SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended
Filed by the Registrant [X]
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 Section 240.14a-11(c) or Section 240.14a-12
CATALYST INTERNATIONAL, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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 previously filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
CATALYST INTERNATIONAL, INC.
8989 North Deerwood Drive
Milwaukee, Wisconsin 53223
__________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 27, 1998
To the Stockholders of Catalyst International, Inc.:
The 1998 Annual Meeting of Stockholders of Catalyst International, Inc.
will be held at the offices of the Company, 8989 North Deerwood Drive,
Milwaukee, Wisconsin 53223, on Monday, April 27, 1998 at 8:00 a.m., local
time, for the following purposes:
(1) To elect one Class III Director to serve for a three-year term;
(2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for 1997; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record at the close of business on March 13, 1998 are
entitled to notice of and to vote at the Annual Meeting and at all
adjournments thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. YOUR VOTE IS
IMPORTANT. HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES MUST BE PRESENT IN
PERSON OR BY PROXY IN ORDER FOR THE ANNUAL MEETING TO BE HELD. THEREFORE, YOU
ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON. IF
YOU ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY
DO SO BY REVOKING YOUR PROXY AT ANY TIME PRIOR TO THE VOTING THEREOF.
By Order of the Board of Directors,
/s/ Mark T. Ehrmann
Mark T. Ehrmann, Secretary
March 25, 1998
<PAGE>
LOGO
CATALYST INTERNATIONAL, INC.
8989 North Deerwood Drive
Milwaukee, Wisconsin 53223
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
April 27, 1998
--------------------
The enclosed proxy is solicited by the Board of Directors of Catalyst
International, Inc. for use at the Company's 1998 Annual Meeting of
Stockholders to be held at the time and place and for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders.
Only holders of record of the 6,663,071 shares of Common Stock outstanding
at the close of business on March 13, 1998 (the "Record Date") are entitled to
notice of and to vote at the Annual Meeting. The presence, in person or by
proxy, of a majority of the shares of the Common Stock outstanding on the
Record Date will constitute a quorum. Abstentions and broker non-votes (i.e.,
proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares as to a matter with respect to which brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the quorum. Neither abstentions nor broker non-votes will have an
impact on the election of Directors. With respect to Proposal Two,
abstentions and broker non-votes will have the same effect as a vote against
the proposal. Each share of Common Stock entitles its holder to cast one vote
on each matter to be voted upon at the Annual Meeting.
This Proxy Statement, Notice of Annual Meeting of Stockholders and the
accompanying proxy card, together with the Company's Annual Report to
Stockholders, including audited financial statements for the year ended
December 31, 1997, are being mailed to stockholders of the Company commencing
on or about March 25, 1998.
IF THE ACCOMPANYING PROXY CARD IS PROPERLY SIGNED AND RETURNED TO THE
COMPANY AND NOT REVOKED, IT WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
CONTAINED THEREON. EACH STOCKHOLDER MAY REVOKE A PREVIOUSLY GRANTED PROXY AT
ANY TIME BEFORE IT IS EXERCISED BY WRITTEN NOTICE OF REVOCATION OR BY
SUBMITTING A DULY EXECUTED PROXY BEARING A LATER DATE TO THE SECRETARY OF THE
COMPANY.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTOR
The Company's directors are divided into three classes, designated as Class
I, Class II and Class III, with staggered terms of three years each. The term
of office of the Director in Class III expires at the 1998 Annual Meeting.
The Board of Directors proposes that the nominee described below, who is
currently serving as a Class III Director, be elected as a Class III Director
for a new term of three years ending at the Company's 2001 Annual Meeting of
Stockholders or until his successor is duly elected and qualified.
The nominee receiving the largest number of affirmative votes cast will be
elected as a Class III Director.
NOMINEE FOR DIRECTOR
Class III Director (term to expire in 2001)
Name Principal Occupation and Directorships
---- --------------------------------------
[C] [S]
Roy J. Carver .. . . . Mr. Carver has served as a Director of the Company
Age 54 since April 1994. Since 1982, Mr. Carver has served
as Chairman of the Board of Carver Pump Company (a
manufacturer of pumps and related products). Since
1982, Mr. Carver has served as a Director of Bandag,
Inc. (a tire retreading company).
CONTINUING DIRECTORS
Class I Directors (term expiring in 1999)
Sean P. McGowan . . . Mr. McGowan has served as a Director of the Company
Age 38 since April 1997. From August 1997, Mr. McGowan has
served as President and Chief Executive Officer of the
Company. From January 1997 until August 1997, Mr.
McGowan served as President and Chief Operating
Officer of the Company. From May 1996 until January
1997, Mr. McGowan served as Senior Vice President -
North American Operations of the Company. Prior to
joining the Company, Mr. McGowan served as General
Manager and as Sales Manager at Professional Control
Corporation from 1991 to 1996; as General Manager and
part-owner of All-Prox Distribution Services, Inc.,
from 1986 to 1991 and as a salesman for Sencon, an
Industrial Controls corporation, with territories
including the East Coast and Midwest from 1982 to
1985.
James F. Goughenour . . Mr. Goughenour has served as Director of the Company
Age 60 since January 1997. Since June 1997, Mr. Goughenour
has served as Vice President of Technology, Planning
and Operations Services at Sealy, Inc. Prior thereto,
Mr. Goughenour served successively as Vice President
of Information Technologies, Customer Service,
Distribution, Logistics, and Process Improvement &
Technology for HON Industries (a manufacturer of
office furniture and fireplaces).
<PAGE>
Class II Directors (term to expire in 2000)
Douglas B. Coder . . . Mr. Coder has served as a Director of the Company
Age 62 since July 1992 and as Chairman of the Board since
January 1997. Mr. Coder has served as a principal
of the Coder Company (a real estate brokerage firm)
and DBC Realty (a real estate holding company) since
1969 and 1971, respectively.
Terrence L. Mealy . . Mr. Mealy has served as a Director of the Company
Age 67 since July 1992. Mr. Mealy has been an attorney in
private practice since 1957 and is a member of the
State Bar of Iowa.
The Board of Directors recommends you vote FOR the election of the
individual nominated to serve as a Class III Director and your proxy will be
so voted unless you specify otherwise.
Meetings and Committees of the Board
The Board of Directors has standing Audit, Compensation and Nominating
Committees. The Board of Directors does not have a Finance Committee. The
Board of Directors held eight meetings in 1997. Each director attended at
least 75% of the full board meetings and meetings of committees on which such
Director served in 1997.
The Audit Committee, consisting of Messrs. Carver, Mealy and Goughenour,
nominates the Company's independent auditors for approval by the Board of
Directors and reviews the scope, results and costs of the audit with the
Company's independent auditors. It also reviews the financial statements of
the Company and the audit function to assure full compliance with the
requirements of regulatory agencies and full disclosure of necessary
information to the stockholders of the Company. The Audit Committee was
established in November 1995 and held two meetings in 1997. It has
recommended the appointment of Ernst & Young LLP as the independent auditors
of the Company for the year ending December 31, 1998.
The Compensation Committee, consisting of Messrs. Carver, Coder and Mealy,
establishes compensation levels for the executive officers of the Company,
including the annual bonus plan for senior management, and administers the
Company's 1993 Stock Option Plan, as amended. The Compensation Committee held
one meeting in 1997.
The Nominating Committee, consisting of Messrs. Carver and Mealy, nominates
persons for election as directors of the Company. The Nominating Committee
was established in March 1997 and held two meetings in 1997.
Director Compensation
Directors of the Company who are not employees of the Company receive a fee
of $1,500 (or its equivalent in stock options) for each Board of Directors
meeting they attend and $500 (or its equivalent in stock options) for each
Committee meeting they attend and are reimbursed for their expenses incurred
in connection with their responsibilities as directors.
<PAGE>
Mr. Coder receives compensation of $2,000 per month plus bonus (equal to
$37,500 for 1997) and full medical benefits in consideration for performing
his duties as Chairman of the Board. In addition, Mr. Goughenour performs
consulting services to the Company at a daily rate of $2,000.
The Director Stock Option Plan, approved at the 1997 Annual Meeting of
Stockholders, allows non-employee Directors to receive stock options in lieu
of cash compensation for attendance at Board of Directors and Committee
meetings.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of Forms 3s and 4s furnished to the Company
pursuant to Section 16 of the Securities and Exchange Act of 1934, as amended,
all such forms were filed on a timely basis by reporting persons in 1997.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates, as of February 28, 1998 (unless otherwise
noted), beneficial ownership of Common Stock by directors, certain executive
officers and persons known by the Company to be beneficial owners of more than
5% of its outstanding Common Stock, and all directors and executive officers
of the Company as a group. Unless otherwise indicated, the person listed has
sole voting and investment power.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owners Ownership Class
- ------------------- ---------- ----------
<S> <C> <C>
Roy J. Carver 247,138(1) 3.71%
2415 Park Avenue
Muscatine, IA 52761
Douglas B. Coder 800,360(2) 12.02%
8711 East Pinnacle Peak Road #127
Scottsdale, AZ 85255
James F. Goughenour 12,305(3) *
1228 Euclid Avenue
Cleveland, OH 44115
Sean P. McGowan 121,249(4) 1.82%
8989 North Deerwood Drive
Milwaukee, WI 53223
Terrence L. Mealy 909,394(5) 13.66%
301 East Second Street
Muscatine, IA 52761
David M. Kogut 40,582(6) *
8989 North Deerwood Drive
Milwaukee, WI 53223
Judith K. Fearn 26,282(7) *
8989 North Deerwood Drive
Milwaukee, WI 53223
John F. Kramer 13,433(8) *
8989 North Deerwood Drive
Milwaukee, WI 53223
Steven S. Rishel 11,483(9) *
8989 North Deerwood Drive
Milwaukee, WI 53223
Michael D. Schulz 0(10) *
8989 North Deerwood Drive
Milwaukee, WI 53223
James G. Stowers 384,000(11) 5.77%
8989 North Deerwood Drive
Milwaukee, WI 53223
<PAGE>
Dennis L. Templar 347,864(12) 5.23%
7421 Vardon Way
Fort Collins, CO 80525
State of Wisconsin Investment Board 795,000(13) 11.96%
Post Office Box 7842
Madison, WI 53707
Massachusetts Financial Services 315,500(14) 4.7%
500 Bolston Street, 15th Floor
Boston, MA 02116
All directors and executive officers
as a group (15 persons) 2,595,388(15) 38.99%
</TABLE>
- ------------
*Less than 1% of the outstanding Common Stock.
(1)Represents options to purchase 12,396 shares, all of which are immediately
exercisable.
(2)Includes 36,271 shares held by Mr. Coder's spouse, 286,240 shares held by
S&S Partnership and 104,498 shares held in trust for the benefit of Mr.
Coder's children. Mr. Coder disclaims beneficial ownership of all such
shares. Mr. Coder has sole voting and investment power with respect to
355,137 shares and shared voting and investment power with respect to 433,009
shares. Also includes options to purchase 12,214 shares, all of which are
immediately exercisable.
(3)Represents options to purchase 12,305 shares, all of which are immediately
exercisable.
(4)Includes options to purchase 106,249 shares which are exercisable within 60
days of February 28, 1998.
(5)Represents options to purchase 12,305 shares, all of which are immediately
exercisable.
(6)Includes options to purchase 36,332 shares which are exercisable within 60
days of February 28, 1998.
(7)Includes options to purchase 26,082 shares which are exercisable within 60
days of February 28, 1998.
(8)Includes options to purchase 12,433 shares which are exercisable within 60
days of February 28, 1998.
(9)Includes options to purchase 11,183 shares which are exercisable within 60
days of February 28, 1998.
(10)The issuance of Mr. Schulz's options to purchase shares is scheduled for
approval at the next regularly scheduled Board of Directors meeting; he does
not currently hold any options.
(11)Includes 20,000 shares held in the name of Mr. Stowers' minor children as
to which Mr. Stowers disclaims beneficial ownership. Mr. Stowers has sole
voting and investment power with respect to 364,000 shares and shared voting
and investment power with respect to 20,000 shares.
(12)This information is based on a Schedule 13G dated February 8, 1998.
(13)This information is based on a Schedule 13G dated January 20, 1998.
(14)This information is based on a Schedule 13G dated February 12, 1998.
(15)Includes options to purchase 264,261 shares which are exercisable within
60 days of February 28, 1998.
<PAGE>
EXECUTIVE OFFICERS*
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sean P. McGowan . . . . . 37 President and Chief Executive Officer
Michael D. Schulz . . . . 45 Executive Vice President and Chief
Operating Officer
James G. Stowers . . . . 54 Senior Vice President-Corporate
Development
David M. Kogut . . . . . 46 Senior Vice President-Customer
Satisfaction
Peter J. Briehl . . . . . 40 Vice President-Development and Delivery
Judith K. Fearn . . . . . 36 Vice President-European Operations
David Harney . . . . . . 59 Vice President-Research and Development
Thomas G. Hickinbotham . 53 Vice President-Finance & Administration
and Chief Financial Officer
Douglas J. Kennedy . . . 34 Vice President-Professional Services
Organization
John F. Kramer . . . . . 34 Vice President-North American Sales
Steven S. Rishel . . . . 32 Vice President-Marketing
</TABLE>
- ----------
* Information current as of March 3, 1998
SEAN P. MCGOWAN has served the President and Chief Executive Officer since
August 1997. Prior thereto, Mr. McGowan served as President and Chief
Operating Officer; and as Senior Vice President-North American Operations
since joining the Company in May 1996. Prior to joining the Company, Mr.
McGowan served as General Manager and as Sales Manager at Professional Control
Corporation from 1991 to 1996; as General Manager and part-owner of All-Prox
Distribution Services, Inc., from 1986 to 1991 and as a salesman for Sencon,
an Industrial Controls corporation, with territories including the East Coast
and Midwest from 1982 to 1985.
MICHAEL D. SCHULZ has served as Executive Vice President and Chief
Operating Officer since January 1998. Prior to joining the Company, Mr.
Schulz served as Director of Information Systems for Case Corporation from
December 1996 to January 1998; as Director Information Services, Worldwide
Data Centers and Global Network Operations from August 1995 to December 1996;
and Director of European Data Systems for Case Corporation from June 1990 to
August 1995.
JAMES G. STOWERS is one of the cofounders of the Company and has served as
its Senior Vice President-Corporate Development since April 1994. Prior
thereto, Mr. Stowers served as a Vice President of the Company with various
marketing, sales and management responsibilities. Mr. Stowers was a director
of the Company from August 1982 to November 1993.
DAVID M. KOGUT has served as Senior Vice President-Customer Satisfaction
since October 1997. Prior thereto, Mr. Kogut served as Senior Vice President-
Operations from January 1997 to October 1997; as Vice President-Customer
Service from October 1995 to January 1997; as Vice President-Marketing from
October 1993 to October 1995 and as Vice President-Systems Integration since
rejoining the Company in October 1991.
PETER J. BRIEHL has served as Vice President-Development and Delivery since
October 1997. Prior thereto, Mr. Briehl served as Director of Advanced
<PAGE>
Technology of the Company from August 1996 to October 1997 and as Manager of
Software Distribution from February 1996 to August 1996. Prior to joining the
Company, Mr. Briehl was employed for over twenty years by the United States
Marine Corps. and served as the Training and Operations Head at the Computer
Science School in Quantico, Virginia from July 1994 to February 1996.
JUDITH K. FEARN has served as Vice President-European Operations since
December 1995 and prior thereto served as the Company's Managing Director-
United Kingdom from May 1994. Prior to joining the Company, Ms. Fearn was
employed for over eight years by Calidus Systems, a competitor of the Company,
and served as its Principal Consultant/Account Manager from 1992 to 1994, and
as its Research and Development Manager from 1989 to 1992.
DOUGLAS J. KENNEDY has served as Vice President-Professional Services
Organization since August 1996. From December 1995 to August 1996, Mr.
Kennedy served as Director-Retail Operations of the Company and as a Project
Manager from November 1994 to November 1995. Prior to joining the Company,
Mr. Kennedy worked in various positions at Woolworth Corporation.
JOHN F. KRAMER has served as Vice President-North American Sales since
October 1996. From January 1996 to October 1996, Mr. Kramer served as
Regional Sales Manager for the Northeast United States. Prior to joining the
Company, Mr. Kramer was employed as a Regional Salesperson for
Pansophic/Computer Associates from December 1990 to January 1996.
DAVID L. HARNEY has served as Vice President-Research and Development of
the Company since December 1992 and served as Vice President-Software
Development from February 1991 to December 1992.
THOMAS G. HICKINBOTHAM has served as Vice President-Finance &
Administration and Chief Financial Officer since June 1997. Prior thereto,
Mr. Hickinbotham served as the Chief Financial Officer at Rent, Inc. and owned
and operated Essentials of International Business, Inc. from 1990 to June
1997.
STEVEN S. RISHEL has served as Vice President-Marketing since August 1996.
Prior to joining the Company, Mr. Rishel served as a Regional Manager at
Computer Technology Corporation from August 1993 to August 1996. Prior
thereto, Mr. Rishel served as a Regional Manager at Tayio America.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation paid by the Company to the Chief Executive Officer and certain of
the other most highly compensated executive officers (collectively, the "named
executive officers") of the Company for services rendered in all capacities to
the Company for the years ended December 31, 1995, 1996 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Named and Principal Position
- ----------------------------
Annual Compensation Long Term Compensation Awards
Year Salary($) Bonus Securities Underlying Options(#)(1)(2)
---- ------------------- --------------------------------------
<S> <C> <C> <C> <C>
Sean P. McGowan, President and Chief Executive Officer
1997 210,435 - 150,000
1996 114,845 40,000 120,000
David M. Kogut, Sr. Vice President-Customer Satisfaction
1997 131,632 - 65,000
1996 90,203 - 30,000
1995 84,037 - 25,000
Judith K. Fearn, Vice President-European Operations
1997 137,083 - 10,000
1996 118,400 - 10,000
1995 99,200 8,394 45,000
John F. Kramer, Vice President-North American Sales
1997 129,750 87,112(3) 33,000
1996 92,160 10,620(3) 17,000
Steven S. Rishel, Vice President-Marketing
1997 106,412 - 33,000
1996 47,265 9,780 17,000
</TABLE>
- ---------------
(1)None of the named executive officers held restricted stock at the end of
1997.
(2)Option grants noted herein represent the option grants in the period in
which they were originally granted. Due to repricings effected by the
Company, some of the original option grants were repriced in subsequent
periods.
(3)Represents sales commissions paid to Mr. Kramer.
<PAGE>
Options. The Company granted options to the named executive officers
during fiscal 1997 as set forth below.
Option Grants in Last Fiscal Year (1997)
<TABLE>
<CAPTION>
Percentage of
Total Options
Granted to Exercise
Number of Securities Employees in Price Expiration
Name Underlying Options Granted Fiscal 1997 ($/Share)(1) Date
- ---- -------------------------- ----------- ------------ ----
<S> <C> <C> <C> <C>
Sean P. McGowan 110,000(2)(3) 7.53% 3.50 03/12/07
45,000(3)(4) 3.08% 3.50 03/12/07
105,000(5) 7.18% 2.75 04/28/07
David M. Kogut 25,000(6) 1.71% 3.50 03/12/07
50,000(7) 3.42% 3.50 03/12/07
15,000(8) 1.03% 2.75 04/28/07
Judith K. Fearn 45,000(9) 3.08% 3.50 03/12/07
10,000(10) 0.68% 3.50 03/12/07
10,000(11) 0.68% 3.50 03/12/07
John F. Kramer 2,000(12)(13) 0.14% 3.50 03/12/07
18,000(13)(14) 1.23% 4.3125 07/21/07
15,000(13)(15) 1.03% 5.50 12/05/07
Steven S. Rishel 15,000(13)(16) 1.03% 3.50 03/12/07
2,000(13)(17) 0.14% 3.50 03/12/07
18,000(13)(18) 1.23% 4.3125 07/21/07
15,000(13)(19) 1.03% 5.50 12/05/07
</TABLE>
- ----------
(1)Options were granted or repriced at an exercise price equal to the fair
market value of the shares as of the date of grant or date of repricing.
(2)Represents repricing of options granted in 1995. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
the date of grant and 1-2/3% each month thereafter, provided Mr. McGowan
remains an employee of the Company.
(3)All such options shall vest upon the earliest of the date of Mr. McGowan's
termination of employment in certain circumstances, the date of a change in
control of the Company or December 31, 1999. In addition, one-half of all
options held by Mr. McGowan which are not vested on December 31, 1998 shall
vest on such date.
(4)The options vest 20% on the first anniversary of the date of grant (March
12, 1997) and 1-2/3% each month thereafter provided Mr. McGowan remains an
employee of the Company.
(5)70,000 of the options vested on December 1, 1997 and 35,000 of the options
vest December 1, 1998, provided Mr. McGowan remains an employee of the
Company.
(6)Represents repricing of options granted in 1995. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
<PAGE>
the repricing and 1-2/3% each month thereafter provided Mr. Kogut remains an
employee of the Company.
(7)The options vest 20% on the first anniversary of the date of grant (March
12, 1997) and 1-2/3% each month thereafter provided Mr. Kogut remains an
employee of the Company.
(8)The options vest 50% on December 1, 1997 and 50% on December 1, 1998
provided Mr. Kogut remains an employee of the Company.
(9)Represents repricing of options granted in 1995. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
the repricing and 1-2/3% each month thereafter provided Ms. Fearn remains an
employee of the Company.
(10)Represents repricing of options granted in 1996. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
the repricing and 1-2/3% each month thereafter provided Ms. Fearn remains an
employee of the Company.
(11)The options vest 20% on the first anniversary of the date of grant (March
12, 1997) and 1-2/3% each month thereafter provided Ms. Fearn remains an
employee of the Company.
(12)Represents repricing of options granted in 1996. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
the repricing and 1-2/3% each month thereafter provided Mr. Kramer remains an
employee of the Company.
(13)All such options shall vest upon the earlier of the date of a change in
control of the Company or December 31, 1999. In addition, one-half of such
options which are not vested on December 31, 1998 shall vest on such date.
(14)The options vest 20% on the first anniversary of the date of grant (July
21, 1997) and 1-2/3% each month thereafter provided Mr. Kramer remains an
employee of the Company.
(15)The options vest 50% on the date of grant (December 5, 1997) and 50% on
December 1, 1998 provided Mr. Kramer remains an employee of the Company.
(16)Represents repricing of options granted in 1996. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
the repricing and 1-2/3% each month thereafter provided Mr. Rishel remains an
employee of the Company.
(17)Represents repricing of options granted in 1996. In connection with the
repricing, the option vesting schedule was reset as of the date of repricing
(March 12, 1997). The repriced options vest 20% on the first anniversary of
the repricing and 1-2/3% each month thereafter provided Mr. Rishel remains an
employee of the Company.
(18)The options vest 20% on the first anniversary of the date of grant (July
21, 1997) and 1-2/3% each month thereafter provided Mr. Rishel remains an
employee of the Company.
(19)The options vest 50% on the date of grant (December 5, 1997) and 50% on
December 1, 1998 provided Mr. Rishel remains an employee of the Company.
<PAGE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table provides information regarding the value of stock
options held at December 31, 1997 by the persons named in the Summary
Compensation Table. No executive officers exercised options in 1997.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SAR in-the-Money Options
at Fiscal Year-End at Fiscal Year-End
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sean P. McGowan 72,000 198,000 91,875 133,125
David M. Kogut 19,500 86,750 53,431 53,022
Peter J. Briehl 0 30,000 0 15,000
Judith K. Fearn 11,000 69,000 43,588 52,413
John F. Kramer 11,000 39,000 0 1,125
Steven S. Rishel 7,500 42,500 0 9,563
</TABLE>
Employment Agreements; Service Agreements
The Company and Mr. Stowers were parties to a letter agreement dated August
1, 1992 which set forth the terms under which Mr. Stowers continued to serve
as Senior Vice President-Corporate Development through August 1, 1997. The
agreement expired and Mr. Stowers has continued in his capacity as Senior Vice
President-Corporate Development without an employment agreement, and as such,
is entitled to participate in all benefits plans generally provided by the
Company to its executive officers, including bonus plans, vacation plans and
health and welfare plans. The Company entered into a letter agreement with
Mr. Stowers in November 1997, setting forth severance and post-termination
obligations of the Company in the event of Mr. Stowers' termination of
employment in certain circumstances. In exchange for compensation as set
forth in the agreement, Mr. Stowers agrees to perform consulting services to
the Company on a part-time basis and agrees not to compete with the Company
for a two 2 year period following his termination. In addition, the Company
entered into a letter agreement with Mr. Stowers in September 1997, as
subsequently amended, in which the Company agreed to pay certain health
benefits to Mr. Stowers and his immediate family through a period which
expires no later than December 31, 2018.
The Company and Vaemond H. Crane were parties to a letter agreement dated
October 30, 1995 which set forth the terms under which Mr. Crane would
continue to serve as Chairman of the Board, President and Chief Executive
Officer of the Company through June 30, 1999. In January 1997, Mr. Crane
resigned all of his positions as an officer of the Company. Pursuant to the
<PAGE>
terms of an agreement between the Company and Mr. Crane, the October 1995
letter agreement was terminated, Mr. Crane received a lump sum payment in the
amount of $190,000 and the Company redeemed 225,945 shares of Common Stock
owned by Mr. Crane at a per share price of $4.75.
The Company and Mr. Coder are parties to a letter agreement dated September
1997, as subsequently amended, under which the Company agreed to pay certain
health benefits to Mr. Coder and his immediate family through a period which
expires no later than December 31, 2011.
Repricing of Options
In March 1997, the Company's Board of Directors approved the repricing of
stock options granted in 1995 and 1996 as an additional incentive for
employees of the Company to remain employed with the Company because certain
of their options previously granted were issued at a price above the market
value of the Company's Common Stock. The repricing was made effective March
12, 1997 at a per share option price of $3.50, the market value of the
Company's Common Stock on that date. The repricing was made available to all
employees on a voluntary basis and was made in exchange for the agreement of
each such employee to modify the vesting schedule with respect to such options
so that 20% of the shares would be vested on the first anniversary of the date
of the option amendment (i.e. March 12, 1998) and the balance would vest at a
rate of 1-2/3% per month over the next 48 months thereafter provided the
optionee remains an employee of the Company.
PROPOSAL TWO
RATIFICATION OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee and subject to ratification by
the stockholders at the Annual Meeting, the Board of Directors has appointed
Ernst & Young LLP, an independent public accounting firm, to audit the
financial statements of the Company for the year ending December 31, 1998.
Ernst & Young LLP has audited the Company since 1993. Representatives of
Ernst & Young LLP will attend the Annual Meeting and have the opportunity to
make a statement if they so desire, and will also be available to answer
questions.
The affirmative vote of holders of a majority of shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled
to vote thereon is required to ratify the appointment of Ernst & Young LLP as
the Company's independent auditors for the year ending December 31, 1998. The
Board of Directors recommends you vote FOR the ratification of the appointment
of Ernst & Young LLP and your proxy will be so voted unless you specify
otherwise.
<PAGE>
SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the Company's By-Laws, nominations, other than by or at
the direction of the Board of Directors, of candidates for election as
directors at the Company's 1999 Annual Meeting of Stockholders and other
proposals to be submitted for consideration at the Company's 1999 Annual
Meeting of Stockholders must be received by the Company no later than January
27, 1999 and must otherwise be in accordance with the requirements of the
Company's By-Laws. To be considered for inclusion in the proxy statement for
the Company's 1999 Annual Meeting of Stockholders, stockholder proposals for
consideration at the Company's 1999 Annual Meeting of Stockholders must be
received by the Company at the Company's principal executive offices by
December 27, 1998. Such nominations or proposals must be submitted to
Catalyst International, Inc., 8989 North Deerwood Drive, Milwaukee, Wisconsin
53223, Attention: Corporate Secretary. To avoid disputes as the date of
receipt, it is suggested that any stockholder proposal be submitted by
certified mail, return receipt requested.
OTHER MATTERS
Although management is not aware of any other matters that may come before
the Annual Meeting, if any such matters should be properly presented, the
persons named in the accompanying proxy intend to vote such proxy in
accordance with their best judgment.
The expenses of printing and mailing proxy material, including expenses
involved in forwarding materials to beneficial owners of stock, will be borne
by the Company. No solicitation other than by mail is contemplated, except
that officers or employees of the Company may solicit the return of proxies
from certain stockholders by telephone, personal solicitation or facsimile.
STOCKHOLDERS MAY OBTAIN A COPY OF THE COMPANY'S ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION AS FILED ON FORM 10-KSB AT NO COST BY
WRITING TO THE INVESTOR RELATIONS DEPARTMENT, CATALYST INTERNATIONAL, INC.,
8989 NORTH DEERWOOD DRIVE, MILWAUKEE, WISCONSIN 53223. EXHIBITS TO FORM 10-
KSB WILL BE FURNISHED UPON PAYMENT OF THE COMPANY'S REASONABLE EXPENSES IN
FURNISHING THE EXHIBITS.
By Order of the Board of Directors,
/s/ Mark T. Ehrmann
Mark T. Ehrmann, Secretary
<PAGE>
CATALYST INTERNATIONAL, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CATALYST INTERNATIONAL, INC.
Annual Meeting of Stockholders - April 27, 1998
The undersigend hereby appoints Sean P. McGowan and Mark T. Ehrmann, and
each of them, as proxies, each with the power to appoint his substitute, and
hereby authorized each of them to represent and to vote, as designated hereon,
all of the shares of common stock of Catalyst International, Inc. held of
record by the undersigned on March 13, 1998, at the 1998 Annual Meeting of
Stockholders of Catalyst International, Inc. to be held on April 27, 1998 or
at any adjournment or postponement thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be vote "FOR" (i) the election of the nominee as a Class III Director and
(ii) ratification of Ernst & Young LLP as the Company's independent auditors
for 1998, all as more fully described in the accompanying Proxy Statement.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
CATALYST INTERNATIONAL, INC. 1998 ANNUAL MEETING
1. ELECTION OF DIRECTOR: 1-ROY J. CARVER
[_] FOR the nominee [_] WITHHOLD AUTHORITY
listed to the left. to vote for the nominee
listed to the left.
2. To ratify the appointment of Ernst & Young LLP as the Company's
Independent auditors for 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
Check appropriate box Date _____________ NO. OF SHARES
Indicate changes below:
Address Change? [_] Name Change? [_] ------------------------------------
------------------------------------
SIGNATURE(S) IN BOX
Please sign exactly as your name appears
on this Proxy. When shares are held by
joint tenants, both should sign. When
signing as an attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
