SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DEVELOPED TECHNOLOGY RESOURCE, INC., A MINNESOTA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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:
DEVELOPED TECHNOLOGY RESOURCE, INC.
12800 WHITEWATER DRIVE,7300 METRO BLVD., SUITE 170
MINNETONKA,550
EDINA, MINNESOTA 5534355439
(PH: 612-820-0022)
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 199714, 1998
To the Shareholders of
Developed Technology Resource, Inc.
The Annual Meeting of the Shareholders of Developed Technology
Resource, Inc. (the "Company" or "DTR"), will be held on Thursday,Tuesday, April 24,
1997,14,
1998, at 43:30 p.m. Minneapolis Time,CST, at the offices of Lurie, Besikof, Lapidus &
Co., LLP, 2501 Wayzata Boulevard, Minneapolis MN 55405,Athletic Club, 615 Second Avenue
South, Minneapolis, Minnesota 55402, for the following purposes:
1. To elect three directors of the Company to serve until the next Annual
Meeting of Shareholders and until their successors are elected and have
qualified.Company.
2. To approveratify the Amendment dated September 30, 1996, to the 1992 Stock
Option Plan.appointment of Deloitte & Touche LLP as independent
auditors.
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 7,
1997,February 13,
1998, as the record date for the determination of shareholders entitled to vote
at the Annual Meeting and to receive notice thereof. The transfer books of the
Company will not be closed.
A PROXY STATEMENT AND FORM OF PROXY ARE ENCLOSED. SHAREHOLDERS ARE
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY TO WHICH NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE ENCLOSED ENVELOPE IN THE UNITED STATES. IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE IN PERSON IF THEY DESIRE.
By Order of the Board of Directors
John P. Hupp/s/ LeAnn H. Davis
LeAnn H. Davis
Secretary and President
Minnetonka,Chief Financial Officer
Edina, Minnesota U.S.A.
February 26, 1997March 17, 1998
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy, date
and sign it, and return it in the envelope provided, which is addressed for your
convenience.
No postage is required if mailed in the United States.
PLEASE MAIL YOUR PROXY PROMPTLY
DEVELOPED TECHNOLOGY RESOURCE, INC.
12800 WHITEWATER DRIVE,7300 METRO BLVD., SUITE 170
MINNETONKA,550
EDINA, MINNESOTA 5534355439
TELEPHONE (612) 938-7080820-0022
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 199714, 1998
---------------------
GENERAL INFORMATION
This proxy statement is furnished to shareholders by the Board of
Directors of Developed Technology Resource, Inc. (the "Company") for
solicitation of proxies for use at the Annual Meeting of Shareholders to be held
on Thursday,Tuesday, April 24, 1997,14, 1998, at 4:00 pm3:30 p.m. CST, at Lurie, Besikof, Lapidus & Co., LLP,
2501 Wayzata Boulevard,the Minneapolis MN 55405,Athletic Club,
615 Second Avenue South, Minneapolis, Minnesota 55402, and at all adjournments
thereof, for the purposes set forth in the attached Notice of Annual Meeting of
Shareholders.
Shareholders may revoke proxies before exercise by submitting a
subsequently dated proxy or by voting in person at the Annual Meeting. Unless a
shareholder gives contrary instructions on the proxy card, proxies will be voted
at the meeting to elect as directors the three nominees listed thereon. This
proxy statement and the enclosed proxy are being mailed to the shareholders of
Developed Technology Resource, Inc. on or about March 24, 1997.17, 1998.
The Company will be providing without charge to each stockholder a copy
of the Annual Report on Form 10-KSB for the fiscal year ended October 31, 1996,1997, including the
financial statements and schedules thereto, filed with the Securities and
Exchange Commission, and this proxy in March. If a stockholder requests copies
of any exhibits of such Form 10-KSB, the Company may require the payment of a
fee covering its reasonable expenses. A written request should be addressed to
the Company at the address shown above.
The cost of soliciting proxies, including their preparation, assembly,
and mailing, will be borne by the Company. In addition to the solicitation of
proxies by use of the U.S. Postal Service, certain officers and regular
employees who will receive no extra compensation for their services may solicit
proxies in person or by telephone or facsimile. The Company may reimburse
brokerage firms and others for expenses in forwarding solicitation materials to
the beneficial owners of Common Stock.
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on January 31, 1997,February 13, 1998, there were outstanding
790,820805,820 shares of Common Stock, par value $.01 per share, which is the only
outstanding class of stock of the Company. Each share is entitled to one vote.
As provided in the Articles of Incorporation of the Company, there is no right
of cumulative voting. All matters being voted upon by the shareholders require a
majority vote of the shares represented at the Annual Meeting either in person
or by proxy.
The presence at the Annual Meeting in person or by proxy of the holders
of a majority of the outstanding shares of the Company's Common Stock entitled
to vote constitutes a quorum for the transaction of business. Shares voted as
abstentions on any matter (or a "withhold authority" vote as to directors) will
be counted as present and entitled to vote for purposes of determining a quorum
and for purposes of calculating the vote with respect to such matter, but will
not be deemed to have been voted in favor of such matter. If a broker submits a
proxy that indicates the broker does not have discretionary authority to vote
certain shares on a particular matter, those shares will be counted as present
for purposes of determining a quorum, but will not be considered present and
entitled to vote for purposes of calculating the vote with respect to such
matter.
PRINCIPAL SHAREHOLDERS AND
MANAGEMENT OWNERSHIP OF MANAGEMENT
The following table contains information as of January 31, 1997,February 13, 1998,
concerning the beneficial ownership of the Company's Common Stock by persons
known to the Company to beneficially own more than 5% of the Common Stock, by
each director, by each executive officer named in the Summary Compensation
Table, and by all current and nominated directors and executive officers as a
group. Shares reported as beneficially owned include those for which the named
persons may exercise voting power or investment power, and all shares owned by
persons having sole voting and investment power over such shares unless
otherwise noted. The number of shares reported as beneficially owned by each
person as of January 31, 1997,February 13, 1998, includes the number of shares that such person
has the right to acquire within 60 days of that date, such as through the
exercise of stock options or warrants that are exercisable within that period.
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED* PERCENTAGE OWNED
------------------------------------ ------------- ----------------
Vladimir Drits 70,252(2) 8.4%
11901 Meadow Lane West
Minnetonka, MN 55305
Peter L. Hauser 26,001(3)(4)(5) 3.0%
2820 IDS Tower
Minneapolis, MN 55402
Roger W. Schnobrich 19,034(5) 2.3%
222 South Ninth Street
Suite 3300
Minneapolis, MN 55402
John P. Hupp(1) 4,583(6) *
All current directors and officers as a group 49,619(7) 5.7%
(3AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNER PERCENTAGE OWNED(A)
- ------------------------------------ ------------------- -----------------
Vladimir Drits 71,335 (1) 7.6%
11901 Meadow Lane West
Minnetonka, MN 55305
Erlan Sagadiev 55,000 (2) 5.8%
7300 Metro Blvd, Suite 550
Edina, MN 55439
Roger W. Schnobrich (B) 30,700 (3) 3.3%
222 South Ninth Street
Suite 3200
Minneapolis, MN 55402
John P. Hupp (B, C) 55,500 (4) 5.9%
7300 Metro Blvd, Suite 550
Edina, MN 55439
Peter L. Hauser (B) 47,736 (5) 5.1%
2820 IDS Tower
Minneapolis, MN 55402
Beneficial Owners of 5% or more, 260,271 27.5%
Officers and Directors as a group
All current directors and officers 133,936 14.2%
as a group (4 people)
* Less than 1%(A) The total number of total shares outstanding.
- -----------outstanding assuming the exercise of all
currently exercisable and vested options and warrants held by all
executive officers, current directors, and holders of 5% or more of the
Company's issued and outstanding Common Stock is 944,320 shares. Does
not assume the exercise of any other options or warrants.
(B) Designates a Director of the Company.
(C) Designates an Executive Officer of the Company.
(1) The named person's address is 12800 Whitewater Drive, Suite 170,
Minnetonka, Minnesota 55343.
(2) Includes 23,33323,335 shares of CommomCommon Stock gifted by Mr. Drits to his
spouse and children, and presntlychildren.
(2) Includes presently exercisable options for the purchase of 55,000
shares at $1.22 per share issued under terms of the the
Company's 1992 Stock Option
Plan as Amended September 30, 1996.
(3) Includes presently exercisable options for the purchase of 833 shares.
(3)15,000
shares at $1.50 per share.
(4) Includes presently exercisable warrantsoptions for the purchase of 9,16755,000
shares at $1.22 per share issued in 1992 under terms of a bridge loan agreement.
(4)the 1992 Stock Option
Plan as Amended September 30, 1996.
(5) Includes 4,236 shares held in IRA for the benefit of Mr. Hauser.
Includes presently exercisable warrants for the purchase of 13,500
shares at $18 per share issued in 1993 under terms of the Company's
initial public offering.
(5) Includes presently exercisable options for the purchase of 3,334 shares
issued under terms of the 1993 Outside Directors Stock Option Plan.
(6) Includes presently exercisable options for the purchase of 4,583 shares
issued under terms of the Developed Technology Resource, Inc. 1992
Stock Option Plan. 8,333 exercisable option were replaced under a new
employment agreement dated September 30, 1996.
(7) Includes presently exercisable options for the purchase of 11,252
shares and presently exercisable warrants for the purchase of 22,667
shares.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be
as fixed from time to time by resolution of the shareholders, subject to
increase by the Board of Directors. The Board is authorized to fill vacancies
resulting from increases in the size of the Board or otherwise. Currently there
are three directors.
The Board of Directors has nominated for election the three personsDirectors named
below. Each of the nominees is currently a director of the Company whose current
term expires at the 1998 Annual Meeting. Unless authority is withheld, the
proxies will be voted FOR these nominees to serve as directors until the next
Annual Meeting of Shareholders and until their successors are elected and have
been qualified. If any one of the nominees is unable to serve as a director by
reason of death, incapacity or other unexpected occurrence, the proxies will be
voted for such substitute nominee as is selected by the Board of Directors, but
in no event will proxies be voted for more than three nominees. The Board of
Directors is unaware of any reason why the nominees would not be available for
election or, if elected, would not be able to serve.
OFFICERS AND DIRECTORS
AND NOMINEES
The namesfollowing table sets forth the current and proposed directors and executive
officers of the nomineesCompany, their ages and certain information about them are set
forth below:
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
Peter L. Hauser(1)(2)(3) 55 Vice President and Principal of Equity 1993
Securities Trading Co., Inc.
John P. Hupp 37 President andpositions with the company as of
February 13, 1998:
NAME AGE POSITION
---- --- --------
Peter L. Hauser(1)(2) 56 Director
Roger W. Schnobrich(1)(2) 68 Director
John P. Hupp 38 Director, President
LeAnn H. Davis 28 Chief Financial
Officer, Secretary of the Company 1996
Roger W. Schnobrich(1)(2) 67 Attorney, Popham, Haik, Schnobrich & Kaufman, 1993
Ltd.
- -----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3)
Pursuant to an Underwriting Agreement dated April 23, 1993 between the
Company and Equity Securities Trading Co., Inc. ("Equity Securities"), in
connection with the Company's initial public offering, the Company granted
Equity Securities the right until April 1998 to nominate one member who is
reasonably satisfactory to the Company for election to the Company's Board of
Directors. While maintaining the right to do so in the future, Equity Securities
has not exercised its right to nominate a member to the board for this election.
Each nominee, if elected, will serve until the 19981999 Annual Meeting of
Shareholders and until a successor has been elected and duly qualified or until
the director's earlier resignation or removal.
Mr. Hauser has been a director of the Company since October of 1993. Since
1977, he has been employed by Equity Securities Trading Co., Inc., a
Minneapolis-based brokerage firm, and is currently a vice president and
principal.
Mr. Schnobrich has been a director of the Company since October 1993.
He is a partner with Hinshaw & Culbertson, a Minneapolis law firm which serves
as legal counsel to the Company. Until 1997, he was an owner and attorney with
Popham, Haik, Schnobrich & Kaufman, Ltd., a Minneapolis-based law firm which he
co-founded in 1960. He also serves as a director of Rochester Medical
Corporation, a company that develops, manufactures and markets improved, latex
free, disposable urological catheters.
Mr. Hupp has been the Company's President since June 1995, and a
director since April 1996. He was Corporate Secretary sincefrom July 1994 until
September 1997, and was Director of Legal Affairs from July 1993 to June 1995.
From June 1992 until June 1993, Mr. Hupp was President of Magellan International
Ltd., which marketed on-line and hard-copyhard copy information for a Russian information
company. From March to June 1992, he served as Of Counsel for the law firm of
Hale & Dorr, establishing the firm's Moscow office. His work included
negotiating and establishing joint ventures for clients. From September 1990 to
January 1992, Mr. Hupp was Senior Project Manager and Corporate Counsel with
Management Partnership International, Ltd. (MPI). Prior to his work at MPI, Mr.
Hupp was a trial lawyer for the firms Bollinger & Ruberry and Pretzel & Stouffer
in Chicago for six years. Mr. Hupp received a J.D. Degree from the University of
Illinois College of Law and a B.A. degrees in Russian Area Studies and Political
Science. Mr. Hupp has extensiveintensive language training from the Leningrad State
University in St. Petersburg, Russia.
Mr. Schnobrich has been a director ofLeAnn H. Davis, CPA was employed by the Company since Octoberas the Controller on
July 7, 1997 and on September 25, 1997 was named Chief Financial Officer and
Corporate Secretary. Prior to joining the Company, Ms. Davis worked as CFO of
1993. He isGalaxy Foods Company in Orlando, Florida from December 1995 to June 1997. From
1994 to 1995, she was a shareholdersenior auditor for Coopers and attorney with Popham, Haik, Schnobrich & Kaufman,
Ltd., a Minneapolis-based lawLybrand LLP in Orlando,
FL. From 1992 to 1994, she worked for the local public accounting firm which he co-foundedof
Pricher and Company in 1960 and which serves
as legal counsel to the Company. He also servesOrlando as a director of Rochester
Medical Corporation,senior auditor and tax accountant. Prior to
1992, Ms. Davis worked for Arthur Andersen LLP as a company that develops, manufacturesstaff auditor. Ms. Davis
earned a BS in Business Administration and markets improved,
latex free, disposable urological catheters.a BS in Accounting from Palm Beach
Atlantic College in West Palm Beach, Florida in May 1990 and a Masters in
Accounting from Florida State University, Tallahassee, Florida in August 1991.
Each Executive Officer of the Company is elected or appointed by the
Board of Directors of the Company and holds office until hisa successor is elected,
or until the earlier of his death, resignation or removal.
To the knowledge of the Company, no executive officer or director of
the Company is a party adverse to the Company or has material interest adverse
to the Company in any legal proceeding.
The information given in this Proxy Statement concerning the Directors
is based upon statements made or confirmed to the Company by or on behalf of
such Directors, except to the extent that such information appears in its
records.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE FOR ELECTION
TO THE BOARD OF DIRECTORS.
MEETINGS OF THE BOARD AND COMMITTEES
The Board of Directors held four formal meetings during fiscal 19961997 and
adopted certain resolutions by written minutes of action. The Board of Directors
has two standing committees; an audit committee and a compensation committee.
All directors attended all of the meetings
were attended by all directors.formal meetings. The Audit Committee is
responsible for reviewing the services rendered by the Company's independent
auditors and the accounting standards and principles followed by the Company.
The Audit Committee held one meeting during fiscal 1996,1997, which was attended by
all Committee members. The Compensation Committee is responsible for making
recommendations to the Board of Directors regarding the salaries and
compensation of the Company's executive officers. The Compensation Committee met
severalfour times during fiscal 1996.1997.
CERTAIN TRANSACTIONS
The law firm of Pophaim Haik SchnobrichHinshaw & Kaufman Ltd.,Culbertson provides legal services to the
Company. Roger Schnobrich, a director of the Company, is a shareholderpartner in the firm.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's Officers and
Directors, and persons who own more than 10 percent of the registered class of
the Company's equity securities to file reports of ownership on Forms 3, 4, and
5 with the SEC. Officers, Directors and greater than 10 percent shareholders are
required by SEC regulation to furnish the Company with copies of all Forms 3, 4,
and 5 they file.
Based solely onupon the Company's review of the copies of such forms it has
received and representations from certain reporting persons that they were not
required to file Forms 5 for specified fiscal years,furnished to the Company
believes that
allwith respect to its fiscal year ended October 31, 1997, each of its Executive Officers, Directors and greaterthe following
directors, officers or beneficial owners of more than 10 percent beneficial
owners complied with all filing requirements applicable to them with respect toof the
Company's Common Stock filed a Form 5 reporting previously unreported
transactions which were reportable, or previously unreported holdings which
became reportable, during such fiscal 1996.year: LeAnn H. Davis. This officer
reported the holdings which became reportable on or before December 15, 1997.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the cash and noncash compensation for
fiscal years 1997, 1996, 1995, and 19941995 awarded to or earned by the Chief Executive
Officer of the Company.
Officer:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ------------------------------------------ LONG-TERM
FISCAL
OTHER ANNUAL COMPENSATION
FISCAL YEAR SALARY BONUS COMPENSATION AWARDS/OPTIONS
NAME AND PRINCIPAL POSITION ENDED ($) ($) ($) (#)
- --------------------------- --------- --------- ------- ------------- ------------------ -------- ----- ------------ --------------
John P. Hupp, President andPresident(1) 1997 $87,500 none none 0
1996 75,000$75,000 none none 250,000(3)
Secretary (1) 1995 65,967 none none 8,333(2)
1994 60,342$65,967 none none 1,6678,333(2)
- -----------
(1) Mr. Hupp became President on June 16, 1995. Beginning June 15, 1993, as
the Company's Director of Legal Affairs, Mr. Hupp began to receive a
full-time salary of $5,000 per month. Effective June 16, 1995, onupon
assuming the position of President, his salary was increased to $6,250
per month. Effective January 1997, his salary was increased to $7,500 per
month.
(2) Mr. Hupp was issued an option for the purchase of 8,333 shares (adjusted
for stock split) on June 15 under terms of his employment agreement.
These options were replaced under the new employment agreement dated
September 30, 1996.
(3) Under the Amendment dated September 30, 1996 to the 1992 Stock Option
Plan, Mr. Hupp was issued an option to purchase 250,000 shares. This
amendment requires approvalwas approved by the shareholders.
OPTION GRANTS DURING FISCALshareholders at the 1996 On September 30, 1996, the 1992 Stock Option Plan was amended
to increase the number of reserved shares of common stock from 200,000 to
600,000 shares. As required by Code Section 422 and the Plan, the foregoing
amendment requires approval by the shareholders.
As a result of this amendment, Mr. John Hupp, President, and
Mr. Erlan Sagadiev, General Director of DTR's Kazakhstan subsidiary, were each
granted an incentive stock option to purchase 250,000 shares of common stock of
the Company, par value one cent per share, at $1.00 per share pursuant to the
terms of their Employment Agreement effective September 30, 1996. An Amendment
to the Stock Option grant was made on December 11, 1996, whereby the option
price was adjusted to $1.22 per share.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($) Date
John P. Hupp 250,000 50% $1.22 9/29/06
Annual Meeting.
AGGREGATED OPTION EXERCISES: LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table summarizes for the named executive officerofficers the
number of stock options exercised during the fiscal year ended October 31, 1996,1997,
the aggregate dollar value realized upon exercise, the total number of
unexercised options held at October 31, 19961997 and the aggregate dollar value of
in-the-money unexercised options held at October 31, 1996.1997. Value realized upon
exercise is the difference between the fair market value of the underlying stock
on the exercise date and the exercise price of the option. Value of Unexercised
In-the-Money Options at fiscal year-end is the difference between its exercise
price and the fair market value of the underlying stock on October 31, 19961997
which was $1 1/2$2 per share.
AGGREGATED OPTION EXERCISES IN FISCAL 1996AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES
----------------------------------------------------------------------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
IN-THE-UNEXERCISED OPTIONS AT MONEYIN-THE-MONEY OPTIONS AT
NAME AND SHARES OCTOBER 31, 19961997 (#) OCTOBER 31, 19961997 ($)
PRINCIPAL SHARES ACQUIRED ON VALUE -------------------- --------------------
POSITION ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ----------- -------- ----------- ------------- ----------- -------------
John P. Hupp,Hupp(1), None None 4,583 250,417(1) None None55,000 200,000 $39,000 $156,000
President
(1) Includes 250,000 options granted under September 30, 1996 employment
agreement (see discussion below).agreement.
EMPLOYMENT AGREEMENTS
Mr. Hupp's original employment agreement dated June 1, 1995 was amended
on September 30, 1996. The new employment agreement provides for compensation
and standard employee benefits during the employment term, and a lump sum
payment equal to 90 days salary if the Agreement is terminated by the Company without cause.cause terminates the
Agreement. Under terms of the Agreement, Mr. Hupp will devote his best efforts
to the performance of his duties, and agrees to certain restrictions related to
participation in activities felt to conflict with the best interests of the
Company.
In addition to cash compensation, Mr. Hupp's employment agreement also
provides for an incentive stock option to purchase 250,000 shares of common
stock of the Company, par value one cent per share at the option price of $1.22
per share. 50,000 shares are exercisable per year commencing September 30, 1997.
The agreement also outlines the exercise of options upon termination of
employment and death. The incentive stock options that were awarded as part of
Mr. Hupp's previous employment agreement were cancelled.
A similar employment agreement was made with Erlan Sagadiev. The new
employment agreement provides for compensation and standard employee benefits
during the employment term, and a lump sum payment equal to 90 days salary if
the Agreement is terminated by the Company without cause. Under terms of the
Agreement, Mr. Sagadiev will devote his best efforts to the performance of his
duties, and agrees to certain restrictions related to participation in
activities felt to conflict with the best interests of the Company.
In addition to cash compensation, Mr. Sagadiev's employment agreement
also provides for an incentive stock option to purchase 250,000 shares of common
stock of the Company, par value one cent per share at the option price of $1.22
per share. 50,000 shares are exercisable per year commencing September 30, 1997.
The agreement also outlines the exercise of options upon termination of
employment and death.
COMPENSATION OF DIRECTORS
No director who is also an employee of the Company received any
separate compensation for services as a director.
The non-employee directors of the Company include Messrs. Hauser and
Schnobrich. During fiscal 19961997 non-employee directors received no cash
compensation for their services as a director or committee member. Non-employee
directors receive stock options as described below under "1993 Outside Directors
Stock Option Plan." Mr.
Schnobrich is an attorney with Popham, Haik, SchnobrichHinshaw & Kaufman, Ltd.,Culbertson, which serves as counsel for
the Company and which receives payment of legal fees for such services.
Non-employeeOn November 6, 1997, the Board of Directors adopted a new stock option
plan for outside directors, superseding the then existing stock option plan. At
the same time the Board, in exchange for the surrender of all stock options
previously granted to the outside directors for their services as directors,
granted to the each receive an automatic grantoutside director stock options for the purchase of 15,000
shares of common stock at a price of $1.50 per share, with 13,750 of the options
vested as of November 6, 1997, and 1,250 of the options to purchase 1,667vest on December 31,
1997.
It is the Company's intention to issue to each outside director an
option for 5,000 shares of the Company's Common Stock under terms of the Developed
Technology Resource, Inc. 19931997
Outside Director's Stock Option Plan on election to the Board for the Company's
1998 annual meeting. The option will vest at 1,250 shares on the date of the
grant and each quarter thereafter.
Options granted under the 1997 Outside Directors Stock Option Plan (the "1993
Plan"), which was approved by the Company's shareholders at the Annual Meeting
held on March 8, 1994.
The 1993 Plan provides for the grant of stock options under a
predetermined formula only to directors who are not employees of the Company.
Options granted under the 1993 Plan are
not intended to and do not qualify as incentive stock options as described in
Section 422 of the Internal Revenue Code.
Options which expire, or are canceled or terminated without having been
exercised, may be regranted to other outside directors under the 1993 Plan. When
an outside director is appointed, elected, or re-elected to the Board, that
person will be granted options for 1,667 shares under the 1993 Plan, effective
on their next anniversary as a director at an exercise price equal to the fair
market value on the date of grant. Options granted under the 1993 Plan first
become exercisable one year and one day after the date of grant. If a person
ceases to be a director, other than by removal for cause, for three months
thereafter that person may exercise only that portion of the outstanding options
that are exercisable at the time when that person ceases to be a director. If an
outside director is removed for cause, all outstanding options granted to that
person under the 1993 Plan immediately lapse.
On April 23, 1996, Messrs. Schnobrich and Hauser were each granted
three-year options for the purchase of 1,667 shares of the Company's Common
Stock at an exercise price of $1.00 per share.
It is the Company's intention to issue to each outside director an
option for 1,667 shares of the Company's Common Stock under terms of the 1993
Outside Director's Stock Option Plan on election to the Board for the Company's
1997 annual meeting.
APPROVAL OF THE AMENDMENT TO THE 1992 STOCK OPTION PLAN
The Developed Technology Resource, Inc. 1992 Stock Option Plan (the
"1992 Plan"), which was approved by the Board of Directors effective August 5,
1992 and by the Company's shareholders on March 15, 1993, provides for the grant
of options to purchase shares of the Company's Common Stock to employees and any
other persons providing services to the Company. The Board of Directors has
determined that outside directors who are eligible to participate under the 1993
Plan are not eligible to receive options under the 1992 Plan. A total of 66,667
shares (after adjustment for split) of Common Stock were reserved for issuance
under the 1992 Plan. Presently, 833 shares (after adjustment for split) have
been acquired on exercise of options, and options for 42,416 shares (after
adjustment for split) are outstanding.
On September 30, 1996, the board amended the plan, subject to
shareholder approval, to increase the number of reserved shares to 600,000 so
that substantial options may be granted to retain the services of and to provide
adequate incentives to key executives following the restructuring of the
Company. Coinciding with this amendment, Messrs. Hupp and Sagadiev were granted
250,000 options each. Options granted under the 1992 Plan may be either
"incentive stock options" (as defined under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) or "non-qualified stock options" (options
which do not qualify for special tax treatment). Only employees of the Company
are eligible to receive incentive stock options under the 1992 Plan.
The 1992 Plan as amended September 30, 1996, is administered by the
Board of Directors of the Company, which designates the type of option to be
granted, the number of options to be granted, the number of shares of Common
Stock to be covered by each option (subject to a specified maximum number of
shares of Common Stock which may be purchased under all options granted), the
exercise price, the method of payment, the exercise period (up to ten years) and
certain other terms. The exercise price for an incentive stock option may not be
less than the fair market value, at the time the option is granted, of the stock
subject to the option. The exercise price for an incentive stock option granted
to any individual who owns stock, at the time of grant, possessing more than 10%
of the voting power of the capital stock of the Company may not be less than
110% of such fair market value on the date of grant. No more than $100,000 of
stock vesting during any calendar year will qualify for incentive stock option
treatment. The exercise price for non-qualified options may not be less than 85%
of the fair market value of the Company's Common Stock on the date of grant.
Options granted under the 1992 Plan may be exercisable at such times as are
determined by the Board of Directors or the committee. Options are
nontransferable, other than by will or the laws of descent and distribution, and
may be exercised only by the optionee while employed by the Company or within
three months after termination of employment by resignation or one year
following termination of employment resulting from death or disability. Options
expire no later than ten years from the date of grant, provided that incentive
stock options granted to employees owning stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company expire five
or fewer years from the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE 1992 STOCK OPTION AGREEMENT.
RELATIONSHIP OF CERTIFIEDINDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors selects the independent certified public
accountants for the Company each year. Lurie, Besikof, LapidusThe Board of Directors selected the firm
of Deloitte & Co.,Touche LLP auditedto audit the Company's consolidated financial
statements for the fiscal year ended October 31, 1996.1997.
Representatives of Lurie, Besikof, LapidusDeloitte & Co,Touche LLP will attend the Annual
Meeting, may make a statement if they so desire, and will be available to
respond to appropriate questions. If possible, such questions should be
submitted in writing to the Company at least 10 days prior to the Annual
Meeting, at 12800 Whitewater Drive,7300 Metro Blvd, Suite 170, Minnetonka,550, Edina, Minnesota 55343,55439, Attention: Mr.
John P. Hupp, President.
On AprilDecember 23, 1996, Price Waterhouse,1997, the Board of Directors dismissed the firm of
Lurie, Besikof, Lapidus & Co., LLP ("PW"(hereinafter "Lurie, Besikof") the independent
accountant who was previously engaged as the
principalindependent accountant to audit the Company's financial statements, declined to stand for re-election. PW's reportsstatements. Lurie,
Besikof's report on the financial statements for the past two years doyear does not contain
an adverse opinion or disclaimer of opinion, and areis not modified as to
uncertainty, audit scope, or accounting principles. In connection with its auditsaudit
for the two most recent fiscal years and through AprilDecember 23, 1996,1997, there have been
no disagreements with PWLurie, Besikof on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PWLurie,
Besikof would have caused them to make reference thereto in their report on the
financial statements for such years.
The decision to change
accountants has been approved by the Board of Directors of the Company.
On AprilDecember 23, 1996 Lurie, Besikof, Lapidus1997, Deloitte & Co.,Touche LLP was appointed as the
Company's new independent accountant to audit the Company's financial
statements. During the two most recent fiscal years and through AprilDecember 23,
1996,1997, the Company has not, prior to engaging the new accountant, consulted the
new accountant regarding the application of accounting principles to a specific
completed or contemplated transaction, or regarding the type of audit opinion
that might be rendered on the Company's financial statementsstatements.
OTHER BUSINESS
Management knows of no other matters that will be presented for
consideration at the meeting. If any other matter properly comes before the
meeting, proxies will be voted in accordance with the best judgment of the
person or persons acting under them.
PROPOSALS FOR 19981999 ANNUAL MEETING
Shareholders who intend to submit proposals for inclusion in the
Company's 19981999 Proxy Statement and Proxy for shareholder action at the 19981999
Annual Meeting must do so by sending the proposal and supporting statements, if
any, to the Company at its corporate offices no later than December 24, 1997.5, 1998.
By Order of the Board of Directors
John P. Hupp
PRESIDENT/s/ LeAnn H. Davis
LeAnn H. Davis
CHIEF FINANCIAL OFFICER AND SECRETARY
March 17, 19971998
DEVELOPED TECHNOLOGY RESOURCE, INC.
ANNUAL MEETING OF SHAREHOLDERS - APRIL 24, 199714, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John P. Hupp or his appointee as proxy
of the undersigned, with full power of substitution, for and in the name of the
undersigned, to represent the undersigned at the Annual Meeting of Shareholders
of Developed Technology Resource, Inc., to be held at 2501 Wayzata
Boulevard,the Minneapolis Athletic
Club, 615 Second Avenue South, Minneapolis, Minnesota 5540555402 at 4:003:30 p.m. CST on
Thursday,Tuesday, April 24,
1997,14, 1998, and at any adjournments thereof, and to vote all shares
of stock of said Company standing in the name of the undersigned, as designated
below, with all the powers which the undersigned would possess if personally at
such meetings.
1. Election of Directors duly nominated: Peter L. Hauser, John P. Hupp,
and Roger W. Schnobrich.
_______[ ] FOR _______[ ] WITHHELD FOR ALL _______[ ] WITHHELD FOR THE FOLLOWING ONLY
(Write the nominee's name in space below):
- --------------------------------------------------------------------------------
2. ApprovalRatification of the Amendment toappointment of Deloitte & Touche LLP as independent
auditors for the 1992 Stock Option Plan.
_______current fiscal year.
[ ] FOR _______[ ] AGAINST
- --------------------------------------------------------------------------------
3. The authority to vote, in their discretion, on all other business that
may properly come before the meeting.
_______[ ] GRANTED _______[ ] WITHHELD
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE GIVEN FOR
VOTING ON THE MATTERS ABOVE, THIS PROXY WILL BE VOTED FOR item 1, electing all
duly nominated Directors as listed, voted FOR item 2, approving the amendment,
and GRANTED for item 3, granting the Directors authority to vote in their
discretion on all other business coming before the meeting. Shareholders who are
present at the meeting may withdraw their Proxy and vote in person if they so
desire. The undersigned has received the proxy statement dated February 26,
1997.March 14, 1998.
Dated _____________, 1997 ___________________________ ______________________________, 1998 __________________________ __________________________
Signature Print Name
Dated _____________, 1997 ___________________________ ______________________________, 1998 __________________________ __________________________
Signature Print Name
Please sign exactly as name(s) appear(s) on this Proxy. If shares are
registered in more than one name, the signatures of all persons are required. A
corporation should sign in its full corporate name by a duly authorized officer,
stating their title. Trustees, guardians, executors and administrators should
sign in their official capacity, giving their full title as such. If a
partnership, please sign in partnership name by authorized person.
Please check as appropriate:
_[ ] I DO plan on attending the Annual Meeting of Shareholders.
_[ ] I DO NOT plan on attending the Annual Meeting of Shareholders.
PLEASE SIGN, DATE AND RETURN THIS PROXY
PROMPTLY NO POSTAGE IS REQUIRED IF RETURNED
IN THE ENCLOSED ENVELOPE. THIS PROXY MAY
ALSO BE RETURNED VIA FACSIMILE TO
612/938-2319.