May 12, 1997
VIA ELECTRONIC TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Datastream Systems, Inc.
Commission File Number: 0-25590
Definitive Proxy Materials
Ladies and Gentlemen:
On behalf of our, Datastream Systems, Inc., a Delaware corporation (the
"Company"), I hereby include for electronic filing pursuant to Regulation S-T
the following:
1. Schedule 14A Cover Page;
2. The Company's Letter to Stockholders;
3. The Notice of Annual Meeting of Stockholders;
4. The Proxy Statement for the Annual Meeting of Stockholders to be
held on June 13, 1997 (the "Proxy Statement"); and
5. The form of Proxy to be used for the Annual Meeting of
Stockholders to be held on June 13, 1997.
The Proxy materials will be first sent to Stockholders on or about May 12,
1997.
Under separate cover the Company will submit, solely for the Commission's
information, seven copies of the Company's 1996 Annual Report to Stockholders
(the "Annual Report"), which comprises the Company's annual report to security
holders required by Rule 14a-3(b) under the Securities Exchange Act of 1934, as
amended.
Please be advised that the financial statements contained in the Annual
Report do not reflect any significant changes in the Company's accounting
practices or policies. The Company intends to register the additional 500,000
shares proposed to be added to the Company's 1995 Stock Option Plan pursuant to
proposal number 2 in the enclosed Proxy Statement by amending its Form S-8
Registration Statement (Commission File No. 333-00080), which was filed in
connection with such 1995 Stock Option Plan with the Securities and Exchange
Commission on January 16, 1996.
By copy of this letter, the Company will also submit three copies of the
definitive proxy materials and the Company's Annual Report to Stockholders to
the Nasdaq Stock Market, Inc., for filing.
If you have any questions about the enclosed documents, please contact the
undersigned at 864/422-5001.
Very truly yours,
/s/ Daniel H. Christie
Daniel H. Christie
Chief Financial Officer
Enclosures
cc: J. Stephen Hufford, Esq.
Nasdaq Stock Market
Kelly A. Carlos, Esq.
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DATASTREAM SYSTEMS, INC.
------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transactions applies:
(3)Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount of which the filing fee
is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1)Amount previously paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
<PAGE>
DATASTREAM SYSTEMS, INC.
50 Datastream Plaza
Greenville, South Carolina 29605
(864) 422-5001
May 12, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Datastream Systems, Inc., which will be held at 2:00 p.m. on
Friday, June 13, 1997 at The Embassy Suites Hotel, 670 Verdae Boulevard,
Greenville, South Carolina 29607.
The principal business of the meeting will be to: (i) elect a director to
Class I of the Company's Board of Directors, to serve a three-year term expiring
in the year 2000; (ii) to consider approval of a proposal to amend and restate
the Company's 1995 Stock Option Plan; and (iii) to transact such other business
as may properly come before the meeting. During the meeting, we will also review
the results of the past fiscal year and report on significant aspects of our
operations during the first quarter of fiscal 1997.
Whether or not you plan to attend the meeting, please complete, sign, date
and return the enclosed proxy card in the postage prepaid envelope provided so
that your shares will be voted at the meeting. If you decide to attend the
meeting, you may, of course, revoke your proxy and personally cast your votes.
Sincerely yours,
/s/ Larry G. Blackwell
Larry G. Blackwell
Chairman, President and Chief
Executive Officer
<PAGE>
DATASTREAM SYSTEMS, INC.
50 Datastream Plaza
Greenville, South Carolina 29605
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of Datastream Systems, Inc.
will be held at 2:00 p.m. on Friday, June 13, 1997 at The Embassy Suites
Hotel, 670 Verdae Boulevard, Greenville, South Carolina 29607. The meeting
is called for the following purposes:
(1) To elect a director to Class I of the Company's Board of Directors,
to serve a three-year term expiring in the year 2000;
(2) To consider approval of a proposal to amend and restate the
Company's 1995 Stock Option Plan; and
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 28, 1997
as the record date for the purpose of determining the stockholders who are
entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof.
By Order of the Board of Directors,
/s/ Larry G. Blackwell
Larry G. Blackwell
Chairman, President and Chief
Executive Officer
Greenville, South Carolina
May 12, 1997
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE
REQUESTED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD SO THAT YOUR SHARES WILL BE REPRESENTED.
<PAGE>
DATASTREAM SYSTEMS, INC.
50 Datastream Plaza
Greenville, South Carolina 29605
PROXY STATEMENT
This Proxy Statement is furnished by and on behalf of the Board of
Directors of Datastream Systems, Inc. (the "Company") in connection with the
solicitation of proxies for use at the 1997 Annual Meeting of Stockholders of
the Company to be held at 2:00 p.m. on Friday, June 13, 1997 at The Embassy
Suites Hotel, 670 Verdae Boulevard, Greenville, South Carolina 29607, and at any
adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the enclosed proxy card will be first mailed on or about May 12,
1997 to the Company's stockholders of record on the Record Date, as defined
below.
THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE
PREPAID ENVELOPE PROVIDED.
SHARES ENTITLED TO VOTE
Proxies will be voted as specified by the stockholder or stockholders
granting the proxy. Unless contrary instructions are specified, if the enclosed
proxy card is executed and returned (and not revoked) prior to the Annual
Meeting, the shares of common stock, $.01 par value per share (the "Common
Stock"), of the Company represented thereby will be voted (i) FOR the election
as director of the nominee listed in this Proxy Statement and (ii) FOR the
approval of a proposal to amend and restate the Company's Amended and Restated
1995 Stock Option Plan (the "Stock Option Plan"), as described herein. The
submission of a signed proxy will not affect a stockholder's right to attend and
to vote in person at the Annual Meeting. A stockholder who executes a proxy may
revoke it at any time before it is voted by filing with the Secretary of the
Company either a written revocation or an executed proxy bearing a later date or
by attending and voting in person at the Annual Meeting.
Only holders of record of Common Stock as of the close of business on
April 28, 1997 (the "Record Date") will be entitled to vote at the Annual
Meeting. As of the close of business on the Record Date, there were 9,151,095
shares of Common Stock (the "Shares") outstanding. Holders of Shares authorized
to vote are entitled to cast one vote per Share on all matters. The holders of a
majority of the Shares outstanding and entitled to vote must be present in
person or represented by proxy to constitute a quorum. Shares as to which
authority to vote is withheld and abstentions will be counted in determining
whether a quorum exists.
Under Delaware law, directors are elected by the affirmative vote of a
plurality of the shares present in person or represented by proxy and entitled
to vote in the election at a meeting at which a quorum is present. Only votes
actually cast will be counted for the purpose of determining whether a
particular nominee received more votes than the persons, if any, nominated for
the same seat on the Board of Directors. <PAGE>
Approval of the proposal to amend and restate the Stock Option Plan, as
well as any other matter that may properly come before the Annual Meeting,
requires the affirmative vote of a majority of the Shares present in person or
represented by proxy and entitled to vote on such matter at a meeting at which a
quorum is present. Abstentions will be counted in determining the minimum number
of votes required for approval and will, therefore, have the effect of votes
against such proposals. Broker non-votes, those shares held by a broker or
nominee as to which such broker or nominee does not have discretionary voting
power, will not be counted as votes for or against approval of such matters.
With respect to any other matters that may come before the Annual Meeting,
if proxies are executed and returned, such proxies will be voted in a manner
deemed by the proxy representatives named therein to be in the best interests of
the Company and its stockholders.
PROPOSAL I - ELECTION OF DIRECTOR
Prior to its initial public offering, the Company's stockholders adopted a
Certificate of Incorporation providing for a classified Board of Directors.
Pursuant to the Certificate of Incorporation, the Board of Directors must be
separated into three classes, each consisting, as nearly as may be possible, of
one-third of the total number of directors constituting the entire Board of
Directors. The Company's Bylaws set the number of directors of the Company at
five, and accordingly, the first, second and third classes of directors consist
of one, two and two directors, respectively.
As required by the Certificate of Incorporation, at the Company's first
annual meeting of stockholders, held on May 23, 1996, membership on the Board of
Directors was divided into the three classes and the Company's stockholders
elected: (i) the first class of directors for a one-year term expiring upon this
Annual Meeting and upon the election and qualification of such director's
successor; (ii) the second class of directors for a two-year term expiring upon
the 1998 annual meeting of stockholders and upon the election and qualification
of such directors' respective successors; and (iii) the third class of directors
for a three-year term expiring upon the 1999 annual meeting of stockholders and
upon the election and qualification of such directors' respective successors. At
each succeeding annual meeting of the Company's stockholders, successors to the
class of directors whose term expires at that annual meeting of the Company's
stockholders will be elected for a three-year term. At this Annual Meeting, the
Company's stockholders will vote for the Class I director, for a term expiring
in the year 2000.
All Shares represented by properly executed proxies received in response
to this solicitation will be voted in connection with the election of the Class
I director as specified therein by the stockholders. Unless otherwise specified
in the proxy, it is the intention of the persons named on the enclosed proxy
card to vote FOR the election of the nominee listed in this Proxy Statement to
the Board of Directors. The nominee has consented to serve as a director of the
Company if elected. If at the time of the Annual Meeting the nominee is unable
or declines to serve as a director, the discretionary authority provided in the
enclosed proxy card may be exercised to vote for a substitute candidate
designated by the Board of Directors. The Board of Directors has no reason to
believe that the nominee will be unable or will decline to serve as a director.
<PAGE>
Stockholders may withhold their votes from the nominee by so indicating in
the space provided on the enclosed proxy card.
Director Nominee Biographical Information
Set forth below is certain biographical information furnished to the
Company by its directors, including Kenneth D. Tracy, the director nominee
for the Company's Class I directorship. Mr. Tracy is proposed for election
at this Annual Meeting to serve a term expiring in the year 2000. Mr. Tracy
currently serves as a director of the Company.
KENNETH D. TRACY
Age: 54
Dr. Kenneth D. Tracy has served as a director of the Company since
1990. He currently serves as Vice President-Environmental Technology for
Warner-Lambert Company, a position he has held since February 1991. From
1984 to 1991, he held positions of increasing responsibility with Air
Products and Chemicals, Inc., including Director of Research from January
1990 to February 1991. Prior to joining Air Products, Dr. Tracy was a
principal in the EDI Technology Companies, where he was involved with process
engineering consulting as well as software design and sales. Dr. Tracy holds
B.S. and Master of Science degrees in engineering from Penn State University
and a Ph.D. in Environmental Systems Engineering from Clemson University.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE ELECTION AS DIRECTOR OF THE NOMINEE NAMED ABOVE IN
THE CLASS NOTED ABOVE.
Biographical Information Concerning Other Directors
LARRY G. BLACKWELL
Age: 56
Class III Director - Term Expires 1999
Dr. Blackwell, the founder of the Company, has served as Chairman of
the Board, Chief Executive Officer and President of the Company from its
inception in 1986 until the present. Prior to founding the Company, he was
President of the Datastream Systems Division of a subsidiary of Wisconsin
Power & Light. He also co-founded and formerly served as Chairman of the
Board of EDI Technology Companies, an environmental process engineering
consulting company. Dr. Blackwell holds a B.S. degree in Engineering from the
University of Mississippi, a Master of Science degree from The Georgia
Institute of Technology and a Ph.D. in Environmental Systems Engineering from
Clemson University. Dr. Blackwell is a registered Professional Engineer in
Illinois, Pennsylvania and South Carolina and was named Inc. magazine's 1994
"Entrepreneur of the Year" in the Master Entrepreneur category for the State
of South Carolina.
<PAGE>
RICHARD T. BROCK
Age: 49
Class II Director - Term Expires 1998
Mr. Brock has served as a director of the Company since August 1993. In
1984, Mr. Brock founded Brock International, Inc. ("Brock International"), a
publicly-held provider of sales and marketing automation software, for which
he has served in various capacities, including Chairman of the Board, Chief
Executive Officer and President, since 1984. Currently, he serves as the
Chairman of the Board of Brock International. He also founded and formerly
served as Chief Executive Officer of Management Control Systems, Inc. Mr.
Brock is a nationally-recognized developer, author and speaker on sales,
marketing and service automation and business development strategy.
IRA D. COHEN
Age: 45
Class II Director - Term Expires 1998
Mr. Cohen has been a director of the Company since February 1995. Since
1988, Mr. Cohen has served as the Managing Director of Updata Group, Inc., an
investment banking firm focused on mergers and acquisitions in the
information technology industry. Mr. Cohen founded Updata Software, Inc., and
from 1986 to 1988 served as that Company's Chief Financial Officer. Mr. Cohen
is also a director of Computer Learning Centers, Inc.
JOHN M. STERLING, JR.
Age: 59
Class III Director - Term Expires 1999
Mr. Sterling has served as a director of the Company since February
1986. He has also served as the Chairman of the Board of Directors and Chief
Executive Officer of Emergent Group, Inc. ("Emergent Group") since December
1990 and served as President of Emergent Group from December 1990 to August
1996. Mr. Sterling has also served as President of Palmetto Seed Capital
Corp. from September 1993 to the present and served as a General Partner of
Reedy River Ventures Limited Partnership ("Reedy River") from 1981 until
August 1995. Reedy River provided venture capital financing to the Company
to fund its early development, and Mr. Sterling originally served on the
Board of Directors of the Company pursuant to that relationship. Mr.
Sterling is the father of John M. Sterling, III, an executive officer of the
Company.
<PAGE>
Additional Information Concerning The Board Of Directors
The Company's Board of Directors held seven meetings during fiscal 1996.
During fiscal 1996, the Board had an Audit Committee and a Compensation
Committee, but did not have a Nominating Committee. No director attended less
than 75% of the aggregate number of meetings of the Board and the committees of
the Board on which he served that were held during his term as a director of the
Company.
Committees of the Board of Directors. In connection with its initial
public offering in March 1995, the Company established an Audit Committee and a
Compensation Committee. The Audit Committee is responsible for reviewing and
making recommendations regarding the Company's employment of independent
auditors, the annual audit of the Company's financial statements and the
Company's internal accounting practices and policies. It consists of Messrs.
Brock, Cohen (Chairman) and Sterling. In fiscal 1996, the Audit Committee held
one meeting.
The Compensation Committee is responsible for making decisions regarding
compensation arrangements for senior management of the Company (including annual
bonus compensation), the adoption of any compensation plans in which management
is eligible to participate and grants of stock options or other benefits under
such plans. It consists of Messrs. Brock (Chairman), Sterling and Tracy. The
Compensation Committee held two meetings in fiscal 1996.
Compensation of Directors. The Company's Board of Directors is comprised
of five members. In fiscal 1996, non-management directors received an annual
retainer of $6,000 and a fee of $1,000 for each day on which they attended a
board or committee meeting. All directors are reimbursed for expenses incurred
in connection with attendance at meetings of the Board of Directors or
committees thereof. The Company also has adopted a Stock Option Plan for
Directors, which provides for annual automatic grants of options to purchase
1,000 shares of Common Stock to non-management directors.
Executive Officers
The executive officers of the Company serve at the discretion of the
Board of Directors and presently include Mr. Blackwell, John Fury Christ,
Daniel H. Christie and John M. Sterling, III. See "Biographical Information
Concerning Other Directors" for information about Mr. Blackwell.
JOHN FURY CHRIST
Age: 41
Dr. Christ served as Manager of Development of the Company from May
1992 to December 1994, and has held the position of Vice President of
Development since December 1994. In January 1997, Dr. Christ was named Chief
Technology Officer of the Company. Prior to joining the Company on a
full-time basis, Dr. Christ served as President of Positech, Inc. from
January 1990 to May 1992. During this period, Positech was awarded a Small
Business Innovative Research Contract for the application of neural networks
in support of the U.S. Government's Strategic Defense Initiative. From 1988
to 1990, Dr. Christ provided contract software development services to the
Company. Dr. Christ holds B.S. and Master of Science degrees in Electrical
and Computer Engineering, and a Ph.D. in Computer Science, all from Clemson
University.
<PAGE>
DANIEL H. CHRISTIE
Age: 44
Mr. Christie served as Controller of the Company from July 1993 to
December 1994, and has held the position of Chief Financial Officer since
December 1994. Prior to joining the Company, from 1991 to 1993, Mr. Christie
served as Group Finance Manager for Digital Equipment Corporation. From 1989
to 1991, Mr. Christie also served as Digital Equipment's PWB Group Cost and
Budgets Manager and the Plant Controller for Digital Equipment's Printed
Wiring Board Advanced Technology Center in Greenville, South Carolina. He
presently serves as a director and as the President and Treasurer of
Vaughn-Russell Candy Co. Mr. Christie holds an A.B. degree in Economics from
Colgate University and an M.B.A. in Accounting/International Finance from
Cornell University.
JOHN M. STERLING, III
Age: 35
From February 1997 to the present, Mr. Sterling has served as the
Company's Managing Director of European Operations, overseeing the operations
of SQL Systems Group, B.V., a wholly owned subsidiary of the Company based in
Rotterdam, Holland. Mr. Sterling also served as the Company's Vice President
of Sales from 1989 to January 1997. Prior to joining Datastream, Mr.
Sterling was a Regional Sales Manager for Silicon Valley Products. Mr.
Sterling holds a B.S. degree in Political Science from The Citadel. Mr.
Sterling is the son of John M. Sterling, Jr., one of the Company's directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own
beneficially more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership of such stock with the Securities and
Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. Directors, executive officers and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all such
forms they file. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, its directors, executive officers and greater
than 10% stockholders complied during fiscal 1996 with all applicable Section
16(a) filing requirements, except for Forms 5 for 1996 for Messrs. Brock,
Sterling (Jr.) and Tracy, which, due to an administrative oversight, were filed
shortly after the prescribed deadline for the filing of such forms. The only
transactions reportable on such Forms 5 were automatic grants of options on
January 1, 1996 to purchase 500 shares of Common Stock of the Company to each of
Messrs. Brock, Sterling (Jr.) and Tracy pursuant to the Company's Amended and
Restated Stock Option Plan for Directors.
<PAGE>
Beneficial Ownership Of Common Stock
The following table sets forth information concerning (i) those persons
known by management of the Company to own beneficially more than 5% of the
Company's outstanding Common Stock, (ii) the directors of the Company, (iii) the
executive officer named in the Summary Compensation Table included elsewhere
herein and (iv) all directors and executive officers of the Company as a group.
Except as otherwise indicated in the footnotes below, such information is
provided as of April 28, 1997. According to rules adopted by the SEC, a person
is the "beneficial owner" of securities if he or she has or shares the power to
vote them or to direct their investment or has the right to acquire beneficial
ownership of such securities within 60 days through the exercise of an option,
warrant or right, the conversion of a security or otherwise. Except as otherwise
noted, the indicated owners have sole voting and investment power with respect
to shares beneficially owned. An asterisk in the percent of class column
indicates beneficial ownership of less than 1% of the outstanding Common Stock.
Amount and Nature Percent
Name of Beneficial Owner of of Class
Beneficial
Ownership
Executive Officers and Directors
Larry G. Blackwell.......................... 1,725,345(1) 18.8%
John M. Sterling, Jr........................ 54,006(2) *
Richard T. Brock............................ 7,000(2) *
Kenneth D. Tracy............................ 6,000(3) *
Ira D. Cohen................................ 500(4) *
All current directors and
executive officers as a
group (8 persons).......................... 2,059,839(5) 22.3%
Other Stockholders
Pilgrim Baxter & Associates(6).............. 544,600 6.1%
- - ----------------------------------
(1) Includes 21,771 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(2) Includes 5,000 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(3) Includes 5,000 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997; includes 1,000 shares of Common Stock
as to which Mr. Tracy shares voting and investment power with his spouse.
(4) Represents 500 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(5) Includes 100,602 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(6) The business address of Pilgrim Baxter & Associates is 1255 Drummers Lane,
Suite 300, Wayne, Pennsylvania 19087. The numbers reported were derived from
a Schedule 13G executed by Pilgrim Baxter & Associates on February 14, 1997
and filed with the Securities and Exchange Commission on March 19, 1997.
According to the Schedule 13G, the power to vote such shares is shared among
the following: Pilgrim Baxter & Associates, Harold J. Baxter and Gary L.
Pilgrim.
<PAGE>
EXECUTIVE COMPENSATION
Pursuant to SEC rules for proxy statement disclosure of executive
compensation, the Compensation Committee of the Board of Directors of the
Company has prepared the following Report on Executive Compensation. The
Committee intends that this report clearly describe the current executive
compensation program of the Company, including the underlying philosophy of the
program and the specific performance criteria on which executive compensation is
based. This report also discusses in detail the compensation paid to the
Company's Chief Executive Officer, Mr. Larry G. Blackwell, during 1996.
Report On Executive Compensation
The Compensation Committee, whose members are Messrs. Brock (who serves as
Chairman), Sterling and Tracy, was established in connection with the Company's
initial public offering. It is responsible for establishing salaries, bonuses
and other compensation for the Company's executive officers, as well as for
administering the Company's Employee Stock Purchase Plan and Stock Option Plan.
Each member of the Compensation Committee is a non-employee director.
Compensation Policy. In February 1995, as a predicate to the Company's
initial public offering, the Compensation Committee met to review the levels and
types of compensation previously established for the Company's executive
officers. This review was based generally upon (i) an evaluation of each
executive officer's ability to contribute to the success of the Company as a
publicly-held entity and (ii) the desire to have some portion of each executive
officer's compensation be incentive in nature. After the end of 1995, the
Compensation Committee met to review and approve management's compensation
recommendations for 1996. At that time, the Compensation Committee made certain
adjustments to the salary component of the compensation packages of its senior
executives, primarily to reflect their increased responsibilities as officers of
a public company. In making these and other compensation decisions, the
Compensation Committee seeks to integrate the Company's annual and long-term
performance goals into the Company's executive compensation structure.
Specifically, the Company's executive compensation policy is designed to:
o Provide compensation levels that are consistent with the
Company's business plan, financial objectives and operating
performance;
o Reward performance that facilitates the achievement of the
Company's business plan goals;
o Motivate executives to achieve strategic operating objectives;
o Provide a compensation package for key employees that is
competitive with comparable arrangements made with other
executives in the software industry; and
<PAGE>
o Align the interests of the Company's executives with those of its
stockholders and the long-term interests of the Company by providing
long-term incentive compensation in the form of stock options.
The Compensation Committee has adopted a three-tiered approach to
executive compensation that involves base salaries, short-term incentive awards
in the form of cash bonuses and long-term incentive awards in the form of stock
options. The procedure used to determine the level of each of these components
is discussed in more detail below.
Base Salaries. In preparing its recommendations to the Compensation
Committee, management typically reviews one or more studies or reports provided
by compensation consulting or Big 6 accounting firms that indicate base salary
levels for officers of other public companies in the software industry holding
the same or similar positions as the executive officers of the Company. These
companies are not necessarily the same companies whose performance is compared
to that of the Company in the Performance Graph included herein. In light of
such data, a salary level for each officer is recommended based on the officer's
experience level, the scope and complexity of the position held and the
officer's performance during the past year, as measured against the average
salary for comparable positions as indicated by the studies described above. In
reviewing management's recommendations and making compensation decisions, the
Compensation Committee also takes into account management's desire for the
Company to be a low-cost provider of software solutions to the maintenance,
repair and operations industry, which requires the Company to keep close control
of its selling, general and administrative expenses. Accordingly, base salaries
range from approximately 70% to 80% of the average salaries indicated by such
studies for comparable positions, although the Compensation Committee retains
the discretion to set base salaries higher than this range if necessary to
attract and retain exceptional employees.
Short-Term Incentive Compensation -- Cash Bonuses. The goal of the
short-term incentive component of the Company's compensation packages is to
place a significant portion of each officer's compensation at risk to encourage
and reward a high level of performance each year. For 1996, criteria were
applied that differed for each executive depending primarily on the
responsibilities of that position. For example, the short-term incentive
compensation of the Company's Vice President of Sales was primarily a function
of the Company's achievement of certain revenue goals, the Company's Vice
President of Development was compensated primarily upon achievement of certain
software release dates and the Company's Chief Financial Officer was compensated
primarily upon the level of the Company's expenses. However, at the
recommendation of management, the Compensation Committee did not award any cash
incentive bonuses to any executive officers for 1996. <PAGE>
For 1997, the Compensation Committee intends to agree on certain
pre-determined criteria for awarding bonuses for each of the members of the
Company's executive management team. For the Company's executive officers, these
criteria are expected to depend principally on the Company's overall performance
for the year (determined primarily based on the Company's achievement of its
earnings per share goals for the year) and, to a lesser degree, on each
executive's own performance as evaluated subjectively by the Compensation
Committee. The Compensation Committee intends to seek to establish short-term
incentive compensation levels for 1997 at approximately 30% to 40% of each
executive's salary, assuming that the Company and each executive is successful
in meeting all of its and his budget objectives. Under the Company's bonus
system, it is also possible for an executive to receive a partial bonus based on
partial achievement by the Company and/or the executive of the bonus criteria.
Long-Term Incentive Compensation -- Stock Options. The goal of the
long-term incentive component of the Company's compensation packages is to
secure, motivate and reward officers and to align their interests with the
interests of the stockholders through the grant of stock options. Under the
Company's Stock Option Plan, the Compensation Committee is authorized to grant
incentive and non-qualified stock options to key employees. The number of
options granted is based upon the position held by the individual, his or her
performance, the prior level of equity holdings by the officer and the
Compensation Committee's assessment of the officer's ability to contribute to
the long-term success of the Company. The Compensation Committee receives and
takes into account data provided by any compensation reports available to it
regarding executives in comparable positions and management's recommendations
concerning proposed option grants. No particular weight is given to any single
factor. Options granted generally vest in equal annual increments over a period
of three to five years and terminate at the end of five or ten years, depending
upon the terms of the grant. None of the Company's executive officers were
awarded option grants in 1996.
Compensation of the Chief Executive Officer. Mr. Blackwell's salary for
1996 was $175,700. His salary for 1997 was recently increased to $200,000, an
amount deemed by the Compensation Committee to be more consistent with the level
of compensation for chief executive officers of software companies with revenues
of between $130 million and $200 million. As was the case with the Company's
other executive officers, Mr. Blackwell did not receive any cash bonus for 1996
and did not receive any options to purchase Common Stock in 1996. The formula
for determining Mr. Blackwell's cash bonus for 1997 has not yet been finalized,
but it is expected to be structured so that it is primarily dependent upon
percentage increases in the value of the Company's Common Stock.
Limitations on Deductibility of Compensation. Under the 1993 Omnibus
Budget Reconciliation Act, a portion of annual compensation payable after 1993
to any of the Company's five highest paid executive officers would not be
deductible by the Company for federal income tax purposes to the extent such
officer's overall compensation exceeds $1,000,000. Qualifying performance-based
incentive compensation, however, would be both deductible and excluded for
purposes of calculating the $1,000,000 base. Although the Compensation Committee
does not presently intend to award compensation in excess of the $1,000,000 cap,
it will continue to address this issue when formulating compensation
arrangements for the Company's executive officers and will seek, where possible,
to maintain the deductibility of any such payments.
Richard T. Brock
John M. Sterling,Jr.
Kenneth D. Tracy
The Report on Executive Compensation of the Compensation Committee of the
Board of Directors shall not be deemed to be incorporated by reference as a
result of any general incorporation by reference of this Proxy Statement or any
part hereof in the Company's 1996 Annual Report to Stockholders or its Report on
Form 10-K.
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is comprised of
Messrs. Brock, Sterling (Jr.) and Tracy. During fiscal 1996, the Compensation
Committee did not include any member of the Board of Directors who at that time
served as an officer or employee of, or a consultant to, the Company. The
Company's Chief Executive Officer, Mr. Blackwell, is not a member of the
Compensation Committee, but typically provides information to the Committee
concerning the performance of the Company's executive officers and makes
recommendations concerning proposed adjustments to their compensation. During
fiscal 1996, no executive officer of the Company served as a member of the board
of directors of any entity which had executive officers who served on the
Company's Board of Directors during that year.
Executive Compensation Tables
Table I - Summary Compensation Table
The following table presents certain information required by the SEC
relating to various forms of compensation awarded to, earned by or paid to the
Company's Chief Executive Officer during fiscal 1996. No other executive officer
earned more than $100,000 during fiscal 1996.
Long-Term
Compensation
Securities
Annual Compensation Underlying
Options All
Name and Principal Other Annual (# of Other
Position(s) Year Salary Bonus Compensation Shares) Compensation
Larry G. Blackwell, 1996 $167,024(1) -- -- -- $4,750(2)
Chairman, President 1995 $168,000(3) $24,000 -- 57,000 $5,544(2)
and Chief Executive 1994 $162,120(3) $15,000 $26,000(4) -- $4,620(2)
Officer
(1) Includes $9,500 deferred at the election of Mr. Blackwell pursuant to the
Company's 401(k) Retirement Plan ("401(k)"). Mr. Blackwell's current
salary is $175,700.
(2) Reflects matching contributions to the Company's 401(k) paid by the
Company on behalf of Mr. Blackwell.
(3) Includes $9,240 deferred at the election of Mr. Blackwell pursuant to the
Company's 401(k).
(4) Includes certain personal benefits, including (i) forgiveness of
indebtedness otherwise payable to the Company by Mr. Blackwell in the amount
of $16,120 and (ii) $9,880 representing the amount of taxes related to the
foregoing transaction for which the Company reimbursed Mr.
Blackwell.
Table II - Option/SAR Grants in Fiscal 1996
The Company did not grant any stock options or stock appreciation rights
to Mr. Blackwell (or any of its executive officers) in fiscal 1996.
<PAGE>
Table III - Option Exercises in Fiscal 1996 and Fiscal 1996 Year-End Option
Values
Mr. Blackwell did not exercise any stock options during fiscal 1996. The
following table shows the number of shares of Common Stock subject to
exercisable and unexercisable stock options held by Mr. Blackwell as of December
31, 1996. The table also reflects the values of such options based on the
positive spread between the exercise price of such options and $18.00, which was
the closing sales price of a share of Common Stock reported on the Nasdaq
National Market on December 31, 1996.
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options
On Value Options at Year-End (#) at Year-End(1)
Name Exercise(#)Realized($) Exercis- Unexercis- Exercis- Unexercis-
able able able able
Mr. Blackwell -- -- 11,771 45,229 $105,000 $420,000
(1)The value of unexercised in-the-money options at December 31, 1996 is
calculated as follows: [(Per Share Closing Sales Price on December 31, 1996)
- (Per Share Exercise Price)] x Number of Shares Subject to Unexercised
Options. The closing sales price reported by the Nasdaq National Market of
the Company's Common Stock on December 31, 1996 was $18.00 per share.
<PAGE>
Performance Graph
The following indexed line graph indicates the Company's total return to
stockholders from March 29, 1995, the date on which the Company's Common Stock
began trading on the Nasdaq National Market, to December 31, 1996, as compared
to the total return for the Nasdaq Composite Index and an index for publicly
traded companies in the software industry based on Standard Industrial
Classification 737 for the same period.
Performance Graph goes here
3/29/95 6/30/95 9/29/95 12/29/95 3/29/96 6/28/96 9/30/96 12/31/96
Nasdaq 100.00 114.38 128.15 129.68 135.78 146.86 152.09 159.56
SIC 737 100.00 118.53 129.47 135.51 141.65 157.45 160.58 167.08
Datastream100.00 117.28 224.69 187.65 290.00 470.00 403.33 240.00
<PAGE>
PROPOSAL 2 -- APPROVAL OF THE PROPOSAL
TO AMEND AND RESTATE THE COMPANY'S
STOCK OPTION PLAN
On May 7, 1997, the Board of Directors adopted and recommended for
submission to the Company's stockholders for their approval a proposal to amend
and restate the Company's Stock Option Plan. The proposed amendments to the
Stock Option Plan will (i) increase the number of shares reserved for issuance
under the Stock Option Plan from 1,000,000 to 1,500,000, (ii) expressly permit
employees of and consultants to the Company's Subsidiaries to receive options;
and (iii) make other revisions to update the Stock Option Plan to reflect and
comply with recently enacted changes to Rule 16b under the Exchange Act that do
not require stockholder approval. A copy of the Stock Option Plan in the amended
and restated form proposed for approval by the stockholders of the Company (the
"Plan") is attached as Appendix A to this Proxy Statement.
The purpose of the Plan is to (i) provide incentives to selected employees
and consultants of the Company and its Subsidiaries to stimulate their efforts
toward the continued success of the Company and to operate and manage the
business of the Company in a manner that will provide for the long-term growth
and profitability of the Company, (ii) encourage stock ownership by selected
employees and consultants by providing them with a means to acquire a
proprietary interest in the Company and (iii) provide a means of obtaining,
rewarding and retaining valuable employees and consultants.
The Board has reserved 1,500,000 shares of Common Stock for grants of
options under the Plan. Since the Company's initial public offering, the
Compensation Committee has granted options to purchase 1,073,550 shares of
Common Stock under the Stock Option Plan. Of the options granted to date,
options to purchase 77,256 shares have been recaptured from employees whose
employment with the Company has terminated. Accordingly, if the proposal to
amend and restate the Stock Option Plan is approved, there will be 503,706
shares of Common Stock available for future grants under the Plan.
The primary features of the Plan are summarized below. This summary is
qualified in its entirety by reference to the specific provisions of the Plan,
the full text of which is set forth as Appendix A to this Proxy Statement.
Plan Summary and Other Information
General. Under the Plan, options may be granted to employees and consultants
of the Company and its Subsidiaries (as defined in the Plan), provided, however,
that an incentive stock option may only be granted to an employee of the Company
or a Subsidiary. Presently, there are approximately 452 persons eligible to
receive grants of options under the Plan, subject to the Compensation
Committee's approval of individual grants.
The Plan offers to these participants ("Participants" or, individually, a
"Participant") the opportunity to purchase shares of Common Stock through stock
options granted to them under the Plan. A stock option entitles the optionee to
purchase shares of Common Stock from the Company at the exercise price. Two
types of options - incentive stock options ("ISOs") and non-qualified stock
options - may be granted under the Plan. The two types of options differ
primarily in the tax consequences associated with the exercise of an option and
the disposition of the shares received upon exercise of an option. See
"--Certain Federal Income Tax Consequences." No Participant may be granted
options that relate to more than 200,000 shares of Common Stock during any
one-year period. <PAGE>
Grants Under the Plan. The Compensation Committee, which is comprised of two
or more Non-Employee Directors (as defined in the Plan) appointed by the Board
of Directors, administers the Plan and designates Participants to whom options
are granted, specifies whether the option is intended to be an ISO or a
non-qualified stock option and specifies the number of shares of Common Stock
subject to each option. All options granted under the Plan are evidenced by
option agreements ("Option Agreements" or, individually, an "Option Agreement")
that are subject to the applicable provisions of the Plan and to such other
terms, conditions and restrictions as the Compensation Committee may determine
to be appropriate. At the time any ISO granted under the Plan is exercised, the
Company shall be entitled to legend the certificates representing the shares of
Common Stock purchased pursuant to the option to clearly identify them as
representing the shares purchased upon the exercise of an ISO.
In the case of ISOs, the aggregate Fair Market Value (as defined in the
Plan) of Common Stock with respect to which stock options intended to meet the
requirements of Code Section 422 of the Internal Revenue Code of 1986, as
amended, become exercisable for the first time by an individual during any
calendar year under all plans of the Company and its subsidiaries may not exceed
$100,000; provided further, that if the limitation is exceeded, the ISOs that
cause the limitation to be exceeded are treated as non-qualified stock options.
Set forth below is the number of incentive and non-qualified options that
had been granted to certain employees of the Company under the Stock Option Plan
and that remained outstanding as of December 31, 1996. The closing sales price
reported by the Nasdaq National Market of the Company's Common Stock on May 6,
1997 was $15.63 per share.
Incentive Non-qualified
Name Options Granted Options Granted
Larry G. Blackwell............... 54,212(1) 2,788(2)
All Executive Officers
as a Group (4 Persons).......... 147,546(3) 32,788(2)
All Other Employees(4)........... 284,359(5) 309,664(5)
- - ----------------------
(1) Options granted become exercisable in one-fifth increments on the first,
second, third, fourth and fifth anniversaries of the date of grant and
expire five years from the date of grant or earlier if the optionee dies or
ceases to be employed by the Company.
(2) Options granted become exercisable in one-third increments on the first,
second and third anniversaries of the date of grant and expire ten years
from the date of grant or earlier if the optionee dies or ceases to be
employed by the Company.
(3) 54,212 of such options granted become exercisable in one-fifth increments on
the first, second, third, fourth and fifth anniversaries of the date of
grant and expire five years from the date of grant or earlier if the
optionee dies or ceases to be employed by the Company. The remainder of such
options become exercisable in one-third increments on the first, second and
third anniversaries of the date of grant and expire ten years from the date
of grant or earlier if the optionee dies or ceases to be employed by the
Company.
(4) These figures represent (i) grants of options to 43 employees in connection
with the Company's initial public offering that are still outstanding and
(ii) grants of options to 121 employees thereafter that are still
outstanding. This figure was adjusted to reflect both the recapture of
77,256 options pursuant to employee terminations and the exercise of 111,907
options by employees as of December 31, 1996.
(5) Options granted become exercisable in varying annual increments following
the date of grant and expire ten years from the date of grant or earlier if
the optionee dies or ceases to be employed by the Company.
<PAGE>
Exercise Price. The price per share for Common Stock purchased upon the
exercise of an option granted under the Plan (the "exercise price") is
determined by the Compensation Committee on the date the option is granted and
set forth in the applicable Option Agreement. The exercise price of an ISO
generally may not be less than the Fair Market Value of a share of Common Stock
on the date the option is granted. With respect to each grant of an ISO to a
Participant who beneficially owns more than 10% of the combined voting power of
the Company or any of its Subsidiaries (determined by applying certain
attribution rules), the exercise price may not be less than 110% of the Fair
Market Value of the Common Stock on the date the option is granted. The
preceding exercise price requirements do not apply to non-qualified stock
options.
Exercise and Payment. An option may be exercised in accordance with the Plan
and such other terms and conditions as the Compensation Committee may prescribe.
Each option is exercisable by the Participant at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Compensation
Committee shall specify in the Option Agreement; provided, however, that
subsequent to the grant of an option, the Compensation Committee, at any time
before complete termination of such option, may accelerate the time or times at
which such option may be exercised in whole or in part, and may permit the
Participant or any other designated person to exercise the option, or any
portion thereof, for all or part of the remaining option term, notwithstanding
any provision of the Option Agreement to the contrary.
The maximum period during which an ISO may be exercised is determined by the
Compensation Committee on the date of grant, but may not be longer than ten
years, provided that, any ISO granted to a Participant who beneficially owns
more than 10% of the combined voting power of the Company or any of its
Subsidiaries (determined by applying certain attribution rules) may not be
exercisable after the expiration of five years after the date of grant. The term
of any ISO or non-qualified stock option is as specified in the applicable
Option Agreement. An option is deemed to be exercised on the date that the
exercise price is paid to the Company.
The exercise price must be paid in cash or a cash equivalent authorized by
the Compensation Committee in the Option Agreement. If the Option Agreement so
provides, the payment of all or part of the exercise price may be made by
surrendering shares of Common Stock that have been owned by the Participant for
at least six months prior to the date of exercise to the Company, provided that
the shares surrendered have a Fair Market Value (determined as of the day
preceding the date of exercise) that is not less than the exercise price or part
thereof. The exercise price may also be paid by having the Company withhold a
number of shares, the Fair Market Value of which is sufficient to satisfy the
exercise price.
Administration. The Plan is administered by the Compensation Committee of
the Board of Directors. Compensation Committee members generally may not be
employees of or consultants to the Company or its Subsidiaries and serve at the
pleasure of the Board of Directors. All members of the Compensation Committee
serve for such terms as the Board of Directors determines and are appointed and
may be removed only by the Board of Directors. The Compensation Committee has
the authority to interpret all provisions of the Plan; to prescribe the form of
Option Agreements; to adopt, amend and rescind rules and regulations pertaining
to the administration of the Plan; and to make all other determinations
necessary or advisable for the administration of the Plan. The Compensation
Committee's determinations under the Plan need not be uniform and may be made by
it selectively among persons who receive, or are eligible to receive, grants
under the Plan (whether or not such persons are similarly situated). <PAGE>
Certain Federal Income Tax Consequences
The following discussion outlines the federal income tax consequences of
participation in the Plan. Individual circumstances may vary these results. The
federal income tax law and regulations are frequently amended, and each
Participant should rely on his or her own tax counsel for advice regarding the
federal income tax consequences of participation in the Plan.
Federal Income Tax Treatment of ISOs. A Participant generally will not
recognize taxable income on the grant or the exercise of an ISO (although the
exercise of an ISO can increase the Participant's alternative minimum tax
liability). A Participant will recognize taxable income if and when he disposes
of the shares of Common Stock acquired under the ISO. If the disposition occurs
more than two years after the grant of the ISO and more than one year after the
shares are transferred to the Participant on exercise of the ISO (the "ISO
holding period"), the Participant will recognize as capital gain or loss the
difference between the amount realized from disposition of the Common Stock and
the Participant's tax basis in that Common Stock. A Participant's tax basis in
the Common Stock generally is the amount the Participant paid for the stock on
exercise of the ISO.
If Common Stock acquired under an ISO is disposed of before the expiration
of the ISO holding period (a "disqualifying disposition"), a Participant
generally will recognize as ordinary income in the year of the disqualifying
disposition the difference between the fair market value of the Common Stock on
the date of exercise of the ISO and the option price paid by the Participant.
Any additional gain will be treated as long-term or short-term capital gain,
depending on the length of time the Participant held the shares of Common Stock.
A special rule applies to a disqualifying disposition of Common Stock in
which the amount realized on the disposition is less than the Fair Market Value
of the Common Stock on the date of exercise of the ISO. In that event, the
Participant generally will recognize as ordinary income the difference between
the amount realized on the disposition of the Common Stock and the exercise
price in lieu of the ordinary income amount described above for a disqualifying
disposition. Any additional loss will be treated as a long-term or short-term
capital loss, depending on the length of time the Participant held the shares of
Common Stock.
The Company generally will not be entitled to a federal income tax deduction
with respect to the grant or exercise of an ISO. In the event a Participant
disposes of Common Stock acquired under an ISO before the expiration of the ISO
holding period, the Company generally will be entitled to a federal income tax
deduction equal to the amount of ordinary income recognized by the Participant.
Federal Income Tax Treatment of Non-qualified Options. A Participant
generally will not recognize any taxable income on the grant of a non-qualified
stock option. On the exercise of a non-qualified stock option, a Participant
will recognize as ordinary income the difference between the Fair Market Value
of the Common Stock acquired and the exercise price. A Participant's tax basis
in Common Stock acquired upon the exercise of a non-qualified stock option is
the amount paid for the stock plus any amounts included in income with respect
to the stock. The Participant's holding period for the stock begins on the day
the Common Stock is acquired. Any gain or loss that a Participant realizes on a
subsequent disposition of Common Stock acquired upon the exercise of a
non-qualified stock option generally will be treated as long-term or short-term
capital gain or loss, depending on the length of time the Participant held such
shares. The amount of the gain or loss will equal the difference between the
amount realized on the subsequent disposition and the Participant's tax basis in
his shares.
The exercise of a non-qualified stock option generally will entitle the
Company to claim a federal income tax deduction equal to the amount of ordinary
income recognized by the Participant. The transfer of Common Stock to a
Participant pursuant to the exercise of a non-qualified stock option will
constitute wages for withholding and employment tax purposes in an amount equal
to the amount of income recognized by the Participant. Accordingly, the Company
will be required to withhold or obtain payment from the Participant as each
Option Agreement permits for the amount of required withholding and employment
taxes. <PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE IN FAVOR OF THE PROPOSAL TO AMEND AND RESTATE
THE STOCK OPTION PLAN.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, the persons appointed in the accompanying proxy intend to vote
the Shares represented thereby in accordance with their best judgment.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies on behalf of the Company will be
borne by the Company. The Company has engaged Corporate Investor Communications,
Inc. to assist it in the proxy solicitation process and will pay such firm
approximately $3,500 for its services (exclusive of postage fees). In addition,
directors, officers and other employees of the Company may, without additional
compensation except reimbursement for actual expenses, solicit proxies by mail,
in person or by telecommunication. The Company will reimburse brokers,
fiduciaries, custodians and other nominees for out-of-pocket expenses incurred
in sending the Company's proxy materials to, and obtaining instructions relating
to such materials from, beneficial owners.
INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP served as the Company's independent
auditors for the fiscal year ended December 31, 1996 and the Board of Directors
has reappointed this firm as the Company's independent auditors for the fiscal
year ending December 31, 1997. A representative of this firm is expected to
attend the Annual Meeting to respond to questions from stockholders and to make
a statement if he or she so desires.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal that a stockholder may desire to have included in the
Company's proxy materials for presentation at the 1998 annual meeting of
stockholders must be received by the Company at its executive offices at 50
Datastream Plaza, Greenville, South Carolina 29605, Attention: Mr. Daniel H.
Christie, on or prior to February 13, 1998.
ANNUAL REPORT
The Company's 1996 Annual Report to Stockholders (which is not part of the
Company's proxy soliciting material) is being mailed to the Company's
stockholders with this proxy statement.
By order of the Board of Directors,
/s/ Larry G. Blackwell
Larry G. Blackwell
Chairman, President and Chief
Executive Officer
Greenville, South Carolina
May 12, 1997
<PAGE>
APPENDIX A
AMENDED AND RESTATED
DATASTREAM SYSTEMS, INC.
1995 STOCK OPTION PLAN
(As Amended and Restated through May 7, 1997)
SECTION I. DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context clearly
indicates otherwise, and the following capitalized words and phrases are used
herein with the meaning thereafter ascribed:
1.1 "Board" means the board of directors of the Company.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Committee" means the committee consisting of two or more Non-Employee
Directors appointed by the Board to administer the Plan.
1.4 "Company" means Datastream Systems, Inc., a Delaware corporation.
1.5 "Disposition" means any conveyance, sale, transfer, assignment, pledge
or hypothecation, whether outright or as security, inter vivos or testamentary,
with or without consideration, voluntary or involuntary.
1.6 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
1.7 "Exercise Price" means the price per share of Stock purchasable under
any Option.
1.8 "Fair Market Value" with regard to a date means the closing price at
which Stock shall have been sold on the last trading date prior to that date as
reported by the Nasdaq National Market System (or, if applicable, as reported by
a national securities exchange selected by the Committee on which the shares of
Stock are then actively traded) and published in The Wall Street Journal;
provided that, for purposes of granting Options other than incentive stock
options, Fair Market Value of the shares of Stock may be determined by the
Committee by reference to the average market value determined over a period
certain or as of specified dates, to a tender offer price for the shares of
Stock (if settlement of an award is triggered by such an event) or to any other
reasonable measure of fair market value. If at the time of the determination of
Fair Market Value shares of Stock are not actively traded on any market
described above, Fair Market Value means the fair market value of a share of
Stock as determined by the Committee taking into account such facts and
circumstances deemed to be material by the Committee to the value of the Stock
in the hands of the Participant; provided, however, for purposes of determining
the Option price per share for an incentive stock option, Fair Market Value
shall be determined by the Committee without regard to any restriction other
than a restriction which, by its terms, will never lapse. Fair Market Value as
determined by the Committee shall be final, binding and conclusive upon each
Participant.
1.9 "Non-Employee Director" means a director who (i) is not a current
employee or officer of the Company or any of its Subsidiaries and has never been
an officer of the Company or any of its Subsidiaries, (ii) does not receive
compensation, either directly or indirectly, from the Company or any of its
Subsidiaries for services rendered in any capacity other than as a director
(iii) does not possess an interest in any other transaction for which disclosure
would be required pursuant to Regulation S-K 404(a) promulgated under the
Exchange Act, and (iv) is not engaged in any business relationship for which
disclosure would be required pursuant to Regulation S-K 404(b) promulgated under
the Exchange Act.
1.10 "Option" means a non-qualified stock option or an incentive stock
option.
1.11 "Over 10% Owner" means an individual who at the time an incentive
stock option is granted owns Stock possessing more than 10% of the total
combined voting power of the Company or one of its Subsidiaries, determined by
applying the attribution rules of Code Section 424(d).
1.12 "Participant" means an individual who receives an Option
hereunder.
1.13 "Plan" means the Datastream Systems, Inc. Amended and Restated
1995 Stock Option Plan, as amended and restated through May 7, 1997.
1.14 "Stock" means the Company's common stock, $.01 par value.
1.15 "Stock Option Agreement" means an agreement between the Company and a
Participant or other documentation evidencing an award of an Option.
1.16 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of an Option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
SECTION 2. THE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
selected employees and consultants of the Company and its Subsidiaries to
stimulate their efforts toward the continued success of the Company and to
operate and manage the business of the Company in a manner that will provide for
the long-term growth and profitability of the Company; (b) encourage stock
ownership by selected employees and consultants by providing them with a means
to acquire a proprietary interest in the Company; and (c) provide a means of
obtaining, rewarding and retaining select employees and consultants.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 4.2 hereof, 1,500,000 shares of Stock (after giving effect to a
two-for-one stock split in the form of a one-for-one share dividend effective
September 12, 1995) (the "Maximum Plan Shares"), are hereby reserved exclusively
for issuance pursuant to Options. At no time shall the Company have outstanding
Options and shares of Stock issued in respect of Options in excess of the
Maximum Plan Shares; for this purpose, the shares of Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Option that is forfeited or canceled or expires or terminates for any reason
without becoming vested, paid, exercised, converted or otherwise settled in full
shall again be available for purposes of the Plan.
2.3 Administration of the Plan. The Plan shall be administered by the
Committee. The Committee shall have full authority in its discretion to
determine the persons to whom Options shall be granted and the terms and
provisions of Options, subject to the Plan. Subject to the provisions of the
Plan, the Committee shall have full and conclusive authority to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock Option
Agreements and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Committee's determinations under the Plan
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, awards under the Plan (whether or not such persons
are similarly situated). The Committee's decisions shall be final and binding on
all Participants.
2.4 Eligibility and Limits. Options may be granted only to employees and
consultants of the Company and its Subsidiaries; provided, however, that an
incentive stock option may only be granted to an employee of the Company or any
Subsidiary. In the case of incentive stock options, if the aggregate Fair Market
Value (determined as at the date an incentive stock option is granted) of Stock
with respect to which Options intended to meet the requirements of Code Section
422 become exercisable for the first time by an individual during any calendar
year under all plans of the Company and its Subsidiaries exceeds $100,000, then
the number of incentive stock option(s) which cause the $100,000 limitation to
be exceeded shall be treated as non-qualified stock option(s).
SECTION 3. TERMS OF OPTIONS
3.1 Terms and Conditions of Options. No more than 1,500,000 shares of
Stock shall be reserved and available for issuance as Options under the
Plan.
3.1.1 Number of Option Shares. The number of shares of Stock as to
which an Option shall be granted shall be determined by the Committee in
its sole discretion, subject to the provisions of Section 2.2 as to the
total number of shares available for grants under the Plan.
Notwithstanding the preceding, to the extent required under Section 162(m)
of the Code and the regulations thereunder for compensation to be treated
as qualified performance-based compensation, the maximum number of shares
of Stock with respect to which Options may be granted during any one year
period to any employee shall not exceed 200,000.
3.1.2 Stock Option Agreement. Each Option shall be evidenced by a
Stock Option Agreement in such form and containing such terms, conditions
and restrictions as the Committee may determine to be appropriate. Each
Stock Option Agreement shall be subject to the terms of the Plan and any
provisions contained in the Stock Option Agreement that are inconsistent
with the Plan shall be null and void.
3.1.3 Type of Option. At the time any Option is granted, the
Committee shall determine whether the Option is intended to be an
incentive stock option described in Code Section 422 or a non-qualified
stock option, and the Option shall be clearly identified as to its status
as an incentive stock option or a non-qualified stock option. At the time
any incentive stock option granted under the Plan is exercised, the
Company shall be entitled to legend the certificates representing the
shares of Stock purchased pursuant to the Option to clearly identify them
as representing the shares purchased upon the exercise of an incentive
stock option. An incentive stock option may only be granted within 10
years from the earlier of the date the Plan is adopted or approved by the
Company's stockholders.
3.1.4 Exercise Price. Subject to adjustment in accordance with
Section 4.2 and the other provisions of this Section 3, the Exercise Price
of an Option shall be as set forth in the applicable Stock Option
Agreement. Notwithstanding the preceding, the Exercise Price under any
incentive stock option shall not be less than the Fair Market Value on the
date the Option is granted, and with respect to each grant of an incentive
stock option to a Participant who is an Over 10% Owner, the Exercise Price
shall not be less than 110% of the Fair Market Value on the date the
Option is granted.
3.1.5 Option Term. Any incentive stock option granted to a
Participant who is not an Over 10% Owner shall not be exercisable after
the expiration of 10 years after the date the Option is granted. Any
incentive stock option granted to a Participant who is an Over 10% Owner
shall not be exercisable after the expiration of five years after the date
the Option is granted. The term of any non-qualified stock option shall be
as specified in the applicable Stock Option Agreement.
3.1.6 Payment. Payment for all shares of Stock purchased pursuant to
the exercise of an Option shall be made in any form or manner authorized
by the Committee in the Stock Option Agreement, including, but not limited
to, (i) cash, (ii) by delivery to the Company of a number of shares of
Stock which have been owned by the Participant for at least six months
prior to the date of exercise having an aggregate Fair Market Value of not
less than the product of the Exercise Price multiplied by the number of
shares the Participant intends to purchase upon exercise of the Option on
the date of delivery; (iii) in a cashless exercise through a broker; or
(iv) by having a number of shares of Stock withheld, the Fair Market Value
of which as of the date of exercise is sufficient to satisfy the Exercise
Price. In its discretion, the Committee also may authorize (at the time an
Option is granted or thereafter) Company financing to assist the
Participant as to payment of the Exercise Price on such terms as may be
offered by the Committee in its discretion. Any such financing shall
require the payment by the Participant of interest on the amount financed
at a rate not less than the "applicable federal rate" under the Code. If a
Stock Option Agreement so provides, the Participant may be granted a new
Option to purchase a number of shares of Stock equal to the number of
previously owned shares of Stock tendered in payment for each share of
Stock purchased pursuant to the terms of the Stock Option Agreement. Any
such new Option shall be subject to the terms and conditions of the Stock
Option Agreement pursuant to which such new Option is granted. Payment of
the Exercise Price shall be made at the time the Option or any part
thereof is exercised, and no shares of Stock shall be issued or delivered
upon exercise of an Option until full payment has been made by the
Participant. The holder of an Option, as such, shall have none of the
rights of a stockholder.
3.1.7 Conditions to the Exercise of an Option. Each Option shall be
exercisable by the Participant at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee
shall specify in the Stock Option Agreement; provided, however, that
subsequent to the grant of an Option, the Committee, at any time before
complete termination of such Option, may accelerate the time or times at
which such Option may be exercised in whole or in part, and may permit the
Participant or any other designated person to exercise the Option, or any
portion thereof, for all or part of the remaining Option term,
notwithstanding any provision of the Stock Option Agreement to the
contrary.
3.1.8 Termination of Incentive Stock Option. With respect to an
incentive stock option, in the event of termination of employment of a
Participant for any reason other than death or disability, the Option or
portion thereof held by the Participant which is unexercised shall expire,
terminate, and become unexercisable no later than the expiration of three
months after the date of termination of employment; provided, however,
that in the case of a holder whose termination of employment is due to
death or disability, one year shall be substituted for such three month
period. For purposes of this Subsection 3.1.8, termination of employment
of the Participant shall not be deemed to have occurred if the Participant
is employed by another corporation (or a parent or subsidiary corporation
of such other corporation) which has assumed the incentive stock option of
the Participant in a transaction to which Code Section 424(a) is
applicable.
3.1.9 Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3, any Option
issued in substitution for an option previously issued by another entity,
which substitution occurs in connection with a transaction to which Code
Section 424(a) is applicable, may provide for an exercise price computed
in accordance with such Code Section and the regulations thereunder and
may contain such other terms and conditions as the Committee may prescribe
to cause such substitute Option to contain as nearly as possible the same
terms and conditions (including the applicable vesting and termination
provisions) as those contained in the previously issued option being
replaced thereby.
3.1.10 Date of Grant. The date an Option is granted shall be the
date on which the Committee has approved the terms and conditions of the
Option and has determined the recipient of the Option and the number of
shares covered by the Option and has taken all such other action necessary
to complete the grant of the Option.
3.1.11 Nonassignability. Options shall not be transferable or
assignable except by will or by the laws of descent and distribution. Such
Options shall be exercisable, during the Participant's lifetime, only by
the Participant; or in the event of the death of the Participant, by the
legal representatives of the Participant's estate or if no legal
representative has been appointed, by the successor in interest determined
under the Participant's will.
3.2 Treatment of Option Upon Termination of Employment. Except as
otherwise provided by Plan Section 3.1.8, any Option granted to a Participant
whose employment with the Company has been terminated may be canceled,
accelerated or continued, as provided in the applicable Stock Option Agreement,
or, in the absence of such provision, as the Committee may determine. The
portion of any grant exercisable in the event of continuation may be adjusted by
the Committee to reflect the Participant's period of service from the date of
grant through the date of the Participant's termination of employment or such
other factors as the Committee determines are relevant to its decision to
continue the award.
SECTION 4. GENERAL PROVISIONS
4.1 Withholding. Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares. A Participant may pay the
withholding tax in cash, or, if the Stock Option Agreement so provides, a
Participant may elect to have the number of shares of Stock he is to receive
reduced by the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and local, if any,
withholding taxes arising from exercise of an Option (a "Withholding Election").
A Participant may make a Withholding Election only if both of the following
conditions are met:
4.1.1 The Withholding Election must be made on or prior to the date
on which the amount of tax required to be withheld is determined (the "Tax
Date") by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
4.1.2 Any Withholding Election made will be irrevocable except on
six months advance written notice delivered to the Company; however, the
Committee may in its sole discretion disapprove and give no effect to the
Withholding Election.
4.2 Changes in Capitalization; Merger; Liquidation.
4.2.1 The number of shares of Stock reserved for the grant of
Options; the number of shares of Stock reserved for issuance upon the
exercise or payment, as applicable, of each outstanding Option; and the
Exercise Price of each outstanding Option shall be proportionately
adjusted for any increase or decrease in the number of issued shares of
Stock resulting from a subdivision or combination of shares or the payment
of a stock dividend in shares of Stock to holders of outstanding shares of
Stock or any other increase or decrease in the number of shares of Stock
outstanding effected without receipt of consideration by the Company.
4.2.2 In the event of or in anticipation of a merger, consolidation
or other reorganization of the Company or tender offer for shares of
Stock, the Committee may make such adjustments with respect to awards and
take such other action as it deems necessary or appropriate to reflect
such merger, consolidation, reorganization or tender offer, including,
without limitation, the substitution of new awards, the termination or
adjustment of outstanding awards, the acceleration of awards or the
removal of restrictions on outstanding awards. Any adjustment pursuant to
this Section 4.2 may provide, in the Committee's discretion, for the
elimination without payment therefor of any fractional shares that might
otherwise become subject to any Option, but shall not otherwise diminish
the then-current value of the Option.
4.2.3 The existence of the Plan and the Options granted pursuant to
the Plan shall not limit or otherwise adversely affect in any way the
right or power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its capital or
business structure, any merger or consolidation of the Company, any issue
of debt or equity securities having preferences or priorities as to the
Stock or the rights thereof, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its business or
assets, or any other corporate act or proceeding.
4.3 Cash Awards. The Committee may, at any time and in its discretion,
grant to any holder of an Option the right to receive, at such times and in such
amounts as determined by the Committee in its discretion, a cash amount which is
intended to reimburse such person for all or a portion of the federal, state and
local income taxes imposed upon such person as a consequence of the receipt of
the Option or the exercise of rights thereunder.
4.4 Compliance with Code. All incentive stock options to be granted
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all incentive stock options granted hereunder shall be construed in
such a manner as to effectuate that intent.
4.5 Right to Terminate Employment. Nothing in the Plan or in any Option
shall confer upon any Participant the right to continue as an employee or
consultant of the Company or affect the right of the Company to terminate the
Participant's employment or other relationship with the Company at any time.
4.6 Non-alienation of Benefits. Other than as specifically provided with
regard to the death of a Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.
4.7 Restrictions on Delivery and Sale of Shares; Legends. Each Option is
subject to the condition that if at any time the Committee, in its discretion,
shall determine that the listing, registration or qualification of the shares
covered by such Option upon any securities exchange or under any state or
federal law is necessary or desirable as a condition of or in connection with
the granting of such Option or the purchase or delivery of shares thereunder,
the delivery of any or all shares pursuant to such Option may be withheld unless
and until such listing, registration or qualification shall have been effected.
If a registration statement is not in effect under the Securities Act of 1933,
as amended (the "Securities Act"), or any applicable state securities laws with
respect to the shares of Stock purchasable or otherwise deliverable under
Options then outstanding, the Committee may require, as a condition of exercise
of any Option or as a condition to any other delivery of Stock pursuant to an
Option, that the Participant or other recipient of an Option represent, in
writing, that the shares received pursuant to the Option are being acquired for
investment and not with a view to distribution and agree that the shares will
not be disposed of except pursuant to an effective registration statement,
unless the Company shall have received an opinion of counsel that such
disposition is exempt from such requirement under the Securities Act and any
applicable state securities laws. The Company may include on certificates
representing shares delivered pursuant to an Option such legends referring to
the foregoing representations or restrictions or any other applicable
restrictions on resale as the Company, in its discretion, shall deem
appropriate.
4.8 Termination and Amendment of the Plan. The Board at any time may amend
or terminate the Plan without stockholder approval; provided, however, that the
Board may condition any amendment on the approval of stockholders of the Company
if such approval is necessary or advisable with respect to tax, securities or
other applicable laws. No such termination or amendment without the consent of
the Participant holding an Option shall adversely affect the rights of such
Participant.
4.9 Choice of Law. The laws of the State of Delaware shall govern the
Plan, to the extent not preempted by federal law.
4.10 Effective Date of Plan. The Plan became effective on May 7, 1997, the
date of its approval by the Board, subject, however, to the subsequent approval
of the Plan by the Company's stockholders.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF DATASTREAM SYSTEMS, INC.
The undersigned stockholder(s) of Datastream Systems, Inc., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated May 12, 1997, and hereby
appoints Larry G. Blackwell and Daniel H. Christie, or either of them, proxies
and attorneys-in-fact, with full power of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1997 Annual Meeting
of Stockholders of the Company to be held at 2:00 p.m. Eastern Standard Time on
Friday, June 13, 1997 at The Embassy Suites Hotel, 670 Verdae Boulevard,
Greenville, South Carolina 29607, and at any adjournment(s) or postponement(s)
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below:
(1) To elect the nominee listed below to serve as a Class I director of the
Company for a term ending in 2000:
Kenneth D. Tracy
[ ] FOR the nominee listed above [ ] WITHHOLD authority to vote
for nominee
(2) To approve the proposal to amend and restate the Company's Amended and
Restated 1995 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment(s) or postponement(s) thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This Proxy, when
properly executed, will be voted in accordance with the directions given by the
undersigned stockholder(s). If no direction is made, it will be voted FOR the
director nominee named in proposal (1), FOR proposal (2) and as the proxies deem
advisable on such other matters as may come before the meeting.
Dated:_________________________, 1997
-------------------------------------
Signature
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Signature (if held jointly)
Title or authority (if applicable)
NOTE: Please sign exactly as name appears hereon. If shares are registered in
more than one name, the signature of all such persons are required. A
corporation should sign in its full corporate name by a duly authorized officer,
stating his or her title. Trustees, guardians, executors and administrators
should sign in their official capacity, giving their full title as such. If a
partnership, please sign in the partnership name by an authorized person.
