Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
Commission file number 0-28422
GeoScience Corporation
(Exact name of Registrant as specified in its charter)
Nevada 76-0497775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10500 Westoffice Drive, Suite 210, Houston, Texas 77042
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: 713/780-1881
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] . No [_].
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Outstanding at July 31, 1997
---------------------------- ----------------------------
Common Stock, $.01 par value 10,063,850
<PAGE>
Form 10-Q
GeoScience Corporation
INDEX
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Page No.
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Part I. Financial Information:
Consolidated Balance Sheet June 30, 1997
and December 31, 1996 1
Consolidated Statement of Income and Accumulated
Earnings for the Quarter Ended June 30,
1997 and 1996 2
Consolidated Statement of Income and Accumulated
Earnings for the Six Months Ended June 30,
1997 and 1996 3
Consolidated Statement of Cash Flows for the
Six Months Ended June 30, 1997 and 1996 4
Notes to Consolidated Financial Statements 5-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
Page 1 Form 10-Q
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
GeoScience Corporation
Consolidated Balance Sheet
(stated in thousands,
except share amounts)
June 30, 1997 December 31, 1996
------------ ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents ............... $ 1,135 $ 1,306
Receivables ............................. 21,848 30,793
Inventories ............................. 50,944 45,845
Other ................................... 3,208 2,632
------------ ------------
Total current assets .............. 77,135 80,576
Property, plant and equipment ............. 22,432 25,093
Long-term receivables ..................... 3,161 9,899
Other assets .............................. 2,363 8,258
Net assets of discontinued operation ...... 12,385
------------ ------------
Total assets ...................... $ 117,476 $ 123,826
============ ============
Liabilities
Current liabilities:
Notes payable and current
maturities of long-term debt ........... $ 13,208 $ 16,197
Accounts payable ........................ 6,978 8,336
Unearned revenue ........................ 2,330 3,232
Taxes on income ......................... 1,139 2,813
Payable to Tech-Sym Corporation ......... 10,583 5,126
Other accrued liabilities ............... 5,079 8,009
------------ ------------
Total current liablilites ......... 39,317 43,713
Long-term debt ............................ 5,023 4,620
Other liabilities and deferred credits .... 131 689
------------ ------------
Total liabilities ................. 44,471 49,022
Shareholders' Investment
Common stock - authorized 35,000,000
shares, $.01 par value; issued
10,497,600 shares ........................ 105 105
Additional capital ........................ 44,877 44,877
Accumulated earnings ...................... 33,247 32,597
Common stock held in treasury
at cost (435,000 and 240,000 shares) ..... (5,298) (3,046)
Cumulative translation adjustments ........ 74 271
------------ ------------
Total shareholders' investment .... 73,005 74,804
------------ ------------
Total liabilities and
shareholders' investment ......... $ 117,476 $ 123,826
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
Page 2 Form 10-Q
GeoScience Corporation
Consolidated Statement of Income and
Accumulated Earnings
(stated in thousands,
except per share amounts)
For the Quarter Ended June 30,
-----------------------------
1997 1996
(unaudited)
Revenue ...................................... $ 23,322 $ 19,996
Cost of revenue .............................. 12,878 11,864
------------ ------------
Gross profit from
continuing operations ............... 10,444 8,132
------------ ------------
Expenses:
Selling, general and administrative
expenses ................................. 5,782 4,573
Research and development expense ........... 2,084 1,749
Interest expense ........................... 546 130
Interest and other (income), net ........... (7) (331)
------------ ------------
8,405 6,121
------------ ------------
Income from continuing operations
before income taxes .................. 2,039 2,011
Provision for income taxes
from continuing operations ................. 632 646
------------ ------------
Income from continuing operations ..... 1,407 1,365
Discontinued operation:
Loss from discontinued operation net
of applicable income taxes of $425
and $538, respectively ................... 946 1,137
------------ ------------
Net income ............................ 461 228
Accumulated earnings:
Beginning of period ...................... 32,786 29,304
------------ ------------
End of period ............................ $ 33,247 $ 29,532
============ ============
Earnings (loss) per common share:
Continuing operations ...................... $ 0.14 $ 0.15
Discontinued operation ..................... (0.09) (0.12)
------------ ------------
Net income ............................ $ 0.05 $ 0.03
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
Page 3 Form 10-Q
GeoScience Corporation
Consolidated Statement of Income and
Accumulated Earnings
(stated in thousands,
except per share amounts)
For the Six Months Ended June 30,
-----------------------------
1997 1996
(unaudited)
Revenue ...................................... $ 46,652 $ 38,869
Cost of revenue .............................. 27,612 22,964
------------ ------------
Gross profit from
continuing operations ............... 19,040 15,905
------------ ------------
Expenses:
Selling, general and administrative
expenses ................................. 11,178 8,522
Research and development expense ........... 3,797 3,614
Interest expense ........................... 959 626
Interest and other (income), net ........... (138) (344)
------------ ------------
15,796 12,418
------------ ------------
Income from continuing operations
before income taxes .................. 3,244 3,487
Provision for income taxes
from continuing operations ................. 1,006 1,117
------------ ------------
Income from continuing operations ..... 2,238 2,370
Discontinued operation:
Loss from discontinued operation net
of applicable income taxes of $713
and $833, respectively ................... 1,588 1,768
------------ ------------
Net income ............................ 650 602
Accumulated earnings:
Beginning of period ...................... 32,597 28,930
------------ ------------
End of period ............................ $ 33,247 $ 29,532
============ ============
Earnings (loss) per common share:
Continuing operations ...................... $ 0.22 $ 0.28
Discontinued operation ..................... (0.16) (0.21)
------------ ------------
Net income ............................ $ 0.06 $ 0.07
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
Page 4 Form 10-Q
GeoScience Corporation
Consolidated Statement of Cash Flows
(stated in thousands)
For the Six Months
Ended June 30,
-----------------------
1997 1996
(unaudited)
Cash flows from operating activities:
Net income ......................................... $ 650 $ 602
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization ................... 3,837 3,294
Change in operating assets and liabilities:
Receivables ..................................... 2,099 (2,982)
Inventories ..................................... (5,300) (6,307)
Other current assets ............................ (994) 1,431
Long-term receivables ........................... (961) 460
Other assets .................................... (349) (3,802)
Accounts payable ................................ (276) (1,361)
Unearned revenue ................................ 341 (3,463)
Taxes on income ................................. (1,511) 1,090
Other liabilities ............................... (2,000) 442
Payable to Tech-Sym ............................. 327
---------- ----------
Net cash used for operating activities ............. (4,137) (10,596)
---------- ----------
Cash flows from investing activities:
Capital expenditures ............................... (4,128) (3,221)
Sale of equipment under operating leases ........... 731
---------- ----------
Net cash used for investing activities ............. (3,397) (3,221)
---------- ----------
Cash flows from financing activities:
Net borrowings from (payments to)
Tech-Sym Corporation .............................. 5,130 (20,904)
Net payments under line of credit agreements ....... (2,882) (6,415)
Proceeds from long-term debt ....................... 894
Payments on long-term debt ......................... (598) (450)
Purchase of treasury stock ......................... (2,252)
Proceeds from issuance of common stock ............. 40,381
Proceeds from sale of notes receivable ............. 7,268
Other .............................................. (197) (58)
---------- ----------
Net cash provided by financing activities .......... 7,363 12,554
---------- ----------
Net decrease in cash and cash equivalents ............ (171) (1,263)
Cash and cash equivalents at beginning of period ... 1,306 1,668
---------- ----------
Cash and cash equivalents at end of period ......... $ 1,135 $ 405
========== ==========
Cash flow from operating activities include:
Interest paid ...................................... $ 980 $ 574
Income taxes paid .................................. 1,028
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
Page 5 Form 10-Q
GeoScience Corporation
Notes to Consolidated Financial Statements
1. The accompanying unaudited consolidated financial statements of
GeoScience Corporation and its subsidiaries ("the Company") have
been prepared in accordance with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements and should be read in conjunction with
the financial statements and notes thereto appearing in the
Company's annual report on Form 10-K for the year ended December 31,
1996.
In the opinion of the Company's management ("Management"), all
adjustments necessary for a fair presentation of the results of
operations for all periods reported have been included. Such
adjustments consist only of normal recurring items.
The consolidated statements of income for the three and six months
ended June 30, 1997, are not necessarily indicative of the results
to be expected for the full year ending December 31, 1997.
The consolidated financial statements have been restated to reflect
the Company's geoscientific software subsidiary as a discontinued
operation in accordance with Accounting Principles Board Opinion No.
30 (see Note 2).
2. Effective June 30, 1997 ("the measurement date"), the Company
adopted a plan to sell its geoscientific software subsidiary,
CogniSeis Development, Inc. ("CogniSeis"). Accordingly, CogniSeis is
reported as a discontinued operation for the periods presented.
Management anticipates CogniSeis will incur operating losses
approximating $500,000 from the measurement date through the
disposal date. Such losses have been deferred due to the fact that
Management expects a gain on the sale of CogniSeis.
On July 15, 1997, the Company signed a letter of intent to sell
CogniSeis for cash and guaranteed future royalties with a combined
estimated value between $19.5 and $23 million. The proposed sale is
subject to the terms of a negotiated definitive agreement which
could vary from the letter of intent, and no assurances can be made
that this transaction will be completed. Management's current
estimate indicates that the total sale proceeds from the disposal of
CogniSeis will result in a gain on the transaction. However, the
ultimate financial impact of the negotiated definitive agreement
could differ from Management's current estimate.
The operating results (unaudited) of the discontinued operation are
summarized as follows (in thousands):
<PAGE>
Page 6 Form 10-Q
GeoScience Corporation
Notes to Consolidated Financial Statements - Continued
Quarter Ended June 30,
----------------------
1997 1996
-------- --------
Revenue ................................ $ 5,575 $ 5,404
======== ========
Loss before provision for
income taxes .......................... 1,371 1,675
Provision for income taxes ............. 425 538
-------- --------
Net loss ............................... $ 946 $ 1,137
======== ========
Six Months Ended
June 30,
----------------------
1997 1996
-------- --------
Revenue ................................ $ 11,398 $ 11,281
======== ========
Loss before provision for
income taxes .......................... 2,301 2,601
Provision for income taxes ............. 713 833
-------- --------
Net loss ............................... $ 1,588 $ 1,768
======== ========
The net assets (unaudited) of the discontinued operation are
summarized as follows (in thousands):
June 30, 1997
-------------
Current assets $ 7,465
Property, plant and equipment, net 3,149
Other assets 5,747
Current liabilities (3,976)
------
Net assets $12,385
======
3. Inventories, stated at the lower of cost (first-in, first-out) or
market, are summarized as follows (in thousands):
June 30, 1997 December 31, 1996
------------- -----------------
(unaudited)
Raw Materials $11,827 $12,669
Work in Process 16,418 16,292
Finished Goods 22,699 16,884
------- -------
Total inventories $50,944 $45,845
======= =======
4. Earnings per common share are based on the weighted average number
of shares outstanding during each period (10,101,000 and 9,185,000
for the quarter ended June 30, 1997 and 1996,
<PAGE>
Page 7 Form 10-Q
GeoScience Corporation
Notes to Consolidated Financial Statements - Continued
respectively, and 10,162,000 and 8,542,000 for the six month period
ended June 30, 1997 and 1996, respectively).
5. In 1997, Statement of Financial Accounting Standards No. 128 (FAS
128), Earnings per Share was issued. FAS 128 is effective for
earnings per share calculations for periods ending after December
15, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate
all prior periods. Adoption of FAS 128 is not expected to have a
material effect on the Company's financial position or operational
results.
<PAGE>
Page 8 Form 10-Q
GeoScience Corporation
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
In June 1997, the Company adopted a plan to sell its geoscientific software
subsidiary, CogniSeis Development, Inc. ("CogniSeis"). CogniSeis is accounted
for as a discontinued operation. Accordingly, the consolidated financial
statements have been restated to report separately the operating results of the
continuing operations. All prior year amounts have been restated.
RESULTS OF OPERATIONS - QUARTER ENDED JUNE 30, 1997 COMPARED TO THE QUARTER
ENDED JUNE 30, 1996
Revenue increased $3,326,000 or 17% to $23,322,000 for the quarter ended June
30, 1997. The increase in revenue resulted primarily from increased shipments of
land and ocean bottom extruded seismic cables. The consolidated gross profit
margin increased 4% to 45% of revenue for the quarter ended June 30, 1997,
compared to the same quarter in the prior year. The increase in gross profit
margin is attributed to reduced costs derived from improved manufacturing
efficiencies and decreased electronic component prices related to the 24-bit
electronic module. Additionally, the prior period quarter gross profit margin
was unusually depressed due to a strategic sale of an ocean bottom cable system
at a lower than customary margin.
Consolidated selling, general and administrative expenses increased 26% to
$5,782,000 during the second quarter of 1997. These expenses as a percentage of
revenue increased from 23% to 25% in comparison to the same quarter a year ago.
The increase was primarily a result of support personnel added at the domestic
manufacturing operations to support the general growth in the Company's
business. Additional increases were due to royalty costs associated with the
overall increase in revenue and additional commissions associated with increased
international sales. Furthermore, expenses related to managing the consolidated
business and necessitated by being a publicly traded company were added.
Research and development expenses were $2,084,000 for the quarter ended June 30,
1997 compared to $1,749,000 for the quarter ended June 30, 1996. The increase
resulted from design changes on the 24-bit electronic module manufactured by
the Company, which are being made to enhance the performance and reliability of
the module.
Interest expense increased to $546,000 during the second quarter of 1997 from
$130,000 during the second quarter of 1996 as a result of the increase in
interest bearing debt incurred to support the growth of the business. Other
income decreased to
<PAGE>
Page 9 Form 10-Q
GeoScience Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Continued
$7,000 from $331,000 due to a reduction in interest income on interest bearing
receivables during the quarter.
The effective tax rate for the quarter ended June 30, 1997 was 31% compared to
32% for the same period in the prior year. The Company's effective tax rate is
lower than the statutory United States rate due to tax benefits generated from
foreign sales.
Income from continuing operations for the second quarter of 1997 was $1,407,000
compared to $1,365,000 and earnings per common share were $.14 compared to $.15
for the corresponding quarter a year ago. The decrease in earnings per share
resulted from the increase in average common shares outstanding due to the
initial public offering of the Company in May 1996.
Loss from the discontinued operation for the quarter ended June 30, 1997
decreased $191,000 or $.03 per share from the same quarter in the prior year.
The fluctuation was a result of an increase in interest income recognized on
contract installment sales.
Net income for the quarter ended June 30, 1997 increased 102% to $461,000 and
earnings per common share increased 67% to $.05 per share from the comparable
quarter a year ago primarily resulting from the decrease in the loss from the
discontinued operation.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO JUNE 30, 1996
Revenue increased 20% to $46,652,000 for the six months ended June 30, 1997,
from $38,869,000 for the same period in the prior year. The majority of the
increase, $6,874,000, was due to an increase in seismic cable sales. Additional
increases resulted from contract awards in the first three months of the year to
provide technical data services to potential bidders on upcoming oil exploration
leases. The consolidated gross profit margin was consistent at 41% of revenue
for the six months ended June 30, 1997 and 1996.
Consolidated selling, general and administrative expenses increased to
$11,178,000 for the period ended June 30, 1997, from $8,522,000.
Correspondingly, these expenses as a percentage of revenue increased from 22% to
24% in comparison to the same period a year ago. The primary reasons for the
increase were the additional support personnel costs and larger royalty and
commission expenses associated with the general growth of the business
<PAGE>
Page 10 Form 10-Q
GeoScience Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Continued
and increase in revenue. The additional costs of managing the consolidated
business and being a publicly traded company were also significant contributors
to the increase. Research and development expenses were $3,797,000 for the
period ended June 30, 1997 compared to $3,614,000 for the period ended June 30,
1996. The increase resulted from design changes being made to the 24-bit
electronic module manufactured by the Company.
Interest expense increased to $959,000 from $626,000 as a result of the increase
in interest bearing debt to support the higher level of inventories and capital
expenditures that correspond to the growth in the business. Other income
decreased to $138,000 from $344,000 due to a reduction in interest bearing
receivables.
Income from continuing operations for the six month period of 1997 was
$2,238,000 compared to $2,370,000 and earnings per common share were $.22
compared to $.28 for the corresponding period a year ago. The decrease reflects
the impact of expenses increasing at a faster rate than the gross profit margin
of the growing revenue base. The decrease in earnings per common share was
further affected by the increase in the average common shares outstanding as a
result of the initial public offering of the Company in May 1996.
Loss from the discontinued operation for the six months ended June 30, 1997
decreased $180,000 or $.05 per share from the same period in the prior year
resulting from an increase in interest income recognized on contract installment
sales.
Net income for the six months ended June 30, 1997 increased 8% to $650,000 and
earnings per common share decreased 14% to $.06 per share from the comparable
period a year ago. The improvement in net income reflects the decrease in the
loss from the discontinued geoscientific software operation partially offset by
the decrease in income from continuing operations as discussed above.
Fluctuations in customer requirements due to vessel availability and other
factors may unfavorably affect the Company's operating results in future
periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently satisfying its working capital and capital expenditure
requirements through internally generated cash from operations, bank borrowings
and loans from an affiliate, Tech-Sym Corporation. At June 30, 1997, the
Company's working capital balance was $37,818,000, compared to $36,863,000
<PAGE>
Page 11 Form 10-Q
GeoScience Corporation
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Continued
at December 31, 1996. The increase in working capital is a result of a decrease
in liabilities which resulted from segregating the net assets of the
discontinued operation as a non-current asset at June 30, 1997. Cash used for
operations was $4,137,000 for the six months ended June 30, 1997, compared to
$10,596,000 for the same period in the prior year.
As of June 30, 1997, the Company had uncommitted bank lines of credit
aggregating approximately $22,504,000. Borrowings under these lines were
$12,381,000, including the discontinued operation. The Company had a working
capital ratio of 1.96 to 1.0 and debt to total capitalization of 28%. The
Company believes that its current financial position and available lines of
credit will provide ample sources of funds to meet foreseeable requirements.
Purchases of property, plant and equipment totaled $4,128,000 for the six months
ended June 30, 1997, compared to $3,221,000 for the corresponding prior year
period. The Company estimates that capital expenditures for property, plant and
equipment during the remainder of 1997 will be approximately $6,395,000. Most of
the anticipated capital expenditures are not subject to firm commitments and the
Company may modify its plans depending on future results of operations or other
factors.
Forward-looking statements in this document are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that all forward-looking statements involve risks and
uncertainties, including, without limitation, risks associated with the
uncertainty of market acceptance of the Company's products, limited number of
customers, as well as risks of downturns in economic conditions generally, risks
associated with competition and competitive pricing pressures, and other risks
detailed in the Company's filings with the Securities and Exchange Commission.
<PAGE>
Page 12 Form 10-Q
GeoScience Corporation
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Company held its 1997 Annual Meeting of Stockholders on April 28, 1997. At
this meeting, the shareholders voted on the following matters:
ELECTION OF CLASS I DIRECTORS
For Withheld
--------- --------
Michael C. Forrest 9,282,484 2,100
J. Rankin Tippins 9,282,184 2,400
In addition to the Class I Directors elected at the 1997 Annual Meeting, W.L.
Creech, Richard F. Miles, and Edward R. Prince, Jr. continue to serve as Class
II Directors until the 1998 Annual Meeting of Stockholders and Wendell W. Gamel,
Christopher C. Kraft, Jr. and Ray F. Thompson continue to serve as Class III
Directors until the 1999 Annual Meeting of Stockholders.
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
For Against Abstained
--------- ------- ---------
9,282,684 1,500 400
AMENDMENTS TO COMPANY'S 1996 EQUITY INCENTIVE PLAN
For Against Abstained
--------- ------- ---------
9,153,451 59,100 2,900
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
10(a) - Form of Employee Stock Option Agreement.
10(b) - Amended and Restated GeoScience Corporation
1996 Equity Incentive Plan.
10(c) - Termination and Incentive Agreement
dated May 14, 1997 between CogniSeis
Development, Inc., GeoScience Corporation, and
Richard C. Cooper.
27 - Financial Data Schedule which is deemed not to be
filed for purposes of liability under the federal
securities laws.
(b) REPORTS ON FORM 8-K.
None.
<PAGE>
Page 13 Form 10-Q
GeoScience Corporation
No financial statements were filed as a part of this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GEOSCIENCE CORPORATION
Registrant
Date: August 13, 1997 /s/ Richard F. Miles
Richard F. Miles, President
Date: August 13, 1997 /s/ Ray F. Thompson
Ray F. Thompson, Vice President and
Chief Financial Officer
<PAGE>
Form 10-Q
GeoScience Corporation
EXHIBIT INDEX
Number Exhibit
------ -------
10(a) Form of Employee Stock Option Agreement.
10(b) Amended and Restated GeoScience Corporation
1996 Equity Incentive Plan.
10(c) Termination and Incentive Agreement dated May 14,
1997 between CogniSeis Development, Inc.,
GeoScience Corporation, and Richard C. Cooper.
27 Financial Data Schedule which is deemed not to be
filed for purposes of liability under the
federal securities laws.
EXHIBIT 10(a)
GEOSCIENCE CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made effective the ____ day of ______, 199_, (the "Grant
Date") between GEOSCIENCE CORPORATION, a Nevada corporation (the "Company"), and
FIRSTNAME LASTNAME ("Optionee").
To carry out the purposes of the GeoScience Corporation 1996 Equity
Incentive Plan (First Amendment), to which this Agreement is expressly subject
and a copy of which is attached hereto as EXHIBIT A, by affording Optionee the
opportunity to purchase shares of Common Stock, par value $.01 per share, of the
Company ("Stock"), and in consideration of the mutual agreements and other
matters set forth herein and in the Plan, the Company and Optionee hereby agree
as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part of an aggregate of
- -SHARES~- shares of Stock, on the terms and conditions set forth herein and in
the Plan. It is intended that the Option qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. EXERCISE PRICE. The exercise price of the Option shall be $_____
per share.
3. EXERCISE OF OPTION.
(a) Subject to the further provisions of this Agreement, the Option
granted pursuant to this Agreement shall not become exercisable until after one
year following the date hereof and thereafter may be exercised upon the
following terms:
(i) after such one year, this Option shall be exercisable for
any number of shares up to and including, but not in excess of, 25% of the
aggregate number of shares subject to this Option;
(ii) after two years, this Option shall be exercisable for any
number of shares up to and including but not in excess of, 50% of the
aggregate number of shares subject to this Option;
(iii) after three years, this Option shall be exercisable for
any number of shares up to and including, but not in excess of, 75% of the
aggregate number of shares subject to this Option; and
(iv) after four years, this Option shall be fully exercisable.
(b) Subject to the earlier expiration of the Option as herein
provided and subject to the terms and conditions contained herein, the Option
may be exercised by written notice (which complies in all respects with the
provisions of this Agreement) to the Company at its principal executive office
addressed to the attention of the Secretary of the Company, identifying the
Option and specifying the number of shares that the Optionee decides to
purchase, such exercise to be effective at the time of receipt of such written
notice at the
<PAGE>
Company's principal executive office during normal business hours. The notice
shall not be considered to be properly given unless accompanied by full payment
and all documentation deemed appropriate by the Committee to reflect exercise of
the Option and compliance with all applicable laws, rules and regulations.
(c) The Option shall automatically be exercisable in full upon the
occurrence of a "Change in Control" of the Company (as defined in the Plan).
(d) Notwithstanding anything herein to the contrary, including,
without limitation Paragraph 7, in no event shall the Option, or any part
thereof, be exercisable after the tenth anniversary of the Grant Date.
4. FORFEITURE.
(a) If, (x) at any time before this Option terminates, or (y) within
one year after exercising any portion of this Option, whichever is later, the
Optionee engages in any activity in competition with the Company, or inimical,
contrary or harmful to the interests of the Company, including, but not limited
to: (i) conduct related to the Optionee's employment with the Company for which
either criminal or civil penalties against the Optionee may be sought, (ii)
violation of Company policies, including, without limitation, the Company's
insider trading policy, (iii) accepting employment with or serving as a
consultant, advisor, or in any other capacity to an employer that is in
competition with or acting against the interests of the Company, including
employing or recruiting any present or future employee of the Company, (iv)
disclosing or misusing any confidential information or material concerning the
Company, or (v) participating in a hostile takeover attempt, then (1) this
Option shall terminate effective as of the date on which the Optionee enters
into such activity (the "Forfeiture Date"), unless terminated sooner by
operation of another term or condition of this Option or the Plan, and (2) any
gain realized by the Optionee upon exercising all or any portion of this Option
during the twelve months prior to the Forfeiture Date or at any time on or after
the Forfeiture Date shall be paid by the Optionee to the Company. As used in
this Paragraph 4, the term "Company" shall mean the Company including its
subsidiaries, its parent and any subsidiary of the parent of the Company.
(b) By accepting this Agreement, the Optionee consents to a
deduction from any amounts the Company owes the Optionee from time to time
(including amounts owed to the Optionee as wages or other compensation, fringe
benefits, or vacation pay, as well as any other amounts owed to the Optionee by
the Company), to the extent of the amounts the Optionee owes the Company under
this paragraph 4. Whether or not the Company elects to make any set-off in whole
or in part, if the Company does not recover by means of set-off the full amount
the Optionee owes the Company, calculated as set forth above, the Optionee
agrees to pay immediately the unpaid balance to the Company.
(c) The Optionee may be released from the obligations stated above
only if the Compensation Committee (or its duly appointed agent) determines in
its sole discretion that such action is in the best interests of the Company.
5. PAYMENT OF OPTION EXERCISE PRICE. Upon exercise of the Option,
the full option exercise price for the shares with respect to which the Option
is being exercised shall be payable to the Company (i) in cash or by check
payable and acceptable to the Company or (ii) subject to the approval of the
Committee, (a) by tendering to the Company shares of Stock owned by the Optionee
having an aggregate Market Value Per Share as of the date of exercise and tender
that is not greater than the full Option exercise price for the shares with
respect to which the Option is being exercised and by paying any remaining
amount of the Option exercise price as provided in (i) above (provided that the
Committee may, upon confirming that the
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Optionee owns the number of shares being tendered, authorize the issuance of a
new certificate for the number of shares being acquired pursuant to the exercise
of the Option less the number of shares being tendered upon the exercise and
return to the Optionee (or not require surrender of) the certificate for the
shares being tendered upon the exercise) or (b) by the Optionee delivering to
the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the option exercise price; provided
that in the event the Optionee chooses to pay the Option exercise as provided in
(ii)(b) above, the Optionee and the broker shall comply with such procedures and
enter into such agreements of indemnity and other agreements as the Committee
shall prescribe as a condition of such payment procedure. Payment instructions
will be received subject to collection.
6. NON-TRANSFERABILITY. The Option may not be transferred by
Optionee separately or otherwise than by will or the laws of descent and
distribution.
7. TERMINATION OF EMPLOYMENT.
(a) If the Optionee's employment with the Company, its Subsidiaries
or its Affiliates is terminated for reasons other than (i) retirement, after
reaching age 55, with the consent of the Company or the individual's employing
Subsidiary or Affiliate, as the case may be ("Retirement"), (ii) permanent
disability as defined in Section 22(d) of the Code or (iii) death, the Option
shall be exercisable by the Optionee, subject to paragraphs 3(d) and 4 above,
only within three months after such termination and only to the extent the
Option was exercisable on the date of termination of employment.
(b) If, however, any termination of employment is due to Retirement
or permanent disability, the Option shall be exercisable by the Optionee at any
time, subject to paragraphs 3(d) and 4 above, after such termination of
employment, only to the extent the Option was exercisable on the date of
termination of employment.
(c) If the Optionee shall die while entitled to exercise the Option,
the Optionee's estate, personal representative or beneficiary, as the case may
be, shall have the right at any time, subject to the provisions of paragraphs
3(d) and 4 above, to exercise the Option, only to the extent that the Optionee
was entitled to exercise the same on the day of the Optionee's death.
(d) Except as provided above in this paragraph 7 , to the extent the
Option is not exercisable on such termination of employment, the Option, or
applicable portion thereof, shall be terminated and forfeited in full.
8. WITHHOLDING OF TAX. Any issuance of Stock pursuant to the
exercise of the Option under this Agreement shall not be made until appropriate
arrangements have been made for the payment of any amounts that may be required
to be withheld or paid with respect thereto under all present or future federal,
state and local tax and other laws and regulations that may be in effect as of
such date ("Tax Amounts"). Such arrangements may, at the discretion of the
Committee, include allowing the Optionee to tender to the Company shares of
Stock owned by Optionee, or to request the Company to withhold a portion of the
shares of Stock being acquired pursuant to the exercise or otherwise distributed
to Optionee, which have a Market Value Per Share as of the date of such
exercise, tender or withholding that is not greater than the sum of all Tax
Amounts, together with payment of any remaining portion of all Tax Amounts in
cash or by check payable and acceptable to the Company. Payment instruments will
be received subject to collection.
9. SECURITIES MATTERS. The Option granted herein shall be subject to
the requirement that, if at any time the Board shall determine, in its
discretion, that the listing,
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registration or qualification of the shares subject to such Option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the issue or purchase of shares hereunder,
such Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not reasonably acceptable to the Board.
10. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, the
Optionee shall be considered to be in the employment of the Company as long as
the Optionee remains an employee of either the Company, a parent or subsidiary
corporation (as defined in Section 424 of the Code) or affiliate of the Company,
or a corporation or a parent or subsidiary of such corporation assuming or
substituting a new agreement for this Agreement, provided, however, it is
recognized that if the Optionee ceases to be an employee of the Company or a
subsidiary thereof, the Option may cease to qualify as an "incentive stock
option," depending on the facts then existing. Any question as to whether and
when there has been a termination of such employment, for purposes of this
Agreement, and the cause of such termination, for purposes of this Agreement,
shall be determined by the Committee, and its determination shall be final.
Nothing herein shall give the Optionee any right to continued employment or
affect in any manner the right of the Company or any Subsidiary or parent
corporation to terminate the employment of the Optionee.
11. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under the Optionee. This Agreement and all actions taken shall be
governed by and constructed in accordance with the laws of the State of Texas.
In the event of conflict between this Agreement and the Plan, the terms of the
Plan shall control. All undefined capitalized terms used herein shall have the
meaning assigned to them in the Plan. The Committee shall have authority to
construe the terms of this Agreement, and the Committee's determinations shall
be final and binding on the Optionee and the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Optionee has executed this Agreement as of the day and year
first above written.
GEOSCIENCE CORPORATION
By:____________________
President
OPTIONEE
----------------------
FirstName LastName
4
EXHIBIT 10(b)
GEOSCIENCE CORPORATION
1996 EQUITY INCENTIVE PLAN
(FIRST AMENDMENT)
GeoScience Corporation, a Nevada corporation (the "Company"), hereby
amends and restates this GeoScience Corporation 1996 Equity Incentive Plan (this
"Plan"), effective as of April 28, 1997, subject to stockholder approval.
1. PURPOSE. The purpose of the Plan is to promote the interests of the
Company by encouraging employees of, and consultants to, the Company and its
Affiliates and the directors of the Company and Tech-Sym Corporation, who are
not also employees of the Company or an Affiliate, to acquire or increase their
equity interests in the Company and to provide a means whereby such persons may
develop a sense of proprietorship and personal involvement in the development
and financial success of the Company, and to encourage them to remain with and
devote their best efforts to the business of the Company, thereby advancing the
interests of the Company and its stockholders. The Plan is also contemplated to
enhance the ability of the Company and its Subsidiaries to attract and retain
the services of individuals who are believed to be essential for the growth and
profitability of the Company.
2. DEFINITIONS. As used in this Plan:
(a) "AFFILIATE" means, at any time, any corporation, partnership or
other entity in which Tech-Sym or the Company, directly or indirectly, has
a significant equity interest, as determined by the Committee.
(b) "APPRECIATION RIGHT" means a right granted pursuant to
Paragraph 5.
(c) "AWARD" means an Appreciation Right, an Option Right, a
Director Option, Phantom Shares, a Performance Unit, Bonus Stock,
Restricted Stock or a Cash Tax Right.
(d) "BOARD" means the Board of Directors of the Company.
(e) "BONUS STOCK" means unrestricted shares of Common Stock granted
pursuant to Paragraph 9.
(f) "CASH TAX RIGHT" means a right granted pursuant to Paragraph 10.
(g) "CHANGE IN CONTROL" shall occur if:
(i) any "person," as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934 (other than Tech-Sym, any trustee
or other fiduciary holding securities under an employee benefit plan of
Tech-Sym, or any company owned, directly or indirectly, by the
stockholders of Tech-Sym in substantially the same proportions as their
ownership of stock of Tech-Sym) together with its "Affiliates" and
"Associates," as such terms are defined in Rule 12b-2 of the Exchange
Act, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
Tech-Sym representing 25% or more of the combined voting power of
Tech-Sym's then outstanding securities;
(ii) during any period of two consecutive years (not including any
period prior to the effective date of this Plan), individuals who at the
beginning of such period constitute the
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Tech-Sym Board, and any new director (other than a director designated
by a person who has entered into an agreement with Tech-Sym to effect a
transaction described in clause (i), (iii) or (iv) of this definition)
whose election by the Tech-Sym Board or nomination for election by Tech-
Sym's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(iii) the stockholders of Tech-Sym approve a merger or
consolidation of Tech-Sym with any other company other than (1) a merger
or consolidation which would result in the voting securities of Tech-Sym
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) more than 80% of the combined voting power of the
voting securities of Tech-Sym (or such surviving entity) outstanding
immediately after such merger or consolidation, or (2) a merger or
consolidation effected to implement a recapitalization of Tech-Sym (or
similar transaction) in which no "person" (as hereinabove defined)
acquires more than 25% of the combined voting power of Tech-Sym's then
outstanding securities; or
(iv) the stockholders of Tech-Sym adopt a plan of complete
liquidation of Tech-Sym or approve an agreement for the sale, exchange
or disposition by Tech-Sym of all or a significant portion of Tech-Sym's
assets. For purposes of this clause (iv), the term "the sale, exchange
or disposition by Tech-Sym of all or a significant portion of Tech-Sym's
assets"shall mean a sale or other disposition transaction or series of
related transactions involving assets of Tech-Sym or any subsidiary
(including the stock of any subsidiary) in which the value of the assets
or stock being sold or otherwise disposed of (as measured by the
purchase price being paid therefor or by such other method as the
Tech-Sym Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than 25% of the
fair market value of Tech-Sym (as hereinafter defined). For purposes of
the preceding sentence, the "fair market value of Tech-Sym" shall be
the aggregate market value of the outstanding shares of common stock of
Tech-Sym (on a fully diluted basis) plus the aggregate market value of
Tech-Sym's other outstanding equity securities. The aggregate market
value of the shares of common stock of Tech-Sym shall be determined by
multiplying the number of shares of Tech-Sym's common stock (on a fully
diluted basis) outstanding on the date of the execution and delivery of
a definitive agreement with respect to the transaction or series of
related transactions (the "Transaction Date") by the average closing
price of the shares of common stock of Tech-Sym for the ten trading days
immediately preceding the Transaction Date. The aggregate market value
of any other equity securities of Tech-Sym shall be determined in a
manner similar to that prescribed in the immediately preceding sentence
for determining the aggregate market value of the shares of common stock
of Tech-Sym or by such other method as the Tech-Sym Board shall
determine is appropriate.
On and after the date the Company ceases to be a subsidiary (within the
meaning of Code Section 424) of Tech-Sym, the terms "Company" and
"Board"shall replace "Tech-Sym" and "Tech-Sym Board", respectively,
wherever such terms are used in this definition of Change in Control.
(h) "CODE" means the Internal Revenue Code of 1986, as in effect
from time to time.
(i) "COMMITTEE" means the Compensation Committee of the Board.
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(j) "COMMON STOCK" means the Common Stock, $0.01 par value, of the
Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 14.
(k) "DATE OF GRANT" means (i) with respect to an Award other than a
Director Option, the date specified by the Committee on which such Award
will become effective (which date will not be earlier than the date on
which the Committee takes action with respect thereto) and (ii) with
respect to a Director Option, the automatic date of grant as provided in
Paragraph 11.
(l) "DIRECTOR" means a director of the Company who is not also an
employee of, or consultant to, the Company or an Affiliate.
(m) "DIRECTOR OPTION" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 11.
(n) "DIVIDEND EQUIVALENT" means, with respect to an Option Right or
Phantom Share, an amount equal to the amount of any dividends that are
declared and become payable after the Date of Grant for such Award and on
or before the date such Award is exercised, paid or forfeited, as the case
may be.
(o) "GRANT PRICE" means the price per share of Common Stock at
which an Appreciation Right not granted in tandem with an Option Right is
granted.
(p) "MANAGEMENT OBJECTIVES" means the objectives, if any,
established by the Committee that are to be achieved with respect to an
Award granted under this Plan, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to
performance of a division, Subsidiary, department or function within the
Company or a Subsidiary in which the Participant receiving the Award is
employed or in individual or other terms, and which will relate to the
period of time (Performance Cycle) determined by the Committee. The
Management Objectives intended to qualify under Section 162(m) of the Code
shall be with respect to one or more of the following (i) net earnings;
(ii) operating income; (iii) earnings before interest and taxes ("EBIT");
(iv) earnings before interest, taxes, depreciation, and amortization
expenses ("EBITDA"); (v) earnings before taxes and unusual or
nonrecurring items; (vi) revenue; (vii) return on investment; (viii) return
on equity; (ix) return on total capital; (x) return on assets; (xi) total
stockholder return; (xii) return on capital employed in the business;
(xiii) stock price performance; (xiv) earnings per share growth; and (xv)
cash flows. Which objectives to use with respect to an Award, the weighting
of the objectives if more than one is used, and whether the objective is to
be measured against a Company-established budget or target, an index or a
peer group of companies, shall be determined by the Committee in its
discretion at the time of grant of the Award. A Management Objective need
not be based on an increase or a positive result and may include, for
example, maintaining the status quo or limiting economic losses. The
Committee, in its sole discretion and without the consent of the
Participant, may amend (i) any stock-based Award to reflect (1) a change in
corporate capitalization, such as a stock split or dividend, (2) a
corporate transaction, such as a corporate merger, a corporate
consolidation, any corporate separation (including a spinoff or other
distribution of stock or property by a corporation), any corporate
reorganization (whether or not such reorganization comes within the
definition of such term in Section 368 of the Code), (3) any partial or
complete corporate liquidation, or (4) a change in accounting rules
required by the Financial Accounting Standards Board and (ii) any Award
that is not intended to meet the requirements of Section 162(m) of the
Code, to reflect significant event that the Committee, in its sole
discretion, believes to be appropriate to reflect the original intent in
the grant of
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the Award. With respect to an Award that is subject to Section 162(m) of
the Code, the Committee must first certify that the Management Objectives
have been achieved before the Award may be paid.
(q) "MARKET VALUE PER SHARE" means, at any date, the closing sale
price per share of the Common Stock on that date (or, if there are no sales
on that date, the last preceding date on which there was a sale) in the
principal market in which the Common Stock is traded.
(r) "OPTION PRICE" means the purchase price per share payable on
exercise of an Option Right or Director Option.
(s) "OPTION RIGHT" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 4.
(t) "PARTICIPANT" means an employee of, or consultant to, the
Company or any of its Affiliates who is selected by the Committee to
receive an Award under any of Paragraphs 4 through 10 and shall also
include a Director or Tech-Sym Director who has received an automatic grant
of Director Options pursuant to Paragraph 11.
(u) "PERFORMANCE UNIT" means a unit equivalent to $100 (or such
other value as the Committee determines) awarded pursuant to Paragraph 8.
(v) "PHANTOM SHARES" means notional shares of Common Stock awarded
pursuant to Paragraph 7.
(w) "RESTRICTED STOCK" means shares of Common Stock granted or sold
pursuant to Paragraph 6 as to which neither the ownership restrictions nor
the restriction on transfers referred to therein has expired.
(x) "RULE 16B-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from
time to time.
(y) "SPREAD" means the amount determined by multiplying (i) the
excess of the Market Value per Share on the date when an Appreciation Right
is exercised over the Option Price provided for in the related Option Right
or, if there is no tandem Option Right, the Grant Price provided for in the
Appreciation Right by (ii) the number of shares of Common Stock in respect
of which the Appreciation Right is exercised.
(z)" "SUBSIDIARY" means, at any time, any corporation in which at
the time the Company then owns or controls, directly or indirectly, not
less than 50% of the total combined voting power represented by all classes
of stock issued by such corporation.
(aa) "TECH-SYM" means Tech-Sym Corporation, a Delaware corporation.
(bb) "TECH-SYM DIRECTOR" means a director of Tech-Sym who is not
also (1) an employee of, or consultant to, the Company or an Affiliate or
(2) a Director.
3. SHARES AVAILABLE UNDER PLAN. Subject to adjustments as provided in
Paragraph 14, 1,500,000 is the maximum number of shares of Common Stock which
may be issued or transferred and covered by all outstanding Awards under this
Plan, of which number no more than 300,000 shares may be issued or transferred
as Restricted Stock and/or Phantom Shares, the vesting of which is not subject
to the achievement of Management Objectives, and/or as Bonus Stock. Such shares
may be shares of original issuance or treasury shares or a combination of the
foregoing. Upon exercise of any Appreciation Rights or the payment of any
Phantom Shares, there will be deemed to have been delivered under this Plan for
purposes of this Paragraph 3 the number of shares of Common Stock covered by the
Appreciation Rights or
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equal to the Phantom Shares, as applicable, regardless of whether such
Appreciation Rights or Phantom Shares were paid in cash or shares of Common
Stock. Subject to the provisions of the preceding sentence, any shares of Common
Stock which are subject to Option Rights, Appreciation Rights, or Phantom Shares
awarded or sold as Restricted Stock that are terminated unexercised, forfeited
or surrendered or which expire for any reason will again be available for
issuance under this Plan, unless, with respect to Restricted Stock, the
Participant has received benefits of ownership with respect to such shares, such
as dividends, but not including voting rights. No person may receive
Appreciation Rights, Option Rights, Phantom Shares, Bonus Stock and Restricted
Stock awards with respect to more than 250,000 shares during any calendar year;
but disregarding any Appreciation Rights granted in tandem with any Option
Rights granted that year. Similarly, the maximum value of Performance Units that
may be granted to any person during any calendar may not exceed $1 million.
4. OPTION RIGHTS. The Committee may from time to time authorize grants to
any Participant (other than a Director or Tech-Sym Director) of options to
purchase shares of Common Stock upon such terms and conditions as it may
determine in accordance with the following provisions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains and whether Dividend Equivalents are awarded with respect
to the option, and; if awarded, the payment or crediting of such Dividend
Equivalents.
(b) Each grant will specify its Option Price, which may not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i)
in cash or by check payable and acceptable to the Company or (ii) subject
to the approval of the Committee, (a) by tendering to the Company shares of
Common Stock owned by the optionee having an aggregate Market Value Per
Share as of the date of exercise and tender that is not greater than the
full Option Price for the shares with respect to which the option is being
exercised and by paying any remaining amount of the Option Price as
provided in (i) above (provided that the Committee may, upon confirming
that the optionee owns the number of shares being tendered, authorize the
issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the option less the number of shares being
tendered upon the exercise and return to the optionee (or not require
surrender of) the certificate for the shares being tendered upon the
exercise) or (b) by the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the Option Price and any required tax withholding
amounts; provided that in the event the optionee chooses to pay the Option
Price as provided in (ii)(b) above, the optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Committee shall prescribe as a condition of such
payment procedure, or (iii) by a combination of such payment methods.
Payment instruments will be received subject to collection.
(d) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company and the Affiliates
and/or the Management Objectives (if any) to be achieved before the Option
Rights or installments thereof will become exercisable, and any grant may
provide for the earlier exercise of the Option Rights in the event of a
Change in Control or other corporate transaction or event or upon
termination of the Participant's employment due to death, disability,
retirement or otherwise, including an involuntary termination other than
for cause.
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(f) Each grant the exercise of which, or the timing of the exercise
of which, is dependent, in whole or in part, on the achievement of
Management Objectives may specify a minimum level of achievement in respect
of the specified Management Objectives below which no Options Rights will
be exercisable and may set forth a formula or other method for determining
the number of Option Rights that will be exercisable if performance is at
or above such minimum but short of full achievement of the Management
Objectives.
(g) Option Rights granted under this Plan may be (i) options which
are intended to qualify as incentive stock options under Section 422 of the
Code, provided, however, such options may only be granted to employees of
the Company, its parent corporation and subsidiaries of the Company, (ii)
options which are not intended to so qualify or (iii) combinations of the
foregoing.
(h) Option Rights granted to a Participant who is an officer of the
Company, Tech-Sym or a Subsidiary may, in the discretion of the Committee,
provide for an automatic "reload" grant upon the exercise of the Option
Right, with such terms and conditions on any such reload grant as the
Committee may choose, provided, however, the Option Price may not be less
than 100% of the Market Value per Share on the Date of Grant of the reload
option and its term may not exceed the remaining term for the exercised
option.
(i) Each grant may, in the discretion of the Committee, provide that
the Common Stock acquired upon exercise of the Option Right shall remain
subject to a "substantial risk of forfeiture", within the meaning of
Section 83 of the Code and the regulations thereunder, with such
restrictions as the Committee may determine.
(j) Each grant shall specify the period during which the Option Right
may be exercised, but no Option Right will be exercisable more than ten
years from the Date of Grant.
(k) Each grant of Option Rights will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to the
Participant and containing such terms and provisions, consistent with this
Plan, as the Committee may approve.
5. APPRECIATION RIGHTS. The Committee may also from time to time
authorize grants to any Participant (other than a Director or Tech-Sym Director)
of Appreciation Rights upon such terms and conditions as it may determine in
accordance with this Paragraph. Appreciation Rights may be granted in tandem
with Option Rights or separate and apart from a grant of Option Rights. An
Appreciation Right will be a right of the Participant granted such Award to
receive from the Company, upon exercise, an amount which will be determined by
the Committee at the Date of Grant and will be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. An Appreciation Right
granted in tandem with an Option Right may be exercised only by surrender of the
related Option Right. Each grant of an Appreciation Right may utilize any or all
of the authorizations, and will be subject to all of the limitations, contained
in the following provisions:
(a) Each grant will state whether it is made in tandem with Option
Rights and, if not made in tandem with any Option Rights, will specify the
number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Option Rights will specify the
Option Price and each grant not made in tandem with Option Rights will
specify the Grant Price, which in either case will not be less than 100% of
the Market Value per Share on the Date of Grant.
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(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash or Company check,
(ii) shares of Common Stock having an aggregate Market Value per Share
equal to the Spread or (iii) any combination thereof, as determined by the
Committee in its sole discretion.
(d) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at
the Date of Grant (valuing shares of Common Stock for this purpose at their
Market Value per Share at the date of exercise).
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company and its Affiliates
and/or Management Objectives to be achieved before the Appreciation Rights
or installments thereof will become exercisable, and will provide that no
Appreciation Right may be exercised except at a time when the Spread is
positive and, with respect to any grant made in tandem with Option Rights,
when the related Option Right is also exercisable. Any grant may provide
for the earlier exercise of the Appreciation Rights in the event of a
Change in Control or other corporate transaction or event or upon the
Participant's termination due to death, disability or retirement, including
an involuntary termination other than for cause.
(f) Each grant the exercise of which, or the timing of the exercise
of which, is dependent, in whole or in part, on the achievement of
Management Objectives may specify a minimum level of achievement in respect
of the specified Management Objectives below which no Appreciation Rights
will be exercisable and may set forth a formula or other method for
determining the number of Appreciation Rights that will be exercisable if
performance is at or above such minimum but short of full achievement of
the Management Objectives.
(g) Each grant of an Appreciation Right will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant receiving the grant, which agreement will
describe such Appreciation Right, identify any Option Right granted in
tandem with such Appreciation Right, state that such Appreciation Right is
subject to all the terms and conditions of this Plan and contain such other
terms and provisions, consistent with this Plan, as the Committee may
approve.
6. RESTRICTED STOCK. The Committee may also from time to time authorize
grants or sales to any Participant (other than a Director or Tech-Sym Director)
of Restricted Stock upon such terms and conditions as it may determine in
accordance with the following provisions:
(a) Each grant or sale will constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of
the performance of services, entitling such Participant to voting and other
ownership rights, but subject to the restrictions hereinafter referred to.
Each grant or sale may limit the Participant's dividend rights during the
period in which the shares of Restricted Stock are subject to any such
restrictions.
(b) Each grant or sale will specify the Management Objectives, if
any, that are to be achieved in order for the ownership restrictions to
lapse. Each grant or sale that is subject to the achievement of Management
Objectives will specify a minimum acceptable level of achievement in
respect of the specified Management Objectives below which the shares of
Restricted Stock will be forfeited and may set forth a formula or other
method for determining the number of shares of Restricted Stock with
respect to which restrictions will lapse if performance is at or above such
minimum but short of full achievement of the Management Objectives.
7
<PAGE>
(c) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(d) Each such grant or sale will provide that the shares of
Restricted Stock covered by such grant or sale will be subject, for a
period to be determined by the Committee at the Date of Grant, to one or
more restrictions, including, without limitation, a restriction that
constitutes a "substantial risk of forfeiture" within the meaning of
Section 83 of the Code and the regulations thereunder, and any grant or
sale may provide for the earlier termination of such period in the event of
a Change in Control or other corporate transaction or event or upon
termination of the Participant's employment due to death, disability,
retirement or otherwise, including an involuntary termination other than
for cause.
(e) Each such grant or sale will provide that during the period for
which such restriction or restrictions are to continue, the transferability
of the Restricted Stock will be prohibited or restricted in a manner and to
the extent prescribed by the Committee at the Date of Grant (which
restrictions may include, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Stock to
continuing restrictions in the hands of any transferee).
(f) Each grant or sale of Restricted Stock will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve.
(g) Unless otherwise approved by the Committee, certificates
representing shares of Common Stock transferred pursuant to a grant of
Restricted Stock will be held in escrow pursuant to an agreement
satisfactory to the Committee until such time as the restrictions on
transfer have expired or the shares have been forfeited.
7. PHANTOM SHARES. The Committee may also from time to time authorize
grants to any Participant (other than a Director or Tech-Sym Director) of
Phantom Shares upon such terms and conditions as it may determine in accordance
with the following provisions:
(a) Each grant will specify the number of Phantom Shares to which it
pertains and the payment or crediting of any Dividend Equivalents with
respect to such Phantom Shares.
(b) Each grant will specify the Management Objectives, if any, that
are to be achieved in order for the Phantom Shares to be earned. Each grant
that is subject to the achievement of Management Objectives will specify a
minimum acceptable level of achievement in respect of the specified
Management Objectives below which the Phantom Shares will be forfeited and
may set forth a formula or other method for determining the number of
Phantom Shares to be earned if performance is at or above such minimum but
short of full achievement of the Management Objectives.
(c) Each grant will specify the time and manner of payment of Phantom
Shares which have been earned, which payment may be made in (i) cash, (ii)
shares of Common Stock or (iii) any combination thereof, as determined by
the Committee in its sole discretion.
(d) Each grant of Phantom Shares will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and
accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve, including
provisions relating to a Change in Control or other corporate transaction
or event or upon the Participant's termination due to death, disability or
retirement or otherwise, including an involuntary termination other than
for cause.
8
<PAGE>
8. PERFORMANCE UNITS. The Committee may also from time to time authorize
grants to any Participant (other than a Director or Tech-Sym Director) of
Performance Units upon such terms and conditions as it may determine in
accordance with the following provisions:
(a) Each grant will specify the number of Performance Units to which
it pertains.
(b) Each grant will specify the Management Objectives that are to be
achieved in order for the Performance Units to be earned. Each grant will
specify a minimum acceptable level of achievement in respect of the
specified Management Objectives below which no payment will be made and may
set forth a formula or other method for determining the amount of payment
to be made if performance is at or above such minimum but short of full
achievement of the Management Objectives.
(c) Each grant will specify the time and manner of payment of
Performance Units which have become payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an aggregate Market Value per
Share equal to the aggregate value of the Performance Units which have
become payable or (iii) any combination thereof, as determined by the
Committee in its sole discretion at the time of payment.
(d) Each grant of a Performance Unit will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve, including
provisions relating to a Change in Control or other corporate transaction
or event or upon the Participant's termination of employment due to death,
disability, retirement or otherwise, including an involuntary termination
other than for cause.
9. BONUS STOCK. The Committee may also from time to time authorize grants
to any Participant (other than a Director or Tech-Sym Director) of Bonus Stock,
which shall constitute a transfer of shares of Common Stock, without other
payment therefor, as additional compensation for the Participant's services to
the Company or its Affiliates.
10. CASH TAX RIGHTS. (a) The Committee may also from time to time
authorize grants to any Participant (other than a Director or Tech-Sym Director)
of Cash Tax Rights upon such terms and conditions as it may determine in
accordance with this Paragraph. Cash Tax Rights may be granted in tandem with
any Award that is payable in shares of Common Stock. A Cash Tax Right will be
the right of the Participant granted such Award to receive from the Company,
upon receipt of shares of Common Stock pursuant to the tandem Award, an amount
of cash, which will be determined by the Committee at the Date of Grant and will
be expressed as a percentage of the Market Value per Share (not exceeding 100%)
of each share of Common Stock received upon payment of the tandem Award.
(b) Each grant of a Cash Tax Right will (i) state the Award it is made in
tandem with and will specify the percentage of the Market Value per Share that
shall be payable in cash and (ii) be evidenced by an agreement extended on
behalf of the Company by any officer and delivered to and accepted, by the
Participant and containing such terms and provisions, consistent with this Plan,
as the Committee may approve, including provisions relating to a Change in
Control or other corporate transaction or event or upon the Participant's
termination of employment due to death, disability, retirement or otherwise,
including an involuntary termination other than for cause.
11. DIRECTOR OPTIONS. (a) Each Director and Tech-Sym Director who serves
in such capacity on the 30th trading day following the date of the closing of
the initial public offering of the Common Stock (the "IPO") shall
automatically receive, on such date, a Director Option for 10,000 and 5,000
shares of Common Stock, respectively. Each Director who is elected or appointed
to the Board for the first time after
9
<PAGE>
such 30th trading day shall automatically receive, on the date of his or her
election or appointment, a Director Option for 10,000 shares of Common Stock. In
addition, each person who is a Director or Tech-Sym Director on December 11,
1996 shall receive on such date a Director Option for 10,000 and 5,000 shares of
Common Stock, respectively ("Special Director Options").
(b) On the day following the regular Annual Meeting of the Stockholders of
the Company in each year that this Plan is in effect (commencing with the 1997
Annual Meeting of Stockholders), each Director who is in office on that day and
who was not elected for the first time at such annual meeting shall
automatically receive a Director Option for 2,000 shares of Common Stock.
(c) Each Director Option will be subject to all of the limitations
contained in the following provisions:
(i) Each Director Option shall become exercisable (vested) on the
earlier of the first day that is more than six months following its Date of
Grant or the date of a Change in Control; provided that in no event shall
any Director Option be exercisable prior to the approval of this Plan by
the Company's stockholders.
(ii) The Option Price of each Director Option shall be the Market
Value per Share on its Date of Grant; except, however, with respect to (A)
Director Options granted on the 30th trading day following the date of the
closing of the IPO, the Option Price shall be the arithmetic average,
without regard to number of shares, of the closing price of the Common
Stock on the NASDAQ National Market for the 30 trading days after the date
of the closing of the IPO, as reported in THE WALL STREET JOURNAL, and (B)
Special Director Options, the Option Price shall be $12.
(iii) Each Director Option that is vested may be exercised in full at
one time or in part from time to time by giving written notice to the
Company, stating the number of shares of Common Stock with respect to which
the Director Option is being exercised, accompanied by payment in full of
the Option Price for such shares, which payment may be (1) in cash by check
acceptable to the Company, (2) by tendering to the Company shares of Common
Stock owned by the optionee having an aggregate Market Value Per Share as
of the date of exercise and tender that is not greater than the full option
exercise price for the shares with respect to which the Option is being
exercised and by paying any remaining amount of the option exercise price
as provided (1) above (provided that the Committee may, upon confirming
that the optionee owns the number of shares being tendered, authorize the
issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the option less the number of shares being
tendered upon the exercise and return to the optionee (or not require
surrender of) the certificate for the shares being tendered upon the
exercise), (3) by the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option exercise price and any required tax
withholding amounts; provided that in the event the optionee chooses to pay
the exercise price in this manner, the optionee and the broker shall comply
with such procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such payment
procedure or (4) by a combination of such methods of payment. Payment
instruments will be received subject to collection.
(iv) Each Director Option shall expire 10 years from the Date of
Grant thereof, but shall be subject to earlier termination as follows:
Director Options, to the extent exercisable as of the date the Director or
Tech-Sym Director ceases to serve as a director of the Company and, if
applicable, Tech-Sym, must be exercised within one year of such date unless
such termination results from the Director's or Tech-Sym Director's death,
disability or retirement, in which case the Director Options
10
<PAGE>
shall be fully vested and may be exercised by the optionee or the
optionee's legal representative or the person to whom the Director's or
Tech-Sym's Director's rights shall pass by will or the laws of descent and
distribution, as the case may be, within three years from the date of
termination; provided however, that no such event shall extend the normal
expiration date of such Director Options.
(v) In the event that the number of shares of Common Stock available
for grants under this Plan is insufficient to make all automatic grants
provided for in this Paragraph 11 on the applicable date, then all
Directors and Tech-Sym Directors who are entitled to a grant on such date
shall share ratably in the number of shares then available for grant under
this Plan, and shall have no right to receive a grant with respect to the
deficiencies in the number of available shares and all future grants under
this Paragraph 11 shall terminate.
(vi) Grants made pursuant to this Paragraph 11 shall be subject to
all of the terms and conditions of this Plan; however, if there is a
conflict between the terms and conditions of this Paragraph 11 and the
terms and conditions of any other Paragraph, then the terms and conditions
of this Paragraph 11 shall control. The Committee may not exercise any
discretion with respect to this Paragraph 11 which would be inconsistent
with the intent that this Plan meet the requirements of Rule 16b-3.
(d) Notwithstanding the foregoing, no further Director Options shall be
granted to a Tech-Sym Director after the date the Company ceases to be a
subsidiary (within the meaning of Section 424 of the Code) of Tech-Sym and such
date shall be treated, for purposes of paragraph (c)(iv) above, as the date a
Tech-Sym Director ceases to serve as a director of Tech-Sym.
12. LSARS. Notwithstanding anything in Paragraphs 4, 5 or 11 above to the
contrary, if during the 60-day period following the date of a Change in Control
or, with respect to an option, Appreciation Right or Director Option granted to
a Participant who is subject to Section 16(b) of the Exchange Act, the 60-day
period following the earlier of the date that Section 16(b) of the Securities
Exchange Act of 1934 ceases to apply to such person or six months following the
date of grant of such option, Appreciation Right or Director Option (but not to
exceed the remaining term of such option, Appreciation Right or Director
Option), a Participant (or beneficiary thereof) elects to exercise an option,
Appreciation Right or Director Option, as applicable, the holder shall receive
in cash whichever of the following amounts is applicable:
(i) with respect to an acquisition of Common Stock described in clause
(i) of the definition of Change in Control, an amount equal to the
Acquisition Spread (as defined below);
(ii) with respect to a change in composition of the Board described in
clause (ii) of the definition of Change in Control, an amount equal to the
Spread (as defined below); or
(iii) with respect to stockholder approval of an agreement or adoption
of a plan described in clause (iii) or (iv) of the definition of Change in
Control, an amount equal to the Merger Spread (as defined below).
As used in this Paragraph 12, the following terms shall have the
meaning indicated:
(1) The term "Acquisition Price Per Share" shall mean the greater
of (i) the highest price paid by a person (or an Affiliate or Associate
thereof) for any share of Common Stock acquired prior to, but in connection
with, a Change in Control described in clause (i) of the definition of a
Change in Control or (ii) the highest Market Value per Share for any day
during the 60-day period ending on the date the option, Appreciation Right
or Director Option is exercised.
(2) The term "Acquisition Spread" shall mean an amount equal to the
product obtained by multiplying (i) the excess of (A) the Acquisition Price
Per Share over (B) the price per share of
11
<PAGE>
Common Stock at which the option, Appreciation Right or Director Option is
exercisable, by (ii) the number of shares of Common Stock with respect to
which such option, Appreciation Right or Director Option is being
exercised.
(3) The term "Merger Price Per Share" shall mean the greater of (i)
the fixed or formula price for the acquisition of shares of Common Stock
specified in such agreement or adoption, if such fixed or formula price is
determinable on the date on which such option, Appreciation Right or
Director Option is exercised, and (ii) the highest Market Value per Share
for any day during the 60-day period ending on the date on which such
option, Appreciation Right or Director Option is exercised.
(4) The term "Merger Spread" shall mean an amount equal to the
product obtained by multiplying (i) the excess of (A) the Merger Price Per
Share over (B) the price per share of Common Stock at which the option,
Appreciation Right or Director Option is exercisable, by (ii) the number of
shares of Common Stock with respect to which such option, Appreciation
Right or Director Option is being exercised.
(5) The term "Spread" shall mean an amount equal to the product
obtained by multiplying (i) the excess of (A) the highest Market Value per
Share for any day during the 60-day period ending on the date the option,
Appreciation Right or Director Option is exercised over (B) the price per
share of Common Stock at which the option, Appreciation Right or Director
Option is exercisable, by (ii) the number of shares of Common Stock with
respect to which such option, Appreciation Right or Director Option is
being exercised.
The Company intends that this Paragraph 12 shall comply with the
requirements of Rule 16b-3 and any future rules promulgated in substitution
therefor ("the Rule") under the Exchange Act during the term of the Plan.
Should any provision of this Paragraph 12 not be necessary to comply with the
requirements of the Rule or should any additional provisions be necessary for
this Paragraph 12 to comply with the requirements of the Rule, the Board may
amend the Plan to add to or modify the provisions of the Plan accordingly.
13. TRANSFERABILITY. No Award will be transferable by a Participant other
than by will or the laws of descent and distribution. Director Options, Option
Rights or Appreciation Rights will be exercisable during the Participant's
lifetime only by the Participant or by the Participant's guardian or legal
representative.
14. ADJUSTMENTS. The Board may make or provide for such adjustments in
the maximum number of shares specified in Paragraph 3, in the numbers of shares
of Common Stock covered by outstanding Director Options, Option Rights,
Appreciation Rights and Phantom Shares granted hereunder, in the Option Price or
Grant Price applicable to any such Director Options, Option Rights and
Appreciation Rights, and/or in the kind of shares covered thereby (including
shares of another issuer), as the Board, in its sole discretion exercised in
good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants that otherwise would result from any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, merger, consolidation,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities or any other corporation transaction or event having an
effect similar to any of the foregoing.
15. FRACTIONAL SHARES. The Company will not be required to issue any
fractional share of Common Stock pursuant to this Plan. The Committee may
provide for the elimination of fractions for the settlement of fractions in
cash.
16. WITHHOLDING OF TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any grant or
payment made to a Participant or any other person
12
<PAGE>
under this Plan, or is requested by a Participant to withhold additional amounts
with respect to such taxes, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such
grant or payment that the Participant or such other person make arrangements
satisfactory to the Company for the payment of the balance of the such taxes
required or requested to be withheld, which arrangements in the discretion the
Committee may include relinquishment of a portion of such Award or payment. With
respect to any Participant who is subject to Rule 16b-3 at the time withholding
is required with respect to an Award payable in Common Stock (other than an
Option Right), the Company shall automatically withhold from such Award, to the
extent such withholding is not satisfied by a tandem Cash Tax Right, if any, a
number of shares of Common Stock having an aggregate Market Value per Share
equal to the amount of taxes required to be withheld by the Company.
17. PARACHUTE TAX GROSS-UP. To the extent that the acceleration of
vesting or any payment, distribution or issuance made to a Participant under the
Plan (a "Benefit") is subject to a golden parachute excise tax under Section
4999(a) of the Code (a "Parachute Tax"), the Company shall pay such
Participant an amount of cash (the "Gross-up Amount") such that the "net"
Benefit received by the Participant under this Plan, after paying all applicable
Parachute Taxes (including those on the Gross-up Amount) and any federal or
state income taxes on the Gross-up Amount, shall be equal to the Benefit that
such Participant would have received if such Parachute Tax had not been
applicable.
18. ADMINISTRATION OF THE PLAN. (a) This Plan will be administered by the
Committee, which at all times will consist entirely of not less than three
directors appointed by the Board, each of whom will be a "disinterested
person" within the meaning Rule 16b-3 and an "outside director" within the
meaning of Section 162(m) of the Code. A majority of the Committee will
constitute a quorum, and the action of the members of the Committee present at
any meeting at which a quorum is present, or acts unanimously approved writing,
will be the acts of the Committee.
(b) The interpretation and construction by the Committee of any provision
of this Plan or of any agreement, notification or document evidencing the grant
of an Award and any determination by the Committee pursuant to any provision of
this Plan or of any such agreement, notification or documentation will be final
and conclusive. No member of the Committee will be liable for any such action or
determination made in good faith or in the absence of gross negligence or
willful misconduct on the part of such member.
19. AMENDMENTS, ETC. (a) This Plan may be amended from time to time by
the Board but may not be amended by the Board without further approval by the
stockholders of the Company if such amendment would result in this Plan no
longer satisfying the requirements of Rule 16b-3; provided, however, that the
provisions of Paragraphs 11 and 12 (as they relate to Director Options) may not
be amended more than once every six months other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
(b) This Plan will not confer upon any Participant any right with respect
to continuance of employment or other service with the Company or any Affiliate,
nor will it interfere in any way with any right the Company or any Affiliate
would otherwise have to terminate such Participant's employment or other service
at any time.
20. TERM. This Plan shall be effective as of April 30, 1996, subject to
approval by the Company's stockholders; provided, however, no Award shall be
exercisable or payable prior to the date of such stockholders' approval. In the
event that this Plan is not approved by the stockholders of the Company within
twelve months after the date of its adoption by the Board, this Plan and all
Awards made under this Plan shall be automatically null and void. Unless sooner
terminated, this Plan shall terminate on December 31, 2005, and no further
Awards shall be made, but all outstanding Awards on such date shall remain
effective in accordance with their terms and the terms of this Plan.
13
EXHIBIT 10(c)
TERMINATION AND INCENTIVE AGREEMENT
This Termination and Incentive Agreement dated as of the 14th day of May, 1997
(this "Agreement") is made and entered into by and between CogniSeis
Development, Inc., a Delaware corporation ("CSD"), GeoScience Corporation, a
Nevada corporation ("GeoScience"), and Richard C. Cooper (the "Employee").
WITNESSETH:
WHEREAS, the Employee is currently an employee of CSD; and
WHEREAS, the CSD desires to encourage the Employee to continue in the employ of
CSD for the benefit of the CSD; and
WHEREAS, the parties desire to execute this Agreement to set forth the criteria
for Employee's termination benefits following a "change in control" of CSD, as
hereinafter defined, and to offer an incentive to the Employee to achieve the
highest possible selling price for CSD;
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and mutual covenants, conditions and agreements set forth
herein, the parties hereby agree as follows:
1. TERM: The term of this Agreement shall commence on the date first written
above and shall continue until December 31, 1997. Termination of the
Agreement after a change in control shall not alter or impair the rights
of Employee arising hereunder prior to such termination.
2. CHANGE IN CONTROL: For purposes of this Agreement, a change in control
("Change in Control") shall be deemed to have occurred upon, and shall
mean: (a) the acquisition by any individual, entity or group of greater
than fifty percent (50%) of the voting Common Stock of CSD, or (b) the
sale of all or substantially all of the assets of CSD, in both such cases
evidenced by a fully-executed asset or stock purchase agreement.
3. TERMINATION FOLLOWING CHANGE IN CONTROL: If a Change in Control of CSD
occurs while the Employee is employed by CSD, Employee shall be entitled
to the entire benefits provided in Section 4 hereof if during the
Termination Period (as hereinafter defined) Employee's employment is
terminated by CSD, unless such termination is (a) by CSD for Cause, in
which case CSD shall pay Employee's earned but unpaid base salary through
the date of termination, (b) due to Employee's death, or (c) by Employee
voluntarily. For purposes of this Agreement, "Termination Period" shall
mean the period of time beginning with the Change in Control and ending on
the date nine (9) months after the Change in Control. For purposes of this
Agreement, termination "for Cause" shall be termination resulting from (a)
the continuing and material failure by the Employee to fulfill Employee's
obligations with CSD or willful misconduct or gross neglect in the
performance of such duties, in either such instance so as to cause
material harm to CSD,
<PAGE>
all of such facts to be determined in good faith by the Board of Directors
of CSD, or (b) the Employee's committing fraud, misappropriation or
embezzlement in the performance of Employee's duties as an employee of
CSD.
4. TERMINATION BENEFITS:
A. If during the Termination Period, CSD shall terminate Employee other
than for Cause, then:
1. Beginning with the first regular pay period following the date
on which a notice of termination is given and continuing for
each pay period (or part thereof) through the end of the
Termination Period, CSD shall pay to Employee a severance
payment equal to the amount of the current rate of salary paid
for the pay period immediately prior to the Change of Control,
but in no event shall the total amount of severance payments
made pursuant to this provision be less than six months of
Employee's current rate of salary for the pay period
immediately prior to the Change of Control.
2. CSD shall maintain in full force and effect for the continued
benefit of Employee and Employee's dependents for the duration
of the Termination Period all health and dental benefits
available to Employee and Employee's dependents by virtue of
being an employee of CSD, provided that Employee's continued
participation is possible under the general terms and
provisions of such plans and programs, and provided further
that Employee pays the regular active employee contribution,
if any, required by such programs. In the event that
participation by Employee in any such plan or program after
the date of Employee's termination is barred pursuant to the
terms thereof, CSD shall obtain comparable coverage for
Employee. In the event Employee becomes covered by another
employer's group plan or programs during the Termination
Period, CSD's plans or programs shall be liable for benefits
only to the extent such benefits are not covered by the
subsequent employer's plans or programs. After the Termination
Period, Employee also shall be entitled to elect COBRA
continuation coverage, to the extent Employee is eligible
under the provisions thereof.
B. The Employee agrees that any severance paid by CSD pursuant to
Provision 4 (A) is the sole severance due and sole remedy available
to the Employee for termination of the Employee's employment with
CSD and that Provision 4 (A) replaces Provision 2 "Involuntary
Termination" under the section entitled "Employment Status" of that
certain Offer of
<PAGE>
Assignment between Employee and CSD dated April 26, 1996 (the
"Offer", a copy of which is attached and incorporated by reference
herein as Exhibit "A"), except as to the payment of relocation costs
which provision shall remain in full force and effect. All other
terms and conditions of the Offer not inconsistent with this
Agreement shall remain in full force and effect.
5. Upon a Change in Control during the term of this Agreement, and except in
the case when Employee voluntarily terminates Employee's employment prior
to the Change in Control or Employee's employment is terminated for Cause,
GeoScience agrees to pay the Employee or Employee's estate a bonus payment
equal to 0.5% of that portion of the Purchase Price (as hereinafter
defined) that exceeds Fifteen Million and No/100 dollars ($15,000,000).
For purposes of this Agreement, "Purchase Price" shall mean the dollar
value of the total consideration received by GeoScience or CSD pursuant to
the applicable stock purchase or asset sales agreement.
6. If a Change in Control occurs and Employee is assigned any duties
materially inconsistent with Employee's positions, duties,
responsibilities and status with CSD immediately prior to such Change in
Control or Employee is asked to relocate to a location outside of the
county where Employee worked prior to such Change of Control, then
Employee may refuse any such duties or relocation; any termination of
Employee as a result of Employee's refusal of any such duties or
relocation shall entitle Employee to the severance benefits outlined in
Provision 4 (A) above.
7. ASSIGNMENT: Employee shall not assign, transfer, pledge or hypothecate
this Agreement and the rights, interests and benefits hereunder.
8. VALIDITY: This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of Texas without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
9. ARBITRATION: Any dispute or controversy arising out of or in connection
with this Agreement as to the existence, construction, validity,
interpretation or meaning, performance, nonperformance, enforcement,
operation, breach, continuance or termination thereof shall be finally
determined and settled pursuant to binding arbitration in Houston, Texas,
in accordance with the Rules of the American Arbitration Association. The
arbitration award shall be final and conclusive and shall receive
recognition, and judgment upon such award may be entered and enforced in
any court of competent jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COGNISEIS DEVELOPMENT, INC. GEOSCIENCE CORPORATION
(As to Provision 5)
By: /S/ RICHARD F. MILES By: /S/ RICHARD F. MILES
Name: Richard F. Miles Name: Richard F. Miles
Title: Chairman Title: President
EMPLOYEE
/S/ ILLEGIBLE
- --------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM GEOSCIENCE'S 2ND QUARTER 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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0
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