<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 under Rule 14a-12
Data Research Associates, Inc.
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(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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
--------------------------------------------------------------------------------
(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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[DRA LOGO]
DATA RESEARCH ASSOCIATES, INC.
January 5, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders of Data Research Associates, Inc. to be held at The Ritz-Carlton
Hotel, 100 Carondelet Plaza, St. Louis, Missouri, on Wednesday, February 14,
2001, at 4:00 p.m. CST.
Details of the business to be conducted at the Annual Meeting are given
in the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend, please complete, sign, date and
return the enclosed proxy card in the envelope provided at your earliest
convenience. If you choose to attend the meeting, you may, of course, revoke
your proxy and personally cast your vote.
We look forward to seeing you at the Annual Meeting.
/s/ Michael J. Mellinger
Michael J. Mellinger
President and Chief Executive Officer
<PAGE> 3
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<PAGE> 4
DATA RESEARCH ASSOCIATES, INC.
1276 North Warson Road
St. Louis, Missouri 63132
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
St. Louis, Missouri
January 5, 2001
The Annual Meeting of Shareholders of Data Research Associates, Inc.,
will be held on Wednesday, February 14, 2001, at 4:00 p.m. CST at The
Ritz-Carlton Hotel, 100 Carondelet Plaza, St. Louis, Missouri 63105, for the
purposes of:
1. Electing two Class A directors to serve for three years;
2. Considering and voting upon a proposal to approve the
Company's 2001 Stock Option Plan; and
3. Transacting such other business as may properly come before
the meeting.
Shareholders of record at the close of business on December 15, 2000,
will be entitled to vote at said meeting. A list of all shareholders entitled to
vote at the Annual Meeting, arranged in alphabetical order and showing the
address of and number of shares held by each shareholder, will be open at the
principal office of Data Research Associates, Inc. at 1276 North Warson Road,
St. Louis, Missouri 63132, during usual business hours, to the examination of
any shareholder for any purpose germane to the Annual Meeting for 10 days prior
to the date thereof.
A copy of the Annual Report for fiscal 2000 accompanies this notice.
By Order of the Board of Directors
POLLY C. MELLINGER
Secretary
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY. A RETURN ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 5
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<PAGE> 6
DATA RESEARCH ASSOCIATES, INC.
1276 North Warson Road
St. Louis, Missouri 63132
PROXY STATEMENT
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Data
Research Associates, Inc. (the "Company"), for use at the Annual Meeting of the
Company's shareholders to be held at The Ritz-Carlton Hotel, 100 Carondelet
Plaza, St. Louis, Missouri 63105, on Wednesday, February 14, 2001, at 4:00 p.m.
CST and at any adjournments thereof. Whether or not you expect to attend the
meeting in person, please return your executed proxy in the enclosed envelope
and the shares represented thereby will be voted in accordance with your wishes.
The first mailing of proxies to shareholders will occur on or about January 5,
2001.
REVOCABILITY OF PROXY
If, after sending in your proxy, you decide to vote in person or desire
to revoke your proxy for any other reason, you may do so by notifying the
Secretary of the Company in writing of such revocation at any time prior to the
voting of the proxy.
RECORD DATE
Shareholders of record at the close of business on December 15, 2000,
will be entitled to vote at the Annual Meeting.
ACTION TO BE TAKEN UNDER PROXY
Unless otherwise directed by the giver of the proxy, the persons named
in the enclosed form of proxy, to-wit, Michael J. Mellinger and Katharine W.
Biggs, or the one of them who acts, will vote:
(1) FOR the election of the nominated directors: Michael J. Mellinger
and F. Gilbert Bickel III, named herein as nominees for Class A directors of the
Company to hold office until the annual meeting of the Company's shareholders in
2004 and until their successors have been duly elected and qualified;
(2) FOR approval of the Company's 2001 Stock Option Plan; and
(3) according to the proxy's judgment on the transaction of such other
business as may properly come before the meeting or any adjournments thereof.
<PAGE> 7
Should the nominees named herein for election as directors become
unavailable for any reason, it is intended that the persons named in the proxy
will vote for the election of such other persons in their stead as may be
designated by the Board of Directors. The Board of Directors is not aware of any
reason that might cause the nominees to be unavailable.
VOTING SECURITIES, VOTING RIGHTS
AND PRINCIPAL SECURITY HOLDERS
On December 15, 2000, there were 4,676,390 shares of Common Stock, of
the par value of $.01 per share ("Common Stock"), outstanding, which constitute
all of the outstanding shares of the Company. Each share is entitled to one vote
on all matters to come before the Annual Meeting, including the election of a
director.
A majority of the outstanding shares entitled to vote, represented in
person or by proxy, will constitute a quorum at the meeting. The affirmative
vote of a majority of the shares represented at the Annual Meeting and entitled
to vote on the subject matter is required to elect a director, to approve the
2001 Stock Option Plan and to act on any other matter properly brought before
the Annual Meeting. Shares represented by proxies that are marked "withhold
authority" with respect to the election of a person to serve on the Board of
Directors are deemed to be represented at the meeting as to such matter and will
be considered in determining whether the requisite number of affirmative votes
are cast on such matter. Accordingly, such proxies will have the same effect as
a vote against the nominee as to whom such direction applies. With regard to any
other matters, abstentions (including proxies that deny discretionary authority
on any matters properly brought before the meeting) will be counted as shares
present and entitled to vote and will have the same effect as a vote against any
such other matters. Shares held in "street name" by brokers but not voted by
such brokers, for any reason, on a particular matter (so-called "broker
non-votes") will not be deemed present or represented at the Annual Meeting for
purpose of such matter and, therefore, will have no effect even if such shares
have been properly voted by the broker, in person or by proxy, on one or more
other matters brought before the Annual Meeting.
As of December 15, 2000, the following persons were known to the
Company who may, individually or as a group, be deemed to be the beneficial
owners, respectively, of more than 5% of the Common Stock, each of which persons
has sole voting and investment power over such Common Stock, except as set forth
in the footnotes hereto:
-2-
<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF CLASS
---------------- ----------------------- --------
<S> <C> <C>
Michael J. Mellinger, 1,866,947(1) 39.9%
Chairman of the
Board, President and
Chief Executive Officer
of the Company
1276 North Warson Road
St. Louis, Missouri 63132
F. Gilbert Bickel III, 761,450(2) 16.3%
a Director
1630 S. Lindbergh Blvd.
St. Louis, Missouri 63131
Schwartz Investment Counsel, Inc. 272,400(3) 5.8%
3707 West Maple Road
Bloomfield Hills, Michigan 48301
</TABLE>
----------
(1) Includes 36,150 shares held by Polly C. Mellinger, wife of Mr.
Mellinger, and 4,000 shares held by his children, as to which shares
Mr. Mellinger disclaims beneficial ownership, and currently exercisable
options to acquire 9,000 shares of Common Stock.
(2) Includes 75,000 shares held by Martha Bickel, wife of Mr. Bickel, and
8,000 shares held by his children, as to which shares Mr. Bickel
disclaims beneficial ownership, and currently exercisable options to
acquire 9,000 shares of Common Stock.
(3) Information derived from Schwartz Investment Counsel, Inc.
-3-
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
On December 15, 2000, the following represented beneficial ownership of
Common Stock by the nominees for election as directors, each of the other
current directors of the Company, each of the executive officers named in the
Summary Compensation Table (see "Executive Compensation" below) and all current
directors and executive officers of the Company as a group (each director and
officer having sole voting and investment power over the shares listed opposite
his or her name except as set forth in the footnotes hereto):
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------------ ----------------------- --------
<S> <C> <C>
F. Gilbert Bickel III 761,450(1) 16.3%
Carole Cotton 18,300(2) *
Donald P. Gallop 21,879(3) *
Marilyn Gell Mason 5,500(4) *
Michael J. Mellinger 1,866,947(5) 39.9%
Howard L. Wood 21,879(2) *
Katharine W. Biggs 28,281(6) *
All Current Directors
and Executive Officers as a
Group (11 individuals) 2,740,697(7) 58.6%
</TABLE>
----------
* Represents less than 1% of the class.
(1) See Note (2) to the table under "Voting Securities, Voting Rights and
Principal Security Holders."
(2) Includes currently exercisable options to acquire 9,000 shares of
Common Stock.
-4-
<PAGE> 10
(3) Includes 9,000 shares held in the name of Gallop, Johnson & Neuman,
L.C., the law firm of which Mr. Gallop is Chairman, and currently
exercisable options to acquire 9,000 shares of Common Stock.
(4) Includes 500 shares held by Robert M. Mason, husband of Ms. Mason, and
currently exercisable options to acquire 3,000 shares of Common Stock
(5) See Note (4) to the table under "Voting Securities, Voting Rights and
Principal Security Holders."
(6) Includes currently exercisable options to acquire 12,000 shares of
Common Stock.
(7) Includes currently exercisable options to acquire 75,750 shares of
Common Stock.
-5-
<PAGE> 11
PROPOSAL 1 - ELECTION OF TWO CLASS A DIRECTORS
INFORMATION ABOUT THE NOMINEES AND DIRECTORS
CONTINUING IN OFFICE
The Company's Amended and Restated By-laws currently provide for three
classes of directors, each class serving for a three-year term expiring one year
after expiration of the term of the preceding class, so that the term of one
class will expire each year. The terms of the current Class B and Class C
directors expire in 2002 and 2003, respectively. The Board of Directors has
nominated F. Gilbert Bickel III and Michael J. Mellinger, who are the current
Class A directors, for a term expiring at the annual shareholders meeting in
2004. The following table lists the principal occupation for at least the last
five years of each of the nominees and the present directors continuing in
office, his or her present positions and offices with the Company, the year in
which he or she first was elected or appointed a director (each serving
continuously since first elected or appointed), his or her age and his or her
directorships in any company with a class of securities registered pursuant to
Sections 12 or 15(d) of the Securities Exchange Act of 1934 or in any company
registered as an investment company under the Investment Company Act of 1940.
<TABLE>
<CAPTION>
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
<S> <C> <C> <C>
CLASS A NOMINEES--
F. Gilbert Bickel III 56 Vice President since April 1988 of Merrill 1979
Lynch, Pierce, Fenner & Smith, Incorporated,
a full-service brokerage firm. Director of
Summit Marketing Group, Inc.
Michael J. Mellinger 51 Chairman of the Board since April 1992 1975
and President and Chief Executive Officer
of the Company since 1975; Treasurer of
the Company from April 1992 to February 1995.
</TABLE>
-6-
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
CLASS B DIRECTORS--
Carole Cotton 54 President, since November 1990, of CCA 1992
Consulting, Inc., a management consulting
and research firm which focuses exclusively
on the information technology market in
education. Such firm also publishes annual
syndicated studies and produces national
conferences on both the K-12 and higher
education markets. Ms. Cotton also provided
consulting services to the Company with such
firm's predecessors since 1986.
Donald P. Gallop(1) 68 Attorney-at-law and Chairman of the law 1992
firm of Gallop, Johnson & Neuman, L.C. for
more than the last five years; Director of Falcon
Products, Inc.
CLASS C DIRECTORS--
Marilyn Gell Mason 56 Consultant to libraries and providers of library 1999
systems since April 1999. Director of the
Cleveland Public Library 1986 to April 1999.
Howard L. Wood 61 Consultant to Charter Communications, Inc. of 1992
which he was formerly Vice-Chairman from
1993 to November 1999. Co-founder and
Director of Charter Communications, Inc.
Director of Gaylord Entertainment Corporation.
</TABLE>
--------------
(1) See "Compensation Committee Interlocks and Insider Participation" for
further information.
-7-
<PAGE> 13
INFORMATION CONCERNING BOARD OF DIRECTORS
During fiscal 2000, four meetings and two telephonic meetings of the
Board of Directors were held. During such fiscal year, each director attended
75% or more of the aggregate of (i) the total number of meetings of the Board of
Directors held during the period for which he or she has been a director and
(ii) the total number of meetings held by all committees of the Board of
Directors on which he or she served during the period for which he or she
served.
The Board of Directors of the Company has a standing Audit Committee
consisting of Mesdames Cotton and Mason and Messrs. Bickel, Gallop and Wood. The
Audit Committee reviews the results and scope of the audit and services provided
by the Company's independent public accountants. The Audit Committee also
reviews the Company's procedures with respect to maintaining books and records,
the adequacy and implementation of internal auditing, accounting and financial
controls, and the policies concerning financial reporting and business
practices. The Board of Directors has determined that the members of the Audit
Committee are independent. The Audit Committee has adopted a written charter.
The charter is included as Exhibit A to this proxy statement. During fiscal
2000, three Audit Committee meetings were held.
The Board of Directors of the Company also has a standing Compensation
Committee consisting of Mesdames Cotton and Mason and Mr. Gallop. The purpose of
the Compensation Committee is to act on behalf of the Board of Directors with
respect to the compensation of directors and executive officers. The
Compensation Committee also administers the Company's stock option and other
benefit plans. During fiscal 2000, one Compensation Committee meeting was held.
The Company has no standing nominating committee or other committee
performing a similar function.
DIRECTOR FEES
The Company pays an annual fee of $12,000 to directors who are not
employees of the Company. In addition, the Company pays non-employee directors
$1,000 for each Board of Directors meeting attended in person, $500 for each
telephonic Board meeting attended and $500 for each committee meeting attended.
The Company also reimburses directors for out-of-pocket expenses incurred in
connection with their attendance at Board and committee meetings. Directors'
fees of $92,500 were paid during fiscal 2000. Additionally, directors
participate in the Company's Director Stock Option Plan. Historically, such
directors have each received annually options to acquire 3,000 shares of the
Company's common stock, exercisable in accordance with the terms of the
Company's Director Stock Option Plan.
-8-
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Donald P. Gallop, a director of the Company, is Chairman of the law
firm of Gallop, Johnson & Neuman, L.C. which provided legal services to the
Company during the fiscal year ended September 30, 2000, and is expected to
provide legal services to the Company in the future.
EXECUTIVE COMPENSATION
The following information is given for the fiscal years ended September
30, 2000, 1999 and 1998, concerning annual and long-term compensation for
services rendered to the Company and its subsidiaries by the Company's Chief
Executive Officer and up to the four most highly compensated executive officers
of the Company whose total salary and bonuses exceeded $100,000 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS
------------------------------------------ ---------------
OTHER ANNUAL SECURITIES ALL OTHER
BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($)(1) ($)(2) OPTIONS/SARS(#) ($)(2)(3)
--------------------------- ---- ---------- ------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
MICHAEL J. MELLINGER 2000 422,900 -0- 3,000 2,000
CHAIRMAN OF THE BOARD, 1999 413,000 -0- 3,000 2,000
PRESIDENT, AND CHIEF 1998 408,000 -0- 3,000 1,500
EXECUTIVE OFFICER
KATHARINE W. BIGGS 2000 151,200 -0- 10,000 2,540
VICE PRESIDENT, 1999 139,013 -0- 10,000 2,540
CHIEF FINANCIAL 1998 122,440 -0- 10,000 2,040
OFFICER AND TREASURER
</TABLE>
(1) Executive officers of the Company, other than Mr. Mellinger, are
entitled to receive bonuses annually at the discretion of the Board of
Directors of the Company. Amounts are earned and accrued during the
fiscal years indicated, and are paid subsequent to the end of each
fiscal year. See "Employment Agreement" below regarding Mr. Mellinger's
employment agreement with respect to his future bonuses, if any.
(2) The named executive officers received certain perquisites during fiscal
2000, none of which in the aggregate exceeded the lesser of $50,000 or
10% of such officer's total salary and bonus for such fiscal year.
(3) Fiscal 2000 compensation includes matching Company contributions to the
Company's 401(k) Profit Sharing Plan of $2,000 each for Mr. Mellinger
and Ms. Biggs and matching Company contributions to the Company's Stock
Purchase Plan of $540 for Ms. Biggs.
-9-
<PAGE> 15
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(4)
------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 0% 5% 10%
NAME # FISCAL YEAR ($/SH) (3) DATE ($) ($) ($)
---- ---------- ------------ ----------- ---------- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Mellinger 3,000(1) 4.0% 8.50 11/11/03 -0- 5,495 11,835
Katharine W. Biggs 10,000(2) 14.0% 8.50 01/01/05 -0- 18,533 39,449
</TABLE>
------------------------------------
(1) The option listed was granted on November 11, 1999, to Mr. Mellinger in
his capacity as director of the Company under the Company's Director
Stock Option Plan and became fully exercisable six months after the
date of grant.
(2) The option listed was granted on November 11, 1999, to each vice
president under the Company's 1992 Stock Option Plan and becomes
exercisable the next January 1 after the second anniversary of the
grant.
(3) Exercise or base price is equal to the closing sales price as reported
on the Nasdaq Stock Market (NASDAQ National Market System) on the date
of grant.
(4) The dollar amounts under these columns result from calculations at 0%
and at the 5% and 10% rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of the price of the Company's Common Stock.
-10-
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Michael J. Mellinger -0- -0- 9,000/0 0/0
Katharine W. Biggs -0- -0- 12,000/20,000 0/0
</TABLE>
EMPLOYMENT AGREEMENT
The Company is a party to an employment agreement with Mr. Mellinger,
which agreement expires September 30, 2002 (the "Employment Agreement"), with an
automatic five-year renewal, unless terminated by Mr. Mellinger or the Company
upon the occurrence of certain events. Pursuant to the Employment Agreement, Mr.
Mellinger has agreed to serve as the President and Chief Executive Officer of
the Company in exchange for annual base compensation of $400,000 (the "Base
Compensation"), as may be increased each fiscal year by the Board of Directors
and payable no less frequently than monthly. For fiscal 1997 and thereafter, Mr.
Mellinger's bonus, if any, shall be determined in accordance with the terms of a
formula (the "Bonus Formula") to be determined for each fiscal year by the
Compensation Committee. For the fiscal year ended September 30, 2000, the bonus
was to be in the amount of 7.5% of the increase in the Company's income before
income taxes and bonuses for such fiscal year compared to the prior fiscal year,
determined by the Company's independent auditors in accordance with generally
accepted accounting principles, consistently applied, and payable within ninety
(90) days of the end of such fiscal year. The Employment Agreement provides that
Mr. Mellinger is entitled to an additional bonus of (i) 150% of the Base
Compensation in the event Mr. Mellinger's employment with the Company is
terminated for reasons other than for cause, permanent disability or death or
there occurs a significant reduction in the position, duties or responsibilities
of Mr. Mellinger (collectively, "Termination") within one year following a
"Change in Control" (as defined in the Employment Agreement), (ii) 100% of Base
Compensation if Termination occurs within the second year following a Change in
Control, and (iii) 50% of Base Compensation if Termination occurs within the
third year following a Change in Control.
-11-
<PAGE> 17
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three outside directors and is responsible for developing and
approving the Company's compensation program for the Chief Executive Officer and
the other executive officers of the Company. The Committee also administers the
Data Research Associates, Inc. 1992 Stock Option Plan ("the 1992 Plan"). The
overall objectives of the Company's executive compensation program are to
provide total compensation that will attract and retain highly qualified
executives and to link executive compensation to corporate performance.
The Company's executive compensation policies include the following:
-Compensation levels should be competitive with other software and
technology companies of comparable size;
-Compensation should be directly related to the Company's achievement
of both short and long-term corporate performance goals and to the
individual executive's contribution to achieving those goals;
-Ownership of the Company's Common Stock provides a link between
executives and shareholders by creating incentives for the executives
to achieve the long-term goal of creating shareholder value.
The Committee feels that it can best reach its objectives through a
compensation package that includes three elements: (1) base salary; (2) annual
cash bonuses; and (3) long-term incentives in the form of stock options. The
Chief Executive Officer, Michael J. Mellinger, makes recommendations to the
Committee on all elements of the compensation package for the executive officers
other than himself.
BASE SALARIES
In order to attract and retain executives, the Company strives to offer
competitive salaries and employee benefits, including its Employee Stock
Purchase Plan, 401(k) Profit Sharing Plan, health care plans and other employee
benefit programs. The Committee sets base salary levels for executives based on
the responsibilities of the position held and the experience of the individual,
and by reference to a self-selected group of software and technology companies
of comparable size and to the Company's competitors, when such information is
available. The Committee also consults published studies of executive
compensation in publicly held companies.
-12-
<PAGE> 18
Base salaries are adjusted annually based on the Social Security
Administration's cost-of-living adjustment (COLA) calculation. Base salaries are
also reviewed annually with regard to the Company's performance for the year and
the responsibilities of the individual executive.
Under the terms of the Employment Agreement, Mr. Mellinger's base salary for
the fiscal year ended September 30, 1997, the first year of the Employment
Agreement, was set at $400,000. The Employment Agreement provides that the
Committee may raise Mr. Mellinger's base salary after considering his individual
performance, the total compensation paid to the chief executive officers of
similar companies of comparable size to the Company's and such other factors as
deemed relevant by the Board of Directors of the Company.
In determining Mr. Mellinger's base salary for fiscal 2000, the Committee
took into consideration that although total revenues for fiscal 1999, as well as
revenue from two of the three sources from which the Company's revenues are
derived, declined from the previous year, the Company's service revenue
increased over fiscal 1998. Additionally, the Committee recognized that the
general release and shipment of the Company's Taos software in the fourth
quarter of fiscal 1999 generated year-over-year revenue growth during fourth
quarter in all three categories of revenue - hardware, software and services.
Based upon these factors, Mr. Mellinger's base salary for fiscal 2000 was set at
$422,900, an increase of 2.4% over fiscal 1999.
ANNUAL BONUSES
For fiscal 2000, the Committee determined bonuses for the Company's
executives, including Mr. Mellinger, based on formulas determined at the
beginning of fiscal 2000 which provided for each officer to receive a bonus
linked to an increase in corporate earnings. Since corporate earnings in fiscal
2000 decreased from earnings in fiscal 1999 the Committee did not award a bonus
to Mr. Mellinger or the Company's other executives.
STOCK OPTIONS
Since its initial public offering in 1992, the Board of Directors of the
Company has realized the importance of providing executives and other key
employees incentives to maximize the Company's financial performance and align
their interests with those of the Company's shareholders. Through the 1992 Plan,
the Company has encouraged its executives to acquire and hold the Company's
Common Stock. Executive officers, along with all of the Company's other
employees, also are eligible to participate in the Data Research Associates,
Inc. Stock Purchase Plan, an ongoing stock acquisition program under which an
employee may defer a portion of his or her salary to acquire shares of Common
Stock. The Company matches a portion of the employee's deferral.
-13-
<PAGE> 19
In fiscal 2000 the Committee granted options under the 1992 Plan to each of the
executive officers (excluding the Chief Executive Officer). In determining how
many options should be granted to each officer, the Committee considered the
entire compensation package of each officer and the recommendation of Mr.
Mellinger.
Respectfully submitted,
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS OF DATA RESEARCH ASSOCIATES, INC.
CAROLE COTTON
DONALD P. GALLOP
MARILYN GELL MASON
-14-
<PAGE> 20
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change
in the cumulative total shareholder return on the Company's Common Stock against
the cumulative total returns of the Center for Research in Security Prices
("CRSP") Index for the Nasdaq Stock Market (U.S. Companies) and the CRSP Index
for Nasdaq Computer and Data Processing Stocks.
[PERFORMANCE GRAPH]
-15-
<PAGE> 21
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Pursuant to an equipment lease which expired on April 15, 1996, the
Company leased its office phone equipment from Davandy Management, Inc.
("Davandy"). Upon expiration of the lease the Company did not exercise its
option to purchase the equipment at fair market value but has continued to lease
the equipment on a month-to-month basis at a monthly rate of $1,640. During
fiscal 2000, Davandy received $19,680 in payments from the Company for the use
of such equipment. Michael J. Mellinger, the Company's President and Chief
Executive Officer, is the president and sole shareholder of Davandy.
Management of the Company believes that the terms and conditions of the
above-described transactions and those described under the heading "Compensation
Committee Interlocks and Insider Participation" were no less favorable to the
Company than those which would have been available to the Company in comparable
transactions with unaffiliated persons.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who 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. Such individuals are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. There are no known
failures to file any forms required under Section 16(a). Based on review of the
copies of such forms furnished to the Company, the Company believes that such
persons complied with all Section 16(a) filing requirements applicable to them
with respect to transactions during fiscal 2000.
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<PAGE> 22
PROPOSAL 2 - APPROVAL OF THE DATA RESEARCH ASSOCIATES, INC.
2001 STOCK OPTION PLAN
BACKGROUND
On November 16, 2000, the Board of Directors (the "Board") adopted the
Data Research Associates, Inc. 2001 Stock Option Plan (the "2001 Plan") designed
to provide incentives to key employees of the Company and its subsidiaries. The
2001 Plan makes available 250,000 shares of Common Stock available for issuance
thereunder. The Board directed that the 2001 Plan be submitted to the
shareholders of the Company for their approval. The 2001 Plan will become
effective only if the holders of at least a majority of the issued and
outstanding shares of Common Stock present at the annual meeting in person or by
proxy vote for the approval of the 2001 Plan.
DESCRIPTION OF 2001 PLAN
The 2001 Plan is designed to provide additional incentives for Officers
and other key employees of the Company and its subsidiaries to promote the
success of the business and to enhance the Company's ability to attract and
retain the service of qualified persons. Only 45,000 shares remain available for
future grants of options under the Company's 1992 Stock Option Plan.
Accordingly, the Board believes that adoption of the 2001 Plan is in the best
interests of the shareholders and the Company because the new plan will allow
the Company to continue to use option grants as an important ingredient in the
successful recruitment and retention of management personnel.
If adopted, the 2001 Plan would be administered by a committee of the
Board of Directors of the Company (the "Board") consisting of not less than two
members of the Board as the Board may appoint (the "Committee"). The 2001 Plan
authorizes the Committee to grant to key employees, including officers and
others as selected by such Committee, incentive stock options and nonqualified
stock options. The 2001 Plan will expire on, and no options may be granted
thereunder, after January 1, 2011, subject to the right of the Board to
terminate the 2001 Plan at any time prior thereto. The Board may amend the 2001
Plan at any time, provided, that no change in any outstanding option may be made
that would impair the rights of the optionee without the consent of such
optionee.
An option enables the optionee to purchase shares of Common Stock at the
exercise price. The exercise price per share may not be less than the fair
market value of the Common Stock at the time the option is granted, provided
that in the event of the grant of an incentive stock option to an optionee who
is or would be the beneficial owner of more than 10% of the total combined
voting power of all classes of the Company's stock, the exercise price may not
be less than 110% of the fair market value of the Common Stock on the date of
grant. In addition, an option granted to an individual owner of more than 10% of
the outstanding voting stock of the Company shall not be exercisable after the
expiration of five years from the date of grant. Otherwise, an option may be
granted that would be exercisable up to ten years from the date of grant. No
person may be granted incentive stock options under the 2001 Plan that are first
exercisable during any calendar year for shares having an aggregate fair market
value of the
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<PAGE> 23
date of grant of more than $100,000. Options will be exercisable for a limited
period of time after the optionee's death, disability or normal retirement from
the Company. Any shares as to which any option expires, lapses unexercised or is
terminated or canceled, may be subject to a new option. The Committee has not
yet determined any awards of options to be received by any key employee pursuant
to the 2001 Plan. The last reported sale price of Common Stock on December 15,
2000, as reported on the Nasdaq Stock Market, was $6.00.
In order to obtain the shares, a participant must pay the full exercise
price to the Company at the time of exercise of the option. The purchase price
may be paid in cash or, with the consent of the Committee, stock of the Company,
including stock acquired under the same option. Incentive stock options are
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not realize any income, nor will the Company be
entitled to a deduction at the time an incentive stock option is granted. If an
optionee does not dispose of the shares acquired on the exercise of an incentive
stock option within one year after the transfer of such shares to him or within
two years from the date the incentive stock option was granted to him, for
federal income tax purposes: (a) the optionee will not recognize any income at
the time of exercise of his incentive stock option, (b) the amount by which the
fair market value (determined without regard to any restriction other than a
restriction which by its terms will never lapse) of the shares at the time of
exercise exceeds the exercise price is an item of tax preference subject to the
alternative minimum tax on individuals, and (c) the difference between the
incentive stock option price and the amount realized upon sale of the shares of
the optionee will be treated as long-term capital gain or loss. The Company will
not be entitled to a deduction upon the exercise of an incentive stock option.
Except in the case of a disposition following the death of an optionee
and certain other very limited exceptions, if the stock acquired pursuant to an
incentive stock option is not held for the minimum periods described above, the
excess of the fair market value of the stock at the time of exercise over the
amount paid for the stock generally will be taxed as ordinary income to the
optionee in the year of disposition. In such case, the Company is entitled to a
deduction for federal income tax purposes at the time and in the amount in which
income is taxed to the optionee as ordinary income by reason of the sale of
stock acquired upon the exercise of an incentive stock option.
An optionee will not realize any income at the time a nonqualified stock
option is granted, nor will the Company be entitled to a deduction at that time.
Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income (whether the nonqualified stock option price is paid in cash or
by the surrender of previously owned Common Stock), in an amount equal to the
difference between the option price and the fair market value of the shares to
which the nonqualified stock option pertains. The Company will be entitled to a
tax deduction in an amount equal to the amount of ordinary income realized by
the optionee.
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<PAGE> 24
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE DATA
RESEARCH ASSOCIATES, INC. 2001 STOCK OPTION PLAN, WHICH IS PROPOSAL 2 ON
THE PROXY CARD.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent
auditors for the fiscal year ended September 30, 2000 and for a number of years
prior thereto, and the Board of Directors has selected this firm to serve as
independent auditors for the fiscal year ending September 30, 2001.
Representatives of Ernst & Young are expected to attend the Annual Meeting and
will have the opportunity to make statements and respond to appropriate
questions from shareholders.
AUDIT COMMITTEE REPORT
The audit committee oversees the Company's financial reporting process
on behalf of the board of directors. Management has the primary responsibility
for the financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the committee
reviewed the audited financial statements in the Annual Report with management,
including a discussion of the quality, and not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the committee under generally accepted auditing standards. In addition, the
committee has discussed with the independent auditors the auditors' independence
from management and the Company including the matters in the written disclosures
required by the Independence Standards Board.
The committee discussed with the Company's independent auditors the
overall scope and plans for their audits. The committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
committee held three meetings during fiscal 2000.
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<PAGE> 25
In reliance on the reviews and discussions referred to above, the
committee recommended to the board of directors (and the board approved) that
the audited financial statements be included in the Annual Report on Form 10-K
for the year ended September 30, 2000, for filing with the Securities and
Exchange Commission.
Respectfully submitted,
AUDIT COMMITTEE OF THE BOARD
OF DIRECTORS OF DATA RESEARCH
ASSOCIATES, INC.
F. GILBERT BICKEL III
CAROLE COTTON
DONALD P. GALLOP
MARILYN GELL MASON
HOWARD L. WOOD
ANNUAL REPORT
The Annual Report of the Company for fiscal 2000 accompanies this
notice.
FUTURE PROPOSALS OF SECURITY HOLDERS
All proposals of security holders intended to be presented at the 2002
Annual Meeting of Shareholders must be received by the Company not later than
September 7, 2001, for inclusion in the Company's 2002 Proxy Statement and form
of proxy relating to such meeting.
In addition, pursuant to the Company's bylaws, if a shareholder wishes
to bring a proposal before the annual meeting outside the proxy inclusion
process discussed above but does not provide written notice of the proposal to
the Company at least 60 days before the date of the annual meeting of
shareholders, such notice will be untimely and any proxies received by the Board
of Directors from the shareholders will be voted by the Company's designated
proxies in their discretion on such matter, regardless of whether specific
authority to vote on such matter has been received from the shareholder
submitting such proxies. Accordingly, any shareholder who wishes to submit a
proposal at the 2002 Annual Meeting of Shareholders and also wishes to avoid, in
certain instances, the possibility of discretionary voting by the Company's
proxies on such matter must give written notice to the Secretary of the Company
on or before the sixtieth day prior to such annual meeting, which date will be
December 14, 2001.
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<PAGE> 26
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the
Annual Meeting other than as set forth above. If other matters properly come
before the meeting, it is the intention of the persons named in the solicited
proxy to vote the proxy on such matters in accordance with their judgment.
MISCELLANEOUS
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit the return of proxies by telephone,
telegram or personal interview and may request brokerage houses and custodians,
nominees and fiduciaries to forward soliciting material to their principals and
will agree to reimburse them for their reasonable out-of-pocket expenses.
Shareholders are urged to mark, sign, date and send in their proxies
without delay.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 2000 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING RELATED FINANCIAL
STATEMENT SCHEDULE) IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE, UPON WRITTEN
REQUEST TO THE SECRETARY, DATA RESEARCH ASSOCIATES, INC., 1276 NORTH WARSON
ROAD, ST. LOUIS, MISSOURI 63132.
By Order of the Board of Directors
POLLY C. MELLINGER
Secretary
St. Louis, Missouri
January 5, 2001
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<PAGE> 27
AUDIT COMMITTEE CHARTER EXHIBIT A
DATA RESEARCH ASSOCIATES, INC.
This charter shall govern the operations of the Audit Committee (the
"Committee") of Data Research Associates, Inc. (the "Company") and shall be
reviewed by the Committee and approved by the Board of Directors (the "Board")
of the Company at least annually.
COMPOSITION OF THE COMMITTEE
The Committee shall be appointed by the Board and shall comprise at least three
directors, each of whom is independent of management and the Company. Members of
the Committee shall be considered independent if they have no relationship that
may interfere with the exercise of their independence from management and the
Company. All Committee members shall be financially literate, or shall become so
within a reasonable period of time after appointment to the Committee. At least
one member of the Committee shall have accounting or related financial
management expertise.
PURPOSE OF THE COMMITTEE
The primary purpose of the Committee is to assist the Board in fulfilling its
responsibility to oversee management's conduct of the Company's financial
reporting process, including by overviewing the financial reports and other
financial information provided by the Company to any governmental or regulatory
body, the public or other users thereof, the Company's systems of internal
accounting and financial controls, the annual independent audit of the Company's
financial statements, the Company's legal compliance and any ethics programs
established by management and the Board.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and to retain outside counsel, auditors
or other experts for this purpose.
The Board and the Committee are in place to represent the Company's
shareholders; accordingly, the outside auditor is ultimately accountable to the
Board and the Committee.
KEY RESPONSIBILITIES OF THE COMMITTEE
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditors are responsible for auditing those financial
statements. The Committee also recognizes that financial management and the
outside auditors, have more time, knowledge and more detailed information on the
Company than do Committee members; consequently, in carrying out its oversight
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<PAGE> 28
responsibilities, the Committee is not providing any expert or special assurance
as to the Company's financial statements or any professional certification as to
the outside auditor's work.
The Committee believes that it can best carry out its responsibilities by
keeping its policies and procedures flexible in order to best react to changing
conditions and circumstances; however, the following functions shall be the
principal recurring activities of the Committee in carrying out its oversight
function. These functions are established as a guide with the understanding that
the Committee may diverge from them as appropriate.
- The Committee shall review with management and the outside
auditors the audited financial statements to be included in
the Company's Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission and review and consider
with the outside auditors the matters required to be discussed
by Statement of Auditing Standards ("SAS") No. 61. This review
and discussion will occur prior to the Company's filing of the
Form 10-K
- As a whole, or through the Committee chair, the Committee
shall review with the outside auditors the Company's interim
financial results to be included in the Company's quarterly
reports on Form 10-Q to be filed with the Securities and
Exchange Commission and the matters required to be discussed
by SAS No. 61. This review will occur prior to the Company's
filing of the Form 10-Q
- The Committee shall:
- Request from the outside auditors annually, a formal
written statement delineating all relationships between
the auditor and the Company consistent with
Independence Standards Board Standard Number 1.
- Discuss with the outside auditors any such disclosed
relationships and their impact on the outside auditor's
independence, and
- Recommend that the Board take appropriate action in
response to the outside auditor's report to satisfy
itself of the auditor's independence.
- The Committee shall make recommendations to the full
Board with regard to its responsibility to select, or
nominate for shareholder approval, evaluate and, where
appropriate, replace the outside auditor.
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<PAGE> 29
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<PAGE> 30
Data Research Associates, Inc.
This proxy is solicited by the Board of Directors for
The 2001 Annual Meeting of Shareholders
The undersigned hereby appoint(s) Michael J. Mellinger and Katharine W. Biggs,
and each of them, with full power to act alone, the true and lawful attorneys-in
-fact and proxies of the undersigned, with full power of substitution, and
hereby authorize(s) them and each of them, to represent the undersigned and to
vote all shares of common stock that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of Data Research Associates, Inc. to be held on
Wednesday, February 14, 2001, commencing at 4:00 p.m. at The Ritz-Carlton Hotel,
100 Carondelet Plaza, St. Louis, Missouri 63105 and at any and all adjournments
thereof, according to the number of votes which the undersigned would possess if
personally present, on the following proposals and any other matters coming
before said meeting.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
for the election of the nominated directors under proposal l, for approval of
2001 Stock Option Plan under proposal 2, and in the discretion of the proxy with
respect to such other business as may properly come before the meeting or any
adjournment thereof.
Please mark, sign, date and return this proxy card promptly
Using the enclosed envelope.
(Continued and to be signed on reverse side)
<PAGE> 31
Data Research Associates, Inc.
DATA RESEARCH ASSOCIATES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
Directors recommend a vote FOR
1. Election of Nominated Directors: For Withhold For All
Class A Nominee(s): F. Gilbert Bickel III All All Except
Michael J. Mellinger
--------------------------------
(Except Nominee(s) written above)
2. Approval of 2001 Stock Option Plan: For Against Abstain
3. In the proxy's discretion with respect to such other business as may properly
come before the meeting or any adjournment thereof.
The undersigned hereby acknowledges receipt of copies of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated January 5, 2001, and the
Annual Report of the Company for fiscal 2000.
DATED:, 2001
Signature(s):
Please sign name(s) exactly as it appears on this proxy. In the case of joint
holders, all should sign. Executors, administrators, trustees and
attorneys-in-fact should so indicate when signing. If executed by a corporation,
this proxy should be signed by a duly authorized officer. If executed by a
partnership, this proxy should be signed by an authorized partner.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 32
APPENDIX A
This appendix is being filed pursuant to Instruction No. 3 of Item 10 of
Schedule 14A. In accordance with such instructions, this appendix is not part of
the 2001 Proxy Statement and has not been sent to the Company's shareholders.
DATA RESEARCH ASSOCIATES, INC.
2001 STOCK OPTION PLAN
I. Purpose of the Plan
The Data Research Associates, Inc. 2001 Stock Option Plan (the "Plan")
is intended to provide a means whereby certain key employees of Data Research
Associates, Inc., a Missouri corporation (the "Company"), may develop a sense of
proprietorship and personal involvement in the development and financial success
of the Company and its subsidiaries, and to encourage them to remain with and
devote their best efforts to the business of the Company and its subsidiaries,
thereby advancing the interests of the Company and its shareholders.
Accordingly, the Company may make awards to certain employees in the form of
stock options ("Options") with respect to shares of the Company's common stock,
par value $0.01 per share (the "Stock"). Options may either be nonqualified
stock options ("Nonqualified Options") or options ("Incentive Stock Options")
which are intended to qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
II. Administration
A. The Committee. The Plan shall be administered by a committee of the
Board of Directors of the Company (the "Board") consisting of not less than two
members of the Board as the Board may appoint (the "Committee"); provided that
so long as the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended ("1934 Act"), the members of the
Committee shall be "Non-Employee Directors" within the meaning of Rule 16b-3
promulgated under the 1934 Act, as such Rule or its equivalent is then in effect
("Rule l6b-3"). Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee, however caused, shall be filled
by the Board. The Committee shall have the authority and discretion to interpret
the Plan, to establish, amend and rescind any rules and regulations relating to
the Plan not inconsistent with the provisions of the Plan, and to make all other
determinations that may be necessary or advisable for the administration of the
Plan. Any interpretation or construction of the Plan or any provision thereof by
the Committee and any decision made by it under the Plan is final and binding on
all persons. The Committee shall act by a majority of its members in office and
the Committee may act either by vote at a telephonic
<PAGE> 33
or other meeting or by a consent or other written instrument signed by all of
the members of the Committee.
B. Powers of the Committee. The Committee shall have the sole authority
to: (1) grant Options; (2) determine the purchase price of the Stock covered by
each Option (the "Exercise Price"), the terms and duration of each Option and
the terms and provisions of the Option agreements (the "Agreements") entered
into under the Plan; (3) determine the key employees to whom, and the times at
which, Options shall be granted; (4) determine whether the Option shall be a
Nonqualified Option or an Incentive Stock Option and the number of shares to be
covered by each Option and (5) prepare and distribute, in such manner as the
Committee determines to be appropriate, information about the Plan.
C. Liability. Neither the Committee nor any member thereof shall be
liable for any act, omission, interpretation, construction or determination made
in connection with the Plan in good faith, and the members of the Committee
shall be entitled to indemnification and reimbursement by the Company in respect
of any claim, loss, damage or expense (including counsel fees) arising therefrom
to the fullest extent permitted by law. The members of the Committee shall be
named as insiders in connection with any directors and officers liability
insurance coverage that may be in effect from time to time.
D. Delegation by the Committee. The day-to-day administration of the
Plan may be carried out by such officers and employees of the Company as shall
be designated from time to time by the Committee. All expenses and liabilities
incurred by the Committee in connection with the administration of the Plan
shall be borne by the Company. The Committee may employ attorneys, consultants,
accountants, appraisers, brokers or other persons, and the Committee, the Board,
the Company and the officers and employees of the Company shall be entitled to
rely upon the advice, opinions or valuations of any such persons.
III. Eligible Employees
A. Key Employees. Only key employees of the Company and its
subsidiaries shall be eligible to receive Options under the Plan. In granting
Options to an employee, the Committee shall take into consideration the
contribution the employee has made or may make to the success of the Company or
its subsidiaries and such other considerations as the Committee shall determine.
The Committee shall also have the authority to consult with and receive
recommendations from officers and other employees of the Company and its
subsidiaries with regard to these matters.
B. No Right to Participate. In no event shall any employee, his legal
representatives, heirs, legatees, distributes, or successors have any right to
participate in the Plan, except to such extent, if any, as the Committee shall
determine.
IV. Shares Subject to the Plan and Delivery Restrictions
A. Number of Shares. The aggregate number of shares which may be issued
under the Plan shall not exceed 250,000 shares of Stock. Such shares may consist
of authorized but unissued shares of Stock or previously issued shares
reacquired by the Company. To the extent any shares of Stock covered by an
Option are not delivered to the holder of the Option because the option, in
whole or in part, expires or terminates unexercised or is cancelled or
forfeited, or the shares of Stock are not delivered because the Option is
settled in cash or used to satisfy the applicable tax withholding obligation,
such shares shall not be deemed to have been delivered, and will be available
for new grants of Options under the Plan. If the exercise price of any Option
granted under the Plan is satisfied by tendering shares of Stock to the Company,
only the
2
<PAGE> 34
number of shares of Stock issued net of the shares of Stock tendered shall be
deemed delivered and the undelivered shares shall be available for new grants of
Options under the Plan. The aggregate number of shares which may be issued under
Options granted under the Plan shall be subject to adjustment as provided in
Article VI hereof.
B. Effect of Termination of Plan. Any of such shares which remain
unsold and which are not subject to outstanding Options at the termination of
the Plan shall cease to be subject to the Plan, but until termination of the
Plan and the expiration of all Options granted under the Plan, the Company shall
at all times make available a sufficient number of shares to meet the
requirements of the Plan and the outstanding Options.
V. Grants of Options
A. General. Options granted under the Plan shall be of such type
(Nonqualified Option or Incentive Stock Option) and for such number of shares of
Stock and subject to such terms and conditions, which may include, without
limitation, the achievement of specific goals, as the Committee shall designate.
The Committee may grant Options at any time and from time to time through, but
not after, January 1, 2011, to any individual eligible to receive the same. For
purposes of the Plan, the date on which an Option is granted is referred to as
the "Grant Date."
B. Restrictions on Incentive Stock Options. Grants of Incentive Stock
Options shall be subject to the following:
1. 10% Shareholders. No employee shall be eligible to receive
any Incentive Stock Option if, on the Grant Date, such employee owns (including
ownership through the attribution provisions of Section 424(d) of the Code) in
excess of 10% of the outstanding voting stock of the Company or a subsidiary (a
"10% Shareholder"), unless the Exercise Price for the shares of Stock subject to
the Incentive Stock Option is at least 110% of the fair market value of the
shares of Stock on the Grant Date and such Option by its terms is not
exercisable after the expiration of five years from the Grant Date.
2. $100,000 Limit. To the extent that the aggregate fair
market value (determined at the Grant Date) of Stock with respect to which
Incentive Stock Options (determined without regard to this sentence) are
exercisable for the first time by any individual during any calendar year (under
all plans of the Company and its subsidiaries) exceeds $100,000, such Options
shall be treated as Nonqualified Options (this sentence shall be applied by
taking Incentive Stock Options into account in the order in which they were
granted).
C. Terms of Nonqualified Options and Incentive Stock Options. The
Committee may fix such waiting and/or vesting periods, exercise dates or other
limitations as it shall deem appropriate with respect to Options granted under
the Plan including, without limitation, the achievement of specific goals.
Options granted pursuant to the Plan shall be evidenced by Agreements that shall
comply with and be subject to the following terms and conditions and may contain
such other provisions, consistent with the Plan, as the Committee shall deem
advisable (references herein to "Agreements" shall include, to the extent
applicable, any amendments to such Agreements):
3
<PAGE> 35
1. Payment of Option Exercise Price. Upon exercise of an
Option, the full Exercise Price for the shares with respect to which the Option
is being exercised shall be payable to the Company: (a) in cash or by check
payable and acceptable to the Company; (b) subject to the approval of the
Committee, by tendering to the Company shares of Stock owned by the optionee
(provided that such shares shall have been then owned by the optionee for a
period of six months prior to the exercise) having an aggregate Market Value Per
Share (as defined below) as of the date of exercise and tender that is not
greater than the full Exercise Price for the shares with respect to which the
Option is being exercised and by paying any remaining amount of the Exercise
Price as provided in (a) above; or (c) subject to the approval of the Committee
and to such instructions as the Committee may specify, at the optionee's written
request the Company may deliver certificates for the shares of Stock for which
the Option is being exercised to a broker for sale on behalf of the optionee,
provided that the optionee has irrevocably instructed such broker to remit
directly to the Company on the optionee's behalf the full amount of the Exercise
Price from the proceeds of such sale and any tax withholding resulting from such
exercise; provided, that in the case of an Incentive Stock Option, (b) and (c)
above shall apply only if Committee approval is given on or prior to the Grant
Date and the Agreement expressly provides for such optional payment terms. In
the event that the optionee elects to make payment as allowed under clause (b)
above, the Committee may, upon confirming that the optionee owns the number of
shares of Stock being tendered, authorize the issuance of a new certificate for
the number of shares being acquired pursuant to the exercise of the Option less
the number of shares being tendered upon the exercise and return to the optionee
(or not require surrender of) the certificate for the shares of Stock being
tendered upon the exercise. Payment instruments will be received subject to
collection.
2. Number of Shares. Each Agreement shall state the total
number of shares of Stock that are subject to the Option.
3. Exercise Price. The Exercise Price for each Option shall be
fixed by the Committee at the Grant Date, but in no event may the Exercise Price
per share be less than the Market Value Per Share on the Grant Date.
4. Market Value Per Share. The "Market Value Per Share" as of
any particular date shall be determined as follows: (a) if the Stock is listed
for trading on a national or regional stock exchange, the closing price quoted
on such exchange which is published in The Wall Street Journal for the trading
day immediately preceding the Grant Date, or if no trade of the Stock shall have
been reported for such date, the closing price quoted on such exchange which is
published in The Wall Street Journal for the next day prior thereto on which a
trade of the Stock was so reported; (b) if the shares are not so listed or
admitted to trading, the average of the highest reported bid and lowest reported
asked prices as furnished by the National Association of Securities Dealers,
Inc., through NASDAQ, or through a similar organization if NASDAQ is no longer
reporting such information, in any case for the first day immediately preceding
the Grant Date on which the Stock is traded; or (c) if shares of the Stock are
not listed or admitted to trading on any exchange or quoted through NASDAQ or
any similar organization, the "Market Value Per Share" shall be determined by
the Committee in good faith using any fair and reasonable means selected in its
discretion.
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5. Term. The term of each Option shall be determined by the
Committee at the Grant Date; provided, however, that each Option shall,
notwithstanding anything in the Plan or an Agreement to the contrary, expire not
more than ten years (five years with respect to an Incentive Stock Option
granted to an employee who is a 10% Shareholder) from the Grant Date or, if
earlier, the date specified in the Agreement.
6. Date of Exercise. In the discretion of the Committee, each
Agreement may contain provisions stating that the Option granted therein may not
be exercised in whole or in part for a period or periods of time or until the
achievement of specific goals, in either case as specified in such Agreement,
and except as so specified therein, any Option may be exercised in whole at any
time or in part from time to time during its term. The Committee may, however,
at any time, in its sole discretion, amend any outstanding Option not
immediately exercisable in full, to accelerate the time at which such Option may
be exercised or to provide that the time for exercising such Option shall be
accelerated upon the occurrence of a specified event.
7. Termination of Employment.
(a) In the event an individual's employment with the
Company and its subsidiaries shall terminate for reasons other than:
(i) retirement in accordance with the terms of a retirement plan of the
Company or one of its subsidiaries ("retirement"), (ii) permanent
disability (as defined in Section 22(e)(3) of the Code), or (iii)
death, the individual's Options shall terminate as of the date of such
termination of employment and shall not be exercisable to any extent as
of and after such time.
(b) If any termination of employment is due to
retirement or permanent disability, the individual shall have the right
to exercise any Option at any time within the 12-month period
(three-month period in the case of retirement for Options that are
Incentive Stock Options) following such termination of employment, but
only to the extent that the option was exercisable immediately prior to
such termination of employment.
(c) Whether any termination of employment is due to
retirement or permanent disability and whether an authorized leave of
absence or absence for military or government service or for other
reasons shall constitute a termination of employment for purposes of
the Plan shall be determined by the Committee in its sole discretion.
(d) If an individual shall die while entitled to
exercise an Option, the individual's estate, personal representative or
beneficiary, as the case may be, shall have the right to exercise the
Option at any time within the 12-month period following the date of the
option's death, to the extent that the option was entitled to exercise
the same on the day immediately prior to the option's death.
D. Effect of Exercise. The right of an individual to exercise an Option
shall terminate to the extent that such Option is exercised.
E. Option Grants in Substitution for Other Awards. Options may be
granted under the Plan from time to time in substitution for stock options and
stock appreciation rights held by
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employees of corporations who become key employees of the Company or of any of
its subsidiaries as a result of a merger or consolidation of the employer
corporation with the Company or any such subsidiary, or the acquisition by the
Company or a subsidiary of assets of the employer corporation or the acquisition
by the Company or a subsidiary of stock of the employer corporation, with the
result that such employer corporation becomes a subsidiary of the Company.
VI. Recapitalization or Reorganization
A. General. The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board or the shareholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting Stock or
the rights thereof, the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding.
B. Adjustments. The shares with respect to which Options may be granted
are shares of Stock as presently constituted, but if, and whenever, prior to the
termination of the Plan or the expiration of an Option theretofore granted, the
Company shall effect a subdivision or consolidation of shares of Stock or the
payment of a stock dividend on Stock without receipt of consideration by the
Company, the remaining shares of Stock available under the Plan and the number
of shares of Stock with respect to which such Option may thereafter be
exercised: (a) in the event of an increase in the number of outstanding shares,
shall be proportionately increased and the Exercise Price per share shall be
proportionately reduced; and (b) in the event of a reduction in the number of
outstanding shares, shall be proportionately reduced and the Exercise Price per
share shall be proportionately increased.
C. Issuance of Securities for Value. Except as may otherwise be
expressly provided in the Plan, the issuance by the Company of shares of capital
stock of any class or securities convertible into shares of capital stock of any
class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares of capital
stock or other securities, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number of shares of Stock available under the Plan or subject to Options
theretofore granted or the Exercise Price per share with respect to outstanding
Options.
D. Fundamental Change. If the Company effects a recapitalization or
otherwise materially changes its capital structure (both of the foregoing are
herein referred to as a "Fundamental Change"), then thereafter upon any exercise
of an Option theretofore granted the optionee shall be entitled to purchase
under such Option, in lieu of the number of shares of Stock as to which such
Option shall then be exercisable, the number and class of shares of capital
stock and securities to which the optionee would have been entitled pursuant to
the terms of the Fundamental Change if, immediately prior to such Fundamental
Change, the optionee had been
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the holder of record of the number of shares of Stock as to which such Option is
then exercisable.
VII. Employee's Agreement
If, at the time of the exercise of any Option, in the opinion of
counsel for the Company, it is necessary or desirable, in order to comply with
any then applicable laws or regulations relating to the sale of securities, for
the individual exercising the Option to agree to hold any shares issued to the
individual for investment and without intention to resell or distribute the same
and for the individual to agree to dispose of such shares only in compliance
with such laws and regulations, the individual shall be required, upon the
request of the Company, to execute and deliver to the Company an agreement to
such effect.
VIII. Termination of Authority to Grant Awards
No Options will be granted pursuant to this Plan after January 1, 2011.
IX. Amendment and Termination
The Board may from time to time and at any time alter, amend, suspend,
discontinue or terminate this Plan and any Options hereunder; provided, that no
change in any Option theretofore granted may be made which would impair the
rights of the optionee without the consent of such optionee.
X. Effective-Date of Plan
The Plan shall become effective upon adoption by the Board and approval
by the Company's shareholders; provided, however, that prior to approval of the
Plan by the Company's shareholders but after adoption by the Board, Options may
be granted under the Plan subject to obtaining such approval; and provided
further, however, that if shareholder approval is not obtained within twelve
months after the date the Plan is adopted by the Board, no Incentive Stock
Options shall be granted under the Plan.
XI. Preemption by Applicable Laws and Regulations
Anything in the Plan or any Agreement entered into pursuant to the Plan
to the contrary notwithstanding, if, at any time specified herein or therein for
the making of any determination with respect to the issuance or other
distribution of shares of Stock, any law, regulation or requirement of any
governmental authority having jurisdiction in the premises shall require either
the Company or the employee (or the employee's beneficiary), as the case may be,
to take any action in connection with any such determination, the issuance or
distribution of such shares or the making of such determination shall be
deferred until such action shall have been taken.
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XII. Miscellaneous
A. Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the optionee, through the surrender of shares of Stock
that the optionee already owns, or through the surrender of shares of Stock to
which the optionee is otherwise entitled under the Plan.
B. No Employment Contract. Nothing contained in the Plan shall be
construed as conferring upon any employee the right to continue in the employ of
the Company or any of its subsidiaries.
C. Employment with Subsidiaries. Employment by the Company for the
purpose of this Plan shall be deemed to include employment by, and to continue
during any period in which an employee is in the employment of, any subsidiary.
D. No Rights as a Shareholder. An employee shall have no rights as a
shareholder with respect to shares covered by such employee's Option until the
date of the issuance of shares to the employee pursuant thereto. No adjustment
will be made for dividends or other distributions or rights for which the record
date is prior to the date of such issuance.
E. No Right to Corporate Assets. Nothing contained in the Plan shall be
construed as giving any employee, such employee's beneficiaries or any other
person any equity or other interest of any kind in any assets of the Company or
any subsidiary or creating a trust of any kind or a fiduciary relationship of
any kind between the Company or any subsidiary and any such person. Any optionee
shall have only a contractual right to shares of Stock as set forth in the
Agreement, unsecured by any assets of the Company or any subsidiary, and nothing
contained in the Plan shall constitute a guarantee that the assets of the
Company or any subsidiary shall be sufficient to pay any benefits to any person.
F. No Restriction on Corporate Action. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action that is deemed by the Company or such subsidiary to be
appropriate or in its best interests, whether or not such action would have an
adverse effect on the Plan or any Option made under the Plan. No employee,
beneficiary or other person shall have any claim against the Company or any
subsidiary as a result of any such action.
G. Non-assignability. Neither an employee nor an employee's beneficiary
shall have the power or right to sell, exchange, pledge, transfer, assign or
otherwise encumber or dispose of such employee's or beneficiary's interest
arising under the Plan or any Option received under the Plan; nor shall such
interest be subject to seizure for the payment of an employee's or beneficiary's
debts, judgments, alimony, or separate maintenance or be transferable by
operation of law in the event of an employee's or beneficiary's bankruptcy or
insolvency and to the extent any such interest arising under the Plan or an
Option received under the Plan is awarded to a
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spouse pursuant to any divorce proceeding, such interest shall be deemed to be
terminated and forfeited notwithstanding any vesting provisions or other terms
herein or in the agreement evidencing such option.
H. Application of Funds. The proceeds received by the Company from the
sale of shares of Stock pursuant to the Plan shall be used for general corporate
purposes.
I. Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any optionee or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
J. Governing Law; Construction. All rights and obligations under the
Plan shall be governed by, and the Plan shall be construed in accordance with,
the laws of the State of Missouri without regard to the principles of conflicts
of laws. Titles and headings to Sections herein are for purposes of reference
only, and shall in no way limit, define or otherwise affect the meaning or
interpretation of any provisions of the Plan.
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