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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
The Source Information Management Company
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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.
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1) Title to each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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THE SOURCE INFORMATION MANAGEMENT COMPANY
11644 Lilburn Park Road
St. Louis, Missouri 63146
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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To the Shareholders of March 9, 1999
The Source Information Management Company: St. Louis, Missouri
A Special Meeting of the Shareholders of The Source Information Management
Company will be held on March 30, 1999 at 10:00 a.m. Central Standard Time at
the Company's principal executive offices at 11644 Lilburn Park Road, St. Louis,
Missouri 63146, for the following purposes:
1. To approve the issuance of 1,473,281 shares of the Common
Stock of the Company upon the conversion of an equal number of
shares of Series A Convertible Preferred Stock of the Company;
2. To approve an amendment to the Company's Articles of
Incorporation to increase the authorized shares of the Common
Stock of the Company from 16,528,925 to 40,000,000; and
3. To approve an amendment to the Company's 1995 Incentive Stock
Option Plan to increase the number of shares of Common Stock
available under the Stock Plan from 520,661 to 1,520,661.
Only shareholders of record at the close of business on March 4, 1999, will be
entitled to vote at the meeting. A list of all shareholders entitled to vote at
the special meeting, arranged in alphabetical order and showing the address of
and number of shares held by each shareholder, will be available at the
principal office of The Source Information Management Company, 11644 Lilburn
Park Road, St. Louis, Missouri 63146, during usual business hours, for
examination by any shareholder for any purpose germane to the Special Meeting
for 10 days prior to the date thereof. The list of shareholders will also be
available at the meeting for examination at any time during the meeting.
By Order of the Board of Directors
W. Brian Rodgers
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.
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The Source Information Management Company
11644 Lilburn Park Road
St. Louis, Missouri 63146
(314) 995-9040
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PROXY STATEMENT
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The enclosed form of proxy is solicited by and on behalf of the Board
of Directors of The Source Information Management Company (the "Company") for
use at the Special Meeting of Shareholders to be held on March 30, 1999 (the
"Special Meeting") and at any adjournments thereof. The shareholder giving the
proxy has the power to revoke it any time before it is exercised by notice in
writing to the Secretary of the Company at the Company's principal executive
offices at 11644 Lilburn Park Road, St. Louis, Missouri 63146, by properly
submitting to the Company a duly executed proxy bearing a later date, or by
attending the meeting and voting in person. The proxy will be voted as specified
by the shareholder in the spaces provided or, if no specification is made, it
will be voted for Proposals 1, 2 and 3.
This Proxy Statement and form of proxy are first being mailed to the
shareholders of the Company on or about March 9, 1999. The solicitation of
proxies is being made primarily by the use of the mails. The cost of preparing
and mailing this Proxy Statement and accompanying materials, and the cost of any
supplementary solicitations, which may be made by mail, telephone, telegraph or
personally by officers and employees of the Company and its subsidiaries, will
be borne by the Company.
Only shareholders of record at the close of business on March 4, 1999
are entitled to notice of, and to vote at, the Special Meeting and any
adjournments thereof. On March 4, 1999 the Company had outstanding 12,168,299
shares of Common Stock. Except as provided below with respect to Proposal 1,
each outstanding share is entitled to one vote on each matter to be voted on at
the Special Meeting. A majority of the outstanding shares of Common Stock
present in person or by proxy will constitute a quorum for the transaction of
business at the Special Meeting. Votes cast by proxy or in person at the Special
Meeting will be tabulated by the inspectors of election appointed by the Board
for the meeting.
Shares which are entitled to vote but which are not voted at the
direction of the beneficial owner ("abstentions") will be counted for the
purpose of determining whether there is a quorum for the transaction of business
at the Special Meeting. Abstentions may be specified on each of Proposals 1, 2
and 3.
The affirmative vote of a majority of the shares of Common Stock voting
at the Special Meeting (other than the shares of Common Stock held by Jonathan
J. Ledecky, James R. Gillis and Monte Weiner) is required to approve Proposal 1
for the issuance of 1,473,281 shares of the Common Stock of the Company upon the
conversion of an equal number of shares of Series A
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Convertible Preferred Stock of the Company. Votes withheld by brokers in the
absence of instructions ("broker non-votes") will not be counted with respect
to, and will have no effect on, whether the shareholders approve this proposal.
Abstentions, however, are counted in determining whether the shareholders have
approved this proposal and, thus, have the effect of a vote against the
proposal.
The affirmative vote of a majority of the outstanding shares of Common
Stock is required to approve Proposal 2 for the adoption of the amendment to the
Articles of Incorporation. Broker non-votes and abstentions will have the effect
of a vote against the proposal.
The affirmative vote of a majority of the shares of Common Stock voting at
the meeting is required to approve Proposal 3 to amend the Company's 1995
Incentive Stock Option Plan (the "Stock Plan"). Broker non-votes will not be
counted with respect to, and will have no effect on, whether the shareholders
approve this proposal. Abstentions, however, are counted in determining whether
the shareholders have approved this proposal and, thus, have the effect of a
vote against the proposal.
Only matters set forth in this Notice of Special Meeting of
Shareholders may be acted upon at the Special Meeting. The proxies will be voted
on matters incident to the conduct of the meeting in accordance with the
judgment of the persons named as proxies therein, or their substitutes, present
and acting at the Special Meeting.
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OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth as of February 10, 1999, the beneficial ownership
of each current director, the chief executive officer and the four most highly
compensated executive officers of the Company, all executive officers and
directors as a group, and each other shareholder known to the Company to own
beneficially more than 5% of the outstanding Common Stock. Unless otherwise
indicated, the Company believes that the beneficial owners set forth in the
table have sole voting and investment power.
Name and Address Beneficial Ownership
of Beneficial Owner
Number of Shares Percent
Jonathan J. Ledecky 1,779,383(a) 15.2
800 Connecticut Ave., N.W.
Suite 1111
Washington, D.C. 20006
S. Leslie Flegel 1,312,772(a)(b)(c) 11.1
11644 Lilburn Park Road
St. Louis, Missouri 63146
William H. Lee 907,623(b)(c) 7.7
711 Gallimore Dairy Road
High Point, North Carolina 27265
Bank America Corporation 880,615(d) 7.5
100 North Tryon St.
Charlotte, North Carolina 28255
Timothy A. Braswell 326,599(e)(f) 2.8
Aron Katzman 199,916(e)(f) 1.7
Jason S. Flegel 139,405(b)(f) 1.2
Dwight L. DeGolia 111,468(b)(f) *
Harry L. Franc, III 40,925(e)(f) *
Randall S. Minix 8,485(f) *
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Stephen E. Borjes 8,000(b) *
All directors and executive 3,133,224(a)(g) 26.2
officers as a group (11 persons)
* Less than 1%
(a) S. Leslie Flegel and Jonathan J. Ledecky entered into a Voting
Agreement on January 7, 1999, wherein Mr. Ledecky granted a proxy to
Mr. Flegel to vote his shares of Common Stock in accordance with the
terms of the Voting Agreement with regard to certain corporate matters,
including Proposals 2 and 3. See Proposal 1. The number of shares shown
for Mr. Flegel in the table does not include Mr. Ledecky's shares.
(b) Includes exercisable options to acquire shares of Common Stock in the
following amounts per beneficial owner: S. Leslie Flegel - 119,752
shares; William H. Lee - 16,364 shares; Jason S. Flegel - 5,636; Dwight
L. DeGolia - 4,364 shares; and Stephen E. Borjes - 8,000.
(c) Does not include shares subject to the terms of a Conversion Voting
Agreement entered into on January 7, 1999, wherein certain other
shareholders of the Company granted proxies to S. Leslie Flegel and
William H. Lee to vote an aggregate of 4,292,791 shares of Common Stock
in favor of Proposal 1. See Proposal 1.
(d) Sole voting power over 0 shares; shared voting power over 880,615
shares; sole investment power over 0 shares; shared investment power
over 870,615 shares. Information, as of December 31, 1998, obtained
from a shareholder filing made with the Securities and Exchange
Commission dated February 8, 1999.
(e) Includes exercisable warrants to acquire shares of Common Stock in the
following amounts per beneficial owner: Timothy A. Braswell - 30,135
shares; Aron Katzman - 30,135 shares; Harry L. Franc, III - 6,697.
(f) Includes shares subject to the terms of a Conversion Voting Agreement
entered into on January 7, 1999, wherein the beneficial owners granted
proxies to S. Leslie Flegel and William H. Lee to vote in favor of
Proposal 1 in the following amounts per beneficial owner: Timothy A.
Braswell - 296,464 shares; Aron Katzman - 169,781 shares; Jason S.
Flegel - 133,769 shares; Dwight L. DeGolia - 107,104 shares; Harry L.
Franc - 34,228 shares; and Randall S. Minix - 8,485 shares.
See Proposal 1.
(g) Includes exercisable options and warrants to acquire 225,446 shares of
Common Stock.
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PROPOSAL 1: APPROVAL OF THE ISSUANCE OF 1,473,281 SHARES OF THE
COMMON STOCK OF THE COMPANY UPON THE CONVERSION OF THE CLASS A
CONVERTIBLE PREFERRED STOCK
On January 7, 1999, the Company and its subsidiary, Source-US Marketing
Services, Inc., entered into an Agreement and Plan of Merger (the "Merger
Agreement") with U.S. Marketing Services, Inc. ("US Marketing"), Jonathan J.
Ledecky, James R. Gillis and Monte Weiner. Pursuant to the Merger Agreement, US
Marketing was merged (the "Merger") into the Company's subsidiary and each share
of US Marketing was converted into a right to receive .3626 shares of Common
Stock of the Company and .2772 shares of Class A Convertible Preferred Stock
(the "Preferred Stock") of the Company. Messrs. Ledecky, Gillis and Weiner
received 1,779,383, 73,668 and 73,668 shares of Common Stock, respectively, and
1,360,617, 56,332 and 56,332 shares of Preferred Stock, respectively. Each share
of Preferred Stock will automatically convert into one share of Common Stock
upon receipt of the approval of the holders of a majority of the outstanding
shares of Common Stock (other than shares held by Messrs. Ledecky, Gillis and
Weiner). If shareholder approval is not received on or before June 30, 1999, the
shares of Preferred Stock will be convertible, at the option of the holders,
into demand debt of the Company aggregating $11,388,462.
In connection with the Merger Agreement, the Company and Messrs.
Ledecky, Gillis and Weiner entered into a Registration Rights Agreement dated
January 7, 1999 (the "Registration Rights Agreement") whereby Messrs. Ledecky,
Gillis and Weiner have agreed not to transfer their shares of Common Stock
(including any shares of Common Stock issuable upon conversion of the Preferred
Stock) for a period of one year from the date of the Registration Rights
Agreement without the consent of the Company, except under certain
circumstances, and Messrs. Ledecky, Gillis and Weiner have the right to require
the registration of their shares of Common Stock (including any shares of Common
Stock issuable upon conversion of the Preferred Stock) under the Securities Act
of 1933, as amended, for resale under certain circumstances.
Also in connection with the Merger Agreement, on January 7, 1999, Mr.
Flegel and Mr. Ledecky entered into a Voting Agreement (the "Voting Agreement")
whereby Mr. Ledecky agreed to vote the Common Stock held by him in the same
manner as Mr. Flegel on matters pertaining to the election of directors of the
Company; the ratification of the Company's auditors; composition of senior
management of the Company; financing; stock bonus, option or incentive plans or
programs for employees and consultants of the Company and amendments thereto;
the amendment of the Articles of Incorporation of the Company to increase the
authorized capital of the Company; and similar matters pertaining to the
day-to-day operations of the Company. The Voting Agreement specifically excludes
matters pertaining to fundamental changes in the Company, including, but not
limited to, mergers, acquisitions requiring shareholder approval, tender offers,
sales of all or substantially all of the assets of the Company, changes in
control of the Company, and the issuance of capital stock of the Company
requiring shareholder approval. Mr. Ledecky granted a proxy to Mr. Flegel to
vote his shares in accordance with the terms of the Voting Agreement. The Voting
Agreement will terminate upon the earlier of the second anniversary of the
Voting Agreement, Mr.
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Ledecky owning less than 10% of the issued and outstanding capital stock of the
Company, or the removal or resignation of Mr. Flegel from either of his
positions as Chief Executive Officer or as Chairman of the Board of Directors of
the Company.
Rule 4460(i)(1)(D) of The Nasdaq Stock Market, Inc. Nasdaq Marketplace
Rules requires certain companies whose securities are traded on the Nasdaq
National Market (such as the Company) to obtain shareholder approval prior to
issuing stock in connection with the acquisition of the stock of another company
when the amount of Common Stock to be issued (or issuable upon conversion) will
be greater than either 20% of the Common Stock or 20% of the voting power of the
Company outstanding prior to the issuance. The issuance of the Common Stock to
Messrs. Ledecky, Gillis and Weiner in connection with the Merger Agreement did
not require shareholder approval pursuant to Rule 4460(i)(1)(D) because it
constituted 20% of the issued and outstanding Common Stock on January 7,
1999, the date of the Merger Agreement. Rule 4460(i)(1)(D), however, requires
the Company to obtain shareholder approval of this Proposal 1 prior to the
issuance of Common Stock upon the conversion of the Preferred Stock because the
number of shares of Common Stock that would be issued upon conversion of the
Preferred Stock, when aggregated with the shares of Common Stock issued in the
Merger, is in excess of 20% of the Common Stock issued and outstanding on
January 7, 1999. If the Company fails to obtain shareholder approval on or
before June 30, 1999, the shares of Preferred Stock will be convertible, at the
option of the holders, into demand debt of the Company aggregating
$11,388,462.
The following is a summary description of the preferences, rights and
limitations of the Preferred Stock as set forth in the Certificate of
Designation as filed with the Secretary of State of the State of Missouri on
January 6, 1999.
Voting Rights. The shares of Preferred Stock carry no voting rights;
however, the Company shall not, without the approval of at least a majority of
the outstanding shares of Preferred Stock, (i) amend the Articles of
Incorporation or any other document to alter or change any rights, preferences
or privileges of the Preferred Stock or to materially and adversely affect the
Preferred Stock, (ii) increase or decrease the authorized number of shares of
Preferred Stock or effect a stock split or reverse stock split of the Preferred
Stock, or (iii) authorize another class or series of shares senior to or pari
passu with the Preferred Stock with respect to distribution of assets on
liquidation.
Dividends. The holders of Preferred Stock are entitled to receive
dividends at the same rate, on the same conditions, at the same time and to the
same extent dividends are paid or declared by the Company on the Common Stock.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the holders of the
Preferred Stock shall be entitled to receive in cash out of the assets of the
Company, before any amount shall be paid to the holders of the Common Stock, a
liquidation preference amount of $7.73 per share plus any dividends previously
declared but unpaid (the "Liquidation Preference Amount").
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Conversion. Upon approval by the holders of a majority of the shares
Common Stock voting at the Special Meeting (other than the shares held by
Messrs. Ledecky, Gillis and Weiner), each share of Preferred Stock shall be
converted automatically into one share of Common Stock. If shareholder approval
is not obtained on or before June 30, 1999, the Company shall, at the election
of any holder of the Preferred Stock, convert all of the shares of the Preferred
Stock held by such holder into a demand note of the Company with a principal
amount per share equal to the Liquidation Preference Amount. For the shares of
Preferred Stock which are to be converted, the Company is obligated to deliver
to the holder thereof a note in a principal amount equal to the Liquidation
Preference Amount times the number of shares of Preferred Stock to be converted.
Such note shall be payable on demand with 30 days notice and shall bear interest
at the Prime Rate (as announced from time to time by J.P. Morgan) plus 1% from
the date of conversion.
In connection with the Merger Agreement, in order to satisfy a
condition to the obligation of Messrs. Ledecky, Gillis and Wiener to close the
Merger, S. Leslie Flegel, CEO and Chairman of the Company, each member of the
Board of Directors of the Company and certain other shareholders of the Company
(the "Conversion Shareholders") entered into a Conversion Voting Agreement dated
as of January 7, 1999, whereby the Conversion Shareholders granted proxies to
Mr. Flegel and William H. Lee, Jr., Chief Operating Officer and Vice-Chairman of
the Company, to vote their shares of Common Stock in favor of this Proposal. The
Conversion Shareholders own an aggregate of shares 4,292,791 (35.3% as of March
4, 1999) of Common Stock eligible to vote for Proposal 1.
Messrs. Ledecky, Gillis and Weiner are not entitled to vote their
shares of Common Stock issued in connection with the Merger Agreement on
Proposal 1, and their shares shall be disregarded for purposes of determining
whether the Proposal has been approved.
The Board of Directors recommends that the shareholders vote "FOR"
Proposal 1.
PROPOSAL 2: AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors recommends the adoption of an amendment to the
Articles of Incorporation to increase the authorized Common Stock of the Company
from 16,528,925 shares to 40,000,000 shares. The proposed amendment would change
only the number of authorized shares of Common Stock and will not change the
number of authorized shares of Preferred Stock or otherwise effect any changes
in the Articles of Incorporation. If approved by the shareholders, paragraph (a)
of Article 4 of the Articles of Incorporation would read in its entirety as
follows:
ARTICLE 4
(a) The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is forty-two million
(42,000,000) shares, each having a par value of One Cent
($.01) per share. Of such authorized shares forty million
(40,000,000) shares are hereby classified and designated
common
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stock and two million (2,000,000) shares are hereby classified
and designated preferred stock.
As of March 4, 1999, the Company had outstanding 12,168,299 shares of
Common Stock and had reserved for issuance 4,263,677 shares of Common Stock.
Without an increase in the number of authorized shares, the Company will have
only approximately 96,949 shares of the currently authorized Common Stock
available for financing, acquisitions, stock splits, issuances under the
Company's Stock Plan, and other corporate purposes. The Company has no present
plans or commitments for issuing any of the additional shares of Common Stock
except as may occur in connection with the conversion of the Preferred Stock
pursuant to Proposal 1, the conversion of certain outstanding warrants and in
connection with the Stock Plan. Nevertheless, the proposed increase in
authorized shares would provide the necessary flexibility for other transactions
the Company might take for proper corporate purposes, including those relating
to stock splits, stock dividends, warrants, employee benefit plans, financing
programs or acquisitions. No further action or authorization by the shareholders
would be necessary prior to the issuance of the additional shares unless it is
required for a particular transaction by applicable law, regulatory agency, the
Nasdaq Marketplace Rules or rules of any stock exchange on which the Company's
Common Stock may then be listed.
The issuance of additional shares under certain of the transactions
mentioned above could possibly be used to make a change in control of the
Company more difficult by diluting the interest of persons seeking to gain
control or by issuance to a holder who favors current management and who would
vote for the election of directors who oppose a transaction which would result
in a change of control. The Board of Directors is not aware of any present
effort to obtain control of the Company by the accumulation of Common Stock or
otherwise.
The additional shares for which authorization is sought would be
identical with the shares of Common Stock now authorized and outstanding, and
the amendment would not affect the terms or the rights of the holders of those
shares. The Company's Common Stock has no conversion, preemptive or subscription
rights and is not redeemable.
The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock is required for adoption of the proposed
amendment. The effective date of the proposed amendment will be the date upon
which the required filing is made in the Office of the Secretary of State of the
State of Missouri. Assuming approval of the amendment by the shareholders, it is
anticipated the filing will be made as soon thereafter as practicable.
Mr. Ledecky has given Mr. Flegel his irrevocable proxy to vote in favor
of Proposal 2. Messrs. Ledecky and Flegel own an aggregate of 2,972,403 shares
(24.4% as of March 4, 1999) of Common Stock eligible to vote for Proposal 2.
The Board of Directors recommends that the shareholders vote "FOR" the
proposed amendment.
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PROPOSAL 3: AMENDMENT TO THE
COMPANY'S 1995 INCENTIVE STOCK OPTION PLAN
On October 7, 1998, the Board of Directors of the Company adopted an
amendment to the Stock Plan and directed that the Stock Plan as amended be
submitted to the shareholders for their approval. The amendment provides for an
increase in the number of shares of the Company's Common Stock available under
the Stock Plan by 1,000,000 shares. The amendment will become effective upon
approval by the holders of at least a majority of the shares of the Common Stock
voting at the Special Meeting. The Stock Plan as amended is attached as Exhibit
A to this Proxy Statement.
GENERAL
The purpose of the Stock Plan is to motivate employees of the Company
and its subsidiaries through incentives inherent in stock ownership by providing
the opportunity to obtain or increase proprietary interest in the Company on a
favorable basis through options to purchase stock granted under the Stock Plan.
The purpose of the proposed amendment to the Stock Plan is to increase the
number of available shares so as to enable the Company to continue the Stock
Plan in future years. The Stock Plan became effective on August 23, 1995. The
maximum number of shares that may be issued under the Stock Plan is now 520,661
shares of Common Stock of which all shares have been issued or reserved for
issuance. In the event there is a lapse, expiration, termination, or
cancellation of any benefit awarded under the Stock Plan and the shares
represented by such benefit either are not issued or are subsequently reacquired
by the Company, such shares may be again available to be used in connection with
the Stock Plan without being charged against the limitation of the number of
authorized shares under the Stock Plan. The shares currently authorized have
been and, if Proposal 3 is approved, the additional shares will be registered
under the Securities Act of 1933, as amended. The closing price of the Company's
Common Stock on March 4, 1999 on the Nasdaq National Market was $10.50 per
share.
The Compensation Committee of the Board of Directors serves as the
Administrator of the Stock Plan (the "Administrator") and has the exclusive
authority to determine the type of options awarded (incentive stock options
("ISO") or non-qualified stock options ("NQSO")); to determine the terms and
conditions of all options; to construe and interpret the Stock Plan and the
options granted under it; to determine the time or times an option may be
exercised, the number of shares as to which an option may be exercised at any
one time, and when an option may terminate; to establish, amend and revoke rules
and regulations relating to the Stock Plan and its administration; and to
correct any defect, supply any omission, or reconcile any inconsistency in the
Stock Plan or any option agreement.
OPTIONS
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All employees of the Company who are not members of the Compensation
Committee are eligible to receive options under the Stock Plan. The
Administrator determines the employees to whom options are granted, the time or
times such options are granted, the number of shares to be subject to each
option and the terms when each option may be exercised.
Options entitle a participant to purchase shares of Common Stock at a
price per share equal to the market value of the Common Stock on the date the
option is granted. However, if an ISO is granted and the participant receiving
the ISO owns more than 10% of the total combined voting power of all classes of
stock of the Company, the purchase price shall not be less than one hundred and
ten percent of the market value of the Common Stock on the date the ISO is
granted.
Any outstanding option and all unexercised rights thereunder shall
expire and terminate automatically upon the earliest of: (i) the cessation of
the employment or engagement of the participant by the Company for any reason
other than retirement (under normal Company policies), death or disability; (ii)
the date which is 3 months following the effective date of the participant's
retirement from the Company's service; (iii) the date which is 1 year following
the date on which the participant's service with the Company ceases due to death
or disability; (iv) the date of expiration of the option determined by the
Administrator at the time the option is granted and specified in such option; or
(v) the 10th annual anniversary date of the granting of the option, or, if and
when an ISO is granted participant owns more than 10% of the total combined
voting power of all classes of stock of the Company, then on the 5th such
anniversary.
Options are exercisable on the terms determined by the Administrator at
the time of the grant. The option price is payable in full upon exercise of an
option and may be paid in cash or, if permitted by the Administrator, by
tendering shares of Common Stock of the Company already owned by the
participant. Options granted under the Stock Plan are nontransferable and
nonassignable by a participant other than by will or by the laws of descent and
distribution, and are exercisable during the participant's lifetime only by the
participant.
CHANGE OF CONTROL
The Stock Plan provides for the accelerated exercisability of options
in the event of a merger, consolidation, acquisition, sale or transfer of
assets, tender, or exchange offer or other reorganization in which the Company
does not survive as an independent company.
AMENDMENT; TERMINATION
The Board of Directors may amend the Stock Plan at any time, except
that the Board may not, without the approval of the shareholders, materially
increase the benefits accruing to participants under the Stock Plan, increase
the number of shares of Common Stock in the aggregate which may be issued under
the Stock Plan, except as provided by the Stock Plan, or materially modify the
requirements as to eligibility for participation in the Stock Plan.
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The Board of Directors may terminate or suspend the Stock Plan at any
time. The Stock Plan currently will terminate automatically on August 23, 2005.
No benefits may be awarded under the Stock Plan after its termination. Except as
provided by the Stock Plan, amendment, suspension or termination of the Stock
Plan will not alter or impair any rights or obligations under options previously
granted under the Stock Plan.
FEDERAL TAX CONSEQUENCES
Incentive Stock Options. A participant who exercises an ISO while
employed by the Company or within the 3 month (1 year for disability) period
after termination of employment, will not recognize any ordinary income at that
time. If the shares acquired upon the exercise are not disposed of until more
than 1 year after the date of the exercise, and more than 2 years after the date
the ISOs were granted, the excess of the sale proceeds over the aggregate option
price of such shares will be treated as long-term capital gain to the
participant. If the shares acquired on exercise of the ISOs are disposed of
prior to such dates (a "disqualifying disposition"), the excess of the fair
market value of the shares at the time of exercise over the aggregate option
price (but not more than the gain on the disposition if the disposition is a
transaction on which a loss, if realized, would be recognized) will be ordinary
income to the participant at the time of such disqualifying disposition. The
Company will be entitled to a federal tax deduction in a like amount, subject to
the limitation on deductions discussed below. If an ISO is exercised more than 3
months (1 year for disability) after termination of employment, the participant
will recognize ordinary income equal to the difference between the option price
and the fair market value of the stock received on the date of exercise. The
Company would be allowed a deduction for a like amount in such case, subject to
the limitation on deductions discussed below.
For purpose of the alternative minimum tax on individuals, on exercise
of an ISO, the difference between the fair market value of the stock on the date
of exercise and the amount paid for the stock will be treated as taxable.
A participant does not recognize any taxable income on the grant for
exercise of an ISO. However, if there is a disqualifying disposition of stock
received on the exercise of an ISO, the Company may deduct from income in the
year of the disqualifying disposition an amount equal to the amount that the
participant recognizes as ordinary income due to the disqualifying disposition,
subject to the limitation on deductions discussed below.
Nonqualified Stock Options. A participant will not realize any income
at the time an NQSO is granted, nor will the Company be entitled to a deduction
at that time. Upon exercise of an NQSO, the participant will recognize ordinary
income (whether the NQSO 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 NQSO pertains. The
Company will be entitled to a tax deduction in an amount equal to the amount of
ordinary income realized by the participant, subject to the limitation on
deductions discussed below.
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Limitation on Deductions. Section 162(m) of the Internal Revenue Code
of 1986, as amended, limits to $1 million per year the federal income tax
deduction available to a public company for compensation paid to its chief
executive officer or any of its other four highest paid officers unless certain
requirements are met. The Stock Plan does not meet the requirements of Section
162(m) and it is possible that certain compensation paid under the Stock Plan
would not be deductible in the future. However, the Company currently believes
that all amounts under the Stock Plan will be deductible because the
compensation of the officers will either not exceed the limit under Section
162(m) or part of the compensation will be paid under the Performance Plan for
Executives which does meet the requirements of Section 162(m).
The following sets forth information with respect to the ISOs granted
by the Administrator during the Company's fiscal year ended January 31, 1999.
All of the ISOs expire 10 years from the date of grant.
Name and Position Exercise Price Per Share Number of Shares Subject to ISOs
----------------- ------------------------ ---------------------------------
S. Leslie Flegel, CEO and Chairman - -
William H. Lee, COO and Vice Chairman - -
Dwight L. DeGolia, Executive Vice President $ 5.00 30,000(a)
$ 5.13 10,000(b)
Jason S. Flegel, Senior Vice President of
RDA Operations $ 5.00 10,000(c)
Stephen E. Borjes, President - Front-End
Merchandising Group $ 5.00 20,000(a)
$ 6.63 20,000(d)
All executive officers $ 5.00 70,000(a)
as a group $ 5.13 10,000(b)
$ 5.00 10,000(c)
$ 6.63 20,000(d)
$ 7.81 202,000(e)
All directors who are not executive - -
officers as a group
All employees as a group $ 5.00 70,000(a)
$ 5.13 10,000(b)
$ 5.00 50,000(c)
$ 6.63 20,000(d)
$ 7.81 202,000(e)
$ 5.00 63,000(f)
$ 6.13 910(g)
$ 6.63 910(h)
$ 7.38 5,000(i)
$10.88 155,000(j)
$10.88 100,000(k)
(a) Except as stated below, one-third of the ISOs are exercisable
immediately, with the remainder exercisable in cumulative installments
of one-third on each of the first two anniversaries of the date of the
grant, October 8, 1998. In the event that this Proposal 3 is not
approved, all of such ISOs shall be deemed not to have been granted
under the Stock Plan and shall not be exercisable.
(b) All of the ISOs are exercisable on the first anniversary of the date of
grant, February 2, 1998.
(c) One-fifth of the ISOs are exercisable immediately, with the remainder
exercisable in cumulative installments of one-fifth on each of the
first four anniversaries of the date of the grant, October 8, 1998.
(d) One-fifth of the ISOs are exercisable immediately, with the remainder
exercisable in cumulative installments of one-fifth on each of the
first four anniversaries of the date of the grant, May 1, 1998.
(e) Except as stated below, one-third of the ISOs are exercisable on
January 1, 2000, with the remainder exercisable in cumulative
installments of one-third on each of January 1, 2001 and January 1,
2002. The ISOs were granted on December 14, 1998. In the event that
this Proposal 3 is not approved, all of such ISOs shall be deemed not
to have been granted under the Stock Plan and shall be deemed to be
NQSOs.
(f) One-third of the ISOs are exercisable immediately, with the remainder
exercisable in cumulative installments of one-third on each of the
first two anniversaries of the date of the grant, October 8, 1998.
(g) One-third of the ISOs are exercisable immediately, with the remainder
exercisable in cumulative installments of one-third on each of the
first two anniversaries of the date of the grant, June 24, 1998.
(h) One-third of the ISOs are exercisable immediately, with the remainder
exercisable in cumulative installments of one-third on each of the
first two anniversaries of the date of the grant, May 1, 1998.
(i) One-fifth of the ISOs are exercisable immediately, with the remainder
exercisable in cumulative installments of one-fifth on each of the
first four anniversaries of the date of the grant, November 30, 1998.
(j) Except as stated below, one-fifth of the ISOs are exercisable
immediately, with the remainder exercisable in cumulative installments
of one-fifth on each of the first four anniversaries of the date of the
grant, January 7, 1999. In the event that this Proposal 3 is not
approved, all of such ISOs shall be deemed not to have been granted
under the Stock Plan and shall be deemed to be NQSOs.
(k) Except as stated below, one-third of the ISOs are exercisable on
January 1, 2000, with the remainder exercisable in cumulative
installments of one-third on each of January 1, 2001 and January 1,
2002. The ISOs were granted on January 7, 1999. In the event that
this Proposal 3 is not approved, all of such ISOs shall be deemed not
to have been granted under the Stock Plan and shall be deemed to be
NQSOs.
Mr. Ledecky has given Mr. Flegel his irrevocable proxy to vote in favor
of Proposal 2. Messrs. Ledecky and Flegel own an aggregate of 2,972,403 shares
(24.4% as of March 4, 1999) eligible to vote for Proposal 2.
The Board of Directors recommends that the shareholders vote "FOR" the
proposed amendment.
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SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1999 Annual Meeting of
Shareholders must be received by the Company by April 28, 1999 for inclusion in
the Company's proxy statement and proxy relating to that meeting. Upon receipt
of any such proposal, the Company will determine whether or not to include such
proposal in the proxy statement and proxy in accordance with regulations
governing the solicitation of proxies.
In order for a Shareholder to bring other business before the 1999 Annual
Meeting of Shareholders, timely notice must be given to the Company within the
time limits set forth above. Such notice must include a description of the
proposed business, the reasons therefor and other matters specified in the
Company's Bylaws. The Board or the presiding officer at the Annual Meeting may
reject any such proposals that are not made in accordance with these procedures
or that are not a proper subject for Shareholder action in accordance with
applicable law. These requirements are separate from the procedural requirements
a Shareholder must meet to have a proposal included in the Company's proxy
statement.
In each case the notice must be provided to the Company at its principal office
in St. Louis, Missouri. Any Shareholder desiring a copy of the Company's Bylaws
will be furnished a copy without charge upon the submission of a written request
to the Company.
If the date of the 1999 Annual Meeting of Shareholders is advanced or delayed by
more than 30 calendar days from the date of the 1998 Annual Meeting of
Shareholders, the Company will make a timely disclosure of such date change and
the impact of such date change on the submission deadlines set forth above in
its first quarterly report on Form 10-QSB following such date change, or, if
impracticable, by any means reasonably calculated to inform shareholders.
By Order of the Board of Directors
/s/ W. Brian Rodgers
_________________________________
W. Brian Rodgers, Secretary
THE BOARD OF DIRECTORS HOPES THAT YOU WILL ATTEND THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN
THE ACCOMPANYING ENVELOPE PROMPTLY. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR
STOCK PERSONALLY BY DELIVERING A WRITTEN REVOCATION OF YOUR PROXY TO THE
SECRETARY OF THE COMPANY.
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EXHIBIT A
THE SOURCE INFORMATION MANAGEMENT COMPANY
AMENDED AND RESTATED
1995 INCENTIVE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The Source Information Management Company 1995 Incentive Stock Option
Plan ("Plan") is intended to provide additional incentive to certain valued and
trusted employees of The Source Information Management Company, a Missouri
corporation (the "Company"), by encouraging them to acquire shares of the $.01
par value common stock of the Company (the "Stock") through options to purchase
Stock granted under the Plan ("Options"). The purpose for granting such Options
and making the purchase of the Stock possible is to increase the proprietary
interest of such employees in the business of the Company and provide them with
an increased personal interest in the continued success and progress of the
Company. The intended result is to promote the interests of both the Company and
its shareholders.
Options granted under the Plan may be either Options intended to
qualify as "incentive stock options" ("ISOs") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified
stock options ("NQSOs"). Each employee granted an Option will receive and be
required to accept a Stock Option Agreement with the Company (the "Option
Agreement"), which sets forth the terms and conditions of the Option, in
accordance with this Plan.
2. ADMINISTRATION OF PLAN
The Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company ("Board"), to be composed
of at least two (2) members. Each member of the Committee shall be a
"non-employee director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rule or
regulation. Each member of the Committee shall serve at the pleasure of the
Board. Any vacancy occurring in the membership of the Committee shall be filled
by appointment by the Board. If there are less than two members of the Board who
qualify as "non-employee directors" within the meaning of Rule 16b-3 under the
Exchange Act, then the full Board shall be deemed to be the administrators of
the Plan and shall be endowed with all of the rights and responsibilities
attributed to the Committee herein:
The Committee shall have the sole power:
a. subject to the provisions of the Plan, to grant Options; to
determine the type of Option (NQSO or ISO); to determine the terms and
conditions of all Options; to construe
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and interpret the Plan and Options granted under it; to determine the time or
times an Option may be exercised, the number of shares as to which an Option may
be exercised at any one time, and when an Option may terminate; to establish,
amend and revoke rules and regulations relating to the Plan and its
administration; and to correct any defect supply any omission, or reconcile any
inconsistency in the Plan, or in any Option Agreement, in a manner and to the
extent it shall deem necessary, all of which determinations and interpretations
made by the Committee shall be conclusive and binding on all Optionees and on
their legal representatives and beneficiaries; and
b. to determine all questions of policy and expediency that may arise
in the administration of the Plan and generally exercise such powers and perform
such acts as are deemed necessary or expedient to promote the best interests of
the Company.
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. The interpretation and construction
by the Committee of any provision of the Plan and any determination by the
Committee under any provision of the Plan shall be final and conclusive for all
purposes. 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 attorneys' fees) arising therefrom to the
fullest extent permitted by law.
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of paragraph 13, the Stock that may be issued
pursuant to Options granted under the Plan shall not exceed in the aggregate
One Million Five Hundred Twenty Thousand Six Hundred Sixty-One (1,520,661)
shares of $.01 par value common stock of the Company. If any Options granted
under the Plan terminate, expire or are surrendered without having been
exercised in full, the number of shares of Stock not purchased under such
Options shall be available again for the purpose of the Plan. The Stock to be
offered for purchase upon the grant of an Option may be authorized but unissued
Stock or Stock previously issued and outstanding and reacquired by the Company.
4. PERSONS ELIGIBLE FOR OPTIONS
All employees of the Company who are not members of the Committee shall
be eligible to receive the grant of Options under the Plan. The Committee shall
determine the employees to whom Options shall be granted, the time or times such
Options shall be granted. the number of
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shares to be subject to each Option and the times when each Option may be
exercised. The Committee shall seek information, advice and recommendations from
management to assist the Committee in its independent determination as to the
employees to whom Options shall be granted. An employee who has been granted an
Option (an "Optionee"), if he or she is otherwise eligible, may be granted
additional Options.
5. PURCHASE PRICE
The purchase price of each share of Stock covered by each Option
("Purchase Price") shall not be less than one hundred percent (100%) of the Fair
Market Value Per Share (as defined below) of the Stock on the date the Option is
granted. However, if and when an ISO is granted the Optionee receiving the ISO
owns or will be considered to own, by reason of Section 424(d) of the Code, more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, the purchase price of the Stock covered by the ISO shall
not be less than one hundred and ten percent (110%) of the Fair Market Value Per
Share of the Stock on the date the ISO is granted.
"Fair Market Value Per Share" of the Stock shall mean: (i) if the Stock
is traded only otherwise than on a securities exchange and is quoted on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ"), the closing quoted selling price of the Stock on the date of grant
of the Option. as reported by the Wall Street Journal; (ii) if the Stock is
admitted to trading on a securities exchange, the closing quoted selling price
of the Stock on the date of grant of the Option, as reported in the Wall Street
Journal; or (iii) if the Stock is traded only otherwise than on a securities
exchange and is not quoted on NASDAQ, the closing quoted selling price of the
Stock on the date of grant of the Option as quoted in the "pink sheets"
published by the National Daily Quotation Bureau. In any case, if there were no
sales of the Stock on the date of the grant of an Option, the Fair Market Value
Per Share shall be determined by the Committee in accordance with Section
20.2031-2 of the Federal Estate Tax Regulations.
6. DURATION OF OPTIONS
Any outstanding Option and all unexercised rights thereunder shall
expire and terminate automatically upon the earliest of: (i) the cessation of
the employment or engagement of the Optionee by the Company for any reason other
than retirement (under normal Company policies), death or disability; (ii) the
date which is three months following the effective date of the Optionee's
retirement from the Company's service; (iii) the date which is one year
following the date on which the Optionee's service with the Company ceases due
to death or disability; (iv) the date of expiration of the Option determined by
the Committee at the time the Option is granted and specified in such Option; or
(v) the tenth (10th) annual anniversary date of the granting of the Option, or,
if and when an ISO is granted the Optionee owns (or would be considered to own
by reason of Section 424(d) of the Code) more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company, then on the
fifth (5th) such
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anniversary. However, the Committee shall have the right, but not the
obligation, to extend the expiration of the Options held by an Optionee whose
service with the Company has ceased for any reason to the end of their original
terms, notwithstanding that such Options may no longer qualify as ISOs under the
Code.
7. EXERCISE OF OPTIONS
a. An Option may be exercisable in installments or otherwise upon such
terms as the Committee shall determine when the Option is granted.
b. No Option will be exercisable (and any attempted exercise will be
deemed null and void) if such exercise would create a right of recovery for
"short-swing profits" under Section 16(b) of the Securities Exchange Act of
1934.
c. No Option will become exercisable if the exercisability of such
Option would cause the aggregate fair market value (as determined at the time of
grant in accordance with the provisions of paragraph 5 hereof) of the Stock with
respect to which Option issued by the Company are first exercisable during such
calendar year to exceed $100,000. If the grant of an Option hereunder would
cause a violation of the foregoing limitation, the exercisability of the portion
of the Option granted hereunder shall be reduced to the extent necessary such
that no violation of the foregoing limitation will occur. Any Option with
respect to which exercisability has been deferred shall become first exercisable
on the first day of the calendar year in which such exercisability would not
cause a violation of the limitations contained in Section 422(b)(7) of the Code;
provided, however, if the exercisability is required to be deferred beyond the
expiration of such Option, the grant of such Option shall be null and void.
8. METHOD OF EXERCISE
a. When the right to purchase shares accrues, Options may be exercised
by giving written notice to the Company stating the number of shares for which
the Option is being exercised, accompanied by payment in full by cash or its
equivalent, as is acceptable to the Company, of the purchase price for the
shares being purchased. The Company shall issue a separate certificate or
certificates of Stock for each Option exercised by an Optionee.
b. In the Committee's discretion, determined at the time an Option is
granted, payment of the purchase price for shares may be made in whole or in
part with other shares of Stock of the Company which are free and clear of all
liens and encumbrances. The value of the shares of Stock tendered in payment for
the shares being purchased shall be the Fair Market Value Per Share on the date
of the Optionee's notice of exercise.
c. Notwithstanding the foregoing, the Company shall have the right to
postpone the time of delivery of any shares for such period as may be required
for the Company, with reasonable diligence, to comply with any applicable
listing requirements of any national
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securities exchange or the National Association of Securities Dealers, Inc. or
any Federal, state or local law. If the Optionee, or other person entitled to
exercise an Option, fails to timely accept delivery of and pay for the shares
specified in such notice, the Committee shall have the right to terminate the
Option and the exercise thereof with respect to such shares.
9. NONTRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be assignable or transferable by
the Optionee, either voluntarily or by operation of law, other than by Will or
the laws of descent and distribution, and, during the lifetime of the Optionee,
shall be exercisable only by the Optionee.
10. CONTINUANCE OF EMPLOYMENT
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Optionee any rights with respect to the continuation of
employment by the Company or interfere in any way with the right of the Company
(subject to the terms of any separate employment agreement to the contrary) at
any time to terminate such employment or to increase or decrease the
compensation of the Optionee from the rate in existence at the time of the
granting of any Option.
11. RESTRICTIONS ON SHARES
If the Company shall be advised by counsel that certain requirements
under Federal or state securities laws must be met before Stock may be issued
under the Plan, the Company shall notify all persons who have been issued
Options, and the Company shall have no liability for the failure to issue Stock
under any exercise of Options because of any delay while such requirements are
being met or the inability of the Company to comply with such requirements.
12. PRIVILEGE OF STOCK OWNERSHIP
No person entitled to exercise any Option granted under the Plan shall
have the rights or privileges of a stockholder of the Company for any shares of
Stock issuable upon exercise of such Option until such person has become the
holder of record of such shares. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date on which such person
becomes the holder of record, except as provided in paragraph 13.
13. ADJUSTMENT
a. If the number of outstanding shares of Stock are increased or
decreased, or such shares are exchanged for a different number or kind of shares
or securities of the Company, through reorganization, merger, recapitalization,
reclassification, stock dividend, stock split, combination of shares, or other
similar transaction, the aggregate number of shares of Stock subject to the
Plan, as provided in paragraph 3, and the shares of Stock subject to issued
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and outstanding Options under the Plan shall be appropriately and
proportionately adjusted by the Committee. Any such adjustment in an outstanding
Option shall be made without change in the aggregate purchase price applicable
to the unexercised portion of the Option but with an appropriate adjustment in
the price for each share or other unit of any security covered by the Option.
b. Notwithstanding paragraph (a), upon: (i) the dissolution or
liquidation of the Company, (ii) a reorganization, merger or consolidation of
the Company with one or more corporations in which the, Company is not the
surviving corporation, (iii) a sale of substantially all of the assets of the
Company or (iv) the transfer of more than 80% of the then outstanding Stock of
the Company to another entity or person, in a single transaction or series of
transactions, the Board shall accelerate the time in which any outstanding
Options granted under the Plan may be exercised to a time prior to the
consummation of the transaction, and the Plan shall terminate upon such
consummation of the transaction. However, the acceleration of the time of
exercise of such Options and the termination of the Plan shall not occur if
provision is made in writing in connection with the transaction, in a manner
acceptable to the Board, for: (A) the continuance of the Plan and assumption of
outstanding Options, or (B) the substitution for such Options of new options to
purchase the stock of a successor corporation (or parent or subsidiary thereof),
with appropriate adjustments as to number and kind of shares and option price.
The Board of Directors shall have the authority to amend this paragraph to
provide for a requirement that a successor corporation assume any outstanding
Options.
c. Adjustments under this paragraph 13 shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent thereof
shall be final, binding and conclusive. No fractional shares of Stock shall be
issued under the Plan or in connection with any such adjustment.
14. INVESTMENT PURPOSE
Each Option granted hereunder may be issued on the condition that any
purchase of Stock by the exercise of an Option which is not the subject of a
registration statement permitting the sale or other distribution thereof shall
be for investment purposes and not with a view to resale or distribution (the
"Restricted Stock"). If requested by the Company, each Optionee must agree, at
the time of the purchase of any Restricted Stock, to execute an "investment
letter" setting forth such investment intent in the form acceptable to the
Company and must consent to any stock certificate issued to him thereunder
bearing a restrictive legend setting forth the restrictions applicable to the
further resale, transfer or other conveyance thereof without registration under
the Securities Act of 1933, as amended, and under the applicable securities or
blue sky laws of any other jurisdiction (together, the "Securities Laws"), or
the availability of exemptions from registration thereunder and to the placing
of transfer restrictions on the records of the transfer agent for such stock. No
Restricted Stock may thereafter be resold, transferred or otherwise conveyed
unless:
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i. an opinion of the Optionee's counsel is received. in form and
substance satisfactory to counsel for the Company, that
registration under the Securities Laws is not required; or
ii. such Stock is registered under the applicable Securities Laws; or
iii. A "no action" letter is received from the staff of the Securities
and Exchange Commission and from the administrative agencies
administering all other applicable securities or blue sky laws,
based on an opinion of counsel for Optionee in form and substance
reasonably satisfactory to counsel for the Company, advising
that registration under the Securities Laws is not required.
15. AMENDMENT AND TERMINATION OF PLAN
a. The Board of Directors of the Company may, from time to time, with
respect to any shares at the time not subject to Options, suspend or terminate
the Plan or amend or revise the terms of the Plan; provided that any amendment
to the Plan shall be approved by a majority of the shareholders of the Company
if the amendment would (i) materially increase the benefits accruing to
participants under the Plan; (ii) increase the number of shares of Stock which
may be issued under the Plan, except as provided under the provisions of
paragraph 13; or (iii) materially modify the requirements as to eligibility for
participation in the Plan.
b. Subject to the provisions of paragraph 13, the Plan shall terminate
ten (10) years from the earlier of the adoption of the Plan by the Board of
Directors or its approval by the shareholders.
c. Subject to the provisions of paragraph 13, no amendment, suspension
or termination of this Plan shall, without the consent of each Optionee, alter
or impair any rights or obligations under any Option granted to such Optionee
under the Plan.
16. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board of Directors
of the Company 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 of Directors, Options may be granted under the Plan
subject to obtaining such approval.
17. TERM OF PLAN
No Option shall be granted under the Plan after ten (10) years from the
earlier of the date of adoption of the Plan by the Board of Directors of the
Company or the date of approval by the Company's shareholders.
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Adopted by the Board of Directors as of August 23, 1995, amended as of
June 26, 1997 and further amended as of October 7, 1998.
THE SOURCE INFORMATION
MANAGEMENT COMPANY
By:_______________________________________
S. Leslie Flegel, Chairman of the Board
and Chief Executive Officer
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THE SOURCE INFORMATION MANAGEMENT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR SPECIAL MEETING OF SHAREHOLDERS,
MARCH 30, 1999 AT 10:00 A.M.
The undersigned shareholder of The Source Information Management
Company (the "Company") hereby appoints S. Leslie Flegel and William H. Lee and
each of them as attorneys and proxies, each with power of substitution and
revocation, to represent the undersigned at the Special Meeting of Shareholders
of the Company to be held at the Company's principal executive offices at11644
Lilburn Park Road, St. Louis, Missouri 63146 on March 30, 1999 at 10:00 A.M.
Central Standard Time, and at any adjournment or postponement thereof, with
authority to vote all shares held or owned by the undersigned in accordance with
the directions indicated herein.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION OF VOTE IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
Proposal 1. The issuance of 1,473,281 shares of the Company's Common Stock upon
the conversion of an equal number of shares of the Company's Series A
Convertible Preferred Stock.
- FOR - AGAINST - ABSTAIN
Proposal 2. An amendment to the Company's Articles of Incorporation to increase
the authorized shares of Common Stock.
- FOR - AGAINST - ABSTAIN
Proposal 3. An amendment to the Company's Stock Plan to increase the number of
available shares.
- FOR - AGAINST - ABSTAIN
Dated: ______________, 1999 __________________________________
(Signature)
__________________________________
(Signature if held jointly)
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The signature should agree with the
name on your stock certificate. If
acting as attorney, executor,
administrator, trustee, guardian,
etc., you should so indicate when
signing. If the signer is a
corporation, please sign the full
corporate name by duly authorized
officer. If shares are held jointly,
each shareholder should sign.
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