<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For use of the
Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
OAO TECHNOLOGY SOLUTIONS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO OF OAO TECHNOLOGY SOLUTIONS]
7500 Greenway Center Drive
16th Floor
Greenbelt, MD 20770
Phone: (301) 486-0400
Fax: (301) 486-0415
Internet: www.oaot.com
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are invited to attend the OAO Technology Solutions, Inc. 2000 Annual Meeting
of Stockholders.
DATE: Friday, May 12, 2000
TIME: 10:00 a.m. Eastern time
PLACE: The Latham Hotel
3000 M Street, N.W.
Washington, DC 20007
(202) 726-5000
DIRECTIONS: Included on the last page
Only stockholders who owned stock at the close of business on March 31, 2000,
can vote at this meeting or any adjournments that may take place.
At the meeting, we will be voting on the following matters:
. the election of seven directors,
. ratification of our selection of auditors for the year ending December 31,
2000, and
. any other business properly presented at the meeting.
We also will report on our 1999 business results and other matters of interest
to our stockholders. You will have an opportunity at the meeting to ask
questions, make comments, and meet our management team.
Our board of directors is a vital resource. We consider your vote important, no
matter how many shares you hold, and we encourage you to vote as soon as
possible.
The proxy statement, accompanying proxy card, and annual report are being mailed
to stockholders beginning April 12, 2000, in connection with the solicitation of
proxies by the board of directors.
Please contact J. Jeffrey Fox by phoning (301) 486-0400 with any questions or
concerns.
Sincerely,
/s/ Gregory A. Pratt /s/ James A. Ounsworth
Gregory A. Pratt James A. Ounsworth
President and Chief Executive Officer Secretary
April 12, 2000
<PAGE>
- --------------------------------------------------------------------------------
QUESTIONS AND ANSWERS
- --------------------------------------------------------------------------------
Q: Who is entitled to vote?
A: Stockholders of record as of the close of business on March 31, 2000 may
vote at the annual meeting.
Q: How many shares can vote?
A: On March 31, 2000, there were 18,040,910 shares of our common stock issued
and outstanding. Every stock-holder may cast one vote for each share owned.
Q: What may I vote on?
A: You may vote on the following items:
* the election of seven directors who have been nominated to serve on our
board of directors,
* ratification of our selection of auditors, and
* any other business that is properly presented at the meeting.
Q: How does the board recommend I vote on the proposals?
A: The board recommends a vote FOR each board nominee and FOR each of the
other proposals.
Q: How do I vote?
A: Sign and date each proxy card you receive, mark the boxes indicating how
you wish to vote, and return the proxy card in the prepaid envelope
provided.
If you sign your proxy card but do not mark any boxes showing how you wish
to vote, Gregory Pratt and J. Jeffrey Fox will vote your shares as
recommended by the board of directors.
Q: What if I hold my OAO Technology shares in a brokerage account?
A: If you hold your shares through a broker, bank or other nominee, you will
receive a voting instruction form directly from them describing how to vote
your shares. This form will, in most cases, offer you three ways to vote:
1. by telephone,
2. via the Internet, or
3. by returning the form to your broker.
Q: What if I want to change my vote?
A: You may change your vote at any time before the meeting in any of the
following three ways:
1. notify our corporate secretary, in writing,
2. vote in person at the meeting, or
3. submit a proxy card with a later date.
If you hold your shares through a broker, bank or other nominee and wish to
vote at the meeting, you must obtain a legal proxy from that nominee
authorizing you to vote at the meeting. We will be unable to accept a vote
from you at the meeting without that form. If you hold your shares directly
and wish to vote at the meeting, no additional forms will be required.
Q: How will directors be elected?
A: The seven nominees who receive the highest number of affirmative votes at a
meeting at which a quorum is present will be elected as directors.
Q: What vote is required to adopt the other items that are on the meeting
agenda?
A: The following votes will be required for each item:
* On the ratification of our selection of auditors, we are not required
under the laws of the State of Delaware to submit this to a vote.
However, our board of directors will consider your vote in selecting
auditors for future years.
1
<PAGE>
Q: Who will count the votes?
A: A representative of ChaseMellon Shareholder Services, L.L.C., our registrar
and transfer agent, will count the votes and act as the inspector of
elections.
Q: What does it mean if I get more than one proxy card?
A: Your shares may be registered differently or may be in more than one
account. We encourage you to have all accounts registered in the exact same
name and address (whenever possible). You may obtain information about how
to do this by contacting our transfer agent:
ChaseMellon Shareholder Services 85
Challenger Road Ridgefield Park, NJ 07660
Toll-free telephone 800-526-0801.
If you provide ChaseMellon with photocopies of the proxy cards that you
receive or with the account numbers that appear on each proxy card, it will
be easier to accomplish this.
You also can find information on transferring shares and other useful
stockholder information on their web site at www.chasemellon.com.
-------------------
Q: What is a quorum?
A: A quorum is a majority of the outstanding shares. The shares may be
represented at the meeting either in person or by proxy. To hold the
meeting, there must be a quorum present.
If you submit a properly executed proxy, your shares will be counted as
part of the quorum even if you abstain from voting or withhold your vote
for a particular director.
Q: What is the effect if I abstain or fail to give instructions to my broker?
A: If you submit a properly executed proxy, your shares will be counted as
part of the quorum even if you abstain from voting or withhold your vote
for a particular director.
Broker non-votes also are counted as part of the quorum. A broker non-vote
occurs when banks, brokers or other nominees holding shares on behalf of a
stockholder do not receive voting instructions from the stockholder by a
specified date before the meeting. In this event, banks, brokers and other
nominees may vote those shares on matters deemed routine. The election of
directors and ratification of the selection of auditors are considered
routine matters.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders and have the effect of negative votes. A
"withheld" vote is treated the same as an abstention. Broker non-votes are
not counted for purposes of determining whether a proposal has been
approved.
Q: Who can attend the meeting?
A: All stockholders are encouraged to attend the meeting. Admission tickets
are not required.
2
<PAGE>
Q: Are there any expenses associated with collecting the stockholder votes?
A: We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and other materials to our stockholders. We do not anticipate hiring
an agency to solicit votes at this time.
Q: What is a stockholder proposal?
A: A stockholder proposal is your recommendation or requirement that OAOT or
our board of directors take action on a matter that you intend to present
at a meeting of stockholders. However, under applicable rules we have the
ability to exclude certain matters proposed, including those that deal with
matters relating to our ordinary business operations.
Q: Can anyone submit a stockholder proposal?
A: To be eligible to submit a proposal, you must have continuously held at
least $2,000 in market value, or 1% of our common stock, for at least one
year by the date you submit your proposal. You also must continue to hold
those securities through the date of the meeting.
Q: If I wish to submit a stockholder proposal for the annual meeting in 2001,
what action must I take?
A: If you wish us to consider including a stockholder proposal in the proxy
statement for the annual meeting in 2001, you must submit the proposal, in
writing, so that we receive it no later than December 13, 2000. The
proposal must meet the requirements established by the SEC. Send your
proposal to:
J. Jeffrey Fox
Vice President of Finance and
Chief Financial Officer
OAO Technology Solutions, Inc.
7500 Greenway Center Drive
16/th/ Floor
Greenbelt, MD 20770-3522
If you wish to present a proposal at the annual meeting in 2001 that has
not been included in the proxy statement, the management proxies will be
allowed to use their discretionary voting authority unless we receive
notice of your proposal no later than February 26, 2001.
Q: Who are OAO Technology's largest stockholders?
A: Safeguard Scientifics, Inc., our largest stockholder, beneficially owns
32.9% of our outstanding shares of common stock. Mr. Barker, our vice-
chairman, beneficially owns 15.3% of our common stock. Other directors and
executive officers beneficially own a total of approximately 5.9%. At
December 31, 1999, no other stockholder owned more than 5% of our stock.
3
<PAGE>
- --------------------------------------------------------------------------------
EXLECTION OF DIRECTORS
Item 1 on Proxy Card
- --------------------------------------------------------------------------------
Directors are elected annually and serve a one-year term. There are seven
nominees for election this year. Each nominee is currently serving as a
director. Each nominee has consented to serve until the next annual meeting if
elected. You will find detailed information on each nominee below. If any
director is unable to stand for re-election after distribution of this proxy
statement, the board may reduce its size or designate a substitute. If the Board
designates a substitute, proxies voting on the original director candidate will
be cast for the substituted candidate.
The board recommends a vote FOR each nominee. The seven nominees who receive the
highest number of affirmative votes will be elected as directors.
================================================================================
JERRY L. JOHNSON Director since 1996
Age 52
Mr. Johnson has served as chairman of the board of directors of OAO Technology
since April 1996. Mr. Johnson is executive vice president of Safeguard
Scientifics, Inc., a leading Internet company focused on the infrastructure
market. Mr. Johnson initially joined Safeguard in September 1995 as senior vice
president of operations and was promoted to his current position in March 1999.
From 1985 to 1995, Mr. Johnson held various senior executive positions with US
West, including group director, vice president of network and technology
services and vice president of residence planning. From 1983 to 1985, he was
president and chief executive officer of Northwestern Bell Information
Technologies, a subsidiary of Northwestern Bell Telephone Company. Mr. Johnson
is the chairman of the board of directors of Pac-West Telecomm, Inc., and is a
member of the International Society of Sloan Fellows.
================================================================================
CECILE D. BARKER Director since 1996
Age 56
Mr. Barker has served as vice chairman of the board of directors of OAO
Technology since April 1996. Mr. Barker is chairman of the board, chief
executive officer and a majority owner of OAO Corporation, a company he founded
in 1973 to provide total solutions for aerospace and information systems
industries. Mr. Barker regularly serves as an advisor to other corporations, and
he is a member of the Advisory Committee for Scientific Policy for the National
Science Foundation and the Science and Technology Advisory Committee for the
Executive Office of the President of the United States. Mr. Barker has over 28
years of experience in the management of major scientific, technological and
commercial programs.
================================================================================
GREGORY A. PRATT Director since 1998
Age 51
Mr. Pratt joined OAO Technology as president and chief executive officer in July
1998. Prior to joining OAO Technology, Mr. Pratt was chief executive officer of
Enterprise Technology Group, a company he founded in 1997 to provide
integration, implementation and training services for SAPTM and Microsoft(R)
applications. From 1992 to 1996, Mr. Pratt was president and chief operating
officer for Intelligent Electronics, a provider of information technology
products, services and solutions to corporate customers, educational
institutions and governmental agencies in the United States. Mr. Pratt has 20
years of information technology industry experience.
4
<PAGE>
================================================================================
YVONNE BRATHWAITE BURKE Director since 1997
Age 67
Ms. Burke has served as supervisor of the Second District of the County of Los
Angeles since 1992. Ms. Burke also serves on the board of L.A. Care and NAACP
Legal Defense and Education Fund. Ms. Burke is a member of the board of trustees
of the Amateur Athletic Foundation and the National Academy of Public
Trusteeship and serves on the advisory committee of NESTLE, USA. Ms. Burke is a
former U.S. Congresswoman, who served on the Appropriations Committee,
Departments of State, Justice and Commerce, and on the Select Committee on
Assassinations.
================================================================================
FRANK B. FOSTER, III Director since 1997
Age 67
Mr. Foster retired as president and chief executive officer of Diamond Bathurst
(formerly Diamond Glass) in 1987 after almost 30 years of service and is
currently a business consultant. Since 1987, Mr. Foster has served on the boards
of numerous companies and is currently a director of 1838 Investment Advisors,
Airgas, Inc., and Contour Packaging, Inc.
================================================================================
JOHN F LEHMAN Director since 1997
Age 57
Mr. Lehman is chairman of the board of directors of J.F. Lehman & Co., a private
equity firm. He also serves on the board of directors of Ball Corporation, ISO
Corporation, Burke Industries, Igor Corporation and SDI Inc. Mr. Lehman was an
investment banker at Paine Webber Inc. and served as Secretary of the Navy for
six years. He served as staff member to Dr. Henry Kissinger on the National
Security Council.
================================================================================
RICHARD B. LIEB Director since 1999
Age 52
Mr. Lieb is president of the Investment Systems and Services Division of SEI
Investments Company, and is responsible for the overall business of SEI's Trust
Technology, Proprietary and Back Office Services. Mr. Lieb has held numerous
positions since joining SEI in 1976, including senior vice president of
operating services, senior vice president of business development, and president
of insurance asset services. Mr. Lieb is a director of SEI Investments Company.
----------------------------------------------
BOARD OF DIRECTORS -- ADDITIONAL INFORMATION
----------------------------------------------
Board Meetings: The board of directors held 6 meetings in 1999. Each director
attended at least 75% of the total number of meetings of the board and
committees of which he or she was a member.
Board Compensation: Directors who are not officers, employees or consultants of
the Company or Safeguard Scientifics receive the following compensation:
* $6,000 annually
* $1,000 annually for chairing either the audit or compensation committee
* $2,000 for each board meeting attended * $1,000 for each committee meeting
attended
* reimbursement of out-of-pocket expenses
Additionally, each director who is not an officer, employee or consultant of the
Company or Safeguard receives a stock option to purchase 20,000 shares of our
common stock upon initial election to the board. Each eligible director also
receives a grant of a stock option to purchase 4,000
5
<PAGE>
shares of our common stock on the second anniversary of his or her election as a
board member, subject to a lifetime maximum of 40,000 options.
Directors' options have a ten-year term and vest 25% each year starting on the
grant date. The exercise price is equal to the fair market value of a share of
our common stock on the grant date.
During 1999 the Company granted a total of 28,000 options to Directors. Ms.
Burke, Mr. Lehman, and Mr. Lieb were granted 4,000, 4,000, and 20,000 options,
respectively, at an exercise price of $3.32, $3.32 and $4.44, respectively. Mr.
Pratt was issued stock options as an employee of the Company. Mr. Johnson, as an
executive officer of Safeguard Scientifics, Inc., is not eligible to receive
stock options.
- ------------------------------------------------------------------------------
BOARD COMMITTEE MEMBERSHIP ROSTER
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Audit Compensation
- ------------------------------------------------------------------------------
Meetings held in 1999 5 4
- ------------------------------------------------------------------------------
Yvonne Brathwaite Burke [X] [X]
- ------------------------------------------------------------------------------
Frank B. Foster, III [X]* [X]
- ------------------------------------------------------------------------------
John F. Lehman [X] [X]*
- ------------------------------------------------------------------------------
* Chairperson
Compensation Committee
. reviews and recommends the compensation arrangements for senior management,
including salaries, bonuses, and options
. administers our equity compensation plan
Audit Committee
. recommends the hiring and retention of our independent certified public
accountants
. discusses the scope and results of our audit with the independent certified
public accountants
. reviews with management and the independent certified public accountants
the interim and year-end operating results
. considers the adequacy of our internal accounting controls and audit
procedures
. reviews the non-audit services to be performed by the independent certified
public accountants
- -------------------------------------------------------------------------------
RATIFICATION OF SELECTION OF AUDITORS
Item 2 on Proxy Card
- -------------------------------------------------------------------------------
The board of directors has selected the firm of Deloitte & Touche, LLP,
independent accountants, to serve as auditors for the year ending December 31,
2000. Deloitte & Touche has served as our auditors since 1996. We expect that a
member of the firm will be present at the annual meeting, will have an
opportunity to make a statement at the meeting, if so desired, and will be
available to respond to appropriate questions. Ratification of the selection of
auditors is not required under the laws of the State of Delaware but will be
considered by our board of directors in selecting auditors for future years.
6
<PAGE>
- -------------------------------------------------------------------------------
STOCK OWNERSHIP OF DIRECTORS, OFFICERS AND
BENEFICIAL OWNERS OF MORE THAN 5%
AS OF MARCH 31, 2000
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Shares
Beneficially
Outstanding Owned
Shares Options Assuming
Beneficially Exercisable Exercise of Percent of
Name Owned Within 60 Days Options Shares
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Safeguard Scientifics, Inc. 5,929,356 0 5,929,356 32.9%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087-1945
- --------------------------------------------------------------------------------------------------------------------
Cecile D. Barker 2,760,000 0 2,760,000 15.3%
OAO Corporation
7500 Greenway Center Drive
Greenbelt, MD 20770
- --------------------------------------------------------------------------------------------------------------------
Jerry L. Johnson 34,696 0 34,696 *
- --------------------------------------------------------------------------------------------------------------------
Gregory A. Pratt 861,111 50,000 911,111 5.0%
- --------------------------------------------------------------------------------------------------------------------
J. Jeffrey Fox 12,293 25,000 37,293 *
- --------------------------------------------------------------------------------------------------------------------
Yvonne Brathwaite Burke 0 16,000 16,000 *
- --------------------------------------------------------------------------------------------------------------------
Frank B. Foster, III 100 22,001 22,101 *
- --------------------------------------------------------------------------------------------------------------------
John F. Lehman 10,000 16,000 26,000 *
- --------------------------------------------------------------------------------------------------------------------
Richard B. Lieb 2,000 5,000 7,000 *
- --------------------------------------------------------------------------------------------------------------------
Executive officers and directors 3,686,672 162,501 3,849,173 21.2%
as a group (9 persons)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1% of our outstanding shares of common stock
Each individual has the sole power to vote and to dispose of the shares (other
than shares held jointly with spouse) except as follows:
Safeguard Scientifics, Inc.
Safeguard Scientifics (Delaware), Inc. is the record owner
of 4,213,100, and Safeguard Delaware, Inc. is the record
owner of 716,256 shares in the above table. Both of these
entities are wholly owned subsidiaries of Safeguard
Scientifics. The remaining 1,000,000 shares are owned of
record by Safeguard 97 Capital, L.P., a limited partnership
of which Safeguard Delaware, Inc. is the sole general
partner. Consequently, all of these shares are beneficially
owned by Safeguard Scientifics and have been pledged by
Safeguard as collateral under its bank line of credit.
John F. Lehman Includes 10,000 shares held in trust.
Richard B. Lieb Includes 2,000 shares held by his spouse.
7
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance: Section 16(a) of the
Securities Exchange Act of 1934 requires our directors and executive officers,
and persons who own more than ten percent of a registered class of our equity
securities (collectively, Reporting Persons), to file with the Securities and
Exchange Commission (SEC) initial reports of ownership and reports of changes in
ownership of our Common Stock and other equity securities. Reporting Persons are
required by SEC regulation to furnish us with copies of all Section 16(a) forms
they file.
To our knowledge during the fiscal year ended December 1999, all Section 16(a)
filing requirements applicable to the Reporting Persons were complied with
except for a Form 5 filed late by each of Mrs. Burke, Mr. Foster and Mr. Lieb,
and three transactions reported late on a Form 5 by Mr. Lehman.
- -------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- -------------------------------------------------------------------------------
The following chart compares the cumulative total stockholder return on the our
common stock for the period beginning with the commencement of our initial
public offering on October 21, 1997, through December 31, 1999, with the
cumulative total return on the Nasdaq Index and the cumulative total return for
a peer group index for the same period. The peer group consists of SIC Code
737--Computer Programming and Data Processing Services. The comparison assumes
that $100 was invested in our common stock on October 21, 1997, at the initial
public offering price of $5.00 per share, and in each of the comparison indices,
and assumes reinvestment of dividends. We have historically reinvested earnings
in the growth of our business and have not paid cash dividends on our common
stock.
COMPARISON OF CUMULATIVE TOTAL
RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
10/21/97 12/31/97 12/31/98 12/31/99
- --------------------------------------------------------------------------------
OAOT $100 $185 $ 60 $155
- --------------------------------------------------------------------------------
NASDAQ $100 $ 99 $139 $253
- --------------------------------------------------------------------------------
Peer Group $100 $100 $168 $323
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
COMPENSATION PHILOSOPHY
We are in a highly competitive industry. To succeed, we must be able to
. attract and retain outstanding employees,
. promote among them the economic benefits of stock ownership in our company,
and
. motivate and reward employees who, by their hard work, loyalty, and
exceptional service, make contributions of special importance to the
success of our business.
We have structured our executive compensation program to support our strategic
goals and objectives.
COMPENSATION STRUCTURE
The compensation of our executives consists of
. base pay,
. annual cash incentives, and
. stock options.
Base Pay
Base pay is established initially for new executives based on salary survey data
of comparable companies in the information technology industry. To establish
these levels, we review the national compensation analysis for various sources.
A range of salary increases generally is determined at the time the budget is
established each year based on a review of the level of achievement of financial
and strategic objectives defined in OAOT's annual strategic plan. At the time of
an individual's review, which generally is performed near the anniversary of an
individual's hire date, salary increases may be awarded based upon the
individual's performance and contributions to the achievement of OAOT's
objectives.
1999 base pay for Mr. Pratt. Mr. Pratt's base salary was fixed in his employment
agreement when he joined OAOT in July 1998. Mr. Pratt received an increase in
base pay of 10%, from his 1998 salary. This increase was approved by the
Compensation Committee based on a review of executive compensation for publicly
traded companies in the information technology sector.
Other highly compensated executives' 1999 base pay. Base pay for 1999 was
determined by considering the same factors discussed above and individual
performance for each executive.
Cash Incentives
Annual cash incentives are intended to motivate executives who significantly
contribute to and influence OAOT's strategic plans and are responsible for the
company's performance. The aim is to
. focus executives' attention on areas such as profitability and asset
management,
. encourage teamwork, and
. tie executive pay to corporate performance goals which are consistent with
the long-term goals of stockholders and other investors.
Cash incentives are awarded based on the achievement of the annual financial and
strategic goals we approve at the beginning of each year. These goals may
include a target range of pretax earnings, earnings per share, return on equity,
or other objective measurement consistent with long-term stockholder goals. We
approve a target range for specific financial and/or strategic goals and a range
of potential bonus amounts for each executive, stated as a percentage of base
salary. Ranges of potential bonuses are determined based upon the executive's
ability to affect OAOT's performance. Actual bonuses are awarded following the
year-end based on the actual achievement level of the specified corporate goals
compared to the target range of achievement.
9
<PAGE>
1999 cash incentive for Mr. Pratt.
Mr. Pratt was awarded a cash incentive payment equal to 59% of his target
incentive. This decision was based upon OAOT's achievement of certain objectives
established at the beginning of 1999, primarily composed of attaining at least
90% of OAOT's revenue and pre-tax earnings objectives.
Other highly compensated executives' 1999 cash incentive. In 1999, the committee
approved cash incentives for two executive officers based upon performance and
achievement of individual goals.
Stock Options
Our equity compensation plan is designed to attract, retain and reward employees
who make significant contributions toward achievement of our financial and
operational objectives. Grants under the plan align the interests of our
executives and employees with the long-term interests of our stockholders and
motivate executives and employees to remain in our employ. Generally, grants are
not necessarily made every year but are awarded subjectively based on a number
of factors, including the achievement of our financial and strategic objectives,
the individual's contributions toward the achievement of our financial and
operational objectives, and the amount and term of options already held by each
individual.
1999 Stock Option Awards. The committee granted stock options during 1999 to
certain of its new executives and employees and also granted options to certain
executives and employees for exceptional performance during 1999. The relative
number of options granted to new executives and employees was based on each
person's responsibilities.
IRS Limits on Deductibility of Compensation.
We are aware that Internal Revenue Code section 162(m) provides that publicly
held companies may not deduct in any taxable year compensation in excess of one
million dollars paid to any of the individuals named in the compensation tables
that is not "performance based" as defined in section 162(m). Our policy is to
qualify future compensation arrangements to ensure deductibility, except in
those limited cases where stockholder value is maximized by an alternative
approach.
By the Compensation Committee:
Yvonne Brathwaite Burke
Frank B. Foster, III
John F. Lehman
10
<PAGE>
- -------------------------------------------------------------------------------
EXECUTIVE COMPENSATION & OTHER ARRANGEMENTS
- -------------------------------------------------------------------------------
1999 Annual Compensation for the Top Officers
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation /(1)/ Long-Term Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Awards
- -----------------------------------------------------------------------------------------------------------------------------------
Securities Restricted
Other Annual Underlying Stock All Other
Name and Principal Compensation Options/SARS Award(s) Compensation
Position Year Salary($) Bonus($) ($) (#) ($)/(4)/ ($)/(2)/
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gregory A. Pratt, 1999 $ 281,092 $ 81,125 -- 200,000 $ 2,932,500 $ 9,920
Chief Executive
Officer and 1998 $ 114,528 $ 0 -- 0 $ 0 $ 2,000
President /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
J. Jeffrey Fox, 1999 $ 152,586 $ 72,542 -- 100,000 -- $ 1,205
Vice President of
Finance and Chief
Financial Officer /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald Branch 1999 $ 104,173 $ 52,803 -- 0 -- $ 4,000
former Executive
Vice President of Sales
& Marketing /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Annual Compensation Table:
(1) Includes compensation that has been deferred by the top three officers
under defined contribution plans.
(2) Represents the company matching contribution under a voluntary savings
plan, an automobile allowance, reimbursed relocation expenses and premiums
of life insurance coverage.
(3) Mr. Pratt joined OAOT in July 1998. Mr. Fox joined OAOT in February 1999.
Mr. Branch served in the position noted until June 1999.
(4) Mr. Pratt acquired 750,000 shares of restricted common stock of the Company
at $3.91 per share in exchange for a $2.9 million full recourse note
bearing interest of 5.82%, due July 14, 2004. The shares were pledged as
security interest to OAOT. The Company has the right to repurchase all or a
portion of the shares, at Mr. Pratt's purchase price, subject to a ratable
four-year vesting period. Share vesting accelerates to 100% in the event
the closing price of the Company's shares equals or exceeds $25 per share
for 20 consecutive days. Any dividends payable on common stock are payable
on restricted shares. The value of the shares on December 31, 1999 was
$5,812,500.
11
<PAGE>
1999 Stock Option Grants
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value
at Assumed Annual
Individual Grants/(1)/ Rates of Stock Price
Appreciation
for Option Term/(2)/
- --------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/
Underlying SARS
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration 5% 10%
Name (#)/(3)/ Year ($/Sh) Date ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Pratt 200,000 17.4% $5.19 2/26/05 $353,019 $800,880
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
J. Jeffrey Fox 100,000 8.7% $5.19 2/26/05 $176,510 $400,440
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Ronald Branch 500,000 43.5% $3.38 2/26/05 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options have an exercise price equal to or greater than the fair market
value of the shares subject to each option at the time of grant. The option
exercise price may be paid in cash, by delivery of previously acquired
shares, subject to certain conditions, or same-day sales (that is, a
cashless exercise through a broker). The committee may modify the terms of
outstanding options, including acceleration of the exercise date.
(2) These values assume that the shares appreciate at the compounded annual
rate shown from the grant date until the end of the option term. These
values are not estimates of our future stock price growth. Executives will
not benefit unless the common stock price increases above the stock option
exercise price.
(3) Each option vests 25% each year commencing on the first anniversary of the
grant date and has a six-year term.
12
<PAGE>
1999 Stock Option Exercises and Year-End Stock Option Values
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options/SARs Options/SARs
Acquired at Fiscal Year-End(#) at Fiscal Year-End($)(1)
on Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Pratt 0 -- 0 200,000 $ 0 $ 512,000
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
J. Jeffrey Fox 0 -- 0 100,000 $ 0 $ 256,000
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Ronald Branch 0 -- 0 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value is calculated using the difference between the option exercise price
and the year-end stock price of $7.75, multiplied by the number of shares
subject to an option.
Employment Contracts and Severance Arrangements
Mr. Pratt's employment agreement provides for his employment on an "at will"
basis. Under this agreement, his initial salary in 1998 was paid at the annual
rate of $250,000 and is subject to annual review. In January 1999, Mr. Pratt's
salary was raised to $275,000. Mr. Pratt will be entitled to a bonus of up to
100% of his base salary upon the achievement of certain company and individual
milestones. If his employment is terminated without cause, Mr. Pratt will be
entitled to payment of his salary and certain benefits for a period of 12
months. Mr. Pratt has agreed not to compete with OAOT during the term of his
employment and for one year after his termination of employment or for a lesser
term of not less than six months if approved by the board of directors.
Mr. Fox joined OAOT in February 1999 as the Vice President of Finance and Chief
Financial Officer. Mr. Fox's employment agreement provides for his employment on
an "at will" basis. Under this agreement, his initial salary was paid at the
annual rate of $170,000, and was raised to $200,000 in August 1999 based upon
his individual performance. He will be entitled to a bonus of up to 100% of his
base salary upon the achievement of certain company and individual milestones.
Mr. Fox also received an option to purchase 100,000 shares of our common stock.
Mr. Fox has agreed not to compete with OAOT during the term of his employment
and for nine months after his termination of employment.
Relationships and Related Transactions with Management and Others
I. In connection with its purchase of OAO Services from OAO Corporation, OAOT
loaned OAO Corporation approximately $2.5 million. OAOT entered into a
promissory note from OAO Corporation for this amount bearing interest at
prime plus 2.0%, due December 1, 1999. The note was amended in 1999 to be
payable upon demand and bear interest at prime plus 2.5%. The note is
guaranteed by a pledge of approximately 1.3 million shares of OAOT common
stock, valued at approximately $10.1 million, owned by Mr. Barker, who is
chairman and CEO of OAO Corporation, and vice chairman of OAOT's board.
II. We have an administrative services agreement with Safeguard for certain
services, including consultation regarding our general
13
<PAGE>
management, investor relations, certain legal services, and tax research
and planning. The annual administrative service fee is equal to a maximum
of 1% of gross revenues each year, not to exceed $500,000. This fee does
not cover extraordinary services provided by Safeguard or services that are
contracted out. We expensed $500,000 during 1999 for these services.
III. As a condition of Mr. Pratt's employment agreement, Mr. Pratt acquired
750,000 restricted shares of OAOT common stock at $3.91 per share in
exchange for a $2.9 million full recourse note bearing 5.82%, due July 14,
2004. The shares were pledged as security interest to OAOT. The Company has
the right to repurchase all or a portion of the shares, at Mr. Pratt's
purchase price, subject to a ratable four-year vesting period. Share
vesting accelerates to 100% in the event the closing price of the Company's
shares equals or exceeds $25 per share for 20 consecutive days.
14
<PAGE>
[LOGO OF OAO]
-----------
Technology Solutions
7500 Greenway Center Drive
16/th/ Floor
Greenbelt, MD 20770
(301) 486-0400
- -------------------------------------------------------------------------------
DIRECTIONS TO THE Latham Hotel
3000 M Street, , NW, Washington, DC 20007
(202) 726-5000
- -------------------------------------------------------------------------------
From the North (New York, Newark, Philadelphia, Baltimore):
Take I-95 South to I-95 South/Turnpike South ramp. Merge onto I-95 S (Portions
toll). I-95 becomes New Jersey turnpike (Portions toll). NJ Turnpike becomes
I-295 S. Take I-95 ramp towards Wilmington. Merge onto I-95 S (Portions toll).
Take the I-495 West exit, exit number 27-25, towards College Park (US-
1)/Silver Spring. Merge onto the Capital Beltway. Take the US-29
South/Colesville Road exit, exit number 30B, towards Silver Spring. Merge onto
Colesville Road. Turn left onto 16/th/ Street. Turn slight right onto New
Hampshire Ave., NW. Right turn onto Dupont Circle, NW. Turn right onto New
Hampshire Ave., NW. Turn right onto M Street, NW. Turn slight right onto
Pennsylvania Ave., NW. Turn slight left onto M Street, NW. The Hotel is 2
blocks on the left, and the driveway is on the left just after the LaMadiline
Restaurant
- -------------------------------------------------------------------------------
From the South (Richmond):
Take I-95 North toward Washington. Take the I-395 exit, exit number 170A, on
the left towards Washington. Merge onto I-395N. Take the VA-27/Washington
Blvd. exit, exit number 8B, towards Pentagon/Arlington Cemetery
/Roslyn/Memorial Bridge. Merge onto Washington Blvd. Take the US-50
West/George Washington Memorial Pkwy. North ramp. Take the Rock Creek Pkwy.
ramp towards Kennedy Center. Merge onto Ohio Drive, SW. Take the E-
Street/Whitehurst Freeway ramp towards Roosevelt Bridge. Merge onto Potomac
River Freeway N. Take the Whitehurst Freeway exit. Merge onto L Street, NW.
Turn left onto 26/th/ Street, NW. Turn left onto Pennsylvania Avenue, NW. Turn
slight left onto M Street, NW.
- -------------------------------------------------------------------------------
From Washington National Airport by Car:
Take the exit toward the George Washington Memorial Parkway North. Merge onto
Parkway. Take the US-50 West exit on the left towards the Memorial
Bridge/Arlington Cemetery. Merge onto Arlington Memorial Bridge. Take the Rock
Creek Parkway ramp towards Kennedy Center. Merge onto Ohio Drive SW. Take the
E-Street/Whitehurst Freeway ramp towards Roosevelt Bridge. Merge onto Potomac
River Freeway N. take the Whitehurst Freeway exit. Merge onto L Street, NW.
Turn onto 26/th/ Street, NW. Turn left onto Pennsylvania Avenue, NW. Turn
slight left onto M Street, NW.
- -------------------------------------------------------------------------------
From the West via I-66 (Falls Church, McLean/Tyson's, Vienna, Centreville):
Take I-66E. Take the E Street exit towards I-66 E. Merge onto Potomac River
Freeway. N. Take the Whitehurst Freeway exit. Merge onto L Street, NW. Turn
left onto 26/th/ Street, NW. Turn left onto Pennsylvania Avenue, NW. Turn
slight left onto M, Street, NW.
<PAGE>
P R O X Y
OAO TECHNOLOGY SOLUTIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please sign and date this proxy, and indicate how you wish to vote, on the back
of this card. Please return this card promptly in the enclosed envelope. Your
vote is important.
When you sign and return this proxy card, you
. appoint Gregory A. Pratt and J. Jeffrey Fox, and each of them (or any
substitutes they may appoint), as proxies to vote your shares, as you have
instructed, at the annual meeting on May 12, 2000, and at any adjournments of
that meeting;
. authorize the proxies to vote, in their discretion, upon any other business
properly presented at the meeting; and
. revoke any previous proxies you may have signed.
IF YOU DO NOT INDICATE HOW YOU WISH TO VOTE, THE PROXIES WILL VOTE FOR ALL
NOMINEES TO THE BOARD OF DIRECTORS AND FOR RATIFICATION OF THE SELECTION OF
AUDITORS, AND AS THEY MAY DETERMINE, IN THEIR DISCRETION, WITH REGARD TO ANY
OTHER MATTER PROPERLY PRESENTED AT THE MEETING.
. FOLD AND DETACH HERE .
<PAGE>
Please mark [X]
your votes as
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS FOR [_] WITHHELD [_]
Nominees: FOR ALL
Jerry L. Johnson TO WITHHOLD AUTHORITY TO VOTE FOR ANY
Cecile D. Barker INDIVIDUAL NOMINEE WHILE VOTING FOR THE
Gregory A. Pratt REMAINDER, STRIKE A LINE THROUGH THE
Yvonne Brathwaite Burke NOMINEE'S NAME IN THE LIST.
Frank B. Foster, III
John F. Lehman
Richard B. Lieb
2. RATIFICATION OF AUDITORS
FOR [_] AGAINST [_] ABSTAIN [_]
SIGNATURE(S)________________________ _____________________ DATE: ________
YOU MUST SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY CARD. If shares are
jointly owned, you must both sign. Include your full title if you are signing as
an attorney, executor, administrator, trustee or guardian, or on behalf of a
corporation or partnership.
. FOLD AND DETACH HERE .
[COMPANY LOGO]
7500 Greenway Center Drive
16/th/ Floor
Greenbelt, MD 20770
Phone: (301) 486-0400
Fax: (301) 486-0415
For more information, please visit our website at
www.oaot.com
