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
[ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
DOCUCON, INCORPORATED
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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:
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>
DOCUCON, INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 25, 1997
The annual meeting of Stockholders of Docucon, Incorporated (the
"Company") will be held at the Company's headquarters at 7461 Callaghan Road,
San Antonio, Texas 78229, on Friday, June 25, 1997, at 12:00 Noon, C.D.T., for
the following purposes:
1. To elect five Directors to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified.
2. To approve the 1997 Employee Stock Purchase Plan of the Company.
3. To amend the 1988 Stock Option Plan of the Company to increase the
number of shares reserved for issuance thereunder by 700,000 shares to
2,160,000 share of Common Stock, par value $.01 per share.
4. To amend the 1988 Stock Option Plan of the Company to extend the
termination date of the 1988 Stock Option Plan of the Company to
December 31, 2001.
5. To amend the 1991 Directors Stock Option Plan of the Company to increase
the number of shares reserved for issuance by 150,000 shares to 650,000
shares of Common Stock, par value $.01 per share.
6. To transact such other business as may properly come before the Annual
Meeting, or any adjournment thereof.
Stockholders of record at the close of business on May 5, 1997, are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof.
If you cannot attend the Annual Meeting in person, please date and execute
the accompanying Proxy and return it promptly to the Company. If you attend the
Annual Meeting, you may revoke your Proxy and vote in person if you desire to do
so, but attendance at the Annual Meeting does not of itself serve to revoke your
Proxy.
RALPH BROWN
Secretary
1
<PAGE>
DOCUCON, INCORPORATED
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held on June 25, 1997, or any adjournment
thereof. This Proxy Statement, the Notice of Annual Meeting and the accompanying
Proxy are being mailed to Stockholders on or about May 25, 1997.
The Company's principal executive offices are located at 7461 Callaghan
Road, Suite 200, San Antonio, Texas 78229. The Company's telephone number is
(210) 525-9221.
As to all matters that may come before the Annual Meeting, each
stockholder will be entitled to one vote for each share of Common Stock of the
Company held by him at the close of business on April 7, 1997. The holders of a
majority of the shares of Common Stock of the Company presented in person or by
proxy and entitled to vote will constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining the
presence of a quorum. At April 7, 1997, the record date for the Annual Meeting,
there were 12,391,942 shares of Common Stock outstanding and 17 shares of Series
A Cumulative Convertible Preferred Stock ("Series A Preferred Stock")
outstanding, each share of which is entitled to cast 33,333 votes as Common
Stock. With respect to references to votes to be taken at the Annual Meeting of
the Stockholders herein, the term "Common Stock" shall include the Company's
Common Stock and the shares of Common Stock into which the outstanding Series A
Preferred Stock may be converted, and with respect to which the holders of such
Preferred Stock are entitled to vote. Thus, the equivalent number of shares
entitled to vote at the Annual Meeting of Stockholders is 12,958,603 (12,391,942
shares of Common Stock and 566,661 shares of Common Stock obtainable upon
conversion of Series A Preferred Stock).
The purposes of the Annual Meeting of Stockholders are (a) to elect a
Board of Directors to serve until the next Annual Meeting of Stockholders, (b)
to approve the 1997 Employee Stock Purchase Plan of the Company, (c) to amend
the 1988 Stock Option Plan of the Company to increase the number of shares
reserved for issuance thereunder by 700,000 shares to 2,160,000 share of Common
Stock, par value $.01 per share, (d) to amend the 1988 Stock Option Plan of the
Company to extend the termination date to December 31, 2001, and (e) to amend
the 1991 Directors Stock Option Plan of the Company to increase the number of
shares reserved for issuance by 150,000 shares to 650,000 shares of Common
Stock, par value $.01 per share. The Company is not aware at this time of any
other matters that will come before the Annual Meeting. The approval of a
majority of the shares of Common Stock present in person or by proxy ,and
entitled to vote, at the Annual Meeting is required for election of nominees as
Directors of the Company and for approval of Proposal 2 (Approval of the 1997
Employee Stock Purchase Plan), Proposal 3 (Increase shares authorized for
issuance under the Company's 1988 Employee Stock Option Plan), Proposal 4
(Amendment of termination date to December 31, 2001, of the Company's 1988
Employee Stock Option Plan), and Proposal 5 (Increase shares authorized for
issuance under the Company's 1991 Director Option Plan). A quorum equal to a
majority of the outstanding Common Stock must be present in person or by proxy
at the Annual Meeting in order to elect Directors and consider Proposals 2, 3,
4, and 5.
All shares of Common Stock represented by properly executed proxies which
are returned and not revoked will be voted in accordance with the instructions,
if any, given therein. If no instructions are provided in a proxy, it will be
voted FOR the Board's nominees for Director, FOR the approval of Proposals 2, 3,
4, and 5 and in accordance with the proxy-holders' best judgment as to any other
matters raised at the Annual Meeting. Abstentions and broker non-votes will be
counted as shares present for purposes of establishing a quorum with respect to
the proposals to which they apply. Abstention votes will be counted as voted
AGAINST the proposals with respect to which they apply. Broker non-votes will
not be considered as either FOR or AGAINST votes with respect to the proposals
to which they apply. A form of Proxy for use at the Annual Meeting is also
enclosed. Any such Proxy may be revoked by a stockholder at any time before it
is exercised by either giving written notice of such revocation to the Secretary
of the Company or submitting a later-dated Proxy to the Company prior to the
Annual Meeting. A stockholder attending the Annual Meeting may revoke his Proxy
and vote in person if he desires to do so, but attendance at the Annual Meeting
will not of itself revoke the Proxy.
PROPOSALS BY STOCKHOLDERS
Any proposals by stockholders of the Company intended to be presented at
the 1998 Annual Meeting of Stockholders must be received by the Company for
inclusion in the Company's Proxy Statement and form of Proxy by December 19,
1997.
2
<PAGE>
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTORS
At the Annual Meeting, five Directors are to elected. The Bylaws of the
Company permit the Board of Directors to determine the number of Directors of
the Company. Unless other instructions are specified, the enclosed Proxy will be
voted in favor of the persons named below to serve until the next Annual Meeting
of Stockholders and until their successors shall have been duly elected and
qualified. In the event any of the nominees shall be unable to serve as a
Director, it is the intention of the persons designated as proxies to vote for
substitutes selected by the Board of Directors. The Board of Directors of the
Company has no reason to believe that any of the nominees named below will be
unable to serve if elected.
The following table sets forth certain information concerning the five
nominees for Director of the Company:
PRINCIPAL OCCUPATION
AND ALL POSITIONS A DIRECTOR
NAME AGE WITH THE COMPANY SINCE
---- --- -------------------- ----------
Edward P. Gistaro 61 Chairman of the Board and 1988
Chief Executive Officer
and Director
Allan H. Hobgood 58 President and Chief Operating 1992
Officer and Director
Ralph Brown 63 Attorney, San Antonio, 1987
Texas, Secretary and Director
Al R. Ireton 62 Chairman, 1993
Manchester Partners
and Directors
Chauncey E. Schmidt 65 Chairman, C.E. Schmidt 1993
& Associates
and Director
Edward P. Gistaro has served as Chief Executive Officer of the Company
since June 4, 1988 and served as President from July 10, 1988 until March 18,
1991. Mr. Gistaro was employed by Datapoint Corporation, a company involved in
the manufacturing of computer systems, in various managerial positions from 1973
to 1987. From 1982 to 1985 Mr. Gistaro served as the President and Chief
Operating Officer of Datapoint Corporation, and he served from 1985 to 1987 as
its President and Chief Executive Officer.
Allan H. Hobgood was elected Chief Operating Officer of the Company on
April 16, 1991 and President of the Company on November 4, 1992. Mr. Hobgood had
served as the Company's Vice President of Marketing from August 25, 1988 to
April 16, 1991. From January 1988 until August 1988, Mr. Hobgood served as Vice
President of Sales for Advanced Signing, Inc., a commercial sign firm, and from
1981 to March, 1987, Mr. Hobgood held several managerial positions relating to
marketing, including Vice President of U.S. Sales, at Datapoint Corporation.
Ralph Brown, an attorney in private practice since 1968, has served as
Secretary of the Company since May 1, 1987. From 1987 to 1989, he served also as
Treasurer of the Company. Mr. Brown has also served since 1975 as President of
Cherokee Ventures, Inc., a real estate leasing firm, since 1978 as President of
East Central Development Corporation and since 1982 as President of Southeast
Suburban Properties, Inc. The latter two businesses are real estate development
firms.
Al R. Ireton was elected as a Director of the Company in May 1993. Mr.
Ireton has been Chairman of Manchester Partners, an investment and growth
strategy advisory organization providing capital and strategic assistance to
growing companies, since October 1988. From 1985 through September 1988, he
served as President and Chief Executive Officer of Texet Corporation, a desktop
publishing company. Mr. Ireton has 25 years' experience serving as president and
chief executive officer of growth-oriented companies, and has served on several
corporate boards.
Chauncey E. Schmidt was elected to the Board of Directors of the Company
in February 1993. He has been Chairman of C. E. Schmidt & Associates, an
investment firm, since April 1989. From 1987 to March 1989, he was Vice Chairman
of the
3
<PAGE>
Board of AMFAC, Inc., a New York Stock Exchange-listed company engaged in
diversified businesses. He has previously served as President of The First
National Bank of Chicago and Chairman of the Board and Chief Executive Officer
of The Bank of California, N.A. Mr. Schmidt is on the Board of Trustees of the
U. S. Naval War College Foundation and is active in several civic and charitable
organizations.
All nominees for Director are currently serving as Directors of the
Company. Directors hold office until the next Annual Meeting of Stockholders of
the Company and until their successors are elected and qualified. Officers are
elected annually by the Board of Directors and serve at the discretion of the
Board of Directors.
MANAGEMENT MATTERS
There are no arrangements or understandings known to the Company between
any of the Directors, nominees for Director or executive officers of the Company
and any other person pursuant to which any such person was elected as a Director
or an executive officer, except the Employment Agreements between the Company
and each of Edward P. Gistaro and Allan H. Hobgood, respectively, described
under "Executive Compensation" in this Proxy Statement. There are no family
relationships between any Directors, nominees for Director or executive officers
of the Company. The Board of Directors of the Company held a total of four
meetings in 1996.
The Board of Directors has an Executive Compensation Committee and Stock
Option Committee, each consisting of Messrs. Ralph Brown, Al Ireton, Philip J.
Romano and Chauncey Schmidt. The Executive Compensation Committee reviews the
salaries, incentive compensation and other direct and indirect benefits for all
Company Officers. During 1996, the Executive Compensation Committee held four
meetings. The Stock Option Committee determines all stock option grants the
Company's 1988 Stock Option Plan. During 1996, the Stock Option Committee held
four meetings.
The Company has no other standing audit, nominating or compensation
committee of the Board of Directors.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who beneficially own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC") and the Boston Stock Exchange. Officers, Directors and beneficial
owners of more than 10% of the Company's Common Stock are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms that
they file. Based solely on review of the copies of such forms furnished to the
Company, or written representations that no reports on Form 5 were required, the
Company believes that for the period from January 1, 1996 through March 31,
1997, all officers, Directors and greater-than-10% beneficial owners complied
with all Section 16(a) filing requirements applicable to them.
APPROVAL OF 1997 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
Effective January 1, 1998, the Board of Directors of the Company adopted
the Company's 1997 Employee Stock Purchase Plan (the "1997 Purchase Plan"),
subject to stockholder approval at the 1997 Annual Meeting of Stockholders. The
1997 Purchase Plan allows employees of the Company to purchase shares of the
Company's Common Stock on a regular basis through payroll deductions. The Board
of Directors believes that the 1997 Purchase Plan will foster broad-based
ownership of the Company's Common Stock by its employees.
Set forth below is a summary of the major features of the 1997 Purchase
Plan. This summary does not purport to be a complete statement of all the
provisions of the 1997 Purchase Plan, and is qualified in its entirety by the
text of the 1997 Purchase Plan attached to this Proxy Statement as Appendix A.
DESCRIPTION OF THE PLAN
4
<PAGE>
The 1997 Purchase Plan is open to participation by all full time or part-time
employees of the Company who are regularly scheduled to work more than 30 hours
per week and who have completed 90 days' employment with the Company. Under the
1997 Purchase Plan, eligible employees may elect to have up to 15% of their Base
Pay (as defined) deducted and utilized for the purchase of Common Stock of the
Company in annual or semiannual offerings to be made by the Company to eligible
employees. The Company has reserved 800,000 shares of Common Stock for issuance
pursuant to the 1997 Purchase Plan.
Under the 1997 Purchase Plan, the Company will make available in each year
from January 1, 1998 through December 31, 2001 up to 200,000 shares of Common
Stock. Such shares will be offered to participating employees in annual or
semiannual offerings. Participating employees will be deemed to have been
granted options to purchase Common Stock in each offering in an amount equal to
the amount of their respective payroll deductions divided by 85% of the market
value of the Common Stock of the Company on the applicable Offering Commencement
Date. The option price shall be the lesser of the 85% of the closing price of
the Common Stock on the Offering Commencement Date (or the next preceding
trading day) or 85% of the closing price of Common Stock on the Offering
Termination Date (or the next preceding trading day). Unless a participating
employee terminates participation as provided in the 1997 Purchase Plan, such
employee shall be deemed to have exercised such option on the Offering
Termination Date and shall be issued a corresponding number of shares of Common
Stock. The 1997 Purchase Plan provides for termination of participation or
withdrawals of amounts previously deducted under certain circumstances. Certain
additional restrictions apply to participating employees who are subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.
The 1997 Purchase Plan is administered by the Compensation Committee of
the Board of Directors and will expire on December 31, 2001 unless sooner
terminated or amended by the Board of Directors.
FEDERAL TAX CONSEQUENCES
The 1997 Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). Under Section 423, if a participating employee
otherwise complies with Section 423(a) and does not dispose of shares of Common
Stock acquired pursuant to the exercise of an option under the 1997 Purchase
Plan for at least two years after the relevant Offering Commencement Date and at
least six months after the relevant Offering Termination Date, such an employee
will not recognize any income at the time that such option is deemed to be
exercised on the Offering Termination Date, but will recognize income on the
sale of the underlying shares of stock. In such case, there is no taxable event
for the Company. If the participating employee does not comply with the
requirements of Section 423(a), including the holding period requirements
described above, the employee will be deemed to have recognized compensation
income in the amount of the difference between the option exercise price and the
fair market value of the Common Stock on the relevant Offering Termination Date.
In such case, the Company will receive a corresponding deduction.
NEW PLAN BENEFITS UNDER THE 1997 PURCHASE PLAN
Because the 1997 Purchase Plan will be effective on January 1, 1998, at
which time the first offering period will begin, it is impossible at this time
to identify the benefits or amounts that will be received by or allocated to any
participants. Such amounts will be indeterminable prior to the initial Offering
Termination Date on December 31, 1998.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Stockholder approval of the 1997 Purchase Plan is required pursuant to
Section 423 of the Code. The Board of Directors believes that the 1997 Purchase
Plan provides significant incentive to all employees of the Company to acquire
and hold the Company's Common Stock, thereby more effectively aligning the
interests of such employees with those of the stockholders. Accordingly, the
Board of Directors recommends a vote FOR the approval of the 1997 Purchase Plan.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present or represented and entitled to vote at the Annual Meeting
will be necessary for stockholder approval of the 1997 Purchase Plan.
AMENDMENTS TO 1988 STOCK OPTION PLAN
GENERAL
6
<PAGE>
The Company has a 1988 Stock Option Plan, currently covering an aggregate of
1,360,000 share of Common Stock. The 1988 Stock Option Plan provides for the
grant to officers, Directors and key employees of the Company if incentive stock
options ("ISOs") intended to qualify under Section 422 (b) of the Code and
non-qualified stock options ("NQSO"). The 1988 Stock Option Plan was approved by
the stockholders of the Company on November 15, 1988. Amendments to the 1988
Stock Option Plan increasing the number of shares covered thereby were approved
by the stockholders of the Company on April 21, 1989, May 14, 1991, May 7, 1992
and May 17, 1994. As of April 1, 1997 there were outstanding under the 1988
Stock Option Plan options to purchase 1,153,683 shares of the Company's Common
Stock at prices ranging from $0.41 to $1.38 per share. See "Executive
Compensation".
REASONS FOR PROPOSED AMENDMENT 3
The Board of Directors believes that it is in the best interests of the
Company to increase the number of shares of Common Stock reserved for issuance
under the 1988 Stock Option Plan to 2,160,000 shares, an increase of 700,000
shares The Board of Directors believes that the success of the Company is
greatly dependent upon its ability to attract and retain executives and
employees of outstanding ability who are motivated to exert their best efforts
on behalf off the Company, and that the 1988 Stock Option Plan has been
effective in achieving this goal. The Board has concluded that the number of
shares available and likely to become available for stock options under the 1988
Stock Option Plan will prove within a relatively short period of time to be
inadequate for future stock option requirements. In the opinion of the Board,
the authorization of 700,000 additional shares will give the Company sufficient
stock reserved for issuance under the 1988 Stock Option Plan to allow the
Company to attract and retain employees who are in a position to contribute
materially to the successful conduct of the Company's operations, to meet
competitive situations created by the stock options plans of other corporations,
and to stimulate in those eligible for participation an increased desire to
render greater service to the Company.
REASONS FOR PROPOSED AMENDMENT 4
The Board of Directors believes that it is in the best interests of the
Company to extend the termination date of the 1988 Stock Option Plan to December
31, 2001. The Board of Directors believes that the future success of the Company
is greatly dependent upon its ability to continue to attract and retain
executives and employees of outstanding ability who are motivated to exert their
best efforts on behalf off the Company, and that the 1988 Stock Option Plan has
been effective in achieving this goal. The Board has concluded that the
termination of the 1988 Stock Option Plan on December 31, 1988 will inhibit the
ability of the Company to attract and retain such executives and employees. In
the opinion of the Board, the extension of the termination date to December 31,
2001 will allow the Company to continue to attract and retain employees who are
in a position to contribute materially to the successful conduct of the
Company's operations, and to meet competitive situations created by the stock
options plans of other corporations.
It should be noted that each director, each nominee for Director and each
officer and employee of the Company has, by reason of being eligible to receive
options under the 1988 Stock Option Plan, an interest in seeing that the
proposed amendments are adopted by stockholders. It should also be noted that,
as a matter of policy, the Company has not granted options to non-employee
Directors under the 1988 Stock Options Plan.
DESCRIPTION OF THE PLAN
Under the Stock Option Plan, which is administered by the Stock Option
Committee of the Board of Directors, key employees may be granted options to
purchase shares of the Company's Common Stock at 100% of fair market value on
the date of grant (or 110% of fair market value in the case of an ISO granted to
a 10% stockholder/grantee). The 1988 Stock Option Plan expires on October 31,
1998 in absence of approval of Amendment 4. Options granted under the 1988 Stock
Option Plan must be exercised within ten years from the date of grant, vest at
varying times, as determined by the Stock Option Committee, are nontransferable
except by will or pursuant to the laws of descent and distribution, are
protected against dilution and expire within three months after termination of
employment, unless such termination is by reason of death or disability or for
cause. All shares purchased upon exercise of any option must be paid in full at
the time of purchase, in accordance with the terms set forth on the option. Such
payment must be made in cash or through delivery of shares of Common Stock or a
combination of cash and Common Stock, all as determined by the Stock Option
Committee. The Stock Option Committee may determine other terms applicable to
particular options. The aggregate fair market value (determined at the same time
each ISO is granted) of the shares of Common Stock with respect to which ISOs
issued to any one person under the 1988 Stock Option Plan are exercisable for
the first time during any calendar year may not exceed $100,000.
The 1988 Stock Option Plan may be amended at any time by one vote of the
Board of Directors. However, no amendment made without approval of the
stockholders of the Company may increase the total number of shares which may be
7
<PAGE>
issued under options granted pursuant to the 1988 Stock Option Plan, reduce the
maximum exercise price or extend the latest date upon which options may be
granted or shall be exercisable, or change the class of employees eligible to
receive the options.
FEDERAL TAX CONSEQUENCES
Pursuant to the Code, upon the exercise of an NQSO under the 1988 Stock
Option Plan, the Company is generally entitled to a tax deduction in an amount
equal to the difference between the option price and the fair market value of
the Common Stock on the date the NQSO is exercised. For federal tax purposes,
the person exercising the option must pay personal income taxes on an amount
equal to the difference between the option price and the fair market value of
the Common Stock on the date the NQSO is exercised. The basis of the Common
Stock obtained by exercising the NQSO will be the option price paid plus the
amount equal to the difference between the option price and the fair market
value of the Common Stock on the date the NQSO is exercised, which amount was
subject to federal income tax. A subsequent sale of the Common Stock by the
person exercising the NQSO will result in a long- or short-term capital gain or
loss depending on the total period of time that the NQSO and Common Stock are
held. Generally, no taxable event occurs under the Code upon the grant of an
NQSO under the 1988 Stock Option Plan.
Pursuant to the Code, the holder of an ISO will recognize no taxable
income (or loss) upon the grant or exercise of an ISO. Upon the sale of the
underlying shares of Common Stock, the optionholder will incur a long-term
capital gain or loss if the provisions of Section 422(b) of the Code are
compiled with. In such case, there is no taxable event for the Company. The
principal requirement of Section 422(b), other than the limitations on option
price, duration of option period, time of exercise and volume exercisable in one
year described above, is that, in order for an option to qualify for ISO
treatment, shares received pursuant to exercise of the option may not be
disposed within two years from the date of grant and one year from the date of
exercise of the option. If an option designated as an ISO ceases to qualify as
an ISO, the tax effects for the optionholder and the Company will be identical
to those described above for NQSOs.
NEW PLAN BENEFITS UNDER THE 1988 STOCK OPTION PLAN
No currently existing benefits under the 1988 Stock Option Plan are
dependent upon approval of the proposed amendment. See "Executive Compensation -
Stock Options - 1988 Stock Option Plan" for a description of outstanding options
under the 1988 Stock Option Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the adoption of the proposed
amendments of the 1988 Stock Option Plan. The affirmative vote of the holders of
a majority of the outstanding shares of the Common Stock entitled to vote at the
Annual Meeting will be necessary for stockholder approval of the amendment of
the 1988 Stock Option Plan.
AMENDMENT TO 1991 DIRECTOR NON-STATUTORY STOCK OPTION PLAN
GENERAL
The Company has a 1991 Director Non-Statutory Stock Option Plan (the "1991
Director Plan"), currently covering an aggregate of 500,000 share of Common
Stock. The 1991 Director Plan provides for the grant NQSOs to non-employee
directors The 1991 Director Plan was approved by the stockholders of the Company
on May 7, 1992. As of April 1, 1997 there were outstanding under the 1991
Director Plan options to purchase 310,000 shares of the Company's Common Stock
at prices ranging from $0.53 to $1.38 per share. See "Executive Compensation".
REASONS FOR PROPOSED AMENDMENT
The Board of Directors believes that it is in the best interests of the
Company to increase the number of shares of Common Stock reserved for issuance
under the 1991 Director Plan to 650,000 shares, an increase of 150,000 shares.
The Board of Directors believes that the success of the Company is greatly
dependent upon its ability to attract and retain outside Directors of
outstanding ability who are motivated to exert their best efforts on behalf of
the Company, and that the 1991 Director Plan has been effective in achieving
this goal. The Board has concluded that the number of shares available and
likely to become available for stock options under the 1991 Director Plan will
prove within a relatively short period of time to be inadequate for future stock
option requirements. In the opinion of the Board, the authorization of 150,000
additional shares will give the Company sufficient stock reserved for issuance
under the 1991 Director Plan to allow the Company to attract and retain outside
Directors who are in
7
<PAGE>
a position to contribute materially to the successful conduct of the Company's
operations, to meet competitive situations created by the stock options plans of
other corporations, and to stimulate in those eligible for participation an
increased desire to render greater service to the Company.
It should be noted that each director and each nominee for Director of the
Company has, by reason of being eligible to receive options under the 1991
Director Plan, an interest in seeing that the proposed amendments are adopted by
stockholders.
DESCRIPTION OF THE PLAN
Under the 1991 Director Plan, which is administered by the Board of
Directors, non-employee Directors are granted options to purchase 40,000 shares
of the Company's Common Stock upon their initial election as Directors and
30,000 shares on the second anniversary date of such election at the
then-current market price of such shares. One-third of the initial grant shall
vest on each anniversary of the date of grant, and one-third of the second grant
shall vest every six months after the date of grant. The 1991 Director Plan
expires on February 10, 2001. Under an amendment to the 1991 Director Plan
adopted by the Board of Directors in February 1992, each eligible Director will
receive an additional annual grant of options covering 10,000 shares of Common
Stock, commencing with the fiscal year of the Company immediately following the
fiscal year in which all shares of Common Stock covered by the initial grant and
the second grant described above are fully vested, and such annual grant will
continue each fiscal year thereafter until options covering all shares reserved
for issuance under the 1991 Director Plan have been granted. Options granted
under the 1991 Director Plan must be exercised within ten years from the date of
grant, are nontransferable except by will or pursuant to the laws of descent and
distribution, are protected against dilution and expire within three months
after termination of service as a Director of the Company, unless such
termination is by reason of death or disability or for cause. All shares
purchased upon exercise of any option must be paid in full at the time of
purchase, in accordance with the terms set forth in the option. Such payment
must be made in cash or through delivery of shares of Common Stock or a
combination of cash and Common Stock. The 1991 Director Plan may be amended at
any time by vote of the Board of Directors.
FEDERAL TAX CONSEQUENCES
Pursuant to the Code, upon the exercise of an NQSO under the 1991 Director
Plan, the Company is generally entitled to a tax deduction in an amount equal to
the difference between the option price and the fair market value of the Common
Stock on the date the NQSO is exercised. For federal tax purposes, the person
exercising the option must pay personal income taxes on an amount equal to the
difference between the option price and the fair market value of the Common
Stock on the date the NQSO is exercised. The basis of the Common Stock obtained
by exercising the NQSO will be the option price paid plus the amount equal to
the difference between the option price and the fair market value of the Common
Stock on the date the NQSO is exercised, which amount was subject to federal
income tax. A subsequent sale of the Common Stock by the person exercising the
NQSO will result in a long- or short-term capital gain or loss depending on the
total period of time that the NQSO and Common Stock are held. Generally, no
taxable event occurs under the Code upon the grant of an NQSO under the 1991
Director Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the adoption of the proposed
amendment of the 1991 Director Plan, The affirmative vote of the holders of a
majority of the outstanding shares of the Common Stock entitled to vote at the
Annual Meeting will be necessary for stockholder approval of the amendment of
the 1991 Director Plan.
EXECUTIVE COMPENSATION
GENERAL
The following table sets forth compensation paid or awarded to the Chief
Executive Officer and the only other executive officer of the Company whose
compensation exceeded $100,000 for all services rendered to the Company in 1996,
1995 and 1994:
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------- --------------------------------------
BONUS/ANNUAL SECURITIES LONG-TERM ALL
INCENTIVE UNDERLYING INCENTIVE OTHER COM-
NAME AND PRINCIPAL POSITION YEAR SALARY AWARD (1) OPTIONS PAYOUTS PENSATION (2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward P. Gistaro .................... 1996 $131,682 $ 97,850 50,000 $ -- $1,468
Chairman of the Board ................ 1995 129,192 -- -- -- 2,238
and Chief Executive Officer .......... 1994 102,701 20,000 45,000 -- --
Allan H. Hobgood ..................... 1996 100,712 112,647 50,000 -- 1,468
President and ........................ 1995 100,256 68,637 -- -- 2,250
Chief Operating Officer .............. 1994 99,732 48,047 45,000 -- --
</TABLE>
- ------
(1) Mr. Gistaro is eligible to receive target bonus payments totaling $76,000
under the 1996 Management Incentive Bonus Plan as approved by the
Compensation Committee of the Board of Directors. These payments may be
increased or decreased depending upon the percentage of achievements of
specified goals, which include revenues and returns on assets.
Mr. Hobgood is eligible to receive 5.5% of the government and commercial
division profits.
(2) Matching contributions under the Company's 401(k) Plan.
STOCK OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES PRICE EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR PER SHARE DATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward P. Gistaro.......................... 50,000 17.59% $.875 05/12/06
Allan H. Hobgood........................... 50,000 17.59% .875 05/12/06
</TABLE>
STOCK OPTION EXERCISES IN 1996 AND OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ON VALUE AT DECEMBER 31, 1996 AT DECEMBER 31, 1996
-------------------------------- ---------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward P. Gistaro -- -- 281,667 33,333 $ 94,708 $ 19,974
Allan H. Hobgood -- -- 271,667 33,333 90,857 19,974
</TABLE>
EMPLOYMENT AGREEMENTS
Edward P. Gistaro, Allan H. Hobgood, and Lori A. Turner, Vice President,
Finance each have employment agreements with the Company. Pursuant to such
agreements, Mr. Gistaro is to be paid $100,000 per annum and Mr. Hobgood is to
be paid $96,000 per annum and 5.5% of the profits of the government and
commercial divisions. Ms. Turner's agreement does not specify an amount per
annum. The agreements do not have fixed terms, and are terminable upon 30 days'
prior written notice by either the Company or the employee, or by the Company
"for cause" at any time. Further, each agreement requires that the employee keep
Company matters confidential, restricts the employee from being directly or
indirectly involved with any entity in a business competitive with that of the
Company for a period of years following the termination of the agreement, and
provides for a severance payment to the employee in the event he is terminated
by the Company without cause.
STOCK OPTIONS
1988 STOCK OPTION PLAN
The Company has a 1988 Stock Option Plan, currently covering an aggregate
of 1,360,000 shares of Common Stock. The 1988 Stock Option Plan is described
under "Amendment to 1988 Stock Option Plan" in this Proxy Statement.
9
<PAGE>
Under the 1988 Stock Option Plan, which is administered by the Stock
Option Committee of the Board of Directors, key employees may be granted options
to purchase shares of the Company's Common Stock at 100% of fair market value on
the date of grant (or 110% of fair market value in the case of an ISO granted to
a 10% stockholder/grantee). The 1988 Stock Option Plan expires on October 31,
1998. Options granted under the 1988 Stock Option Plan must be exercised within
ten years from the date of grant, vest at varying times, as determined by the
Stock Option Committee, are nontransferable except by will or pursuant to the
laws of descent and distribution, are protected against dilution and expire
within three months after termination of employment, unless such termination is
by reason of death or disability or for cause. All shares purchased upon
exercise of any option must be paid in full at the time of purchase, in
accordance with the terms set forth in the option. Such payment must be made in
cash or through delivery of shares of Common Stock or a combination of cash and
Common Stock, all as determined by the Stock Option Committee. The Stock Option
Committee may determine other terms applicable to particular options. No one
person may receive ISO options for which the aggregate fair market value
(determined at the time each ISO is granted) of options exercisable for the
first time during any calendar year exceeds $100,000.
1991 DIRECTOR PLAN
The Company also has a 1991 Director Plan currently covering an aggregate
of 500,000 shares of Common Stock. The 1991 Director Plan is described under
"Amendment to 1991 Director Non-statutory Stock Option Plan" in this Proxy
Statement
Under the 1991 Director Plan, which is administered by the Board of
Directors, non-employee Directors are granted options to purchase 40,000 shares
of the Company's Common Stock upon their initial election as Directors and
30,000 shares on the second anniversary date of such election at the
then-current market price of such shares. One-third of the initial grant shall
vest on each anniversary of the date of grant, and one-third of the second grant
shall vest every six months after the date of grant. The 1991 Director Plan
expires on February 10, 2001. Under an amendment to the 1991 Director Plan
adopted by the Board of Directors in February 1992, each eligible Director will
receive an additional annual grant of options covering 10,000 shares of Common
Stock, commencing with the fiscal year of the Company immediately following the
fiscal year in which all shares of Common Stock covered by the initial grant and
the second grant described above are fully vested, and such annual grant will
continue each fiscal year thereafter until options covering all shares reserved
for issuance under the 1991 Director Plan have been granted. Options granted
under the 1991 Director Plan must be exercised within ten years from the date of
grant, are nontransferable except by will or pursuant to the laws of descent and
distribution, are protected against dilution and expire within three months
after termination of service as a Director of the Company, unless such
termination is by reason of death or disability or for cause. All shares
purchased upon exercise of any option must be paid in full at the time of
purchase, in accordance with the terms set forth in the option. Such payment
must be made in cash or through delivery of shares of Common Stock or a
combination of cash and Common Stock. The 1991 Director Plan may be amended at
any time by vote of the Board of Directors.
During 1996, Messrs. Ralph Brown and Philip J. Romano, both Directors of
the Company, were granted options covering 10,000 shares each of Common Stock at
an exercise price of $1.03 per share. The exercise price per share of each such
option was not less than the closing bid price of the Common Stock reported on
The Nasdaq Stock Market on the date of the grant.
REPRICING OF OUTSTANDING OPTIONS
Set forth below is certain information concerning a repricing of options
held by the executive officers named in the Summary Compensation Table set forth
in Item 10, "Executive Compensation General", during the period October 24, 1986
through February 28, 1995:
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
MARKET PRICE EXERCISE OPTION TERM
NUMBER OF OF STOCK AT PRICE AT REMAINING AT
OPTIONS/ TIME OF TIME OF DATE OF
SARS REPRICING REPRICING NEW REPRICING OR
REPRICED OR OR OR EXERCISE AMENDMENT
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE (MONTHS)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward P. Gistaro 6/23/89 90,000 .56 .70 .56 51
8/28/91 50,000 .56 1.25 .56 77
8/13/92 30,000 .56 1.375 .56 88
8/10/93 50,000 .56 1.218 .56 100
10
<PAGE>
Allan H. Hobgood 6/23/89 60,000 .56 .70 .56 51
5/28/91 50,000 .56 1.25 .56 74
8/28/91 30,000 .56 1.25 .56 77
8/13/92 30,000 .56 1.375 .56 88
8/10/93 40,000 .56 1.218 .56 100
</TABLE>
In order to ensure that the Company's equity-based compensation programs
meet their goals of providing motivation and incentive for key executives of the
Company, the Board of Directors determined at a meeting held on February 14,
1995, that it was desirable to reprice all outstanding options held by officers,
Directors and employees of the Company to bring their exercise prices into line
with the then-current market price of the Company's Common Stock. The Company's
stock option plans generally provide that the Board of Directors has the
discretion to effect such a repricing in the exercise of their business
judgment.
EMPLOYEE STOCK PURCHASE PLAN
In order to promote ownership of the Company's Common Stock by its
employees, effective January 1, 1998, the Board of Directors adopted the
Company's 1997 Employee Stock Purchase Plan (the "1997 Purchase Plan"), subject
to approval by the stockholders at the 1997 Annual Meeting of Stockholders.
Under the 1997 Purchase Plan, eligible employees may elect to have up to 15% of
their Base Pay (as defined) deducted and utilized for the purchase of Common
Stock of the Company in annual or semiannual offerings to be made by the Company
to eligible employees. The Company has reserved 800,000 shares of Common Stock
for issuance pursuant to the 1997 Purchase Plan.
The Company's 1993 Employee Stock Purchase Plan (the "1993 Purchase Plan")
was approved by the stockholders at the 1994 Annual Meeting of Stockholders.
Under the 1993 Purchase Plan, eligible employees may elect to have up to 10% of
their Base Pay (as defined) deducted and utilized for the purchase of Common
Stock of the Company in annual or semiannual offerings to be made by the Company
to eligible employees. The Company has reserved 800,000 shares of Common Stock
for issuance pursuant to the 1993 Purchase Plan. The Company issued 286,050,
100,583 and 70,983 shares in January 1997, 1996 and 1995 pursuant to this Plan
at purchase prices of $.32, $.32 and $.345 per share, which represents 85% of
the closing price on December 29, 1995, December 29, and December 30, 1994,
respectively.
Under the 1993 and 1997 Purchase Plans, the Company will make available in
each year from January 1, 1994 through December 31, 1997 and January 1, 1998
through December 31, 2001, respectively, up to 200,000 shares of Common Stock.
Such shares will be offered to participating employees in annual or semiannual
offerings. Participating employees will be deemed to have been granted options
to purchase Common Stock in each offering in an amount equal to the amount of
their respective payroll deductions divided by 85% of the market value of the
Common Stock of the Company on the applicable Offering Commencement Date. The
option price shall be the lesser of 85% of the closing price of the Common Stock
on the Offering Commencement Date (or the next preceding trading day) or 85% of
the closing price of Common Stock on the Offering Termination Date (or the next
preceding trading day). Unless a participating employee terminates participation
as provided in the 1993 and 1997 Purchase Plans, such employee shall be deemed
to have exercised such option on the Offering Termination Date and shall be
issued a corresponding number of shares of Common Stock.
The 1993 and 1997 Purchase Plans are administered by the Compensation
Committee of the Board of Directors and will expire on December 31, 1997 and
December 31, 2001, respectively, unless sooner terminated or amended by the
Board of Directors.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 1, 1997, by all persons
known to the Company to own beneficially more than 5% of the Company's Common
Stock.
NAME AND AMOUNT AND
ADDRESS OF NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
- -------------- ----------------- -------------------- --------
Common Stock, Demuth, Folger & Terhune 900,000 (1) 6.5
11
<PAGE>
par value $.01 One Exchange Plaza
per share 55 Broadway
New York, New York 10006
(1) Consists of 900,000 shares of Common Stock underlying a Warrant to
Purchase Common Stock exercisable at an exercise price of $2.00 per share.
The percentage of ownership is calculated based on 13,856,936 shares of
outstanding.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 1, 1997 (a) by each of the
Company's directors, (b) by the Company's Chief Executive Officer and its only
other executive officer whose 1996 compensation exceeded $100,000, and (c) by
all Directors and executive officers as a group.
NAME AND AMOUNT AND
ADDRESS OF NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) OF CLASS (3)
- --------------------------------------------------------------------------------
Common Stock, Edward P. Gistaro 588,663 (4) 4.44%
par value $.01 Allan H. Hobgood 407,586 (5) 3.05%
per share Ralph Brown 273,100 (6) 2.1%
Al R. Ireton 70,000 (7) .54%
Philip J. Romano 230,763 (6) 1.77%
Chauncey E. Schmidt 115,000 (7) .88%
All Directors and
Executive Officers
as a Group (7
persons including
the above) 1,771,224 (8) 12.76%
- --------------------
(1) The address for all persons named is 7461 Callaghan Road, San Antonio,
Texas 78229.
(2) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
except as otherwise indicated.
(3) Unless otherwise indicated below, the percentage of ownership is based
upon 12,956,936 shares of Common Stock outstanding, which includes 633,327
shares of Common Stock into which outstanding shares of Preferred Stock
are convertible and which the holders of the Preferred Stock are entitled
to vote.
(4) Includes 298,334 shares subject to currently exercisable stock options.
The percentage of ownership is based on 13,255,270 shares outstanding.
(5) Includes 288,334 shares subject to currently exercisable stock options.
The percentage of ownership is based on 13,245,270 shares outstanding.
(6) Includes 55,000 shares subject to currently exercisable stock options. The
percentage of ownership is based on 13,011,936 shares outstanding.
(7) Includes 70,000 shares subject to currently exercisable stock options. The
percentage of ownership is based on 13,026,936 shares outstanding.
(8) Includes 919,502 shares subject to currently exercisable stock options.
The percentage of ownership is based on 13,876,438 shares outstanding.
RELATIONSHIP WITH
12
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co., San Antonio, Texas has been engaged by the Board of
Directors of the Company as independent public accountants for the Company and
its subsidiaries for the fiscal year 1996, and it is expected that such firm
will serve in that capacity for the 1997 fiscal year. Management expects that a
representative of Arthur Andersen & Co. will be present at the Annual Meeting to
make a statement if he or she desires to do so and to be available to answer
appropriate questions posed by stockholders.
FINANCIAL STATEMENTS
The Company's audited financial statements for the fiscal year ended
December 31, 1996, and Management's Discussion and Analysis of Financial
Condition and Results of Operations incorporated herein by reference to the
Company's 1996 Annual Report to Stockholders which is being mailed to
stockholders with this Proxy Statement.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any business which will be presented for consideration
at the Annual Meeting other than that specified herein and in the Notice of
Annual Meeting of Stockholders, but if other matters are presented, it is the
intention of the persons designated as proxies to vote in accordance with their
judgment on such matters.
SOLICITATION
The cost of soliciting Proxies in the accompanying form will be borne by
the Company. In addition to the solicitation of Proxies by the use of the mails,
certain officers and associates (who will receive no compensation therefor in
addition to their regular salaries) may be used to solicit Proxies personally
and by telephone and telegraph. In addition, banks, brokers and other
custodians, nominees and fiduciaries will be requested to forward copies of the
Proxy material to their principals and to request authority for the execution of
Proxies. The Company will reimburse such persons for their expenses in so doing.
In addition, the Company has engaged MacKenzie Partners, Inc., New York, New
York to assist in soliciting Proxies for a fee of approximately $3,000 plus
reasonable out of pocket expenses.
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER OF THE COMPANY WHOSE PROXY IS
SOLICITED BY THE FOREGOING PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON ADDRESSED TO RALPH BROWN, SECRETARY, DOCUCON, INCORPORATED, 7461
CALLAGHAN ROAD, SAN ANTONIO, TEXAS 78229. SUCH A REQUEST FROM A BENEFICIAL OWNER
OF THE COMPANY'S COMMON STOCK MUST CONTAIN A GOOD-FAITH REPRESENTATION BY SUCH
PERSON THAT, AS OF MAY 5, 1997, HE WAS A BENEFICIAL OWNER OF THE COMPANY'S
COMMON STOCK.
Please SIGN and RETURN the enclosed Proxy promptly.
By Order of the Board of Directors:
RALPH BROWN
Secretary
April 15, 1997
13
<PAGE>
APPENDIX A
DOCUCON, INCORPORATED
1997 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1
PURPOSE
Section 1.1 PURPOSE. The Docucon, Incorporated 1997 Employee Stock
Purchase Plan (the "Plan") is intended to provide a method whereby employees of
Docucon, Incorporated (hereinafter referred to, unless the context otherwise
requires, as the "Company") and its subsidiary corporations will have an
opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the Common Stock, par value $.01 per share (the "Common
Stock"), of the Company. It is the intention of the Company that the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall
be construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
ARTICLE II
DEFINITIONS
Section 2.1 BASE PAY. "Base Pay" shall mean regular straight-time
earnings, excluding payments for overtime, shift premium, bonuses and other
special payments, commissions and other marketing incentive payments.
Section 2.2 COMMITTEE. "Committee" shall mean the individuals described in
Article XI.
Section 2.3 EMPLOYEE. "Employee" shall mean any person who is customarily
employed on a full-time or part-time basis by the Company and is regularly
scheduled to work more than 30 hours per week.
Section 2.4 SECTION 16 EMPLOYEE. "Section 16 Employee" shall mean any
Employee who is an officer (as such term is defined for purposes of Section 16
of the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder) or a Director of the Company; provided, however, that if
at any time participation in the Plan is open to Employees who, directly or
indirectly, beneficially own more than 10% of any class of the Company's equity
securities, such term shall also be deemed to include such Employees regardless
of their status as officers or Directors of the Company.
<PAGE>
Section 2.5 SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean
any present or future corporation which (I) would be a "subsidiary corporation"
of Docucon, Incorporated as that term is defined in Section 424 of the Code and
(ii) is designated as a participant in the Plan by the Committee.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
Section 3.1 INITIAL ELIGIBILITY. Any Employee who shall be employed by the
Company on the date of his participation in the Plan is to become effective (an
"Eligible Employee") shall be eligible to participate in offerings under the
Plan which commence on or after such 90-day period has concluded.
Section 3.2 LEAVE OF ABSENCE. For purposes of participation in the Plan, a
person on leave of absences shall be deemed to be an Employee for the first 90
days of such leave of absence and such Employee's employment shall be deemed to
have terminated at the close of business on the 90th day of such leave of
absence unless such Employee shall have returned to regular full-time or
part-time employment (as such the case may be) prior to the close of business on
such 90th day. Termination by the Company of any Employee's leave of absence,
other than termination of such leave of absence on return to full-time or
part-time employment, shall terminate an Employee's employment for all purposes
of the Plan and shall terminate such Employee's participation in the Plan and
right to exercise any option.
Section 3.3 RESTRICTIONS OF GRANT OF OPTIONS. Notwithstanding any
provisions of the Plan to the contrary, no Employee shall be granted an option
under the Plan:
(a) if, immediately after the grant of the option, such Employee would
own Common Stock, and/or hold outstanding options to purchase Common
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 Close shall apply in
determining stock ownership of any Employee); or
(b) which permits his rights to purchase Common Stock under all employee
stock purchase plans of the Company of a type described in Section
423 of the Code to accrue at a rate which exceeds $25,000 in fair
market value of the Common Stock (determined at the time such option
is granted) for each calendar year in which such option is
outstanding at any time.
<PAGE>
Section 3.4 COMMENCEMENT OF PARTICIPATION. An Eligible Employee may become
a participant in the Plan by completing an authorization for a payroll deduction
on the form provided by the Company and filing it with the office of the Vice
President, Finance of the Company on or before the date therefor by the
Committee, which date shall be prior to the Offering Commencement Date for the
Offering (as such terms are defined below) (a "Participant"). Payroll deductions
for a Participant shall commence on the applicable Offering Commencement Date
when his authorization foe a payroll deduction becomes effective and shall end
on the Offering Termination Date of the Offering to which such authorization is
applicable unless sooner terminated by the Participant as provided in Article
VII.
ARTICLE IV
OFFERINGS
Section 4.1 ANNUAL OFFERINGS. The Plan will be implemented by four annual
offerings of the Company's Common Stock (the "Offerings") beginning on the 1st
say of January in each of the years 1998, 1999, 2000 and 2001, such offering
terminating on December 31st of the following year, provided, however, that each
annual Offering may, in the discretion of the Committee exercised prior to the
commencement thereof, be divided into two six-month Offerings commencing,
respectively, on January 1 and July 1 of such year and terminating on June 30th
of the following year and December 31st of such year, respectively. The maximum
number of shares issued in the respective years shall be:
(a) From January 1, 1998, to December 31, 1998: 200,000 shares.
(b) From January 1, 1999, to December 31, 1999: 200,000 shares plus
unissued shares from the prior Offerings, whether offered or not.
(c) From January 1, 2000, to December 31, 2000: 200,000 shares plus
unissued shares from prior Offerings, whether offered or not
(d) From January 1, 2001, to December 31, 2001: 200,000 shares plus
unissued shares from the prior Offerings, whether offered or not.
If a six-month Offering is made, the maximum number of shares to be issued
shall be one-half of the number of shares set forth for the annual period in
which the six-month Offering falls, plus, if the Offering is a July 1 to
December 31 Offering, unissued shares, whether offered or not, from the
immediately preceding six-month Offering. As used in the Plan, the term
"Offering Commencement Date" means the January 1 or July 1, as the case may be,
on which the particular Offering begins and "Offering Termination Date" means
the June 30 or December 30, as the case may be, on which the particular Offering
terminates.
ARTICLE V
PAYROLL DEDUCTIONS
<PAGE>
Section 5.1 AMOUNT OF DEDUCTION. At the time a Participant files his
authorization for payroll deduction, he shall elect to have deductions made from
his Base Pay for each pay period during the time he is a Participant in an
Offering at the rate of 1,2,3,4,5,6,7,8,9,10,11,12,13,14 or 15% of his Base Pay
in effect at the Offering Commencement Date of such Offering. In the case of a
part-time hourly Employee, such Employee's Base pay during an Offering shall be
determined by multiplying such Employee's hourly rate of pay in effect in the
Offering Commencement Date by the number of regularly scheduled hours of work
for such Employee during such Offering.
Section 5.2 PARTICIPANT'S ACCOUNT. All payroll deductions made by the
Company for a Participant shall be credited to such Participant's account under
the Plan. A Participant may not make any separate cash payment into such
account, except when on leave of absence, and then only as provided in Section
5.4 hereof.
Section 5.3 CHANGE IN PAYROLL DEDUCTION. A Participant may discontinue his
participation in the Plan as provided in Article VII, but no other change can be
made by a Participant during an Offering. Without limiting the generality of the
foregoing, a Participant may not alter the rate of his payroll deductions for
that Offering.
Section 5.4 LEAVE OF ABSENCE. If a Participant goes on a leave of absence,
such Participant may elect to (a) withdraw the balance in his or her account
pursuant to Section 7.2 hereof, (b) discontinue contributions to the Plan but
remain a Participant in the Plan, or (c) remain a Participant in the Plan during
such leave of absence, authorizing deductions to be made from payments by the
Company to the Participant during such
leave of absence and undertaking to make cash payments to the Plan at the end of
each payroll period to the extent that amounts payable by the Company to such
Participant are insufficient to meet such Participant's authorized payroll
deductions.
ARTICLE VI
GRANTING OF OPTION
Section 6.1 NUMBER OF OPTION SHARES. On the Offering Commencement Date of
each Offering, a Participant shall be deemed to have been granted an option to
purchase a maximum number of shares of the Common Stock of the Company equal to
an amount determined as follows: an amount equal to the product of (I) that
percentage of the Employee's Base Pay which he has authorized deduction of (but
not in any case in excess of 15% of Base Pay) multiplied by (ii) the Employee's
Base Pay during the period of the Offering, divided by (iii) 85% of the market
value of the Common Stock of the Company on the applicable Offering Commencement
Date. The market value of the Company's Common Stock shall be determined as
provided in Section 6.2(a) and (b) hereof. An Employee's Base Pay during the
period of an Offering shall be determined by multiplying, in the case of a
one-year Offering, his normal weekly rate of pay (as in effect on the last day
prior to the Offering Commencement Date of such
<PAGE>
Offering) by 52 or his normal hourly rate by 2,080 or, in the case of a
six-month Offering, by 26 or 1040, as the case may be, provided that, in the
case of a part-time hourly Employee, the Employee's Base Pay during the period
of an Offering shall be determined by multiplying such Employee's hourly rate by
the number of regularly scheduled hours of work for such Employee during such
Offering.
Section 6.2 OPTION PRICE. The option price of Common Stock purchased with
authorized payroll deductions during such annual Offering for a Participant
shall be the lesser of:
(a) 85% of the closing price of the Common Stock on the Offering
Commencement Date or the nearest prior business day on which trading
occurred on the Market, as defined herein below; or
(b) 85% of the closing price of the Common Stock on the Offering
Termination Date or the nearest prior business day on which trading
occurred on the Market, as defined herein below.
For purposes of this Section 6.2, "Market" shall mean, if the shares of Common
Stock are traded on the New York Stock Exchange or American Stock Exchange, such
exchanges, or, if the shares if Common Stock are not traded on such exchanges,
the over-the-counter market (or if the Common Stock shall be quoted by the
National Association of Securities Dealers Automated Quotation System, them the
NASDAQ System), or if the shares of Common Stock are not traded in the
over-the-counter market, then, for purposes of Section 602(a) and (b), the
closing price of the Common Stock shall be such fair market value as determined
by the Board of Directors of the Company (which determination shall be
conclusive and binding for all purposes).
ARTICLE VII
EXERCISE OF OPTION
Section 7.1 AUTOMATIC EXERCISE. Unless a Participant gives written notice
to the Company as hereinafter provided, his option for the purchase of Common
Stock with authorized payroll deductions during any Offering will be deemed to
have been exercised automatically on the Offering Termination Date applicable to
such Offering , for the purchase of the number of full shares off Common Stock
which the accumulated authorized payroll deductions in his account at such time
will purchase at the applicable option price (but not in excess of the number of
shares for which options have been granted to the Participant pursuant to
Section 6.1 hereof), and any excess in his account at such time will be returned
to him.
Section 7.2 WITHDRAWAL OF ACCOUNT. By written notice to the Vice
President, Finance of the Company, at any time prior to the Offering Termination
Date
<PAGE>
applicable to any Offering, a Participant may elect to withdraw the balance of
the accumulated authorized payroll deductions in his account at such time.
Section 7.3 FRACTIONAL SHARES. Fractional shares will not be issued under
the Plan and any accumulated authorized payroll deductions which would have been
used to purchase fractional shares will be returned to the Participant promptly
following the termination of an Offering, without interest.
Section 7.4 EXERCISE AND TRANSFERABILITY OF OPTION. During a Participant's
lifetime, options held by such Participant shall be exercisable only by that
Participant and subject to Sections 12.1 and 12.2 hereof, shall not be
transferable.
Section 7.5 DELIVERY OF COMMON STOCK. As promptly as practicable after the
Offering Termination Date of each Offering, the Company will deliver to each
Participant, as appropriate, the Common Stock purchased upon exercise of his
option.
ARTICLE VIII
WITHDRAWAL
Section 8.1 IN GENERAL. As indicated in Section 7.2 hereof, a Participant
may withdraw authorized payroll deductions credited too his account under the
Plan at any time by giving written notice to the Vice President, Finance of the
Company. All of the Participant's authorized payroll deductions credited to his
account will be paid to him promptly after receipt of his notice of withdrawal,
and no further payroll deductions will be made from his Base Pay during such
offering. The Company may, at its option, treat any attempt to borrow by a
participant on the security of his accumulated authorized payroll deductions as
an election, under Section 7.2 hereof, to withdraw such deductions.
Section 8.2 EFFECT ON SUBSEQUENT PARTICIPATION. A Participant's withdrawal
from any offering will not have any effect upon his eligibility to participate
in any succeeding Offering or in any similar plan which may hereafter be adopted
by the Company.
Section 8.3 TERMINATION OF EMPLOYMENT. Upon termination of the
Participant's employment for any reason, including retirement (but excluding
death while in the employ of the Company or continuation of a leave of absence
for a period exceeding 90 days), the authorized payroll deductions credited to
his account will be returned to him, or, in the case of his subsequent to the
termination of his employment, to the person or persons designated on accordance
with Section 12.1 hereof.
Section 8.4 TERMINATION OFF EMPLOYMENT DUE TO DEATH. Upon termination of
employment because of a participant's death, his beneficiary (as defined in
<PAGE>
Section 12.1 hereof) shall have the right to elect, by written notice given to
the Vice President, Finance of the Company prior to the earlier of the Offering
Termination Date or the expiration of a period of 60 days commencing with the
date of the death of the Participant, either:
(a) to withdraw all of the authorized payroll deductions credited to the
Participant's account under the Plan, or
(b) to exercise the Option for the purchase of Common Stock on the
Offering Termination Date following the date of the Participant's
death for the purchase of the number of full shares of Common Stock
which the accumulated authorized deductions in the Participant's
account at the date of the Participant's death will purchase at the
applicable option price, and any excess in such account will be
remitted to said beneficiary, without interest.
In the event that no such written notice of election shall be duly received by
the office of the Vice President, Finance of the Company, the beneficiary shall
automatically be deemed to have elected, pursuant to paragraph (a) above, to
withdraw all of the Participant's account balance.
Section 8.5 LEAVE OF ABSENCE. A Participant on leave of absence shall,
subject to the election made by such Participant pursuant to Section 5.4 hereof,
continue to be a Participant in the Plan so long as such Participant is on
continuous leave of absence. A participant who has been on leave of absence for
more than 90 days and who therefore is not an Employee for the purpose of the
Plan shall not be entitled to participate in any Offering commencing after the
90th day of such leave of absence. Not withstanding any other provisions of the
Plan, unless a Participant on leave of absence returns to regular full time or
part time employment with the Company at the earlier of: (a) the termination of
such leave or absence of (b) three months following the 90th day of such leave
of absence, such Participant's participation in the Plan shall terminate on
whichever of such dates first occurs.
ARTICLE IX
SPECIAL PROVISIONS APPLICABLE
TO SECTION 16 EMPLOYEES
Section 9.1 WAIVER OF RIGHT FROM PARTICIPATION DURING ANY OFFERING PERIOD.
Notwithstanding any contrary provision contained in this Plan, a Participant who
is a Section 16 Employee shall be subject to the restrictions on withdrawal from
participation in the Plan and disposition of shares of Common Stock obtained
through exercise of options granted under the Plan set forth in Sections 9.2 and
9.3 hereof unless such Participant shall, not later than six months prior to any
Offering Termination Date deliver to the Committee a waiver, of such
Participant's rights under Sections 7.2 and 8.1
<PAGE>
to withdraw from participation in the Offering which concludes on such Offering
Termination Date. The Committee, in its discretion, may prescribe forms on which
such waivers must be made.
Section 9.2 EFFECT OF WITHDRAWAL FROM PARTICIPATION BY A SECTION 16
EMPLOYEE. Ant Participant who is a Section 16 Employee who makes a withdrawal
from his account as provided in Section 7.2 and 8.5 or otherwise ceases to
participate in the Plan may not resume participation in the Plan until the
expiration of six months from the date of such withdrawal or cessation.
Section 9.3 HOLDING PERIOD FOR STOCK ACQUIRED ON EXERCISE OF OPTION. Any
Participant who is a Section 16 Employee and who, to any Offering, has not
delivered to the Committee the waiver contemplated by Section 9.1 hereof not
later than six months prior to the Offering Termination Date, may not sell or
otherwise transfer or dispose of shares of Common Stock acquired upon exercise
of the option granted to him during such Offering until at least the earlier of
(a) six months after the Offering Termination Date or (b) six months after the
date on which such a waiver is delivered to the Committee with respect to such
Offering, except as otherwise permitted under Rule 16b-3(d)(2)(I) promulgated
under the Securities Exchange Act of 1934, as such regulation may be amended
from time to time, or any successor regulation thereto.
ARTICLE X
INTEREST
Section 10.1 PAYMENT OF INTEREST. No interest will be paid or allowed on
any authorized payroll deductions paid into the Plan or credited to the account
of any Participant Employee.
ARTICLE XI
STOCK
Section 11.1 MAXIMUM SHARES. The maximum number of shares which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 12.4 hereof shall be 200,000 shares in each
annual Offering (100,000 shares in each six-month Offering), plus in each
Offering all unissued shares from prior Offerings, whether offered or not, not
to exceed 800,000 shares for all Offerings. If the total number of shares for
which options are exercised on any Offering Termination Date in accordance with
Article VI exceeds the maximum number of shares for the applicable Offering, the
Company shall make a pro rata allocation of the shares available for delivery
and distribution in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of authorized payroll
deductions credited to the account of each Participant under the Plan shall be
disbursed to him as promptly as possible.
<PAGE>
Section 11.2 PARTICIPANT'S INTEREST IN COMMON STOCK UNDERLYING OPTION. The
Participant will have no interest in Common Stock covered until such option has
been exercised.
Section 11.3 REGISTRATION OF COMMON STOCK. Common Stock to be delivered to
a Participant under the Plan will be registered in the name of the Participant,
or, if the Participant so directs by written notice to the Vice President,
Finance of the Company prior to the Offering Termination Date applicable
thereto, in the names of the names if the Participant and one such other person
as may be designated by the Participant, as joint tenants with rights of
survivorship or as tenants by the entireties, to the extent permitted by
applicable law.
Section 11.4 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall have
been duly listed, upon official notice of issuance, upon a stock exchange, and
that either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the Participant shall have represented at the time of purchase in
form and substance satisfactory to the Company, that is his
intention to purchase the shares for investment and not for resale
or distribution.
ARTICLE XII
ADMINISTRATION
Section 12.1 APPOINTMENT OF COMMITTEE. The Compensation Committee of the
Board of Directors (the "Committee") shall administer the Plan. No member of the
Committee shall be eligible to purchase Common Stock under the Plan.
Section 12.2 AUTHORITY OF COMMITTEE. Subject to the express provisions of
the Plan, the Committee shall have plenary authority in its discretion to
interpret and construe any and all provisions off the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.
Section 12.3 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. All
determinations of the Committee shall be made by a majority of it members. The
Committee may correct any defect or omission or reconcile any inconsistency in
the Plan, in manner and to the extent it shall deem desirable. Any decision or
determination reduced to writing and signed by a majority of the members of the
Committee shall be as
<PAGE>
fully effective as if it had been made by a majority vote at a meeting duly
called and held. The Committee may appoint a secretary and shall make such rules
and regulations for the conduct of its business as it shall deem advisable.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 DESIGNATION OF BENEFICIARY. A Participant may file a written
designation of a beneficiary who is to receive any Common Stock and/or cash
under the Plan with the Vice President, Finance of the Company. Such designation
of beneficiary may be changed by the Participant at any time by written notice
to the Vice President, Finance of the Company. Upon the death of a Participant
and upon receipt by the Company of proof of identity and existence at the
Participant's death of a beneficiary validly designated by him under the Plan,
the Company shall deliver such Common Stock and/or cash to such beneficiary
pursuant to the terms of the Plan. In the event of the death of a Participant
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such Participant's death, the Company shall deliver such
Common Stock and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
Common Stock and/or cash to the spouse or to any one or more dependents of the
Participant as the Company may designate. No beneficiary shall, prior to the
death of the Participant by whom he has been designated, acquire any interest in
the Common Stock or cash credited to the Participant or his account under the
Plan.
Section 13.2 TRANSFERABILITY. Neither authorized payroll deductions
credited to a Participant's account nor any rights with regard to the exercise
of an option or to receive Common 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. Any such attempted
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 7.2 hereof.
Section 13.3 USE OF FUNDS. All authorized payroll deductions withheld by
the Company under this Plan may be used by the Company for any corporate purpose
and the Company shall not be obligated to segregate such authorized payroll
deductions.
Section 13.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding, the outstanding shares of
Common Stock of the Company have increased, changes to, or have been
exchanged for a different number or kind of shares or securities of
the Company through
<PAGE>
reorganization, merger, recapitalization, reclassification, stock
split, reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the number
and/or kind of shares which are subject to purchase under
outstanding options and on the option exercise price or prices
applicable to such outstanding options. In addition, in any such
event, the number and/or kind of shares which may be offered in the
Offerings described in Article IV hereof shall also be
proportionately adjusted. No adjustments shall be made for stock
dividends. For the purpose of this paragraph, any distribution of
shares to stockholders in an amount aggregating 20% or more of the
outstanding shares shall be deemed a stock split and any
distributions of shares aggregating less than 20% of the outstanding
shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company is not the
surviving corporation, or upon sale of substantially all of the
property or capital stock of the Company to another corporation, the
holder of each option then outstanding under the Plan will
thereafter be entitled to receive at the next Offering Termination
Date upon the exercise of such option for each share as to which
such option shall be exercised, as nearly as reasonably may be
determined, the cash, securities and/or property which a holder of
one share of the Common Stock was entitled to receive upon and at
the time of such transaction. The Board of Directors shall take such
steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.4 shall
thereafter be applicable, as nearly as reasonably may be determined,
in relation to the said cash, securities and/or property as to which
such holder of such option might thereafter be entitled to receive.
Section 13.5 AMENDMENT AND TERMINATION. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the stockholders
of the Corporation (I) increase the maximum number of shares which may be issued
under any Offering (except pursuant to Section 12.4 hereof), or (ii) amend the
requirements as to the class of Employees eligible to purchase Common Stock
under the Plan or permit the members of the Committee to purchase Common Stock
under the Plan. No termination, modification, or amendment of the Plan may,
without the consent of an Employee then having an option under the Plan to
purchase Common Stock, adversely effect the rights of such Employee under such
option.
Section 13.6 EFFECTIVE DATE. The Plan shall become effective as of October
1,1997, subject to approval by the holders of the majority of the Common Stock
present and represented at a special or annual meeting of the shareholders held
on or before December 31, 1997. If the Plan is not so approved, the Plan shall
not become effective and all transactions under the Plan prior to such
stockholder vote, if any, shall be deemed to be null and void.
<PAGE>
Section 13.7 NO EMPLOYMENT RIGHTS. The Plan does not, directly or
indirectly, create any right for the benefit of any Employee or class of
Employee or class of Employees to purchase any shares under the Plan, or create
in any Employee or class of Employees 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
employment at any time.
Section 13.8 EFFECT OF PLAN. The provisions of the Plan shall, in
accordance with its term, be binding upon, and inure to the benefit of, all
successors of each Employee participating in the Plan, including, without
limitation, such Employee's estate and the executors, administrators or trustees
thereof, heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such Employee.
Section 13.9 GOVERNING LAW. The law of the State of Delaware will govern
all matters relating to this Plan except to the extent it is superseded by the
laws of the United States.
<PAGE>
DOCUCON, INCORPORATED
PROXY
ANNUAL MEETING OF STOCKHOLDERS-MAY 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints EDWARD P. GISTARO and ALLAN H. HOBGOOD or
___________________________, and each of them, with several powers of
substitution, proxies to vote the shares of Common Stock, par value $.01 per
share of Docucon, Incorporated which the undersigned could vote if personally
present at the Annual Meeting of Stockholders of Docucon, Incorporated to be
held at the Company's headquarters at 7461 Callaghan Road, San Antonio, Texas
78229, on Friday, June 25, 1997, at 12:00 Noon, C.D.T., and any adjournment
thereof:
1. Election of Directors:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
INSTRUCTION: To withhold authority for any individual nominee, mark a line
through the nominee's name in the list below.
Edward P. Gistaro Allan H. Hobgood Chauncey E. Schmidt
Ralph Brown Al R. Ireton
2. To approve the 1997 Employee Stock Purchase Plan of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To amend the 1988 Stock Option Plan of the Company to increase the number of
shares reserved for issuance thereunder by 700,000 shares to 2,160,000 share
of Common Stock, par value $.01 per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To amend the 1988 Stock Option Plan of the Company to extend the termination
date of the 1988 Stock Option Plan of the Company to December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To amend the 1991 Directors Stock Option Plan of the Company to increase the
number of shares reserved for issuance by 150,000 shares to 650,000 shares of
Common Stock, par value $.01 per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, to act upon any matters incidental to the foregoing and
such other business as may properly come before the Annual Meeting, or any
adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR Items 1, 2, 3, 4 and 5 above. Any stockholder who wishes to withhold
the discretionary authority referred to in Item 6 above should mark a line
through the entire Item.
Dated ________________, 1997 Signatures(s) _______________________
----------------------------------
(Please sign exactly and as fully as your name
appears on your stock certificate. If shares are
held jointly, each stockholder should sign.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY, USING THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED.
