Messrs. Cook and Gilmour
provide that if a payment to or for the benefit of Mr. Cook or Mr. Gilmour
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code, then Mr. Cook or Mr. Gilmour will be entitled to receive an
additional payment such that after payment by him of all taxes (including,
without limitation, such excise tax, income taxes and interest and penalties),
he will retain an amount of such additional payment equal to such excise tax.
With respect to both the Change of Control Employment Agreements and Mr.
Haley's employment agreement, if during the employment period, an executive's
employment is terminated by us other than for cause or disability, or an
executive terminates his employment for good reason, then 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) an
amount equal to the executive's annual bonus for the most recently completed
fiscal year, reduced pro rata for the number of days remaining in the fiscal
year; (3) to the extent unpaid, any compensation previously deferred by the
executive and any accrued vacation pay and (4) for Mr. Avallone, two times the
sum of his annual base salary and most recent bonus, for Mr. Haley, one-half of
his annual base salary and most recent bonus or, if such termination follows a
change of control, 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 salaries and most recent bonuses. In addition, for
a period of time after the date of termination, we will continue to provide
welfare benefits to the executive and his family, subject to certain
limitations, and we will pay or provide any other amounts or benefits required
to be paid or provided to the executive under any of our plans, programs,
policies, practices or contracts. However, each executive will forfeit his
right to receive, or shall repay, the lump sum payment referred to in clause
(4) above if, at any time
10
<PAGE>
during two years after the date on which his employment terminates, he violates
the post-employment restrictive covenants contained in his agreement.
If, during the employment period, an executive's employment is terminated
for cause, we 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. If an executive voluntarily
terminates his employment other than for good reason, we will be obligated to
pay the executive his accrued obligations and provide his other benefits. If,
during the employment period, an executive dies or becomes disabled, we 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 agreement provides that the executive
is not required to seek other employment or take other actions to mitigate
amounts payable, and such amounts will not be reduced if the executive obtains
other employment following the termination of his employment with us.
Each executive's agreement also provides that for a two-year period
following the termination of his employment, the executive may not disclose or
otherwise use any of our confidential information, solicit or induce any of our
employees to terminate their employment, solicit our customers for the purpose
of selling competing services to such customers or engage in the provision of
competing services within the State of Georgia.
Option Grants
The following table provides information with regard to stock option grants
to the named executive officers pursuant to our 1998 Long Term Incentive Plan,
or LTIP, during fiscal 2000. Except as otherwise set forth in the footnotes to
the table, all options become exercisable at the rate of 25% per year beginning
on the first anniversary of the grant date. All options expire ten years from
the date of grant.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Percent Value
of Total at Assumed Annual
Options Rates
Number of Granted of Stock Price
Securities to Exercise Appreciation
Underlying Employees or Base for Option Term
Options In Fiscal Price Expiration ---------------------
Name Granted(#) Year(1) ($/Sh) Date 5%($) 10%($)
---- ---------- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Cook......... 75,000(2) 4.14% $15.94 3/30/2010 $ 751,726 $1,905,021
Stephen C. Haley........ 200,000(3) 11.05 11.25 12/14/2009 1,415,013 3,585,920
10,000(4) 0.55 15.00 1/11/2010 94,334 239,061
50,000(2) 2.76 15.94 3/30/2010 501,150 1,270,013
4,000(4) 0.22 5.50 6/1/2010 13,836 35,062
William J. Gilmour...... 30,000(2) 1.66 15.94 3/30/2010 300,690 762,008
Martin D. Avallone...... 20,000(2) 1.10 15.94 3/30/2010 200,460 508,006
</TABLE>
--------
(1) Options to purchase a total of 1,810,433 shares of common stock were
granted to employees in fiscal 2000.
(2) These options will vest at the rate of 25% per year, except that 50% of
the options will vest immediately if our share price increases to three
times the exercise price of the options and the remaining 50% will vest
immediately if our share price increases to four times the exercise price
of the options.
(3) 50% of these options would have vested immediately on December 31, 2000 if
specific Company financial objectives had been met. Those objectives were
not met, and the options will instead vest at the rate of 25% per year
beginning on the first anniversary of the grant date.
(4) These options were granted to Mr. Haley's wife, who is one of our
Directors of Marketing. All of the options granted on June 2, 2000 vest on
June 2, 2004, except that 50% of the options granted will vest immediately
if our share price increases to $20.00 and the remaining 50% will vest
immediately if our share price increases to $30.00.
11
<PAGE>
Amounts reported in the last two columns represent hypothetical amounts that
may be realized upon exercise of the 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. The numbers
shown in these two columns are calculated based on SEC rules and do not reflect
our estimate of future stock price growth. Actual gains, if any, on stock
option exercises and common stock holdings depend on the timing of such
exercises and the future performance of the common stock. We do not guarantee
that the rates of appreciation assumed in these two columns can be achieved or
that the amounts reflected will be received by the named executive officers.
The two columns do not take into account any appreciation of the price of the
common stock from the date of grant to the current date.
Option Exercises and Fiscal Year-End Option Values
The following table sets forth information regarding
. the number of shares of common stock received upon exercise of options
by the named executive officers during fiscal 2000;
. the net value realized upon such exercise (the net value realized upon
exercise is equal to the difference between the option exercise price
and the closing sale price of $6.75 per share of common stock on the
Nasdaq National Market on September 29, 2000);
. the number of unexercised options held at September 30, 2000; and,
. the aggregate dollar value of unexercised options held at September 30,
2000.
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Options at September 30, The-Money Options at
Acquired On Value 2000(#) September 30, 2000($)
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard C. Cook......... -- -- 272,775/170,325 $198,913/$117,188
Stephen C. Haley(1)..... -- -- --/264,000 0/5,000
William J. Gilmour...... -- -- 98,857/68,265 46,875/28,125
Martin D. Avallone...... -- -- 54,475/58,225 23,438/14,063
</TABLE>
--------
(1) Includes options to purchase 14,000 shares granted to Mr. Haley's wife.
12
<PAGE>
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The audit committee of the board of directors is composed of three directors
who are independent directors as defined under the rules of The Nasdaq Stock
Market, Inc. As required by such rules, each of the committee members is
financially literate and the chairman of the committee, as the chief financial
officer of a company and our former chief financial officer, has financial
management expertise. The audit committee operates under a written charter
adopted by the board of directors on June 9, 2000, which is included as Exhibit
A to this proxy statement.
The audit committee reviews with our independent accountants their audit
plan, the scope and results of their audit engagement and the accompanying
management letter, if any. Members also consult with the independent
accountants and management with regard to our accounting methods and the
adequacy of our internal accounting controls as well as review the range of the
independent accountants' audit and nonaudit fees. The audit committee also
discusses annually with the independent accountants (1) the matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended, and (2) the independent accountants' independence
from the Company and its management, including the matters in the written
disclosures that the independent accountants provide to the audit committee as
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees.
The audit committee has reviewed our audited year-end financial statements
and discussed them and the audit with our management and the auditors. Based on
the reviews and discussions referenced above, the audit committee has
recommended to the board of directors, and the board has approved, that the
audited financial statements be included in the Company's Annual Report on Form
10-K for fiscal 2000 for filing with the SEC.
Committee Members:
George A. Chamberlain 3d (Chairman)
H. Mitchell Watson, Jr.
Roger J. Heinen, Jr.
13
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Introduction
The compensation committee is responsible for developing our executive
compensation policies and advising the board of directors with respect to these
policies. This report by the compensation committee reviews our policies
generally with respect to the compensation of all executive officers as a group
for fiscal 2000 and specifically reviews the compensation established for our
Chief Executive Officer for fiscal 2000.
The members of the committee are Edward J. Kfoury (Chairman), H. Mitchell
Watson, Jr. and Terry H. Osborne. None of the committee members is or has been
an officer or employee of us or any of our subsidiaries or has engaged in any
business transaction with us or has any business relationship with us that is
required to be disclosed in this proxy statement.
Compensation Policy for Executive Officers
Our executive compensation program is designed to attract and retain a
highly qualified and motivated management team, reward individual performance
and link the interests of the senior executives directly with those of the
shareholders through a highly leveraged compensation program, performance
units, stock options and restricted stock. Our 2000 compensation program is
comprised of base salary, annual bonuses and long-term incentive pay in the
form of stock options and restricted stock. This program applies to all of our
key executive management personnel, including our Chief Executive Officer. All
of our executives also are eligible for other employee benefits, including
life, health, disability and dental insurance and our 401(k) savings plan and
employee stock purchase plan.
Base Salary and Annual Bonus. The compensation committee set the total cash
compensation of top executive management for fiscal 2000 after reviewing total
compensation levels in the software industry for comparable executive
positions. Total cash compensation consists of two components, base salary and
annual bonus.
The compensation committee established annual base salaries at levels
competitive with those of similarly situated companies of similar size and
revenue levels in our industry. The compensation committee set the criteria for
earning annual cash bonuses for executive officers in fiscal 2000 on a
combination of our financial performance and the achievement of individual or
group performance goals. The compensation committee established average and
target bonus amounts after reviewing similar information presented in
independent industry surveys. The compensation committee created highly
leveraged total cash compensation plans for our executive officers by setting
bonus levels which could potentially enable the executives to earn more in
annual bonus as a percentage of their annual base salary than their peers at
competitive firms. The compensation committee's review ranged from broad-based
overviews of the entire software industry to information regarding entities
more similar to us in revenues. Based on such comparative information, the
compensation committee used "median" and 90th percentile levels as a guide for
setting total cash compensation amounts for our top management positions.
As indicated above, the committee set exceptionally high financial
performance targets for the bonus plans. Bonus payment amounts would be
accelerated if such targets were met, such that the executive in many cases
would be paid at the 90th percentile for similarly situated executives at
comparable software companies. During fiscal 2000, earnings per share based
incentive awards were payable only if earnings per share performance exceeded
50% of targeted levels. Generally, if actual performance ranged from 50% to 58%
of targeted performance, our executive officers received 6.25% of the budgeted
amount for each 1% of performance achieved. From 58% to 100% of targeted
performance, our executive officers received 1.2% of the budgeted amount for
each 1% of performance achieved. For performance exceeding 100%, an executive
officer
14
<PAGE>
received 2.4% of the budgeted amount for each 1% increase in performance.
Incentive pay received by all executive officers for fiscal 2000 ranged from
$46,635 to $213,750. This represented from 48% to 78% of targeted bonus amounts
established.
Additional Bonus. In connection with the acquisition of Pivotpoint, Inc., we
hired Mr. Stephen C. Haley, the chief executive officer of Pivotpoint as our
Chief Operating Officer. As part of the acquisition, we agreed to pay Mr. Haley
a bonus of $1,000,000. We paid the first $500,000 in fiscal 2000. Provided Mr.
Haley continues to be employed by us, we will pay him the remaining amount in
equal installments on January 12, 2001 and January 12, 2002.
Long-Term Incentive Pay. Long-term incentive pay is reviewed at least
annually for our senior executives. The compensation committee establishes an
annual long-term incentive compensation amount for each senior executive based
on his performance. Long-term incentives consist of stock options, performance
units, and restricted stock.
Stock Options. Stock options are typically granted annually under the LTIP
to executives officers. All options granted to executive officers in fiscal
2000 have an exercise price equal to the fair market value of the underlying
stock on the date of grant, 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; provided, however, that 50% of the options granted generally
vest immediately if the share price increases to three times the exercise price
of the options and the remaining 50% generally vest immediately if the share
price increases to four times the exercise price of the options.
Restricted Stock. The compensation committee may make awards of restricted
stock, which are subject to restrictions on transferability and other
restrictions, possibly including limitations on the right to vote the
restricted stock or the right to receive dividends on the restricted stock. The
compensation committee granted restricted stock to each of our executive
officers in fiscal 2000. The restrictions, which are as to transferability
only, lapse three years from the date of grant.
Performance Units. Performance units, if awarded, 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. Such
performance units are designed to reward executive officers for achievement of
long-term financial objectives, such as increasing long-term shareholder value.
Performance units also provide a method of increasing our senior executives'
stock ownership. The initial performance period under our Executive Growth Plan
was October 1, 1997 through September 30, 2000, and performance units were
granted on April 1, 1998 for this initial performance period. No additional
performance units were granted during fiscal 2000, and based on our financial
performance in fiscal 2000, none of the performance units granted on April 1,
1998 were paid out. The compensation committee may grant additional performance
units from time to time, and new performance goals would be set at the
beginning of each new period. However, at the present time, the compensation
committee does not intend to grant additional performance units.
Chief Executive Officer's Compensation
Richard C. Cook served as our President and Chief Executive Officer during
fiscal 2000. Mr. Cook's fiscal 2000 base salary was $275,000. Based on our
financial performance in fiscal 2000, Mr. Cook earned an annual incentive bonus
of $213,750, which represented 71% of his target annual incentive pay amount.
The compensation committee also granted Mr. Cook 11,000 shares of restricted
stock under the LTIP. The compensation committee set the levels of many
components of Mr. Cook's compensation based upon comparative information
regarding compensation of chief executive officers at companies of similar size
and revenue levels in the software industry. Mr. Cook's total compensation for
fiscal 2000 is provided in detail in the Summary Compensation Table set forth
above.
15
<PAGE>
Policy With Respect to Deductibility of Compensation Expense
It is the responsibility of the compensation committee to address the issues
raised by Code Section 162(m) of the Internal Revenue Code of 1986, as amended,
which limits our annual tax deduction to $1,000,000 for compensation paid to
our Chief Executive Officer and each of our named executive officers, unless
the compensation is "performance based" as defined in the Code. The LTIP and
our general cash bonus plans are designed to comply with Internal Revenue
Service requirements for deductibility of performance-based compensation.
Conclusion
Our executive compensation program is designed to closely link pay with
performance and the creation of shareholder value. Executive compensation is
highly leveraged. If we achieve average financial performance levels, our
executives will be compensated at "median levels" for comparable companies. If
our performance is exceptionally higher at the targeted levels, executive
compensation will substantially exceed such "median levels." The compensation
committee believes that the program has been and will continue to be successful
in supporting our financial growth and other business objectives.
COMMITTEE MEMBERS:
Edward J. Kfoury (Chairman)
H. Mitchell Watson, Jr.
Terry H. Osborne
16
<PAGE>
STOCK PERFORMANCE GRAPHS
The following stock performance graph and accompanying table compare the
shareholders' cumulative return on our common stock from September 30, 1995 to
September 30, 2000 with the cumulative total return of the Nasdaq Stock Market
Index (U.S.) and the Nasdaq Computer and Data Processing Index over the same
period. The comparative data assumes $100.00 was invested on September 30, 1995
in the common stock and in each of the indices referred to above and assumes
that any dividends were reinvested. However, the performance graph and table do
not reflect a dividend of one share of common stock of our former subsidiary
Marcam Solutions, Inc. for every two shares of our common stock that was
distributed to our shareholders in a spin-off transaction on July 29, 1997.
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Sept. Sept. Sept. Sept. Sept. Sept.
1995 1996 1997 1998 1999 2000
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
MAPICS, Inc.............................. $100 $ 78 $134 $227 $ 89 $ 69
NASDAQ U.S............................... 100 119 163 166 270 359
NASDAQ Computer & Data Processing........ 100 124 168 218 369 484
</TABLE>
17
<PAGE>
The following stock performance graph and accompanying table compare the
shareholders' cumulative return on the common stock from July 29, 1997, the
date of the distribution of the Marcam Solutions' common stock, to September
30, 2000 with the cumulative total return of the Nasdaq Stock Market Index
(U.S.) and the Nasdaq Computer and Data Processing Index over the same period.
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 were reinvested.
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
July Sept. Sept. Sept. Sept.
1997 1997 1998 1999 2000
---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
MAPICS, Inc..................................... $100 $131 $222 $ 87 $ 68
NASDAQ U.S...................................... 100 106 108 176 233
NASDAQ Computer & Data Processing............... 100 99 128 218 274
</TABLE>
The stock price performance shown in the two graphs and tables set forth
above is not necessarily indicative of future stock price performance. We
obtained the information used in the graphs and tables from the Nasdaq Stock
Market, which we believe to be a reliable source but we are not responsible for
any errors or omissions in the information.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The United States securities laws require our directors, executive officers
and any persons who beneficially own more than 10% of our common stock to file
with the SEC and the Nasdaq Stock Market initial reports of ownership and
subsequent reports of changes in ownership. To our knowledge, based solely on a
review of the copies of the reports furnished to us and written representations
that no other reports were required, during fiscal 2000 all directors,
executive officers and beneficial owners of more than 10% of our common stock
made all required filings.
18
<PAGE>
SHAREHOLDERS' PROPOSALS FOR 2002 ANNUAL MEETING
To be considered for inclusion in our proxy statement for the 2002 annual
meeting, director nominations and other proposals of shareholders must be
submitted in writing to our Corporate Secretary on or before August 31, 2001.
For any director nomination or other proposal that is not submitted for
inclusion in next year's proxy statement but is instead sought to be presented
directly to the shareholders at the 2002 annual meeting, management will be
able to vote proxies in its discretion if we:
. receive notice of the proposal before the close of business on November
14, 2001 and advise shareholders in the proxy statement for the 2002
annual meeting about the nature of the proposal and how management
intends to vote on the proposal, or
. do not receive notice of the proposal before the close of business on
November 14, 2001.
All director nominations and other proposals of shareholders with regard to
the 2002 annual meeting should be submitted by certified mail, return receipt
requested, to MAPICS, Inc., 1000 Windward Concourse Parkway, Alpharetta,
Georgia 30005, Attention: Martin D. Avallone, Vice President, General Counsel
and Secretary.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has audited our financial statements for fiscal
2000. Representatives of PricewaterhouseCoopers LLP will be present at the
annual meeting and will be available to respond to appropriate questions.
By Order of the board of directors,
/s/ Martin D. Avallone
Martin D. Avallone
Vice President, General Counsel and Secretary
Atlanta, Georgia
December 29, 2000
Our 2000 Annual Report and our Annual Report on Form 10-K for the fiscal
year ended September 30, 2000, which includes audited financial statements,
have been mailed to shareholders with these proxy materials. Such materials do
not form any part of the materials for the solicitation of proxies.
19
<PAGE>
EXHIBIT A
MAPICS, INC.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the audit committee is to assist the board of
directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the corporation
to any governmental body or the public; the corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the board have established; and the corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the audit committee should encourage continuous improvement of, and
should foster adherence to, the corporation's policies, procedures and
practices at all levels. The audit committee's primary duties and
responsibilities are to:
. Serve as an independent and objective party to monitor the corporation's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the corporation's independent
accountants.
. Provide an open avenue of communication among the independent
accountants, financial and senior management and the board of directors.
The audit committee will primarily serve these responsibilities by carrying
out the activities enumerated in Section IV of this charter.
II. COMPOSITION
The audit committee shall be comprised of three or more directors as
determined by the board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the board, would interfere with
the exercise of his or her independent judgement as a member of the committee.
Members of the audit committee shall be considered independent if they have no
relationship to the corporation that may interfere with the exercise of their
independence from management and the corporation. All members of the committee
shall have a working familiarity with basic finance and accounting practices,
and at least one member of the committee shall have accounting or related
financial management expertise. Committee members may enhance their familiarity
with finance and accounting by participating in educational programs conducted
by the corporation or an outside consultant.
The members of the committee shall be elected by the board at the annual
organizational meeting of the board or until their successors shall be duly
elected and qualified. Unless a chair is elected by the full board, the members
of the committee may designate a chair by majority vote of the full committee
membership.
III. MEETINGS
The committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
committee should meet at least annually with management and the independent
accountants in separate executive sessions to discuss any matters that the
committee or each of these groups believe should be discussed privately. The
committee may ask members of management or others to attend meetings and
provide pertinent information as necessary. In addition, the committee or at
least its chair should meet with the independent accountants and management
quarterly to review the corporation's financial statements consistent with IV.3
below.
The presence of at least a majority of the members of the audit committee
shall be necessary for the transaction of business at all meetings of the audit
committee and action of the audit committee shall require the concurrence of a
majority of those present at such a meeting.
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IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the audit committee shall:
Document/Reports Review
1. Review and update this charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by
the independent accountants.
3. Review with financial management and the independent accountants the
Annual Report, Form 10-K and Form 10-Q prior to its filing or prior to the
release of earnings. The chair of the committee may represent the entire
committee for purposes of this review.
Independent Accountants
4. Recommend to the board of directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants. On
an annual basis, the committee should review and discuss with the
accountants all significant relationships the accountants have with the
corporation to determine the accountants' independence. The audit committee
shall be responsible for receiving from the external accountants a formal
written statement delineating all relationships between the auditor and the
company, consistent with Independence Standards Board Standard 1.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
Financial Reporting Process
7. In consultation with the independent accountants, review the
integrity of the organization's financial reporting process, both internal
and external.
8. Consider the independent accountants' judgements about the quality
and appropriateness of the corporation's accounting principles as applied
in its financial reporting.
9. Consider and approve, if appropriate, major changes to the
corporation's auditing and accounting principles and practices as suggested
by the independent accountants or management.
Process Improvement
10. Establish regular and separate systems of reporting to the audit
committee by each of management and the independent accountants regarding
any significant judgements made in management's preparation of the
financial statements and the view of each as to appropriateness of such
judgements.
11. Following completion of the annual audit, review separately with
each of management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
12. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
13. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the audit committee, have been implemented. (This review should
be conducted at an appropriate time subsequent to implementation of changes
or improvements, as decided by the committee.)
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[LOGO OF MAPICS]
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Vote By Telephone Vote By Internet
It's fast, convenient, and immediate! It's fast, convenient, and your vote
1-877-PRX-VOTE (1-877-779-8683) is immediately confirmed and posted.
Follow these four easy steps: Follow these four east steps:
1. Read the accompanying proxy statement 1. Read the accompanying proxy
and proxy card. statement and proxy card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683) http://www.eproxyvote.com./mapx
3. Enter your 14-digit voter control 3. Enter your 14-digit voter
number located on your proxy card control number located on your
above your name. proxy card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/mapx
anytime!
Do not return your proxy card if you are voting by telephone or Internet
IF YOU HAVE NOT SUBMITTED YOUR PROXY VOTING INSTRUCTIONS BY TELEPHONE OR THE
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INTERNET, THEN PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ENCLOSED PREPAID ENVELOPE.
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving shareholder material
electronically via the Internet helps reduce MAPICS' mailing and printing costs.
To receive future proxy materials electronically, go to:
http://www.econsent.com/mapx and follow the instructions provided. Your
enrollment in this program will remain in effect until you cancel your
enrollment. You are free to cancel your enrollment at any time by going to
http://www.econsent.com/mapx on the Internet.
DETACH HERE
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X PLEASE MARK VOTE AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
1. The election of (01) Edward J. Kfoury as Class 1 director to serve
until the 2004 annual meeting of shareholders and until his
successor is elected and qualified.
[_] FOR [_] WITHHELD
MARK HERE IF YOU PLAN TO ATTEND THE MEETING. [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. [_]
In their discretion, the proxies are authorized
to vote upon such other business as may properly
come before the annual meeting and any
adjournments thereof.
Please mark, date and sign exactly as your name
appears on this proxy card. When shares are jointly
held, 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: Date: Signature: Date:
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DETACH HERE
REVOCABLE PROXY
COMMON STOCK
MAPICS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 2001 ANNUAL MEETING OF
SHAREHOLDERS. IF YOU CHOOSE TO SUBMIT YOUR PROXY VOTING INSTRUCTIONS BY TOUCH
TONE TELEPHONE OR THE INTERNET, THEN DO NOT RETURN THIS PROXY CARD.
The undersigned hereby appoints William J. Gilmour and Martin D. Avallone ,
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. that
the undersigned is entitled to vote at the 2001 annual meeting of shareholders,
to be held February 13, 2001 at 9:00 a.m. at the Four Seasons Hotel, 75 14th
Street, Atlanta, Georgia, and at any and all adjournments.
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 ONE NOMINEE NAMED IN PROPOSAL 1. If any other business is
presented to a vote of the shareholders at the annual meeting, this proxy card
will be voted by the proxies in their best judgment. At the present time, the
board of directors does not know of any other business to be presented to a vote
of the shareholders at the annul meeting.
If the undersigned elects to withdraw this proxy card on or before the time
of the annual meeting or any adjournments and notifies Martin D. Avallone, our
Vice President, General Counsel and Secretary, at or prior to the annual meeting
of that decision, then the power of this proxy shall be deemed terminated and of
no further force and effect. If the undersigned withdraws this proxy card in
the manner described above and does not submit a duly executed and subsequently
dated proxy card prior to the annual meeting, the undersigned may vote all
shares of common stock owned by the undersigned as of the record date, December
15, 2000, in person at the annual meeting.
SEE REVERSE (Continued, and to be signed and dated, SEE REVERSE
SIDE on the reverse side) SIDE
