SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the 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 '240.14a-11(c) or '240.14a-12
TMS, INC.
..........
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 21, 2000
Notice is hereby given that the Annual Meeting of Shareholders of TMS,
Inc., an Oklahoma corporation (the "Company"), will be held in Room 119 of the
Stillwater Public Library, 1107 South Duck, Stillwater, Oklahoma, on Friday,
January 21, 2000, at 10:00 a.m., Central Standard Time, for the following
purposes:
(1) To elect five persons to serve as directors of the Company;
(2) To approve the adoption of the TMS, Inc. Employee Stock Purchase Plan;
(3) To approve and ratify the selection of KPMG LLP as independent
auditors; and
(4) To consider and act upon any other matters which may properly
come before the Meeting or adjournments thereof.
Shareholders of record at the close of business on December 1, 1999 shall
be entitled to notice of and to vote at the Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
Marshall C. Wicker, Secretary
Stillwater, Oklahoma
December 8, 1999
<PAGE> 1
TMS, INC.
206 West Sixth Street
Stillwater, Oklahoma 74074
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 21, 2000
This Proxy Statement is furnished to shareholders of TMS, Inc., an Oklahoma
corporation (the "Company"), in connection with the solicitation of proxies for
the Annual Meeting of Shareholders (the "Meeting") to be held in Room 119 of the
Stillwater Public Library, 1107 South Duck, Stillwater, Oklahoma on Friday,
January 21, 2000, at 10:00 a.m., Central Standard Time, or at any adjournment
thereof. The persons named as proxies in the enclosed form were selected by the
Board of Directors of the Company.
This Proxy Statement and the accompanying proxy are first being mailed to
shareholders on or about December 8, 1999, along with the Annual Report to
Shareholders, including financial statements for the fiscal year ended August
31, 1999.
GENERAL
Outstanding Shares and Voting Rights; Voting Procedures
At December 1, 1999, the Company had 13,597,659 shares of common stock,
$.05 par value ("Common Stock"), outstanding. The presence, in person or by
proxy, of the holders of at least a majority of the outstanding shares of Common
Stock is necessary to constitute a quorum of such class at the Meeting.
Shareholders have no cumulative voting rights.
Any person signing and mailing the enclosed proxy may vote in person if in
attendance at the Meeting. Proxies may be revoked at any time before they are
voted by notifying the Secretary of such revocation, in writing, at the Meeting,
or by submitting a later dated proxy. Shareholders are encouraged to vote on
the matters to come before the Meeting by marking their preferences on the
enclosed proxy and by dating, signing, and returning the proxy in the enclosed
envelope. If a preference is not indicated on a proxy, the proxy will be voted
"FOR" the nominees to serve as directors of the Company, "FOR" approval of the
TMS, Inc. Employee Stock Purchase Plan and "FOR" the ratification and selection
of independent auditors.
It is not anticipated that matters other than those described above and in
the Notice of Annual Meeting, to which this Proxy Statement is appended, will be
brought before the Meeting for action, but if any other matters properly come
before the Meeting, it is intended that votes thereon will be cast pursuant to
said proxies in accordance with the best judgment of the proxy holders.
With respect to the tabulation of votes on any matter, all abstentions and
non-votes for nominees are treated as present or represented and entitled to
vote at the Meeting.
Record Date
The close of business on December 1, 1999 has been fixed as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Meeting. Each outstanding share of Common Stock is entitled to one vote
on all matters herein.
Expenses of Solicitation
The expenses of this solicitation of proxies will be borne by the Company,
including expenses in connection with the preparation and mailing of this Proxy
Statement and all documents which now accompany or may hereafter supplement it.
Solicitations will be made only by the use of the mails, except that, if deemed
desirable, officers and regular employees of the Company may solicit proxies by
telephone. It is contemplated that brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the proxy soliciting material to the
beneficial owners of the Common Stock held of record by such persons and that
the Company will reimburse them for their reasonable expenses incurred in
connection therewith.
<PAGE> 2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of shares of the Company's Common Stock as of December 1, 1999, by
each shareholder known to the Company to be a beneficial owner of more than 5%
of Company's Common Stock. Unless otherwise indicated, the beneficial owner has
sole voting and investment power with respect to such shares of Common Stock.
Amount and Nature Percent
Name and Address of Beneficial Ownership of Class(1)
...................... ......................... ............
Dana R. Allen 1,854,962 13.7%
433 Airport Boulevard, #414
Burlingame, California 94010
Theodore A. Walker 920,000(2) 6.8%
P.O. Box 1580
Alvin, Texas 77512
James R. Rau, M.D. 754,500(3) 5.5%
1203 South Hill Street
Alvin, Texas 77511
.................................
(1) Shares of Common Stock subject to options exercisable on or before
February 1, 2000 ("Currently Exercisable Options") are deemed outstanding
for purposes of computing the percentage for such person but are not
deemed outstanding in computing the percent of any other person.
(2) Includes 56,000 shares which are held by Mr. Walker in joint tenancy with
his wife, Jerline, with whom he shares voting and investment power.
(3) Includes 345,010 shares held by Dr. Rau's wife, Martha, with whom he
shares voting and investment power as to such shares, and 137,500
shares subject to Currently Exercisable Options.
As of the close of business on October 31, 1999, Cede & Co. owned of
record, but not beneficially, 6,781,933 shares (50%) of Common Stock. Cede &
Co., the nominee for the Depository Trust Company, holds securities of record
for participating financial institutions such as banks and broker/dealers.
Market for the Company's Common Stock
The Company's Common Stock is traded in the over-the-counter market, and
prices are quoted by the National Quotation Bureau, Incorporated ("NQB") on
the "pink sheets" and the NASD Non-Nasdaq OTC Bulletin Board. The following
table sets forth the quarterly range of high and low bid prices of the
Company's Common Stock for fiscal years 1999 and 1998. The quotations are
inter-dealer prices without retail mark-ups, mark-downs, or commissions and
may not represent actual transactions. The source of such quotations is the
NQB.
Bid Prices
.................
Fiscal 1999 High Low
........... ..... ....
First Quarter $ .375 $ .260
Second Quarter .380 .260
Third Quarter .350 .290
Fourth Quarter .340 .260
Fiscal 1998 High Low
........... ..... ....
First Quarter $ .562 $ .406
Second Quarter .500 .312
Third Quarter .687 .312
Fourth Quarter .593 .343
<PAGE> 3
The Company has not declared or paid any cash dividends since its
incorporation, nor does it anticipate that it will pay dividends in the
foreseeable future. Any earnings realized by the Company are expected to be
reinvested in the Company's business; however, the declaration and payment of
dividends in the future will be determined by the Board of Directors in light
of conditions then existing, including, among others, the Company's earnings,
its financial condition and capital requirements (including working capital
needs), and any arrangements restricting the payment of dividends.
As of December 1, 1999, there were approximately 1,730 recordholders of
Common Stock, which is the only outstanding class of the capital stock of the
Company.
ELECTION OF DIRECTORS
General
Pursuant to the Bylaws of the Company, the shareholders are to elect at the
Meeting, directors to hold office until the next Annual Meeting of Shareholders
and until their successors shall be elected and shall qualify. The Board of
Directors has fixed the number of directors at five for the ensuing year.
The Board of Directors has no reason to believe that any nominee will
become unavailable. However, in the event that any of the nominees should become
unavailable, proxies solicited by the Board of Directors will be voted for the
election of substitute nominees or additional nominees designated by the Board
of Directors.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS, IF PROPERLY SIGNED AND
RETURNED, WILL BE VOTED "FOR" THE ELECTION OF THE FIVE NOMINEES LISTED BELOW AS
DIRECTORS OF THE COMPANY.
Information Concerning Nominees
Certain information as of December 1, 1999, concerning the nominees to the
Board of Directors of the Company, is set forth below based upon information
supplied by such persons. Unless otherwise indicated, the beneficial owner has
sole voting and investment power with respect to such shares of Common Stock.
Common Stock Beneficially Owned
................................
Director Term Number Percentage
Age Since Expires of Shares of Class(1)
..... ....... ...... ........... ...........
Dana R. Allen 46 1996 2000 1,854,962 13.7%
James R. Rau, M.D. 70 1990 2000 754,500(2) 5.5%
Doyle E.Cherry 57 1988 2000 330,903(3) 2.4%
Russell W. Teubner 43 1999 2000 400,000 3.0%
Marshall C. Wicker 73 1999 2000 361,828(4) 2.7%
All executive
officers and 3,720,193(5) 26.6%
directors as a
group (6 persons)
.....................................
<PAGE> 4
(1) Shares of Common Stock subject to Currently Exercisable Options are
deemed outstanding for purposes of computing the percentage for such
person but are not deemed outstanding in computing the percent of any other
person.
(2) See footnote (3) to the table under heading "Security Ownership of Certain
Beneficial Owners."
(3) Includes 20,000 shares held by Mr. Cherry in joint tenancy with his wife,
Theresa, with whom he shares voting and investment power; and 225,000
shares subject to Currently Exercisable Options.
(4) Includes 163,399 shares held by Mr. Wicker in joint tenancy with his wife,
Bettye, with whom he shares voting and investment power; and 50,000 shares
subject to Currently Exercisable Options.
(5) Includes 530,409 shares as to which directors and executive officers share
voting and investment power with others and 427,500 shares subject to
Currently Exercisable Options.
Information Concerning Nominees
The Company's nominees for the five directorships are listed below with brief
statements setting forth their principal occupations and other biographical
information.
Dana R. Allen has served as Chairman of the Board of Directors of the Company
since August 1998, and as a Director of the Company since 1996. Mr. Allen
served as Chief Executive Officer and President from January 1999 to September
1999, and as Executive Vice President of the Company and General Manager of the
Company's Image Enhancement and Forms line of business from March 1996 to
December 1998. Mr. Allen was President of Sequoia Computer Corporation
("Sequoia") from 1987 until joining the Company in March 1996. Prior to
founding Sequoia in 1987, Mr. Allen was Data Development Manager and Product
Manager for Triad Systems, Inc., a data services company. Prior to that time,
Mr. Allen served as President of H&A Auto Parts, an auto parts
retailer/wholesaler.
Doyle E. Cherry served as Chairman of the Board of Directors of the Company
from October 1997 through August 1998, and has served as a Director of the
Company since 1988. Mr. Cherry is a chartered financial consultant and since
1961 has worked in the insurance and securities industries and the actuarial,
tax and financial consulting fields. From 1982 to 1993, Mr. Cherry also served
as President and Chief Executive Officer of First Market Corporation and the
First Market Group of Companies. From 1993 through 1997, he served as President
of Thiotech USA, Inc., a chemical manufacturer and distributor located in
Houston, Texas. Mr. Cherry is currently serving as President of C&H Pipe, a
pipe manufacturing company located in Houston, Texas.
Dr. James R. Rau has served as a Director of the Company since 1990. Dr. Rau
practiced medicine from 1956 to 1985 in a private practice and from 1985 to 1988
as a part-time physician with the Monsanto Company in Houston, Texas. Since
leaving Monsanto, Dr. Rau has managed his financial and real estate investments.
<PAGE> 5
Marshall C. Wicker has served as a Director of the Company since 1994. Since
1983, he has owned and operated Marwick Enterprises, which is engaged in
ranching and investments. Mr. Wicker is a Professional Engineer and a member of
the American Association of Petroleum Geologists and Society of Exploration
Geophysicists.
Russell W. Teubner has served as a Director of the Company since 1999. Since
March 1998, he has been President of Esker, S.A., a publicly held software
company. From 1983 to 1998 Mr. Teubner served as President of Teubner &
Associates, a software firm which he founded. Mr. Teubner also serves on the
Board of Directors of CustomerSoft.
Executive Officers
The following sets forth the name and a description of the background and
principal occupation of each executive officer of the Company who is not a
director of the Company.
Deborah D. Mosier, 32, has served as President of TMS since September, 1999.
She joined the Company in 1995 as Controller of Financial Operations and was
appointed Chief Financial Officer in 1996. Prior thereto, Ms. Mosier worked for
six years in the audit practice of KPMG LLP. Ms. Mosier received her
Bachelor of Science Degree with a major in accounting from Oklahoma State
University and is a Certified Public Accountant.
Board of Directors' Meetings
During the 1999 fiscal year, the Company's Board of Directors held six
meetings. All members of the Board of Directors attended more than seventy-five
percent (75%) of the Board of Directors' meetings.
Committees of the Board
The Board of Directors has a standing Compensation Committee. Such committee
is currently comprised of Dr. Rau and Messrs. Cherry and Wicker, and conducts
all necessary business during the regular meetings of the Board or through
action by written consent. The Compensation Committee, which administers the
Company's stock option plans, met 4 times during the 1999 fiscal year. All of
the members of the Compensation Committee attended more than seventy-five
percent (75%) of the Committee's meetings. The Company does not have a standing
nominating committee.
Certain Relationships and Related Transactions
No officer or director had transactions with or indebtedness to the Company in
excess of $60,000 during the fiscal year ended August 31, 1999.
Changes in Control
We do not know of any arrangements (including any pledge by a person of our
securities) which would result in a change of control.
<PAGE> 6
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 and the rules promulgated
thereunder require that certain officers, directors and beneficial owners of the
Company's Common Stock file various reports with the Securities and Exchange
Commission (the "SEC"). Based solely upon a review of such reports filed with
the SEC, the Company believes that no late reports were filed, for the fiscal
year ended August 31, 1999.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash and noncash compensation for each of
the last three fiscal years awarded to or earned by the Chief Executive Officer
of the Company.
Annual Compensation
All Other
Name and Principal Position Year Salary Bonus Compensation
........................... .... ............ ....... .................
Dana R. Allen (1) 1999 $70,372 __ $2,903
Arthur D. Crotzer (2) 1999 $32,500 __ $1,725
1998 $97,621 $27,010 $2,840
Maxwell Steinhardt(3) 1998 $25,750 __ $773
1997 $121,200 __ $1,832
(1) Mr. Allen became Chief Executive Officer effective January 1, 1999, and
resigned effective September 24, 1999. "All Other Compensation" includes
employer matching contributions to the Company's defined contribution plan.
(2) Mr. Crotzer became Chief Executive Officer effective October 23, 1997, and
resigned effective January 1, 1999. "All Other Compensation" includes
employer matching contributions to the Company's defined contribution plan.
(3) Mr. Steinhardt became Chief Executive Officer in March 1996 and resigned
effective October 23, 1997. "All Other Compensation" includes employer
matching contributions to the Company's defined contribution plan.
Option Grants Table
No director or executive officer was granted any stock options or appreciation
rights during fiscal year 1999.
Compensation of Directors
Each non-employee Director receives $1,000 per month for services as a
Director. The non-employee Directors consist of Dr. Rau and Messrs., Allen,
Cherry, Teubner and Wicker.
<PAGE> 7
APPROVAL OF TMS, INC. EMPLOYEE STOCK PURCHASE PLAN
Introduction
The Board of Directors has adopted and recommends that the shareholders
approve the Employee Stock Purchase Plan. The purpose of the Employee Stock
Purchase Plan is to assist the Company in attracting and retaining employees by
offering them a greater stake in the Company's success and a closer identity
with it, and to encourage ownership of the Company's stock by employees. The
Employee Stock Purchase Plan will accomplish these goals by allowing eligible
employees of the Company and its subsidiaries an ongoing opportunity to purchase
the Company's Common Stock through payroll deduction at a discounted price. The
maximum number of shares of the Company's Common Stock available for purchase
under the Employee Stock Purchase Plan is 1,000,000, subject to adjustments for
stock splits, stock dividends and the like.
The following summary description of the Employee Stock Purchase Plan is
qualified in its entirety by the full text of the Employee Stock Purchase Plan,
which is included as Appendix A to this Proxy Statement.
The Employee Stock Purchase Plan
Eligibility. Employees of the Company and its subsidiaries whose customary
employment is at least 20 hours per week or at least five months per year are
eligible to participate in the Employee Stock Purchase Plan after they have
completed one month of service prior to the Effective Date if they continue to
be employed by the Company. There are approximately 40 employees eligible for
participation in the Employee Stock Purchase Plan. Participation in the Employee
Stock Purchase Plan automatically terminates upon an employee's ceasing to be an
employee of the Company or one of its subsidiaries.
Participant Contributions. An eligible employee participates in the
Employee Stock Purchase Plan by electing to make after-tax payroll contributions
in an amount equal to not less than 1% and not more than 10% of his or her base
compensation. A participant's payroll contributions to the Employee Stock
Purchase Plan are allocated to a bookkeeping account ("Account") and used to
purchase Common Stock on a quarterly basis.
Because the number of shares of Common Stock purchased by an eligible
employee is dependent upon the amount such employee contributes to the Employee
Stock Purchase Plan, it is not possible at this time to determine the number of
shares of Common Stock that will be acquired under the Employee Stock Purchase
Plan by any one employee or group of employees.
Purchase of Common Stock. The Employee Stock Purchase Plan permits
participants to purchase Common Stock at a 15% discount from the applicable
closing price of the Common Stock (as described below). The Employee Stock
Purchase Plan operates on a quarterly basis ("Offering Periods"). Contributions
allocated to a participant's Account during an Offering Period are used to buy
shares of Common Stock on the last day of such Offering Period. The purchase
price of a share of Common Stock under the Employee Stock Purchase Plan will be
the lesser of:
Eighty-five percent (85%) of the official average of the bid and ask
price of the Common Stock on the Offering Termination Date on the Nasdaq
OTC Market (or on such other national securities exchange upon which the
Stock may then be listed, hereinafter referred to as the "Exchange") or if
no sale of Stock occurred on such date, the official average of the bid and
ask price on the preceding Business Day; or
<PAGE> 8
Eighty-five percent (85%) of the official average of the bid and ask
price of the Common Stock on the Offering Commencement Date on the Exchange
(or if no sale of Stock occurred on such date, the closing price on the
preceding business day).
Each participant is deemed to legally own all shares of Common Stock
allocated to his or her Account and is entitled to exercise all of the rights
associated with ownership of the shares, including voting, tendering and
receiving dividends on, such Common Stock.
The Company may acquire Common Stock for use under the Employee Stock
Purchase Plan from authorized but unissued shares, treasury shares, in the open
market or in privately negotiated transactions. The Company will pay all
expenses incident to the operation of the Employee Stock Purchase Plan,
including the costs of recordkeeping, accounting and legal fees and the cost of
delivery of stock certificates to participants.
Administration. An individual or committee, designated by the Board of
Directors (the "Administrator"), has exclusive authority to administer the
Employee Stock Purchase Plan. The Administrator will interpret the provisions of
the Employee Stock Purchase Plan and make all determinations necessary for the
administration of the Employee Stock Purchase Plan.
Amendment and Termination. The Board of Directors has authority to amend
the Employee Stock Purchase Plan at any time. However, the approval of the
Company's shareholders is required to: (i) increase the maximum number of shares
available for purchase under the Employee Stock Purchase Plan; (ii) modify the
Employee Stock Purchase Plan's eligibility requirements; or (iii) cause the
Employee Stock Purchase Plan to fail the requirements of Section 423 of the
Code.
The Board of Directors also has authority to terminate the Employee Stock
Purchase Plan at any time. In any event, if not earlier terminated by the Board
of Directors, the Employee Stock Purchase Plan will automatically terminate when
the participants have purchased all of the shares of Common Stock available
under the Employee Stock Purchase Plan.
Federal Tax Treatment. The Employee Stock Purchase Plan is an "employee
stock purchase plan" under Section 423 of the Code. Therefore, a participant who
purchases shares of Common Stock under the Employee Stock Purchase Plan will not
be subject to Federal income tax on the difference between the fair market value
of the shares and the price actually paid for such shares at the time of
purchase. The Company is not entitled to a deduction for the difference between
the fair market value of the shares and the price paid for such shares.
If a participant disposes of Common Stock purchased under the Employee
Stock Purchase Plan after owning the shares for at least two years, the
participant will be treated as having ordinary compensation income equal to the
lesser of (i) the excess of the fair market value of the Common Stock on the
date it was purchased over the actual purchase price; or (ii) the excess of the
fair market value of the Common Stock at the time of disposition over the actual
purchase price. The amount of the compensation income is then added to the
participant's basis in the Common Stock. The difference between the amount
realized on the sale of the Common Stock and the participant's adjusted basis
will be treated as a capital gain or loss.
<PAGE> 9
If a participant disposes of Common Stock purchased under the Employee
Stock Purchase Plan before owning it for at least two years, the participant
will be treated as having ordinary compensation income equal to the excess of
the fair market value of the Common Stock on the date it was purchased over the
actual purchase price. Any additional appreciation in the Common Stock is
treated as a capital gain. In addition, if a participant disposes of Common
Stock before owning it for at least two years, the Company is entitled to a tax
deduction equal to the amount of income treated as compensation by the
participant.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE TMS, INC. EMPLOYEE STOCK PURCHASE PLAN.
APPROVAL OF SELECTION OF AUDITORS
Subject to approval by the shareholders, the Board of Directors has selected
the firm of KPMG LLP, certified public accountants (the "Auditors"), as
auditors of the Company for the fiscal year ending August 31, 2000.
Representatives of the Auditors are expected to be present at the Meeting to
respond to questions of shareholders.
The Company has been advised by the Auditors that neither the firm nor any
of its associates has any relationship with the Company or any affiliate of the
Company other than the usual relationship that exists between independent public
accountants and their clients. To the knowledge of the Board of Directors,
neither the Auditors nor any of its associates has any direct or material
indirect financial interest in the Company and its subsidiaries in the
capacities of promoter, underwriter, voting trustee, director, officer, or
employee.
During the past fiscal year, the Auditors have audited the financial
statements of the Company and provided other services with respect to certain
filings of the Company with the Securities and Exchange Commission.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the Meeting in person or by proxy and entitled to vote is
required to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE SELECTION OF KPMG LLP AS
AUDITORS OF THE COMPANY FOR THE CURRENT FISCAL YEAR AND THE PROXY, UNLESS
OTHERWISE INDICATED THEREON, WILL BE VOTED "FOR" THE RATIFICATION OF KPMG LLP AS
AUDITORS OF THE COMPANY FOR THE CURRENT FISCAL YEAR.
SHAREHOLDERS' PROPOSALS
Proposals by shareholders intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company prior to September 30,
2000, in order for the proposals to be included in the proxy statement and proxy
card relating to such meeting. It is suggested that proposals be submitted to
the Company by certified mail, return receipt requested.
<PAGE> 10
OTHER MATTERS
Management knows of no other business which is likely to be brought before
the Meeting. If other matters not now known to management come before the
Meeting, however, it is the intention of the persons named in the accompanying
proxy to vote in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
MARSHALL C. WICKER, Secretary
December 8, 1999
A copy of the Company's Form 10-KSB Annual Report as filed with the
Securities and Exchange Commission will be furnished without charge to
shareholders on request to the Chief Financial Officer of the Company, at its
address stated herein.
<PAGE> 11
APPENDIX A
TMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The TMS, Inc. Employee Stock Purchase Plan (the "Plan") is intended to
provide the eligible employees of TMS, Inc. (the"Company") and its qualifying
subsidiaries a convenient means of purchasing shares of the Company's common
stock, par value $.05 per share (the "Stock"). The Plan is intended to qualify
as an "employee stock purchase plan" under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), and shall be administered, interpreted
and construed in a manner consistent with the requirements of that section of
the Code.
ARTICLE I
DEFINITIONS
............
1.1. "Account" means the book keeping account established on behalf of each
participant by the Administrator to record payroll deduction contributions made
by such Participant and shares of Stock purchased on his behalf.
1.2. "Administrator" means the individual or committee appointed pursuant
to Article VIII to administer the Plan.
1.3. "Board" means the Board of Directors of the Company.
1.4. "Business Day" means each day on which the Exchange (as defined in
Section 4.2) is open for business.
1.5. "Compensation" means all regular salary, wages or earnings, including
but excluding overtime, commissions, bonuses, amounts realized from the exercise
of a qualified or non-qualified stock option and other special incentive
payments, fees or allowances.
1.6. "Effective Date" means August 1, 1999, subject to the provisions of
Section 9.8 of the Plan.
1.7. "Employee" means any person who is employed by the Company except an
employee whose customary employment is:
(a) less than 20 hours per week; or
(b) less than 5 months a year.
For the purpose of determining whether an individual is an Employee, the
definition of Company shall also include the Company's subsidiaries, if any, as
defined under Code section 424(f).
1.8. "Entry Date" means October 15, January 15, April 15, July 15 of each
Plan Year.
1.9. "Offering Commencement Date" means the first Business
Day of each Offering Period.
<PAGE> 12
1.10. "Offering Period" means each three month period.
1.11. "Offering Termination Date" means the last Business Day
of each Offering Period.
1.12. "One Month of Service" means a one-month period during
which an individual was an Employee.
1.13. "Participant" means an Employee who has met the
eligibility requirements of Article II and who has elected to
participate pursuant to an election under Section 3.1.
1.14. "Plan Year" means the 12-month period ending December
31.
1.15. "Shares" means shares of Stock that have been allocated
to a Participant's Account.
ARTICLE II
ELIGIBILITY
.............
2.1. Eligibility. Except as provided in Section 3.6, an
Employee who has completed One Month of Service prior to the
Effective Date and who continues to be employed by the Company
shall be eligible to participate in the Plan as of the Effective
Date. All other Employees, except as provided in Section
3.6, shall be eligible to participate in the Plan as of the Entry
Date coinciding with or next following the completion of One
Month of Service.
2.2. Eligibility Restrictions. A Participant who elects to
terminate participation in the Plan in accordance with Section
3.5 shall be prohibited from participating in the Plan until the
Entry Date next following the date of such termination.
ARTICLE III
PARTICIPATION
..............
3.1. Commencement of Participation. An eligible Employee
may become a Participant in the Plan on any Entry Date by
completing an enrollment and payroll deduction form and
delivering it to the Company in accordance with procedures
established by the Administrator.
3.2. Payroll Deduction. At the time a Participant files his
enrollment and payroll deduction form, he shall elect to have
after-tax deductions made from his Compensation by a whole
percentage that is not less than 1% nor more than 10% of his
Compensation.
3.3. Participants' Accounts. All payroll deductions made
from a Participant's Compensation shall be credited to his
Account and used to purchase shares of Stock in accordance with
Article V. Contributions credited to a Participant's Account
shall not accrue interest or earnings during the period prior to
being used to purchase shares of Stock in accordance with Article
V.
<PAGE> 13
3.4. Changes in Payroll Deductions. The percentage
designated by a Participant as his rate of contribution under
Section 3.2 shall automatically apply to increases and decreases
in his Compensation. Except as provided in Section 3.5, a
Participant may elect to change the rate of his contributions
to any other permissible rate effective as of the first day of
the first payroll period of any Offering Period provided the
Participant files written notice with the Administrator of an
election to change his contribution rate at least ten (10)
Business Days before the effective date of the election.
3.5. Suspension and Resumption of Payroll Deductions. A
Participant may terminate contributions under the Plan as of the
first day of any payroll period by filing written notice thereof
with the Administrator at least ten (10) Business Days before the
effective date of the termination. A Participant who has
terminated his participation in the Plan in accordance with the
preceding provisions, shall be prohibited from resuming
contributions under the Plan until the following Entry Date. A
Participant whose contributions have been terminated in
accordance with the preceding provisions, may resume
contributions under the Plan in accordance with Section 2.2.
3.6. Restrictions on Participation. Notwithstanding any
provisions of the Plan to the contrary, no Employee shall be
granted an option to participate in the Plan under the following
conditions:
(a) No Employee shall be granted an option if,
immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock,
possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company (for purposes
of this paragraph, the rules of Section 424(d) of the Code
shall apply in determining stock ownership of any Employee);
or
(b) No Employee shall be granted an option which
permits his rights to purchase Stock under the Plan and all
other employee stock purchase plans (as described in Section
423 of the Code) of the Company to accrue at a rate which
exceeds $25,000 of fair market value of such Stock
(determined at the time such option is granted) for each
calendar year in which such option is outstanding at any
time. For purposes of this Section 3.6(b):
(i) the right to purchase Stock under an option
accrues when the option (or any portion thereof) first
becomes exercisable during the calendar year;
(ii) the right to purchase Stock under an option
accrues at the rate provided in the option, but in no
case may such rate exceed $25,000 of fair market value
of such Stock (determined at the time such option is
granted) for any one calendar year; and
(iii) a right to purchase Stock which has accrued
under one option granted pursuant to a plan may not be
carried over to any other option.
ARTICLE IV
OFFERINGS
...........
4.1. Quarterly Offerings. The Plan shall be implemented
through quarterly offerings of the Company's Stock. Each
Offering Period shall begin on the Offering Commencement Date and
shall end on the Offering Termination Date; provided, however, if
the first Offering Period commences prior to stockholder approval
of the Plan, the Offering Termination Date for such initial
Offering Period shall not occur until the end of the quarter in
which stockholder approval of the Plan is secured.
<PAGE> 14
4.2. Purchase Price. The "Purchase Price" per share of
Stock with respect to each Offering Period shall be the lesser
of:
(a) Eighty-five percent (85%) of the official average
of the bid and ask price of the Stock on the Offering
Termination Date on the Nasdaq OTC Market (or on such other
national securities exchange upon which the Stock may then
be listed, hereinafter referred to as the "Exchange") or if
no sale of Stock occurred on such date, the official average
of the bid and ask price on the preceding Business Day; or
(b) Eighty-five percent (85%) of the official average
of the bid and ask price of the Stock on the Offering
Commencement Date on the Exchange (or if no sale of Stock
occurred on such date, the closing price on the preceding
business day).
4.3. Maximum Offering. The maximum number of shares of
Stock which shall be issued under the Plan, subject to adjustment
upon changes in capitalization of the Company as provided in
Section 9.3, shall be 1,000,000 shares. At the beginning of each
Offering Period, the Board shall specify a maximum number of
shares which may be purchased by any Employee as well as a
maximum aggregate number of shares which may be purchased by all
eligible Employees pursuant to such quarterly offering. If the
total number of shares which would be purchased during any
Offering Period exceeds the maximum number of available shares,
the Administrator shall make a pro rata allocation of the
available shares in a manner that it determines to be equitable
and the balance of payroll deductions credited to the Accounts
of Participants shall be returned to such Participants as soon as
administratively practicable.
ARTICLE V
PURCHASE OF STOCK
.............
5.1. Automatic Exercise. On each Offering Termination Date,
each Participant shall automatically and without any act on his
part be deemed to have purchased Stock to the full extent of the
payroll deductions credited to his Account during the Offering
Period ending on such Offering Termination Date.
5.2. Fractional Shares. Fractional shares of Stock may not
be purchased under the Plan.
5.3. Acquisition of Stock. The Company may acquire Stock
for use under the Plan from authorized but unissued shares,
treasury shares, in the open market or in privately negotiated
transactions.
5.4. Accounting for Purchased Stock. All shares of Stock
purchased pursuant to Section 5.1 shall be allocated as Shares to
the appropriate Participant's Account as of the Offering
Termination Date on which such shares are purchased.
<PAGE> 15
ARTICLE VI
ACCOUNTING
...........
6.1. General. The Administrator shall establish procedures
to account for payroll deductions made by a Participant, the
number of Shares of Stock purchased on a Participant's behalf and
the number of Shares allocated to a Participant's Account.
6.2. Registration of Stock. Shares of Stock allocated to a
Participant's Account shall be registered in the name of the
Company or its nominee for the benefit of the Participant on
whose behalf such shares were purchased.
6.3. Accounting for Distributions. Shares of Stock
distributed or sold from a Participant's Account shall be debited
from his Account on a first-in, first-out basis.
6.4. Account Statements. Each Participant shall receive at
least semi-annual statements of all payroll deductions and shares
of Stock allocated to his Account together with all other
transactions affecting his Account.
ARTICLE VII
WITHDRAWALS AND DISTRIBUTIONS
...............................
7.1. Withdrawal of Shares. A Participant may elect to
withdraw any number of Shares allocated to his Account by
providing notification to the Company in accordance with
procedures established by the Administrator. As soon
as administratively practicable following notification of a
Participant's election to withdraw Shares, the Administrator
shall cause a certificate representing the number of Shares to be
withdrawn to be delivered to the Participant.
7.2. Distribution Upon Termination. As soon as
administratively practicable after a Participant's termination of
employment with the Company or a participating subsidiary for any
reason, a certificate representing all of such Participant's
Shares shall be distributed to him (or his executor, in the
event of his death).
7.3. Distribution of Payroll Deductions. In the event a
Participant terminates his employment with the Company or a
participating subsidiary or his participation in the Plan is
terminated pursuant to Section 3.5, any payroll deductions
allocated to his Account and not yet applied to purchase Stock
in accordance with Section 5.1 shall be distributed to him in a
cash lump sum as soon as administratively practicable thereafter.
ARTICLE VIII
ADMINISTRATION
...............
8.1. Appointment of Administrator. The Board shall appoint
an individual or committee comprised of so many members as the
Board shall determine to administer the Plan. The Board may from
time to time, if the Plan is administered by a committee, appoint
members to the committee in substitution for or in addition to
members previously appointed and may fill vacancies, however
caused, in the committee.
<PAGE> 16
8.2. Authority of Administrator. The Administrator shall
have the exclusive power and authority to administer the Plan,
including, without limitation, the right and power to interpret
the provisions of the Plan and make all determinations deemed
necessary or advisable for the administration of the Plan. All
such actions, interpretations and determinations which are done
or made by the Administrator in good faith shall be final,
conclusive and binding on the Company, the Participants and all
other parties and shall not subject the Administrator to any
liability.
8.3. Administrator Procedures. The Administrator shall hold
its meetings at such times and places as it shall deem advisable
and may hold telephone meetings. In the event that the
Administrator is a committee, a majority of its members shall
constitute a quorum and all determinations shall be made by
a majority of its members. Any decision or determination reduced
to writing and signed by the Administrator shall be as fully
effective as if it had been made by a majority vote at a meeting
duly called and held. The Administrator may appoint a secretary
and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
8.4. Expenses. The Company will pay all expenses incident
to the operation of the Plan, including the costs of record
keeping, accounting fees, legal fees and the costs of delivery of
stock certificates to Participants.
ARTICLE IX
MISCELLANEOUS
.............
9.1. Transferability. Neither payroll deductions credited
to a Participant's Account nor any rights with regard to the
purchase of Stock under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way by the Participant
other than by will or the laws of descent and distribution.
9.2. Status as Owner. Each Participant shall be deemed to
legally own all shares of Stock allocated to his Account and
shall be entitled to exercise all rights associated with
ownership of the shares, including, without limitation, the right
to vote such shares in all matters for which Stock is entitled
to vote, receive dividends, if any, and tender such shares in
response to a tender offer.
9.3. Adjustment Upon Changes in Capitalization. In the
event of a reorganization, recapitalization, stock split,
spin-off, split-off, split-up, stock dividend, combination of
shares, merger, consolidation or any other change in the
corporate structure of the Company, or a sale by the Company of
all or part of its assets, the Board may make appropriate
adjustments in the number and kind of shares which are subject to
purchase under the Plan and in the exercise price applicable to
outstanding options.
9.4. Amendment and Termination. The Board shall have
complete power and authority to terminate or amend the Plan
(including without limitation the power and authority to make any
amendment that may be deemed to affect the interests of any
Participant adversely); provided, however, that the Board shall
not, without the approval of the shareholders of the Company (i)
increase the maximum number of shares which may be offered under
the Plan (except pursuant to Section 9.3); (ii) modify the
requirements as to eligibility for participation in the Plan; or
(iii) in any other way cause the Plan to fail the requirements
of Section 423 of the Code.
The Plan and all rights of Employees hereunder shall
terminate: (i) at any time, at the discretion of the Board, in
which case any cash balance in Participants' Accounts shall be
refunded to such Participants as soon as administratively
possible; or (ii) on the Offering Termination Date on
which Participants become entitled to purchase a number of shares
of Stock that exceeds the maximum number of shares available
under the Plan.
<PAGE> 17
9.5. No Employment Rights. The Plan does not, directly or
indirectly, create in any Employee any right with respect to
continuation of employment by the Company and it shall not be
deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an Employee's terms of employment
at any time.
9.6. Withholding. To the extent any payments or
distributions under this Plan are subject to Federal, state or
local taxes, the Company is authorized to withhold all applicable
taxes. The Company may satisfy its withholding obligation by (i)
withholding shares of Stock allocated to a Participant's Account,
(ii) deducting cash from a Participant's Account, or (iii)
deducting cash from a Participant's other compensation. A
Participant's election to participate in the Plan authorizes the
Company to take any of the actions described in the preceding
sentence.
9.7. Use of Funds. All payroll deductions held by the
Company under this Plan may be used by the Company for any
corporate purpose and the Company shall not be obligated to hold
such payroll deductions in trust or otherwise segregate such
amounts.
9.8. Shareholder Approval. Notwithstanding the provision of
Section 1.6 of the Plan, the Plan shall not take effect until
approved by the shareholders of the Company.
9.9. Choice of Law. Except to the extent superseded by
Federal law, the laws of the State of Oklahoma will govern all
matters relating to the Plan.
To record the adoption of the Plan, TMS, Inc. has caused its
authorized officers to affix its Corporate name and seal this
29th day of June, 1999.
TMS, INC.
(SEAL) By: /s/ Dana R. Allen
___________________
Dana R. Allen, President and
Chief Executive Officer
ATTEST:
/s/ Marshall C. Wicker
___________________
Secretary
<PAGE> 18
(INSTRUCTION): To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
______________________________________________________________
TMS, Inc.
206 West Sixth Street
Stillwater, Oklahoma 74074
This Proxy is solicite on behalf of the Board of Directors
of TMS, Inc. (the "Company"). The undersigned hereby appoints
Doyle E. Cherry, Russell W. Teubner, Dana R. Allen, James R. Rau,
M.D., and Marshall C. Wicker, as proxies, each with the power to
appoint his substitute, and hereby appoints and authorizes them
to represent and vote as designated below, all the shares of
common stock of the Company held of record by the undersigned on
December 1, 1999, at the Annual Meeting of Shareholders to be
held on January 21, 2000, or any adjournment thereof.
1.ELECTION OF DIRECTORS [ ]FOR all nominees [ ]WITHHOLD AUTHORITY
listed below to vote for all
(except as marked nominees
to the contrary below) listed below
Dana R. Allen Doyle E. Cherry James R. Rau, M.D.
Russell W. Teubner Marshall C. Wicker
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2.PROPOSAL to approve and ratify the TMS, Inc. Employee Stock
Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.PROPOSAL to approve and ratify the selection of KPMG LLP as the
Company's independent auditors for the fiscal year ending
August 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment thereof.
(Continued and to be signed on the reverse side.)
<PAGE> 19
This proxy, when properly executed, dated and delivered, will
be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be
voted FOR Proposals 1, 2 3 and 4.
Please sign exactly as name appears below.
When shares are held by joint tenants, both
should sign. When signing as attorney or as
executor, administrator, trustee or guardian,
please give full title as such. If
corporation, please sign in full corporate
name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Date:________________________________,19_____
X____________________________________________
(Signature)
X____________________________________________
(Signature, if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 20
