SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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DocuCorp International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Michael D. Andereck, President and CEO
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[LOGO] DOCUCORP(TM)
INTERNATIONAL
5910 North Central Expressway, Suite 800
Dallas, Texas 75206
October 27, 2000
Dear Stockholders:
Enclosed is a proxy statement for the Annual Meeting of Stockholders to be
held on Tuesday, December 12, 2000, at the Hotel Crescent Court, 400 Crescent
Court, Dallas, Texas at 9:00 a.m., local time. Also enclosed is a proxy card and
a copy of the Annual Report to Stockholders for fiscal 2000.
On the following pages you will find a Notice of Annual Meeting of
Stockholders and Proxy Statement. The following items of formal business will be
presented at the Annual Meeting:
(i) The election of six directors to the Board of Directors of DocuCorp;
(ii) The proposed amendment to the 1997 Equity Compensation Plan to
increase the number of shares of Common Stock issuable upon exercise
of stock options from 1,730,000 to 2,500,000; and
(iii) The ratification of the appointment of PricewaterhouseCoopers LLP as
the independent auditors for the 2001 fiscal year.
I ask for your support for the foregoing items.
During the Annual Meeting there will be a time for discussion, and I
encourage you to present comments, questions and ideas at the Annual Meeting
during the discussion period.
Whether or not you plan to attend the Annual Meeting and regardless of the
number of shares you own, please date, sign and return the enclosed proxy card
in the enclosed envelope (which requires no postage if mailed in the United
States).
I hope that you are able to join us at the Annual Meeting.
Sincerely,
/s/ Michael D. Andereck
Michael D. Andereck
President and Chief Executive Officer
[LOGO] DOCUCORP(TM)
INTERNATIONAL
5910 North Central Expressway, Suite 800
Dallas, Texas 75206
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 12, 2000
To the holders of Common Stock of
DocuCorp International, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DocuCorp
International, Inc. (the "Company" or "DocuCorp") will be held at the Hotel
Crescent Court, Dallas, Texas, on December 12, 2000 at 9:00 a.m., local time,
for the following purposes:
(i) The election of six directors to the Board of Directors of DocuCorp;
(ii) The ratification of the amendment to the 1997 Equity Compensation
Plan to increase the number of shares of Common Stock issuable upon
exercise of stock options under the plan from 1,730,000 to
2,500,000;
(iii) The ratification of the appointment of PricewaterhouseCoopers LLP as
the independent auditors for the 2001 fiscal year; and
(iv) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 20, 2000
are entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
Whether or not you plan to attend the Annual Meeting and regardless of the
number of shares you own, please date, sign and return the enclosed proxy card
in the enclosed envelope (which requires no postage if mailed in the United
States).
By Order of the Board of Directors,
/s/ Joan P. Moore
Joan P. Moore
Secretary
October 27, 2000
Dallas, Texas
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 12, 2000
This Proxy Statement is furnished to stockholders of DocuCorp
International, Inc., a Delaware corporation (the "Company" or "DocuCorp"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders to be held on December 12,
2000 at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas at 9:00
a.m., local time, and at any and all adjournments or postponements thereof.
Proxies in the form enclosed will be voted at the Annual Meeting, if properly
executed, returned to the Company prior to the meeting and not revoked. The
proxy may be revoked at any time before it is voted by giving written notice to
the Secretary of the Company.
ACTIONS TO BE TAKEN AT THE MEETING
At the Annual Meeting, holders of the Company's Common Stock will consider
and vote for the election of six nominees as directors of the Company. In
addition to the election of directors, the stockholders will be asked to ratify
(i) an amendment to the DocuCorp 1997 Equity Compensation Plan (the "Equity
Compensation Plan") and (ii) the selection of PricewaterhouseCoopers LLP as the
independent auditors of the Company for the 2001 fiscal year. In addition, any
other business as may properly come before the Annual Meeting will be considered
and the persons named in the proxies will vote in accordance with their judgment
on such business. The Board of Directors of DocuCorp knows of no such other
business that will be brought before the Annual Meeting as of the date of this
Proxy Statement.
Only holders of record of Common Stock at the close of business on October
20, 2000 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting. As of October 6, 2000, the Company had outstanding, and entitled
to vote at the Annual Meeting, approximately 14.9 million shares of Common
Stock. Holders of record of Common Stock are entitled to one vote per share on
the matters to be considered at the Annual Meeting.
The presence, either in person or by properly executed proxy, of the
holders of record of a majority of the Common Stock outstanding on the Record
Date is necessary to constitute a quorum at the Annual Meeting. The election as
a director of each nominee requires the affirmative vote of the holders of
record of a plurality of the outstanding voting power of the shares of Common
Stock represented, in person or by proxy, at the Annual Meeting. The
ratification of the selection of independent auditors requires the affirmative
vote of the majority of shares represented at the Annual Meeting. Approval of
the amendment to the Equity Compensation Plan requires the affirmative vote of
the holders of a majority of the shares of the Common Stock represented at the
Annual Meeting with respect to this matter.
The accompanying proxy, unless the stockholder otherwise specifies in the
proxy, will be voted (i) for the election as directors of the Company of the six
nominees set forth in this Proxy Statement, (ii) for the amendment to the Equity
Compensation Plan, (iii) for the ratification of the selection of
PricewaterhouseCoopers LLP as independent auditors and (iv) at the discretion of
the proxy holders on any other matter that may properly come before the meeting
or any adjournment thereof.
If a stockholder owns shares in "street name" by a broker, the broker, as
the record holder of the shares, is required to vote those shares in accordance
with your instructions. If you do not give instructions to the broker, the
broker will nevertheless be entitled to vote the shares with respect to
"discretionary" items but will not be permitted to vote the shares with respect
to "non-discretionary" items (in which case, the shares will be treated as
"broker non-votes"). Abstentions and "broker non-votes" are counted as present
and entitled to vote for the purposes of determining a quorum but are not
counted for purposes of the election of a director; however, are counted as
votes against other proposals.
If any other matter or business is brought before the meeting, the proxy
holders may vote the proxies in their discretion. The directors do not know of
any such other matter or business.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of October 6, 2000 for (i)
each person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each current executive officer of the Company listed in the Summary Compensation
Table set forth under the caption "Executive Compensation," and (iv) all of the
directors and current executive officers of the Company as a group. Except
pursuant to applicable community property laws and except as otherwise
indicated, each stockholder identified in the table possesses sole voting and
investment power with respect to its or his shares.
Shares Owned
-----------------------
Name Number Percent
---- --------- -------
Safeguard Scientifics, Inc. (1) .................... 3,095,832 20.8%
Michael D. Andereck (2) ............................ 1,200,638 8.0%
Technology Leaders II (3) .......................... 1,077,699 7.2%
Anshoo S. Gupta (4) ................................ 34,000 *
Milledge A. Hart, III (5) .......................... 243,020 1.6%
John D. Loewenberg (6) ............................. 76,517 *
Warren V. Musser (7) ............................... 178,912 1.2%
George F. Raymond (8) .............................. 68,920 *
Arthur R. Spector (9) .............................. 137,624 *
B. Bruce Dale (10) ................................. 241,999 1.6%
Kerry K. LeCrone (11) .............................. 96,571 *
All Directors and Executive
Officers as a group (9 persons) .................. 2,278,201 15.3%
- ----------
* Less than one percent.
(1) The shares are held of record by Safeguard Scientifics (Delaware), Inc., a
wholly-owned subsidiary of Safeguard Scientifics, Inc. ("Safeguard").
Includes 348,952 shares of Common Stock issuable pursuant to exercisable
warrants and also includes 136,852 shares of Common Stock transferred by
Safeguard to certain of its employees pursuant to a long-term incentive
plan (the "LTIP"). Safeguard will continue to exercise voting control of
the shares held by the LTIP until the occurrence of certain vesting
requirements. The stockholder's address is 800 The Safeguard Building, 435
Devon Park Drive, Wayne, Pennsylvania 19087.
(2) Includes beneficial ownership, of which 90,678 shares are held in a trust
which is not in Mr. Andereck's control. Mr. Andereck disclaims any
beneficial ownership as to such shares. In addition, includes 10,000
shares of Common Stock issuable pursuant to exercisable stock options. The
stockholder's address is c/o DocuCorp, 5910 N. Central Expressway, Suite
800, Dallas, Texas 75206.
(3) Includes 154,826 shares of Common Stock issuable pursuant to exercisable
warrants. Technology Leaders II consists of Technology Leaders II L.P. and
Technology Leaders II Offshore C.V. Technology Leaders II Management L.P.,
a limited partnership, is the sole general partner of Technology Leaders
II L.P. and co-general partner of Technology Leaders II Offshore C.V.
Technology Leaders II L.P. and Technology Leaders II Offshore C.V. are
venture capital funds that are required by their governing documents to
make all investment, voting and disposition actions in tandem. Technology
Leaders II Management L.P. has sole authority and responsibility for all
investment, voting and disposition decisions for Technology Leaders II.
The general partners of Technology Leaders II Management, L.P. are (i)
Technology Leaders Management, Inc., a wholly-owned subsidiary of
Safeguard, (ii) Robert E. Keith, Gary J. Anderson, M.D., Ira M. Lubert and
Mark J. DeNino, and (iii) four other corporations (the "TLA Corporations")
owned by natural
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persons, one of whom is a director of Safeguard. Technology Leaders II
Management L.P. is managed by an executive committee, by whose decisions
the general partners have agreed to be bound, which consists of ten voting
members including (i) Warren V. Musser, who is a designee of Technology
Leaders Management, Inc., (ii) Mr. Keith, Dr. Anderson, Mr. Lubert, Mr.
DeNino, Christopher Moller, Ph.D., individually, and (iii) one designee of
each of the TLA Corporations and (as a non-voting member) Clayton S. Rose.
Technology Leaders Management, Inc. is the administrative manager of
Technology Leaders II, subject to the control and direction of the
executive committee of Technology Leaders II Management L.P. Mr. Keith is
a director of Safeguard. Technology Leaders Management, Inc. holds a 34%
general partnership interest in Technology Leaders II Management L.P. The
stockholder's address is 700 Building, 435 Devon Park Drive, Wayne,
Pennsylvania 19087.
(4) Represents 34,000 shares of Common Stock issuable pursuant to exercisable
stock options.
(5) Includes 22,000 shares of Common Stock issuable pursuant to exercisable
stock options.
(6) Includes 43,758 shares of Common Stock issuable pursuant to exercisable
stock options.
(7) Includes 18,000 shares of Common Stock issuable pursuant to exercisable
stock options.
(8) Includes 58,000 shares of Common Stock issuable pursuant to exercisable
stock options.
(9) Includes 134,724 shares of Common Stock issuable pursuant to exercisable
stock options and warrants.
(10) Includes 233,492 shares of Common Stock issuable pursuant to exercisable
stock options.
(11) Includes 67,103 shares of Common Stock issuable pursuant to exercisable
stock options.
ELECTION OF DIRECTORS
The following six persons have been nominated for election as directors at
the Annual Meeting: Milledge A. Hart, III, Michael D. Andereck, Anshoo S. Gupta,
John D. Loewenberg, George F. Raymond and Arthur R. Spector. Should any nominee
become unable or unwilling to accept nomination or election, the proxy holders
may vote the proxies for the election in his stead of any other person the Board
of Directors may recommend. Each nominee has expressed his intention to serve
the entire term for which election is sought. The Board of Directors recommends
a vote FOR the election of each of the nominated directors.
DIRECTORS AND EXECUTIVE OFFICERS
A brief description of each executive officer and director of the Company
is provided below. Directors hold office until the expiration of their term of
office or until their successors are elected and qualified. All officers serve
at the discretion of the Board of Directors. References to "Image Sciences" and
"FormMaker" mean Image Sciences, Inc. and FormMaker Software, Inc.,
respectively, which were predecessors of the Company.
MILLEDGE A. HART, III, 66, was appointed Chairman of the Board of the
Company in May 1997. He served as a member of Image Sciences' Board of Directors
from 1985 to May 1997. Mr. Hart is founder and currently Chairman of the Board
of Hart Group, Inc. and Rmax, Inc. He also serves on the Board of Directors of
The Home Depot, Inc., Lyco Energy Corporation, Kionix, WireBreak Entertainment
and the Board of Regents of Southern Methodist University. Mr. Hart served as
President of Electronic Data Systems from 1970 until his retirement in 1977.
MICHAEL D. ANDERECK, 47, has been President and Chief Executive Officer of
the Company since its inception in January 1997. From 1984 to 1997, he was
President, Chief Executive Officer and a director of Image Sciences. Mr.
Andereck joined Image Science as Vice President of Finance in 1983. From 1975 to
1983, Mr. Andereck was with KPMG Peat Marwick, where he attained the position of
senior manager.
3
WILLIAM D. BARRY, 42, became Senior Vice President, Sales and Marketing of
the Company in April 2000. Prior to joining DocuCorp, Mr. Barry was vice
president of sales and marketing for BancTec. Prior to joining BancTec in 1999,
he was executive vice president of CompuCom Systems, Inc. Mr. Barry has also
held sales positions with TriStar Data Systems and Keystone Information Systems.
B. BRUCE DALE, 37, has served as Senior Vice President, Products of the
Company since May 1997. He was Vice President of Product Development of Image
Sciences from 1994 through May 1997. Mr. Dale joined Image Sciences in 1986 as a
Client Services Custom Software Developer. Since 1988, Mr. Dale held several
management positions within Client Services, Marketing and Product Development.
In 1992, he was appointed Director of Product Direction.
KERRY K. LECRONE, 55, became Senior Vice President, Services and
Processing of the Company in May 1997. He was Senior Vice President, Technical
and Processing Services of FormMaker from March 1995 through May 1997. Between
1974 and 1990, Mr. LeCrone served in various capacities for several insurance
and financial service businesses with primary responsibilities for software
development and operations. In 1990, Mr. LeCrone co-founded Adam Investment
Services, a financial services company that became a leading retail investment
management organization with more than $1.0 billion in assets under management.
ANSHOO S. GUPTA, 53, was elected as a director of the Company in February
1998. He has been President of Production Solutions Group at Xerox Corporation
since January 1999. From 1969 through 1998, Mr. Gupta held a series of
financial, marketing, planning and General Management positions at Xerox.
JOHN D. LOEWENBERG, 60, became a director of the Company in May 1997. He
was previously Chief Executive Officer and President of FormMaker. From May 1995
through March 1996, he served as Executive Vice President and Chief
Administrative Officer of Connecticut Mutual, a life insurance company. Prior to
joining Connecticut Mutual, Mr. Loewenberg served as Senior Vice President of
Aetna Life and Casualty, a multi-line insurer, and as Chief Executive Officer of
Aetna Information Technology, the information systems company of Aetna Life and
Casualty. Mr. Loewenberg was Chairman of Precision Systems, Inc. until April
1996 and is currently a member of the Boards of CompuCom Systems, Inc., Diamond
Technology Partners Incorporated, Sanchez Computer Associates, Inc., Integrated
Visions, Inc. and Sherwood International, PLC. He is also a trustee of several
not for profit organizations.
GEORGE F. RAYMOND, 62, became a director of the Company in July 1997. He
is a private investor and software industry consultant. He is a director of BMC
Software Inc., a Houston-based, publicly held software firm. He is also a
director of Atlantic Data Services, Balance Bar Co. as well as several privately
held software companies. Mr. Raymond founded Automatic Business Centers, Inc.
("ABC"), a payroll processing company in 1972, and sold the company to CIGNA in
1983. Mr. Raymond and other members of ABC's management repurchased ABC in 1986
from CIGNA, and sold ABC to Automatic Data Processing ("ADP") in 1989. In 1986,
Mr. Raymond was Chairman of ITAA, the computer software and services trade
association.
ARTHUR R. SPECTOR, 60, has been a director of the Company since May 1997.
From December 1995 through May 1997, he served as Chairman of the Board and a
director of FormMaker. Since January 1997, Mr. Spector has served as managing
director of the general partner and of the management company of Safeguard
International Fund, L.P., an international private equity fund. Mr. Spector also
serves as a director of Metallurg Holdings, Inc., Metallurg, Inc., Becancour
Silicon, Inc. and International Fiber Corporation, all portfolio companies of
Safeguard International. From January 1997 to March 1998, Mr. Spector served as
a managing director of TL Ventures LLC, a fund management company organized to
manage the day-to-day operations of TL Ventures III L.P. and TL Ventures III
Offshore L.P., which are venture capital partnerships investing in tandem. From
January 1995 through December 1996, Mr. Spector served as Director of
Acquisitions of Safeguard. From November 1994 to March 1998, he served as
Chairman of the Board of USDATA Corporation; since that date he has served as a
director of that company. He also serves as Chairman of the Board of Neoware
Systems, Inc. From July 1992 until May 1995, Mr. Spector served as Vice Chairman
and Secretary of Casino & Credit Services, Inc.
4
In August 1999, Anshoo S. Gupta received options to purchase 85,000 shares
of Common Stock at an exercise price of $3.84 per share. In August 2000,
Milledge A. Hart, III, Anshoo S. Gupta, John D. Loewenberg, George F. Raymond
and Arthur R. Spector received options to purchase 25,000 shares of Common Stock
each at an exercise price of $3.97 per share. The options vest over a five year
period. Additionally, the Company donates $5,000 per year on behalf of each
director to the charity(s) of his choice. Directors are reimbursed for
out-of-pocket expenses incurred for attendance at board meetings.
The Board of Directors held four meetings in fiscal 2000. No director
attended fewer than 75% of the meetings of the Board (and any committees
thereof) which they were required to attend.
Certain Transactions
All future transactions between the Company and its officers, directors
and principal stockholders or their affiliates will be on terms no less
favorable to the Company than may be obtained from unrelated third parties, and
any such transactions will be approved by a majority of the disinterested
directors of the Company.
Committees of the Board of Directors
The Board of Directors of the Company has appointed an Audit Committee,
which currently consists of Anshoo S. Gupta, George F. Raymond and Arthur R.
Spector. The Audit Committee's duties include engaging and discharging the
Company's independent accountants; reviewing and approving the engagement of the
independent accountants for audit and non-audit services requested; reviewing
with the independent accountants the scope and timing of the audit and non-audit
services; reviewing the completed audit with the independent accountants
regarding their report, the conduct of the audit, accounting adjustments,
recommendations for improving internal accounting and auditing procedures with
the Company's financial staff and initiating and supervising any special
investigations it deems necessary.
The Board of Directors of the Company has also appointed a Compensation
Committee which currently consists of Milledge A. Hart, III, John D. Loewenberg
and Warren V. Musser. The Compensation Committee's duties include reviewing and
making recommendations to the Board of Directors regarding compensation and
benefit plan matters, including executive officer compensation, director
compensation, employee stock option grants, 401(k) plan matters, employee stock
purchase plan matters and other defined benefit plan matters.
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company served as a member of the Compensation
Committee (or other board committee performing similar functions or, in the
absence of any such committee, the entire board of directors) of another
corporation, one of whose executive officers served on the Compensation
Committee. No executive officer of the Company served as a director of another
corporation, one of whose executive officers served on the Compensation
Committee. No executive officer of the Company served as a member of the
Compensation Committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another corporation, one of whose executive officers served as a director of the
Company.
5
Executive Compensation
The following table sets forth information concerning cash compensation
paid or accrued by the Company during the three-year period ended July 31, 2000
to or for the Company's Chief Executive Officer and the three other highest
compensated executive officers of the Company whose total compensation exceeded
$100,000.
Long Term
Compensation
Annual Compensation Awards
------------------------ --------------
Year Salary Bonus Options (#)
---- ----------- ---------- --------------
Michael D. Andereck ....................... 2000 $305,000 $ 0 50,000
President and CEO 1999 290,000 80,000 --
1998 275,000 200,000 --
B. Bruce Dale ............................. 2000 175,000 20,000 30,000
Sr. VP, Products 1999 140,000 31,250 --
1998 125,000 63,750 --
Phillip J. Hamrick, III ................... 2000 245,000* 0 15,000
Sr. VP, Sales and Marketing 1999 140,000 60,000 100,000
(resigned April 2000)
Kerry K. LeCrone .......................... 2000 175,000 25,000 30,000
Sr. VP, Services and Processing 1999 140,000 61,250 25,000
1998 125,000 72,500 20,400
- ----------
* Includes severance pay in the amount of $140,000.
In January 1997, the Company entered into an employment agreement with
Michael D. Andereck. The employment agreement has an indefinite term and
provides that Mr. Andereck's salary is to be reviewed annually by the Board of
Directors. Effective August 1, 2000, the Board of Directors set Mr. Andereck's
annual base salary for fiscal 2001 to $320,000. In addition to base salary, the
agreement allows for discretionary bonuses, participation in any 401(k) plan and
stock option plan maintained by the Company and other fringe benefits that the
Company maintains for its top-level executives. The agreement also contains
severance provisions which, if triggered, entitle Mr. Andereck to monthly
severance payments in an amount equal to Mr. Andereck's then-current monthly
salary for a period of up to 12 months. The severance payments are triggered by
the occurrence of any of the following events: termination of employment by the
Company without cause, termination of employment by Mr. Andereck for good reason
(which includes a material failure of the Company to observe or perform any
material term of the employment agreement, the exclusion of Mr. Andereck from
participation in any new compensation or benefit arrangement offered to
similarly situated employees or a reduction in Mr. Andereck's level of
responsibility, position, authority or duties), resignation by Mr. Andereck with
60 days' notice and total disability. The employment agreement also provides a
non-competition provision prohibiting Mr. Andereck from competing against the
Company while employed by the Company and for one year following the termination
of payments to Mr. Andereck.
Report of the Compensation Committee
The Company is in a highly competitive industry. In order to succeed, the
Company believes that it must be able to attract and retain outstanding
executives, promote among them the economic benefits of stock ownership in the
Company, and motivate and reward executives who make contributions of special
importance to the success of the business of the Company. The Company has
structured its executive compensation program to support the strategic goals and
objectives of the Company.
As a matter of policy, the Compensation Committee believes that the annual
compensation of the executive officers should consist of a base salary,
contingent cash bonus and stock options. Base salary levels are based on
generally subjective factors and include the contribution the executive officer
made and is anticipated to make to the success of the Company, the level of
experience and
6
responsibility of the executive officer, the competitive position of the
Company's executive compensation and the Company's historical levels of
compensation for executive officers. Cash bonuses are awarded based on the
achievement of annual financial goals recommended by the Compensation Committee
and approved by the Board of Directors at the beginning of each fiscal year.
These goals may include a target range of revenue, pretax earnings, earnings per
share or other objective measurement consistent with long-term stockholder
goals. The Compensation Committee approves a target range for specific financial
goals and a range of potential bonus amounts for each executive. Actual bonuses
are awarded following the year-end based on the actual achievement level of the
specified corporate goals compared to the target range of achievement.
Grants of Company stock options are intended to align the interests of
executives and key employees with the long-term interests of the Company's
stockholders and to encourage executives and key employees to remain in the
Company's employ. Grants are awarded subjectively based on a number of factors,
including the individual's level of responsibility, the amount and term of
options already held by the individual, the individual's contributions and
anticipated contributions to the achievement of the Company's financial and
strategic objectives and the Company's achievement of its financial and
strategic objectives.
Effective August 1, 1999, the Compensation Committee recommended an
increase in the base salary of Mr. Andereck, the Company's Chief Executive
Officer, from $290,000 to $305,000. The increase in base salary was intended to
recognize Mr. Andereck's contribution toward the successful growth of the
Company. During fiscal 2000, Mr. Andereck was awarded 50,000 non-qualified stock
options at a per share exercise price of $4.73. At the conclusion of the year
ended July 31, 2000, Mr. Andereck was not awarded a bonus.
Compensation Committee
Milledge A. Hart, III
John D. Loewenberg
Warren V. Musser
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors
and executive officers and persons who own more than 10% of the Company's Common
Stock, are required to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates have been established for these reports,
and the Company is required to disclose in this proxy statement any failure to
file by these dates. Based solely on its review of the copies of such forms
received by it with respect to fiscal 2000, the Company believes that all of its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities timely filed these reports.
7
Option Plans
The following table sets forth certain information with respect to the
options granted during the year ended July 31, 2000 to each executive officer of
the Company listed in the Summary Compensation Table set forth under the caption
"Executive Compensation."
Potential Realizable Value
Percent of at Assumed Annual Rates
Total Options of Stock Price
Granted to Appreciation
Options Employees Exercise or for Option Term (1)
Granted in Fiscal Base Price Expiration ---------------------------
Name # Year $/Sh (2) Date 5% 10%
- ----- --------- ------------ ----------- ---------- ------------ -----------
Michael D. Andereck ............. 50,000 7.7% $4.73 8/16/09 $ 76,574 $262,017
B. Bruce Dale ................... 30,000 4.6% $3.84 8/19/09 $ 72,644 $183,910
Phillip J. Hamrick, III ......... 15,000 2.3% $3.84 4/25/00 $ -- $ --
Kerry K. LeCrone ................ 30,000 4.6% $3.84 8/19/09 $ 72,644 $183,910
- ----------
(1) The 5% and 10% assumed annual rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not reflect the
Company's estimates or projections of future prices of the shares of the
Company's Common Stock. There can be no assurance that the amounts
reflected in this table will be achieved.
(2) Fair market value as of the date of grant.
The following table sets forth certain information with respect to the
options exercised by each executive officer of the Company listed in the Summary
Compensation Table set forth under the caption "Executive Compensation" during
the year ended July 31, 2000 or held by such persons at July 31, 2000.
Value of Unexercised
Number of Unexercised In-the-Money Options
Shares Options at July 31, 2000 at July 31, 2000 (2)
Acquired Value -----------------------------------------------------
Name on Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
------ ----------- ----------- ----------- ------------- ----------- -------------
Michael D. Andereck ........ -- -- 10,000 40,000 -- --
B. Bruce Dale ............... -- -- 233,492 24,000 $766,156 --
Phillip J. Hamrick, III ..... -- -- 33,332 -- -- --
Kerry K. LeCrone ............ -- -- 67,103 53,796 $ 13,798 $3,860
- ----------
(1) Based upon the sale price received for the underlying shares of Common
Stock of DocuCorp.
(2) Based upon the average of the high and low price of the Common Stock of
DocuCorp on July 31, 2000 which was $3.67 per share.
AMENDMENT TO THE 1997 EQUITY COMPENSATION PLAN
The amendment to the Equity Compensation Plan would increase the number of
shares of the Company's Common Stock subject to the plan from 1,730,000 shares
to 2,500,000 shares. The purpose of the Equity Compensation Plan is to encourage
an ownership attitude among the Company's employees. In order to continue to
obtain the beneficial effects of the Equity Compensation Plan, it will be
necessary to increase the number of shares available under such plan.
As of July 31, 2000, options to purchase an aggregate of 1,341,000 shares
of Common Stock (net of options canceled) had been granted pursuant to the
Equity Compensation Plan, 36,000 options to purchase shares had been exercised,
options to purchase 1,305,000 shares remained outstanding, and 390,000 shares
remained available for future grant. As of July 31, 2000, the market value of
all shares of Common Stock subject to outstanding options was approximately
$4,789,000 (based upon the fair market value of the Common Stock as of July 31,
2000).
During the year ended July 31, 2000, the following executive officers
named in the Compensation Table appearing elsewhere in this Proxy Statement have
been granted options under the Equity
8
Compensation Plan in the amount indicated: Michael D. Andereck, President and
Chief Executive Officer, 50,000 shares; B. Bruce Dale, Senior Vice President,
Products, 30,000 shares; Phillip J. Hamrick, III, Senior Vice President Sales
and Marketing, 15,000 shares; and Kerry K. LeCrone, Senior Vice President,
Services and Processing, 30,000 shares. Since adoption of the Equity
Compensation Plan and through July 31, 2000, all current executive officers, as
a group, have been granted options covering 270,400 shares of Common Stock,
which represents approximately 16.7% of the total number of options granted
pursuant to the Equity Compensation Plan. Subsequent to July 31, 2000, the
following executive officers named in the Compensation Table appearing elsewhere
in this Proxy Statement have been granted additional options under the Equity
Compensation Plan, in the amount indicated: Michael D. Andereck, President and
Chief Executive Officer, 50,000 shares; B. Bruce Dale, Senior Vice President,
Products, 30,000 shares; and Kerry K. LeCrone, Senior Vice President, Services
and Processing, 30,000 shares. The foregoing amounts do not include options
granted under the stock options plans of Image Sciences and FormMaker, which
plans were terminated in 1997.
The Equity Compensation Plan provides for the issuance to employees,
non-employee directors and eligible independent contractors (collectively
"Optionees") of shares of Common Stock pursuant to the grant of incentive stock
options ("ISO's"), non-qualified stock options ("NQSO's"), Stock Appreciation
Rights ("SAR's"), restricted stock and performance units. The Compensation
Committee of the Board of Directors (the "Committee") has the authority to
determine to whom stock options and other equity compensation awards will be
granted and the terms of any such award, including the number of shares subject
to, and the vesting provisions of, the award. Subject to the terms of the Equity
Compensation Plan, the Committee may also amend the terms of any outstanding
award.
The option price per share of Common Stock under the Equity Compensation
Plan is determined by the Committee at the time of each grant; provided,
however, that the option price per share for any ISO shall not be less than 100%
of the fair market value of the Common Stock at the time of the grant. If a
person who owns 10% or more of the Company's Common Stock (a "10% Stockholder")
is granted an ISO, the exercise price shall not be less than 110% of the fair
market value on the date of grant. The term of each stock option may not exceed
10 years and in the case of a 10% Stockholder, the term may not exceed five
years. Stock options are exercisable at such time or times as are determined by
the Committee. Payment for the exercise of an option is required to be made in
cash, check or other instrument as the Committee may accept, including, in the
discretion of the Committee, unrestricted Common Stock of the Company. The
Committee may also allow an option holder to elect to cash out the excess of the
fair market value over the option price of all or a portion of a stock option.
The Committee may also grant, in its sole discretion, a "cashless exercise"
feature for the exercise of stock options. Unless sooner terminated, the Equity
Compensation Plan will terminate in 2007.
The aggregate fair market value (determined at the time of the grant) of
the shares of Common Stock which any employee is first eligible to purchase in
any calendar year by exercise of incentive stock option granted under the Equity
Compensation Plan and all incentive stock option plans of the Company cannot
exceed $100,000. For this purpose, the fair market value (determined at the
respective date of grant of each option) of the stock purchasable by exercise of
an incentive stock option (or any installment) is counted against the $100,000
annual limitation for an employee only for the calendar year such stock is first
purchasable under the terms of the option. No option can be exercisable more
than ten years after the date the option is awarded. An incentive option may not
be granted under the Equity Compensation Plan to an employee who owns more than
10% of the outstanding Common Stock unless the purchase price is 110% of the
fair market value of the Common Stock at the date of award and the option is not
exercisable more than five years after it is awarded.
An Optionee who received stock options will not normally realize any
income, nor will the Company normally receive any deduction for federal income
tax purposes, upon the grant of an ISO or NQSO.
When an NQSO is exercised, the Optionee will generally realize ordinary
income (compensation) measured by the difference between the aggregate exercise
price of the Common Stock as to which the NQSO is exercised and the aggregate
fair market value of the Common Stock on the exercise date, and the Company
generally will be entitled to a deduction equal to the amount the Optionee is
required to treat as ordinary income, but only if the Company withholds federal
income tax with respect to such
9
amount. An Optionee's holding period for the shares received on exercise of an
NQSO will commence on the date the option is exercised, and his basis in the
shares will equal his option price plus the amount included in income on
exercise of the option.
An Optionee generally will not recognize any income upon the exercise of
an ISO, but the exercise may, depending on particular factors relating to the
Optionee, subject the Optionee to the alternative minimum tax. An Optionee will
recognize capital gain or loss in the amount of the difference between the
exercise price and the sale price on the sale or exchange of stock acquired
pursuant to the exercise of an ISO, provided that the Optionee does not dispose
of such stock within two years from the date of grant and one year from the date
of exercise of the ISO (the "Required Holding Period"). An Optionee disposing of
such shares before the expiration of the Required Holding Period will recognize
ordinary income equal to the lesser of (i) the difference between the option
price and the fair market value of the stock on the date of exercise, or (ii)
the total amount of gain realized. The maximum federal income tax rate on the
remaining gain or loss generally depends on how long the shares are held. The
Company will not be entitled to a federal income tax deduction in connection
with the exercise of an ISO, except where the Optionee disposes of the shares of
Common Stock received upon exercise before the expiration of the Required
Holding Period.
The tax consequences of SAR's, restricted stock and performance units are
not discussed herein, as the Company has not granted any of the foregoing at the
present time and has no current expectation to do so.
In addition, the Equity Compensation Plan has established for officers and
directors of the Company an exemption from the provisions of Section 16(b) of
the Exchange Act for the grants of options. Section 16(b) provides for recovery
by the Company of profits made by officers and directors on short-term trading
in shares of Common Stock. Grants of options to purchase common stock under the
Equity Compensation Plan by officers and employee-directors may be entitled to
an exemption from the operation of Section 16(b), provided certain conditions
are met under the rules and regulations of the Commission.
Approval of this amendment requires the affirmative vote of the holders of
a majority of the shares of the common stock represented at the Annual Meeting.
The Board of Directors recommends a vote FOR approval of the amendment to the
Equity Compensation Plan.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the
independent auditors of the Company for the fiscal year ending July 31, 2001,
subject to stockholder ratification. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the meeting with the opportunity to make a
statement if they so desire and to be available to respond to appropriate
questions. The Board of Directors recommends a vote FOR approval of the
appointment of PricewaterhouseCoopers LLP as the independent auditors of the
Company.
10
STOCK PRICE PERFORMANCE
Set forth below is a line graph indicating the stock price performance of
the Company's Common Stock for the period beginning April 6, 1998 (the date of
the Company's initial public offering) and ending July 31, 2000 as contrasted
with the Nasdaq Market Index and the Nasdaq Computer and Data Processing Index.
The graph assumes that $100 was invested at the beginning of the period. No cash
or stock dividends have been paid by the Company during this period.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
[The following table was depicted as a mountain graph in the printed material.]
DocuCorp NASDAQ Computer NASDAQ
International, Inc. & Data Processing Market Index
------------------- ----------------- ------------
4/6/98 100 100 100
7/31/98 61.45 107.41 102.31
7/31/99 38.55 160.43 144.54
7/31/2000 35.24 216.84 210.43
11
STOCKHOLDERS' PROPOSALS
Any proposals that stockholders of the Company desire to have presented at
the 2001 annual meeting of stockholders must be received by the Company at its
principal executive offices no later than August 31, 2001.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy and the material used in the solicitation thereof will be borne by
the Company. In addition to the use of mails, proxies may be solicited by
persons regularly employed by the Company, by personal interview, telephone and
telegraph. Such persons will receive no additional compensation for such
services, but will be reimbursed for any out-of-pocket expenses incurred by them
in connection with such services. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, and the Company may reimburse such persons for
reasonable out-of-pocket expenses incurred by them in connection therewith.
By Order of the Board of Directors,
/s/ Joan P. Moore
Joan P. Moore
Secretary
Dallas, Texas
October 27, 2000
12
[LOGO] DOCUCORP(TM)
INTERNATIONAL
5910 North Central Expressway, Suite 800
Dallas, Texas 75206
(214) 891-6500
www.docucorp.com
PROXY
DOCUCORP INTERNATIONAL, INC.
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of DocuCorp International, Inc. (the "Company") to be
held on December 12, 2000, at 9:00 a.m., C.S.T., and the Proxy Statement in
connection therewith, and (b) appoints Milledge A. Hart, III and Michael D.
Andereck, or each of them, his proxies, with full power of substitution and
revocation, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned or with respect to which the undersigned
is entitled to vote and act at said meeting or at any adjournment or
postponement thereof, and the undersigned directs that his proxy be voted as
follows:
1. ELECTION OF DIRECTORS
|_| FOR nominees listed below except as marked to the contrary below
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
Michael D. Andereck, Milledge A. Hart, III, Anshoo S. Gupta, John D. Loewenberg,
George F. Raymond and Arthur R. Spector
INSTRUCTION:To withhold authority to vote for any individual nominee, write that
nominee's name in the space below.
- --------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE AMENDMENT OF THE COMPANY'S 1997 EQUITY COMPENSATION
PLAN TO INCREASE THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK
SUBJECT TO THE PLAN FROM 1,730,000 SHARES TO 2,500,000 SHARES:
FOR AGAINST ABSTAIN
|_| |_| |_|
3. PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY:
FOR AGAINST ABSTAIN
|_| |_| |_|
4. To vote upon other such matters that may legally come before the meeting
or any adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
(Continued from other side)
If more than one of the proxies listed on the reverse side shall be
present in person or by substitute at the meeting or any adjournment thereof,
the majority of said proxies so present and voting, either in person or by
substitute, shall exercise all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTORS
AND FOR THE TWO OTHER PROPOSALS SET FORTH.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms all
that said proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
Dated: _________________________________
________________________________________
Signature
________________________________________
(Signature if held jointly)
Please date the proxy and sign your
name exactly as it appears hereon.
Where there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be signed
by a duly authorized officer. Please
sign the proxy and return it promptly
whether or not you expect to attend the
meeting. If you do attend, you may
revoke your proxy and vote in person if
you so desire.
PLEASE MARK, SIGN, DATE AND MAIL TO THE COMPANY AT THE ADDRESS STATED ABOVE.