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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 Section 240.14a-11(c) or Section 240.14a-12
AXSYS TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
AXSYS TECHNOLOGIES, INC.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO] AXSYS
TECHNOLOGIES
EXECUTIVE OFFICES
September 23, 1997
Dear Axsys Technologies Stockholder:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Special Meeting of Stockholders on October 14, 1997 at 10:00 a.m., at
the offices of Republic National Bank, Lower Level Conference Room, 452 Fifth
Avenue, New York, New York 10018.
The accompanying Notice of Special Meeting and Proxy Statement describes the
proposals to be considered at the meeting.
Whether or not you are able to attend the meeting, please complete, sign and
return the enclosed proxy card as soon as possible. A postage-prepaid envelope
is enclosed for your convenience. If you attend the meeting, you may revoke your
proxy and, if you wish, vote your shares in person.
Very truly yours,
/s/ Stephen W. Bershad
STEPHEN W. BERSHAD
Chairman of the Board
Chief Executive Officer
AXSYS TECHNOLOGIES, INC. . 645 MADISON AVENUE . NEW YORK NY 10022
212.593.7900 . 212.754.6348 . web: www.axsys.com
<PAGE>
[LOGO] AXSYS
TECHNOLOGIES
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 14, 1997
--------------
The Special Meeting of Stockholders (the "Meeting") of Axsys Technologies,
Inc. (the "Company") will be held on Tuesday, October 14, 1997 at 10:00 a.m.,
local time, at the offices of Republic National Bank, Lower Level Conference
Room, 452 Fifth Avenue, New York, New York 10018, for the following purposes:
1. To amend the Certificate of Incorporation of the Company to increase
the number of shares of authorized Common Stock to 30,000,000 shares;
2. To amend the Certificate of Incorporation of the Company to delete a
provision limiting ownership of the Company's Common Stock for tax
reasons no longer applicable; and
3. To amend the Vernitron Corporation Long-Term Stock Incentive Plan (the
"Plan").
Only stockholders of record at the close of business on August 15, 1997 will
be entitled to notice of and to vote at the Meeting and any adjournments
thereof.
The Board of Directors of the Company has approved each of the proposals
described in this Proxy Statement and recommends that stockholders vote FOR
each proposal.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. ACCORDINGLY,
YOU ARE ENCOURAGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
REPLY ENVELOPE PROVIDED AS SOON AS POSSIBLE.
By Order of the Board of Directors,
/s/ Louis D. Mattielli
Louis D. Mattielli
Secretary
September 23, 1997
<PAGE>
[LOGO] AXSYS
TECHNOLOGIES
SPECIAL MEETING OF STOCKHOLDERS
OF AXSYS TECHNOLOGIES, INC.
TO BE HELD ON OCTOBER 14, 1997
--------------
PROXY STATEMENT
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INTRODUCTION
This Proxy Statement (the "Proxy Statement") and the enclosed proxy card,
which are first being mailed to stockholders on or about September 23, are
furnished to stockholders of Axsys Technologies, Inc., a Delaware corporation
(the "Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") for use at the Special Meeting of
Stockholders of the Company to be held on Tuesday, October 14, 1997 at 10:00
a.m., local time, at the offices of Republic National Bank, Lower Level
Conference Room, 452 Fifth Avenue, New York, New York 10018, including any and
all adjournments or postponements thereof (the "Meeting").
MATTERS TO BE CONSIDERED AT THE MEETING
At the Meeting, holders of shares of Common Stock, par value $.01 per share
("Common Stock"), of the Company will be asked to consider and vote upon the
following matters:
1. To amend the Certificate of Incorporation of the Company to increase
the number of shares of authorized Common Stock to 30,000,000 shares;
2. To amend the Certificate of Incorporation of the Company to delete a
provision limiting ownership of the Company's Common Stock for tax
reasons no longer applicable; and
3. To amend the Vernitron Corporation Long-Term Stock Incentive Plan (the
"Plan").
RECOMMENDATION OF THE BOARD
The Board of the Company has unanimously approved each of the proposals
described in this Proxy Statement and recommends that stockholders vote FOR
each proposal.
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RECORD DATE; QUORUM; BROKER SHARES
The Board has fixed the close of business on August 15, 1997, as the record
date for determination of the stockholders entitled to notice of, and to vote
at, the Meeting (the "Record Date"). As of the Record Date, there were
3,048,381 shares of Common Stock issued and outstanding. The presence, either
in person or by proxy, of the holders of a majority of the voting power of the
outstanding shares of stock of the Company entitled to vote is necessary to
constitute a quorum at the Meeting. If a share is represented for any purpose
at the Meeting, it is deemed to be present for all other matters. Abstentions
will be counted for purposes of determining the presence or absence of a
quorum and the total number of votes cast with respect to a proposal. Shares
held of record by a broker or its nominee ("Broker Shares") that are voted on
any matter are included in determining the absence or presence of a quorum;
however, Broker Shares that are not voted on any matter will not be included
in determining the total number of votes cast.
VOTE REQUIRED
Each of the amendments to the Company's Certificate of Incorporation, as set
forth in Proposals One and Two below, requires the affirmative vote of a
majority of the outstanding shares of the Company on the Record Date entitled
to vote at the Meeting. The amendment of the Plan, as set forth in Proposal
Three below, requires the affirmative vote of a majority of shares entitled to
vote and present at the Meeting in person or by proxy. Each share of Common
Stock outstanding on the Record Date entitles the record holder thereof to one
vote on each matter that may properly come before the Meeting.
Officers and directors of the Company, who (together with certain affiliates
and related parties) are the beneficial owners of approximately 41.9% of the
shares of the outstanding Common Stock, have advised the Company that they
intend to vote all of the shares over which they have voting power in favor of
the approval of each of the proposals described in this Proxy Statement.
PROXIES
Stockholders are encouraged to specify the way they wish to vote their
shares by marking the appropriate boxes on the enclosed proxy card. Shares of
Common Stock represented by properly executed proxies received at or prior to
the Meeting and which have not been revoked will be voted in accordance with
the instructions indicated therein. IF NO CHOICE IS SPECIFIED, THE SHARES WILL
BE VOTED FOR PROPOSALS ONE, TWO AND THREE DESCRIBED IN THIS PROXY STATEMENT.
A stockholder who has given a proxy may revoke such proxy at any time prior
to its exercise at the Meeting by (i) giving written notice of revocation to
the Secretary of the Company, (ii) properly submitting to the Company a duly
executed proxy bearing a later date, or (iii) attending the Meeting and voting
in person. Attendance at the Meeting will not in and of itself revoke a proxy.
All written notices of revocation and other communications with respect to
revocation of proxies should be addressed as follows: Axsys Technologies,
Inc., 645 Madison Avenue, New York, New York 10022, Attention: Corporate
Secretary.
The Board intends to present for a vote at the Meeting only those proposals
described in this Proxy Statement. If a quorum is not obtained, or if fewer
shares are voted in favor of a proposal than the number required for approval,
the Meeting may be adjourned for the purpose of obtaining additional proxies
or votes or for any other purpose, and, at any subsequent reconvening of the
Meeting, all proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the meeting (except for any
proxies which have therefore effectively been
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revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
The expense of preparing, printing and mailing this Proxy Statement and the
related proxy solicitation material will be paid by the Company. Proxies are
being solicited principally by mail; but proxies may also be solicited
personally, by telephone and similar means by directors, officers and regular
employees of the Company without additional compensation. The Company will
reimburse brokerage firms and others for their expenses in forwarding proxy
solicitation materials to the beneficial owners of Common Stock.
PROPOSAL ONE--AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board has approved and declared it advisable to amend the Certificate of
Incorporation of the Company (the "Certificate of Incorporation") increasing
the number of shares of Common Stock authorized for issuance to a total of
30,000,000. The additional shares of Common Stock would be part of the
existing class of Common Stock and, if and when issued, would have the same
rights and privileges as shares of Common Stock presently outstanding. The
Certificate of Incorporation, as currently in effect, provides that the
authorized capital stock consists of 8,000,000 shares in aggregate, of which
4,000,000 shares, par value $.01 per share, are designated Preferred Stock and
4,000,000 shares, par value $.01 per share, are designated Common Stock.
At August 15, 1997, 3,048,381 shares of the Common Stock out of the
4,000,000 shares available for issuance were issued and outstanding. In
addition, 48,600 shares were reserved for issuance pursuant to the exercise of
options granted under the Company's Long-Term Stock Incentive Plan, 314,809
shares were reserved for the exercise of warrants and 100,000 shares were
reserved pursuant to the Company's 1997 acquisition of Teletrac, Inc.
Accordingly, the Company had only 488,210 shares of Common Stock available for
issuance as of August 15, 1997.
Like most companies, the Company has historically maintained a substantial
reserve of authorized but unissued shares in order to avoid the time and
expense of seeking shareholder approval each time it needs to make a new
issuance of Common Stock in light of possible future activities which the
Board deems to be in the best interests of the stockholders. In the Company's
view, the above reserve is inadequate for its possible requirements. On
September 19, 1997, the Company filed a registration statement under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission which includes its proposed offering of 979,283 shares of Common
Stock (including shares that may be offered under an overallotment option). In
addition, the Company is proposing in this Proxy Statement to increase the
number of shares of Common Stock available for grants or awards under its
Long-Term Stock Incentive Plan. The Company also has utilized common stock as
consideration in its acquisitions. It may continue to do so in the future. The
Company, moreover, may have other future requirements, including, without
limitation, an equity or equity-based offering, a stock split or dividend,
strategic relationships with corporate partners and other equity incentives
for employees, officers or directors. The Company reserves the right to
postpone or terminate the foregoing registration statement or alter the number
of shares of Common Stock offered thereby. Notwithstanding any such decision
to postpone or terminate, the Company would expect to hold the Meeting and to
present all of the above-referenced proposals at such meeting.
If Proposal One is adopted by the stockholders, the additional shares of
Common Stock would be issuable, at any time from time to time, by action of
the Board without further authorization from the stockholders, except as
provided under applicable law. Current holders of Common Stock do not have
statutory preemptive rights or other statutory
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rights to subscribe to additional shares of Common Stock. To the extent that
additional shares of Common Stock are issued in the future and existing
stockholders do not participate to the extent of their proportional interests,
such issuance will decrease the existing stockholders' percentage equity
ownership and, depending on the price at which such shares are issued, could
be dilutive to the existing stockholders.
The full text of Proposal One is set forth in Exhibit A attached to this
Proxy Statement.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL ONE.
PROPOSAL TWO--AMENDMENT TO CERTIFICATE OF INCORPORATION TO
DELETE SECTION 8
The Board has approved and declared it advisable to amend the Certificate of
Incorporation to delete Section 8.
Section 8 of the Certificate of Incorporation was intended to protect the
Company's ability to utilize its net operating loss carryovers, capital loss
carryovers and business credit carryovers (the "Tax Benefits") under the
Internal Revenue Code of 1986, as amended, from certain changes in ownership
that would jeopardize the Tax Benefits. Because the Company has fully utilized
its Tax Benefits, the Board believes that the ownership restrictions of
Section 8 are no longer necessary and proposes to delete Section 8.
The full text of current Section 8 is set forth in Exhibit B attached to
this Proxy Statement.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL TWO.
PROPOSAL THREE--AMENDMENTS TO VERNITRON LONG-TERM
STOCK INCENTIVE PLAN
The Company's stockholders are being asked to approve the Amended and
Restated Vernitron Corporation Long-Term Stock Incentive Plan (the "Amended
Plan"), which was originally adopted by Vernitron Corporation, a predecessor
to the Company. The Board has adopted the Amended Plan, subject to stockholder
approval, and recommends that stockholders vote to approve the Amended Plan.
The Vernitron Corporation Long-Term Stock Incentive Plan (the "Current
Plan") was originally adopted in August 1991. It provides for granting Stock
Options, Restricted Stock, Performance Units, Stock Appreciation Rights
("SARs") or a combination of any of the foregoing to directors, officers and
other key employees of the Company or its subsidiaries.
The proposed amendments contained in the Amended Plan will (i) increase the
number of shares of Common Stock authorized for grant or award under the
Current Plan from 79,400 to 400,000, (ii) make certain modifications to the
Current Plan to qualify grants and awards for favorable treatment under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and (iii) change the Current Plan's name to reflect the Company's name today.
These amendments will ensure that the Company may continue to grant awards, at
levels determined by the Board, to attract, retain and motivate qualified
employees, directors and consultants.
Following are summaries of the principal provisions and the principal
federal income tax consequences of the Amended Plan. Capitalized terms used in
this summary that are not defined herein have the meanings ascribed to them in
the Amended Plan.
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OPERATION OF THE AMENDED PLAN
Duration of the Amended Plan. The Amended Plan will retain the original term
of the Current Plan, which term expires in August 2001.
Amended Plan Administration. The Amended Plan will continue to be
administered by the Stock Incentive Plan Committee (the "Committee"), a
committee of the Board consisting of two or more directors. However, unlike
the Current Plan, the Amended Plan will clarify that (i) the Committee must
consist of non-employee directors to remain exempt from certain reporting
requirements under the Exchange Act of 1934 (the "Exchange Act") and (ii) to
the extent necessary for grants and awards to qualify for favorable treatment
under Section 162(m) of the Code, the Committee must be composed solely of two
or more "outside directors" as that term is used in Section 162(m) of the
Code. Consistent with the Current Plan, the Amended Plan provides that the
Committee will select those officers and other key employees of the Company
and its subsidiaries who are to receive Awards or Options, establish rules and
guidelines relating to the Amended Plan, establish modify and terminate terms
and conditions of Awards and Options, and take such other actions as may be
necessary for proper administration of the Amended Plan.
Shares Available for Issuance. The Current Plan authorizes the issuance of
79,400 shares of Common Stock and, of such authorized amount, grants
representing 48,600 shares have been made as of June 30, 1997. The maximum
number of shares of Common Stock that may be issued, delivered or made subject
to Awards or Options under the Amended Plan will be increased to 400,000
inclusive of such outstanding grants. As the Current Plan provides, whenever
any Option terminates or is canceled for any reason without having been
exercised, shares of Common Stock subject to an Award or Option are resold to
the Company or forfeited, or any shares of Common Stock are delivered to pay
the exercise price of an Option, such shares will then become available for
grants of Options or Awards under the Amended Plan.
In order to comply with Section 162(m) of the Code, the Amended Plan will
impose limits on the number of Shares with respect to which Options or Awards
may be granted to any Eligible Participant in any calendar year. These limits
do not exist in the Current Plan. The Amended Plan provides that (i) any
executive officer may not be granted Awards or Options in the aggregate in
respect of more than 60,000 Shares per calendar year and (ii) any other
Eligible Participant may not be granted Awards or Options in the aggregate in
respect of more than 60,000 Shares per calendar year.
Amended Plan Participants. Under the Amended Plan, the Committee may select
any director, officer or other employee to receive Awards or Options under the
Amended Plan. To clarify the fact that the Amended Plan covers any employee
and it is the intent of the Board that a broad-range of employees be eligible
under the Amended Plan, the phrase "key employee" under the Current Plan's
definition of "Eligible Participant" will be to revised to cover any employee
under the Amended Plan.
Awards Available under the Amended Plan. As the Current Plan provides,
grants under the Amended Plan may take the form of Options to purchase shares
of Common Stock, SARs, Restricted Stock and Performance Units (collectively,
"Stock Incentives"). Under the Amended Plan, the Committee will continue to
determine the provisions of Stock Incentive awards, including whether the
awards may be exercised all at once or in installments and at what prices they
may be exercised.
Terms of Exercise. The Amended Plan will not alter the general terms
governing the exercise of Stock Incentives. Consistent with the Plan, each
Stock Incentive will be exercisable, in whole or in part, prior to its
cancellation or termination, by written notice to the Company. With respect to
the exercise of any Option, the Amended Plan will continue to require that
such notice be accompanied by payment in full of the purchase price in cash,
or if
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acceptable to the Committee, in shares of Common Stock or a combination of the
two. As with the Current Plan, the Company will be able make loans to such
participants as the Committee, in its discretion, may determine in connection
with the exercise of Options in an amount up to the exercise price of the
option plus any applicable withholding taxes. Such loans still may not exceed
the Fair Market Value, at the date of exercise, of the shares covered by the
Option exercised.
Transferability and Termination. Consistent with the Current Plan, Stock
Incentives will not be transferable except by devise or by the laws of descent
and distribution under the Amended Plan. In general, Option and Award
Agreements under the Current Plan provide for termination upon the earlier of
(i) the date fixed by the Committee when the Stock Incentive is granted or
(ii) in the event of termination of employment other than for cause, up to 90
days after the holder's termination of employment to the extent the Stock
Incentive was then exercisable unless determined otherwise by the Committee.
Stock Options. As with the Current Plan, stock options meeting the
requirements of Section 422 of the Code ("Incentive Stock Options") and those
that do not so qualify ("Non-Qualified Options") are both available for grant
under the Amended Plan. Consistent with the Current Plan, the term of each
Option will be determined by the Committee at the time of grant. In the event
of death or termination due to disability, the Amended Plan will continue to
permit the exercise of Options, to the extent then exercisable, for up to one
year thereafter. As with the Current Plan, in the event of termination for
cause, any and all Options of the terminated participant will be immediately
canceled under the Amended Plan.
In general, Options granted under the Current Plan have been Incentive Stock
Options. As of June 30, 1997, there were Options to acquire 48,600 shares of
Common Stock outstanding under the Current Plan. Of the 29,400 Options granted
in 1997 (the "1997 Options"), 15,000 have an exercise price of $15 per share,
8,400 have an exercise price of $4.15 per share, 4,000 have an exercise price
of $17.75 per share and 2,000 have an exercise prices of $16.50 per share. In
general, the 1997 Options have a term of ten years, unless extended. For the
most part, the Options granted prior to 1997 have an exercise price of $3.75
per share and a term of seven years, unless extended. In general, within one
year from the date of grant, 40% of such Options are exercisable, and an
additional 30% becomes exercisable each year thereafter.
Stock Appreciation Rights. Consistent with the Current Plan, SARs may be
granted by themselves or in conjunction with all or a portion of the shares
covered by an Option under the Amended Plan. As provided by the Current Plan,
a SAR granted in conjunction with an Option will entitle the holder to receive
the excess of the Fair Market Value of a share of Common Stock at the date of
exercise over the exercise price for each surrendered Option. Such a SAR is
exercisable only at such times and to the extent that the related Options are
exercisable. Upon exercise of a SAR, the related Options will be canceled as
to the number of shares of Common Stock on which the SAR was exercised. The
Amended Plan, as does the Current Plan, permits the Committee to grant SARs
unrelated to Options. As with the Current Plan, in such cases, the Committee
will determine the terms and conditions of SARs, including vesting and
duration, at the time of grant.
Performance Units. Consistent with the Current Plan, the Committee may grant
Performance Units under the Amended Plan, payable in shares of Common Stock,
the Fair Market Value of such shares in cash, or a combination of the two upon
the attainment of certain performance objectives under the Amended Plan. As
with the Current Plan, the Committee will determine the performance objectives
as well as other terms at the time of grant. In contrast to the Current Plan,
under which the Committee may utilize any standard that it deems appropriate,
the Amended Plan provides an exclusive list of permissible performance
standards: net earnings or net worth, return on equity or assets, earnings per
share of Common Stock, share price of Common Stock, gross revenues, EBITDA,
dividends, market share
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or market penetration, or any combination of the foregoing. In addition, the
Amended Plan will clarify that these standards may be determined before or
after accounting changes, special changes, foreign currency effects,
acquisitions, divestitures or other extraordinary events.
With respect to any Performance Unit intended to qualify under Section
162(m) of the Code, the Amended Plan revises the Current Plan to require the
Committee to certify that the appropriate performance objectives were
satisfied prior to the vesting, payment, settlement or lapsing of
restrictions. As with the Current Plan, in the event of termination of the
employment, any nonvested Performance Units will be forfeited unless
determined otherwise by the Committee.
Restricted Stock. Consistent with the Current Plan, the Committee may grant
Restricted Stock, which entitles the holder to receive shares of Common Stock
subject to risk of forfeiture based upon certain conditions determined by the
Committee. The Amended Plan provides, as does the Current Plan, that, subject
to the restrictions of the Award Agreement, the holder of Restricted Stock is
entitled to all rights of a stockholder with respect to the Restricted Stock,
including the rights to vote and receive dividends. However, as with the
Current Plan, dividends and distributions will be held in escrow where they
will accumulate interest until all restrictions are satisfied, lapsed or
waived.
Change of Control. The Amended Plan will clarify the current discretion of
the Committee to determine that all Stock Incentives which have not terminated
and which are then held by any participant will become immediately exercisable
upon change of control. Under the Current Plan, the Committee determines what
constitutes a change of control with respect to all awards. By contrast, the
Amended Plan provides that, with respect to awards intended to qualify as
performance-based compensation under Section 162(m), the Committee must set
forth and define in each applicable Option or Award Agreement the terms or
events upon which the vesting or exercisability of the Options or Awards will
accelerate. With respect to awards not intended to so qualify, the Amended
Plan will continue to permit the Committee to exercise sole discretion to
accelerate the vesting or exercisability upon the occurrence of a change of
control as defined by the Committee.
Interpretation. The Amended Plan, in contrast to the Current Plan, will
include certain rules of interpretation and administration. Under these rules,
the Board will be authorized to amend the Amended Plan and modify Option or
Award Agreements to ensure compliance with the reporting requirements of the
Exchange Act. In addition, the Amended Plan will provide that (except in
certain instances regarding payments made upon a change of control), unless
otherwise stated in the applicable Option or Award Agreement, each Option, SAR
and Performance Unit granted to an executive officer of the Company is
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Code, and that the Committee is prohibited from
exercising any discretion which would jeopardize such treatment. Finally,
these rules will permit the Board or the Committee to selectively apply
provisions designed to satisfy the requirements of Section 162(m) of the Code
only to those individuals whose compensation is subject to such section.
CERTAIN PLAN BENEFITS
As described above, the selection of Eligible Participants who will receive
awards under the Amended Plan and the size and type of the awards, is to be
determined by the Committee in its sole discretion. No awards have been made
or granted under the Amended Plan, nor are any such future awards now
determinable. Thus, it is not possible to predict the benefits and amounts
that will be received by or allocated to particular individuals or groups of
employees in 1997.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of Awards under the Amended Plan based upon current federal
income tax laws. The Amended Plan is not qualified under Section 401(a) of the
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Internal Revenue Code. The summary is not intended to be comprehensive and,
among other things, does not describe state, local or foreign tax
consequences.
Stock Options. Generally, an Optionee will not recognize taxable income at
the time of grant of Non-Qualified Option. Upon exercise of the Option, the
difference between the Fair Market Value of the Shares on the date of exercise
and the exercise price will be taxable as ordinary income to the Optionee. The
Company will receive a commensurate tax deduction at the time of exercise,
subject to the deduction limitation under Section 162(m) of the Code (which is
discussed below).
Subject to the discussion below, an Optionee will not recognize taxable
income at the time of grant or exercise of an Incentive Stock Option, and the
Company will not be entitled to a tax deduction with respect to such grant or
exercise. However, upon exercise, the difference between the Fair Market Value
of the Shares and the exercise price is an item of tax preference subject to
the possible application of the alternative minimum tax.
Generally, if an Optionee holds Shares acquired upon the exercise of an
Incentive Stock Option for at least one year after the date of exercise and
for at least two years after the date of grant of the Incentive Stock Option,
upon disposition of such Shares by the Optionee, the difference, if any,
between the sales price of the Shares and the exercise price will be treated
as long-term capital gain or loss to the Optionee. If an Optionee sells or
disposes of Shares acquired upon the exercise of an Incentive Stock Option
within one year after the date of exercise or within two years after date of
grant of the Incentive Stock Option (a "disqualifying disposition"), then (i)
any excess of the Fair Market Value of such Shares at the time of exercise of
the Option over the exercise price of such Option will constitute ordinary
income to the Optionee, (ii) any excess of the amount realized by the Optionee
on the disqualifying disposition over the Fair Market Value of the Shares on
the date of exercise will generally be capital gain, and (iii) the Company
will be entitled to a deduction equal to the amount of such ordinary income
recognized by the Optionee, subject to the deduction limitation under Section
162(m) of the Internal Revenue Code.
If an Option is exercised through the use of Shares previously owned by the
Optionee, such exercise generally will not be considered a taxable disposition
of the previously-owned Shares and thus no gain or loss will be recognized
with respect to such Shares upon such exercise. However, if an Incentive Stock
Option is exercised through the use of previously-owned Shares that were
acquired on the exercise of an Incentive Stock Option, and the holding period
requirement for those Shares is not satisfied at the time they are used to
exercise the Option, such use will constitute a disqualifying disposition of
the previously-owned Shares resulting in the recognition of ordinary income in
the amount described above with respect to disqualifying dispositions.
Stock Appreciation Rights. No income will be realized by a Grantee in
connection with the grant of a SAR. The Grantee must include in ordinary
income the amount of cash received and the Fair Market Value on the exercise
date of any Shares received upon the exercise of a SAR. The Company will be
entitled to a deduction, subject to the deduction limitation under Section
162(m) of the Internal Revenue Code, equal to the amount included in such
Grantee's income by reason of the exercise of a SAR.
Restricted Stock. A grant of Restricted Stock generally does not constitute
a taxable event for a Grantee or the Company. However, the Grantee will be
subject to tax, at ordinary income rates, when any restrictions on ownership
of the Restricted Stock lapse. The Company will be entitled to take a
commensurate deduction at that time, subject to the deduction limitation under
Section 162(m) of the Code.
A Grantee may elect to recognize taxable ordinary income at the time
Restricted Shares are awarded in an amount equal to the Fair Market Value of
the Stock at the time of grant, determined without regard to any forfeiture
restrictions. If such an election is made, the Company will be entitled to a
deduction at that time in the same amounts,
8
<PAGE>
subject to the deduction limitation under Section 162(m) of the Code. Future
appreciation of the Shares will be taxed at the capital gains rate when the
Shares are sold. However, if, after making such an election, the Shares are
forfeited, the Grantee will be unable to claim a deduction.
Performance Units. Generally, a Grantee will not recognize any taxable
income and the Company will not be entitled to a deduction upon the award of
Performance Units. At the time the Grantee receives a payment in respect of
Performance Units, the Fair Market Value of any Shares or the amount of any
cash received in payment for such Performance Units generally is taxable to
the Grantee as ordinary income and the Company will be entitled to a tax
deduction, subject to the deduction limitation under Section 162(m) of the
Code.
Non-Employee Director Awards. Non-Employee Director options will receive the
same federal income tax treatment as other Non-Qualified Options. The Director
will recognize ordinary income equal to the Fair Market Value of the shares
received in lieu of Directors' fees and the Company will be entitled to a
deduction in the same amount, subject to the deduction limitation under
Section 162(m) of the Internal Revenue Code.
Deductibility of Executive Compensation. Section 162(m) of the Code
generally disallows a federal income tax deduction to any publicly held
company for compensation paid in excess of $1 million in any taxable year to
the chief executive officer or any of the other four most highly compensated
executive officers employed by the corporation on the last day of the taxable
year. Exceptions are made for, among other things, qualified "performance-
based compensation." Qualified performance-based compensation means
compensation paid solely on account of the attainment of objective performance
goals, provided that (i) performance goals are established by a compensation
committee consisting solely of two or more outside directors, (ii) the
material terms of the performance-based compensation are disclosed to and
approved by shareholders in a separate shareholder vote prior to payment and
(iii) prior to payment, the compensation committee certifies that the
performance goals were attained and other materials terms were satisfied. The
Amended Plan is designed to conform with the performance-based compensation
exception to Section 162 (m) of the Internal Revenue Code.
Section 280G of the Code. Under certain circumstances, the accelerated
vesting or exercise of Options or SARs or the accelerated lapse of
restrictions with respect to other Awards in connection with a Change of
Control of the Company might be deemed an "excess parachute payment" for
purposes of the golden parachute tax provisions of Section 280G of the
Internal Revenue Code. To the extent it is so considered, the Grantee may be
subject to a 20% excise tax and the Company may be denied a tax deduction.
The foregoing summary of Proposal Three is qualified in its entirety by
reference to the full text of the Amended Plan as set forth in Exhibit C
attached to this Proxy Statement.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL THREE.
9
<PAGE>
MANAGEMENT
The following table sets forth the names, ages and positions of the
Company's directors and executive officers. All directors hold office until
the annual meeting of stockholders of the Company following their election or
until their successors are duly elected and qualified. Officers are appointed
by, and serve at the discretion of, the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Stephen W. Bershad............... 55 Chairman, Chief Executive Officer
Anthony J. Fiorelli, Jr.......... 67 Director
Eliot M. Fried................... 64 Director
Richard V. Howitt................ 53 Director
Raymond F. Kunzmann.............. 40 Vice President--Chief Financial Officer
Louis D. Mattielli............... 47 Vice President--General Counsel & Secretary
Kenneth F. Stern................. 37 Vice President--Corporate Development
</TABLE>
The Compensation Committee oversees compensation policies of the Company.
Its members are Messrs. Bershad and Fiorelli. The Stock Incentive Plan
Committee administers the Company's Long-Term Stock Incentive Plan, and is
comprised of Messrs. Fiorelli and Fried.
The compensation of directors is fixed by the Board of Directors. Directors
who are not employees of the Company receive meeting fees of $2,500 for each
Board meeting attended and $1,000 for each committee meeting attended other
than in connection with a Board meeting. Directors are reimbursed for travel
and other expenses incurred in the performance of their duties.
10
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of August 15, 1997, information with
respect to the beneficial ownership of the Common Stock of the Company by (i)
each person known to the Company to own 5% or more of the outstanding shares
of Common Stock, (ii) each of the Company's directors, (iii) each of the Named
Executives and (iv) all of the directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------
NAME AND ADDRESS OF NUMBER OF PERCENT OF SHARES
BENEFICIAL OWNER SHARES(1) OUTSTANDING(2)
------------------- --------- -----------------
<S> <C> <C>
Stephen W. Bershad(3)......................... 1,256,371 39.8
Anthony J. Fiorelli, Jr.(4)................... 15,885 *
Eliot M. Fried(5)............................. 2,000 *
Richard V. Howitt(6).......................... 39,760 1.3
Elliot N. Konopko(7).......................... 9,000 *
Raymond F. Kunzmann(8)........................ 4,000 *
Louis D. Mattielli............................ -- --
Kenneth F. Stern(9)........................... 8,000 *
All Directors and officers as a group (7
persons) (3)(4)(5)(6)(8)(9).................. 1,326,016 41.9
Lehman Electric Inc.(10)...................... 463,741 14.7
World Financial Center
200 Vesey Street
New York, NY 10285
Paribas Principal, Inc. and Banque
Paribas(11).................................. 288,540 8.4
787 Seventh Avenue
New York, NY 10019
John W. Gildea(12)............................ 154,500 4.9
Gildea Management
115 East Putnam Avenue
Greenwich, CT 06830
Axsys Technologies, Inc.(13).................. 244,995 7.8
401(k) Plan
Axsys Technologies, Inc.
645 Madison Avenue
New York, NY 10022
</TABLE>
- -------
* Less than 1%.
(1) Except as set forth in the footnotes to this table and subject to
applicable community property law, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by such stockholder.
(2) Applicable ownership percentage is based on 3,148,381 shares of Common
Stock, consisting of 3,048,381 shares outstanding on August 15, 1997 and
100,000 shares issuable to minority stockholders of Teletrac, Inc.
(3) Includes 7,560 shares of Common Stock underlying options which are
exercisable as of August 15, 1997 or within 60 days after such date. Also
includes 590,764 shares of Common Stock owned directly by SWB Holding
Corporation. Mr. Bershad is the sole shareholder and Chairman of SWB
Holding Corporation. Accordingly, Mr.
11
<PAGE>
Bershad is the beneficial owner of such shares. Also includes 658,047
shares of Common Stock owned by Mr. Bershad directly. Mr. Bershad's address
is 645 Madison Avenue, New York, NY 10022. Excludes 5,511 shares
representing his interest in the 401(k) Plan.
(4) Includes 2,000 shares of Common Stock underlying options which are
exercisable as of August 15, 1997 or within 60 days after such date.
(5) Represents 2,000 shares of Common Stock underlying options which are
exercisable as of August 15, 1997 or within 60 days after such date.
(6) Represents 22,260 shares of Common Stock received by Mr. Howitt in the
Teletrac acquisition and 17,500 representing Mr. Howitt's proportional
interest in the 100,000 shares issuable to minority shareholders of
Teletrac, Inc.
(7) Excludes 5,839 shares representing his interest in the 401(k) Plan.
(8) Represents 4,000 shares of Common Stock underlying options which are
exercisable as of August 15, 1997 or within 60 days after such date.
Excludes 1,973 shares representing his interest in the 401(k) Plan.
(9) Includes 2,000 shares of Common Stock underlying options which are
exercisable as of August 15, 1997 or within 60 days after such date.
Excludes 1,182 shares representing his interest in the 401(k) Plan.
(10) Lehman Electric Inc., a Delaware corporation ("Lehman Electric"), is an
investment vehicle. Lehman Brothers Inc., a Delaware corporation ("Lehman
Brothers"), is a registered broker-dealer. Lehman Brothers Group Inc., a
Delaware corporation ("Group"), is a holding company and parent of Lehman
Electric. Lehman Brothers Holdings Inc., a Delaware corporation
("Holdings"), through its domestic and foreign subsidiaries, is a full-
line securities firm. It is the immediate parent of Lehman Brothers and
Group. The foregoing entities (other than Lehman Brothers) may be deemed
to beneficially own the 463,741 shares of Common Stock directly owned by
Lehman Electric. In the ordinary course of its business on behalf of its
customers, Lehman Brothers may purchase and sell shares of Common Stock.
(11) Consists of a warrant to purchase 133,262 shares of Common Stock
exercisable at $0.05 per share, granted to Banque Paribas ("Paribas") and
a warrant to purchase 155,278 shares of Common Stock, exercisable at
$6.25 per share, granted to Paribas Principal, Inc. ("PPI"). PPI is a New
York corporation and Paribas is a banking corporation organized under the
laws of the Republic of France. Paribas maintains branches in a number of
jurisdictions and is acting through its Grand Cayman Branch in connection
with its investment in the Company. The principal business of PPI, a
wholly-owned subsidiary of Paribas and a small business investment
company under the Small Business Investment Act of 1958, as amended, is
that of making debt and equity investments in "small concerns" (as
defined under the regulations of the Small Business Administration).
Paribas is a subsidiary of Compagnie Financiere de Paribas ("Compagnie
Financiere"), a diversified holding company organized under the laws of
the Republic of France. The operating subsidiaries of Compagnie
Financiere engage in a wide variety of banking, financial services,
manufacturing, trading, development and related activities. Through its
Grand Cayman Branch, which is licensed under the laws of the jurisdiction
to engage in banking activities, Paribas engages in lending activities,
acceptance of deposits, international trade financing trading activities
and serves as agent for various banks under the Company's secured credit
facility. Each of Paribas and PPI may be deemed to beneficially own the
shares held by the other.
(12) Includes 139,500 shares of Common Stock beneficially owned by Net Fund
III as to which shares Gildea Management Co., a Delaware corporation, has
dispositive power by virtue of an investment advisory agreement. Mr.
Gildea is the Chairman of the Board of Directors, Chief Executive
Officer, President and sole stockholder of Gildea Management Co., and as
such may be deemed the beneficial owner of the shares owned by Gildea
Management Co. Mr. Gildea also owns 15,000 shares of Common Stock in his
individual capacity.
(13) Messrs. Kunzmann and Mattielli are the sole trustees of the Company's
401(k) Plan and may be deemed to beneficially own such shares, although
each of them disclaims beneficial ownership thereof, except to the extent
of his interest therein.
12
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for
services in all capacities awarded, earned by or paid to the Company's Chief
Executive Officer and the other executive officers whose aggregate cash
compensation exceeded $100,000 (collectively, the "Named Executives") for the
three years ended December 31, 1996:
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ---------------- ALL OTHER
NAME AND BONUS OTHER ANNUAL OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) COMPENSATION (# OF SHARES)(2) ($)(3)
------------------ ---- --------- ------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stephen W. Bershad(4) 1996 262,500 157,500 -- -- 7,576
Chairman of the Board 1995 262,500 100,000 -- -- 6,258
and
Chief Executive Officer 1994 262,500 150,000 -- 4,200 10,810
Elliot N. Konopko(5) 1996 210,673 82,875 -- -- 20,555
Vice President, General 1995 175,000 40,000 -- -- 6,521
Counsel and Secretary 1994 175,000 55,000 -- 3,000 6,318
Raymond F. Kunzmann(6) 1996 141,385 85,000 -- -- 10,603
Vice President-Finance 1995 120,635 45,000 -- -- 7,197
and Controller 1994 70,000 28,000 -- 4,000 2,721
Kenneth F. Stern(7) 1996 130,269 52,250 -- -- 10,439
Vice President- 1995 120,000 25,000 -- -- 4,429
Corporate Development 1994 25,000 5,000 -- 2,000 --
</TABLE>
- -------
(1) Reflects payments under the Company's Annual Incentive Plan, which is
described below.
(2) Reflects awards under the Company's Long-Term Stock Incentive Plan, which
is described under "Stock Incentive Plan" below.
(3) Reflects matching contributions under the Company's 401(k) Plans,
described under 401(k) Plan below, and payments under the Company's
executive health insurance plan and other miscellaneous amounts. The
Company's executive health insurance plan, which covers only executive
officers, provides for the reimbursement of deductible and coinsurance
amounts and certain medical expenses not covered under the Company's basic
medical plans. See "--401(k) Plans."
(4) Mr. Bershad's current salary is $300,000.
(5) Mr. Konopko was Vice President--General Counsel and Secretary of the
Company from March 1990 until his resignation on June 18, 1997. Mr.
Mattielli, his successor, is employed at an annual base salary of
$175,000.
(6) Raymond F. Kunzmann joined the Company in June 1994.
(7) Kenneth F. Stern joined the Company in October 1994.
13
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth certain information regarding the year-end
number and value unexercised stock options granted pursuant to the Company's
Long-Term Stock Incentive Plan as of December 31, 1996 held by the Named
Executive Officers. No options were exercised during fiscal 1996 by such
executives.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
---------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FISCAL
AT FISCAL YEAR-END (#) YEAR-END ($)(1)
------------------------- ------------------------- -------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen W. Bershad...... 2,940 1,260 20,874 8,946
Raymond F. Kunzmann..... 2,800 1,200 21,000 9,000
Elliot N. Konopko(2).... 8,100 900 60,750 6,750
Kenneth F. Stern........ 1,400 600 10,500 4,500
</TABLE>
- -------
(1) Market value of underlying securities at December 31, 1996 based on a per
share value of $11.25 less the aggregate exercise price.
(2) Mr. Konopko was Vice President--General Counsel and Secretary of the
Company from March 1990 until his resignation on June 18, 1997. On June 2,
1997, Mr. Konopko exercised all his 9,000 options for an aggregate
exercise amount of $33,750.
INCENTIVE PLANS
An Annual Incentive Plan and a Supplemental Revenue Growth Incentive Plan
have been established by the Company to provide additional incentive
compensation which is based on the Company's performance.
Under the Annual Incentive Plan, a payment may be made to many of the
Company's employees based on the achievement of certain consolidated or
individual business unit performance criteria, including, among other things,
operating income, bookings and return on investment. Distributions under this
plan are made in cash annually after the close of each fiscal year.
During 1996, the Board of Directors of the Company adopted a Supplemental
Revenue Growth Incentive Plan under which certain management employees of the
Company became eligible for future payments, contingent upon the Company
achieving certain net sales growth objectives over the three-year period 1996
to 1998. Awards will be earned following the conclusion of any fiscal year
where net sales growth, adjusted to take into account structural changes such
as acquisitions and dispositions, over the higher of (i) net sales for a base
period which in general reflects 1995 net sales and (ii) the highest net sales
for any subsequent fiscal year, is at least equal to the targeted growth
percentage established by the Company's Chief Executive Officer. If net sales
growth exceeds the targeted growth percentage, a participant receives a two
percent increase in his award for each one percent increase in net sales
growth over the targeted growth percentage. Incentive compensation earned for
any year under this plan vests in one-third increments 12 months, 24 months
and 36 months after the date of the grant and is paid at each vesting date in
shares of Common Stock or, in certain circumstances, in cash. The number of
shares of Common Stock earned for any year is determined by dividing the
dollar value of the award earned in that year by the price of the Common Stock
on the last day of the year for which the award was earned.
14
<PAGE>
The table below sets forth certain information relating to grants to the
Named Executives under the Supplemental Revenue Growth Incentive Plan.
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OTHER PERIOD NON-STOCK PRICE BASED PLANS
SHARES, UNITS OR UNTIL MATURATION ------------------------------------
NAME OTHER RIGHTS (1) OR PAYOUT THRESHOLD TARGET MAXIMUM(1)
---- ---------------- ---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Stephen W. Bershad...... 1996-1998 $ 90,000 $ 90,000
Raymond F. Kunzmann..... 1996-1998 43,500 43,500
Kenneth F. Stern........ 1996-1998 40,500 40,500
</TABLE>
- -------
(1) See discussion above.
TELETRAC, INC. MANAGEMENT INCENTIVE COMPENSATION PLAN
Under the Teletrac, Inc. Management Incentive Compensation Plan (the
"Teletrac Plan"), Teletrac, Inc. ("Teletrac") may make certain cash bonus
awards ("Awards") to employees of Teletrac who are senior officers, member of
senior management or key employees and consultants to Teletrac. The purpose of
the Teletrac Plan is to advance the best interest of Teletrac and the Company
by providing eligible employees with additional incentives to promote the
success of Teletrac's business, to increase their vested interest in the
success of Teletrac's business and to encourage them to remain employees of
Teletrac. The Teletrac Plan was ratified and approved by Teletrac's
shareholders on May 30, 1997. Under the Teletrac Plan, Teletrac must establish
incentive compensation pools ("Incentive Compensation Pools") for each of the
fiscal years ending December 31, 1997 and December 31, 1998 and the thirteen-
month period ending January 31, 2000 (each an "Incentive Period") and, under
certain circumstances, additional incentive compensation pools ("Additional
Incentive Compensation Pools") for the same periods. The Incentive
Compensation Pools and the Additional Incentive Compensation Pools are
determined based on a percentage of the excess of "gross profits" (as defined
in the Teletrac Plan) for each Incentive Period over a base amount. The
aggregate amount of the Incentive Compensation Pools and the Additional
Incentive Compensation Pools shall not exceed $3.0 million and $1.1 million,
respectively. Subject to the next succeeding sentence, Mr. Howitt, the
President of Teletrac and a director of the Company, is entitled to a
percentage of annual payments, not to exceed 43%, from the Incentive
Compensation Pool and the Additional Incentive Compensation Pool, if
applicable, as determined by the committee administering the Teletrac Plan. In
addition, in accordance with employment agreements between Teletrac and
Messrs. Barker and Howitt, if such agreements are terminated for certain
reasons, each of them will be entitled to receive an Award of 40% of all
amounts payable to them under the Teletrac Plan after such termination date.
The Teletrac Plan is administered by a committee comprised solely of Mr.
Howitt as long as he is President and a full-time employee of Teletrac and, in
the event Mr. Howitt shall cease to be the President and a full-time employee
of Teletrac, by David Barker as long as he is Vice President--Research and
Development and at least a half-time employee of Teletrac and thereafter by
individuals appointed by the Board of Directors of Teletrac. Subject to
certain exceptions, including exceptions for amendments that adversely affect
a participant's right (without consent) to receive Awards under the Teletrac
Plan, the Board of Directors of Teletrac may amend the Teletrac Plan from time
to time or suspend or terminate it entirely. In the event Teletrac sells all
or substantially all of its assets, the participants in the Teletrac Plan are
entitled to receive an amount equal to $4.1 million less all amounts
previously paid as Incentive Compensation Pools and Additional Incentive
Compensation Pools unless certain conditions are satisfied.
401(K) PLANS
Axsys currently maintains several 401(k) salary reduction plans (the "401(k)
Plans") which are intended to qualify under Sections 401(a) and 401(k) of the
Internal Revenue Code. Generally, all employees who are not members
15
<PAGE>
of collective bargaining groups and who are 21 years of age or older are
eligible to participate in a 401(k) Plan on the first calendar day of the
month immediately following the month in which they complete 1,000 hours of
service. All eligible executive officers have elected to participate in a
401(k) Plan.
Eligible employees electing to participate in a 401(k) Plan may defer a
portion of their compensation on a pre-tax basis, by contributing a percentage
thereof to the 401(k) Plan. The minimum contribution ranges from one to three
percent of annual gross pay. The maximum is prescribed by the Tax Reform Act
of 1986. The limit for 1996 was $9,500 and will be $9,500 in 1997. The Company
made matching contributions ranging from up to four to five percent of the
employee's gross earnings in 1996. Eligible employees who elect to participate
in a 401(k) Plan are generally vested in the Company's matching contribution,
which may be in shares of Common Stock, according to the following schedule:
less than 1 year of service--0%; 1 year of service--20%; 2 years of service--
40%; 3 years of service--60%; 4 years of service--80%; and 5 years of
service--100%.
STOCK INCENTIVE PLAN
For a description of the Vernitron Corporation Long-Term Stock Incentive
Plan, see Proposal Three of this Proxy Statement.
As of June 30, 1997, options to acquire 48,600 shares of Common Stock were
outstanding under the Stock Incentive Plan. The Options granted prior to 1997,
unless extended, in general terminate seven years after the date of grant and
are exercisable at $3.75 per share.
The following table sets forth certain information concerning individual
grants of stock options granted pursuant to the Stock Incentive Plan during
1997 (through June 30) to the Named Executives and to Mr. Mattielli. Except as
set forth in the footnote to the foregoing table, no options were exercised in
that period by such executive officers.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES EXERCISE OR
OPTIONS (THROUGH BASE PRICE
NAME GRANTED (#)(1) JUNE 30, 1997) ($/SH) EXPIRATION DATE
- ---- -------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C>
Stephen W. Bershad...... 8,400(2) 22.6% $ 4.15 2/11/2002
2,000 9.5 16.50 2/11/2002
Raymond F. Kunzmann..... 2,000 9.5 15.00 2/11/2007
Elliot N. Konopko(3).... 2,000 9.5 15.00 2/11/2007
Louis D. Mattielli...... 4,000 19.0 17.75 6/17/2007
Kenneth F. Stern........ 2,000 9.5 15.00 2/11/2007
</TABLE>
- -------
(1) These options are exercisable to the extent of 40% thereof after one year
from the date of grant and an additional 30% at the end of each year
thereafter.
(2) Represents the extension of options which were originally granted in
September 1991.
(3) These options were forfeited as a result of Mr. Konopko's resignation on
June 18, 1997.
In 1997, each of Messrs. Fried and Fiorelli also were granted options to
purchase 2,000 shares of Common Stock at an exercise price of $15.00 per share
with an expiration date of February 11, 2007, which were fully vested at the
date of grant.
TERMINATED PENSION PLAN
The Company has a defined benefit pension plan which was terminated on July
31, 1989. The estimated annual benefits payable upon retirement to Mr.
Bershad, the only executive officer participating in such plan, are $22,121,
assuming retirement at age 65.
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Bershad, a member of the Compensation Committee, is Chairman of the
Board and Chief Executive Officer of the Company.
AGREEMENTS WITH DIRECTORS AND OFFICERS
The Company has entered into indemnification agreements with its directors
and certain officers in order to induce them to continue to serve as directors
and officers of the Company, indemnifying them for any and all liabilities
incurred by them arising out of their service as directors or officers, other
than liabilities arising out of conduct which has been determined in a final
adjudication to constitute bad faith or a knowing violation of law or receipt
by such person of an improper personal benefit. The rights to indemnification
under such agreements are in addition to any rights to indemnification
contained in the Company's Certificate of Incorporation, or By-Laws, which
provide for indemnification under certain circumstances.
The Company has entered into severance agreements with each of Messrs.
Kunzmann and Stern dated June 10, 1996. Under each of these agreements, the
Company has agreed to pay each of Messrs. Kunzmann and Stern up to one year's
base compensation, in accordance with its customary payroll practices, and
certain other benefits in the event of their respective termination by the
Company other than for cause. However, such amounts would be reduced by any
salary received from another employer, if any, in the period concerned.
KEY MAN INSURANCE
The Chairman of the Board and Chief Executive Officer is a key employee of
the Company and his contribution to the Company has been and will continue to
be a significant factor in the Company's success. The loss of his services
could adversely affect the Company's business, financial condition or results
of operations. The Company maintains, and is the beneficiary of, a life
insurance policy on his life. The face amount of such policy is $5.0 million.
INDEPENDENT ACCOUNTANTS
The Board has selected Arthur Andersen LLP as independent accountants to
audit the consolidated books and accounts of the Company for the period
beginning January 1, 1997 and ending December 31, 1997. A representative of
Arthur Andersen LLP will not be present at the Meeting.
STOCKHOLDER PROPOSALS
Any holder of Common Stock who wishes to present a proposal for inclusion in
the Company's proxy statement for the next annual meeting of stockholders must
comply with the rules and regulations of the Securities and Exchange
Commission (the "Commission") then in effect. Such proposal must be received
by the Secretary of the Company's principal executive office, 645 Madison
Avenue, New York, New York, 10022, no later than January 28, 1998, in order to
be considered for inclusion in the Company's proxy statement for the next
annual meeting.
In addition, the By-laws of the Company require advance notice for any
stockholder proposal to be considered at the annual meeting. In general,
written notice must be received by the Secretary of the Company at its
principal executive office, not less than 60 days nor more than 90 days prior
to the date of the scheduled annual meeting and
17
<PAGE>
must contain information specified in the By-laws concerning the matter to be
brought before such meeting. Any stockholder who wishes to obtain a copy of
the By-laws will be furnished one without charge upon written request to the
Secretary of the Company at its principal executive office.
The preceding two paragraphs are intended to summarize the applicable By-
laws of the Company and are qualified in their entirety by reference to those
By-laws.
By Order of the Board of Directors,
/s/ Louis D. Mattielli
Louis D. Mattielli
Secretary
September 23, 1997
18
<PAGE>
EXHIBIT A
PROPOSAL ONE
The Company proposes to amend its Certificate of Incorporation to increase
the number of authorized shares of Common Stock by deleting the first sentence
of Section 4. (a) and inserting in its place the following:
"The aggregate number of shares which the Corporation shall have
authority to issue is 34,000,000, of which 4,000,000 shares, par value $.01
per share, shall be designated "Preferred Stock,' and 30,000,000 shares,
par value $.01 per share, shall be designated "Common Stock."'
A-1
<PAGE>
EXHIBIT B
PROPOSAL TWO
The Company proposes to delete Section 8 from its Certificate of
Incorporation. Such Section currently provides as follows:
"8. A. Certain Restrictions on the Transfer of Stock. In order to
preserve the net operating loss carryovers, capital loss carryovers, and
business credit carryovers (the "Tax Benefits") to which the Corporation is
entitled pursuant to the Internal Revenue Code of 1986, as amended, or any
successor statute (collectively the "Code") and the regulations thereunder,
the following restrictions shall apply until December 31, 1994 unless the
Board of Directors shall fix an earlier or later date in accordance with
Paragraph G of this Section 8 (such date is sometimes referred to herein as
the "Expiration Date"):
(1) From and after the effectiveness of the amendment to the
Certificate of Incorporation of the Corporation adding this Section 8,
no person other than the Corporation shall transfer any shares of stock
of the Corporation (other than stock described in Section 1504(a)(4) of
the Code or any successor statute, or stock that is not so described
solely because it is entitled to vote as a result of divided arrearages)
to any person to the extent that such transfer, if effective, would
cause the Ownership Interest Percentage of the transferee or any other
person to increase about four and one-half (4.5) percent, whether or not
said transferee or other person held stock of the Corporation in excess
of such percentage before such transfer. For purposes of this Section:
(i) "person" refers to any individual, corporation, estate, trust,
association, company, partnership, joint venture, or similar
organization; (ii) a person's Ownership Interest Percentage shall be the
sum of such person's direct ownership interest in the Corporation as
determined under Treasury Regulation Section 1.382-2T(f)(8) or any
successor regulation and such person's indirect ownership interest in
the Corporation as determined under Treasury Regulation Section 1.382-
2T(f)(15) or any successor regulation, except that, for purposes of
determining a person's director ownership interest in the Corporation,
any ownership interest held by such person in the Corporation described
in Treasury Regulation Section 1.382-2T(f)(18)(iii)(A) or any successor
regulation shall be treated as stock of the Corporation and for purposes
of determining a persons indirect ownership interest in the Corporation,
Treasury Regulations Sections 1.382-2T(g)(2), 1.382-2T(h)(2)(iv) and
1.382-2T(h)(6)(iii) or any successor regulations shall not apply and any
stock that would be attributed to such person pursuant to the option
attribution rule of Treasury Regulation Section 1.382-2T(h)(4) or any
successor regulation, if to do so would result in an ownership change,
shall be attributed to such person without regard to whether such
attribution results in an ownership change; (c) "transfer" refers to any
means of conveying legal or beneficial ownership of shares of stock of
the Corporation, whether such means is direct or indirect, voluntary or
involuntary, including, without limitation, the transfer of ownership of
any entity that owns shares of stock of the Corporation, and
"transferee" means any person to whom stock of the Corporation is
transferred.
(2) Nothing in this Section 8 shall be construed to limit or restrict
the Board of Directors, subject to the exercise of its fiduciary duties
under applicable law, from approving any amendment to or waiving any
provision of or taking any other action relating to this Section.
Without limiting the generality of the foregoing, any transfer of shares
of stock of the Corporation that would otherwise be prohibited pursuant
to the preceding subparagraph shall nonetheless be permitted if
information relating to a specific proposed transaction is presented to
the Board of directors and the Board determines that such transaction
will not jeopardize the Tax Benefits, based upon an option of legal
counsel selected by the Board to that effect. In
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addition, this Section 8 shall not apply to transfer of shares of
Preferred stock of the Corporation outstanding on the effective date of
this Section 8.
B. Attempted Transfer in Violation of Transfer Restrictions. Unless
approval of the Board of Directors is obtained as provided in subparagraph
(a)(2) of this Section 8, any attempted transfer of shares of stock of the
Corporation in excess of the shares that could be transferred to the
transferee without restriction under subparagraph (a)(1) of this Section 8
is not effective to transfer ownership of such excess shares (the
"Prohibited Shares") to the purported acquirer thereof (the "Purported
Acquirer"). Who shall not be entitled to any rights as a shareholder of the
Corporation with respect to the Prohibited Shares (including, without
limitation, the right to vote or to received dividends with respect
thereto. All rights with respect to the Prohibited Shares shall remain the
property of the person who initially purported to transfer the Prohibited
Shares to the Purported Acquirer (the "Initial Transferor") until such time
as the Prohibited Shares are resold as set forth in subparagraph 3(1) or
subparagraph 3(2) of this Section 8. The Purported Acquirer, by acquiring
ownership of shares of stock of the Corporation that are not prohibited
shares shall be deemed to have consented to all the provisions of this
Section 8 and to have agreed to act as prohibited in the following
subparagraph (b)(1).
(1) Upon demand by the Corporation, the Purported Acquirer shall
transfer any certificate or other evidence of purported ownership of the
Prohibited Shares within the Purported Acquirer's possession or control,
along with any dividends or other distributions paid by the Corporation
with respect to the Prohibited Shares that were received by the
Purported Acquirer (the "Prohibited Distributions"), to an agent
designated by the Corporation (the "Agent"). If the Purported Acquirer
has sold the Prohibited Shares to an unrelated party in an arms-length
transaction after purported acquiring them, the Purported Acquirer shall
be deemed to have sold the Prohibited Shares as agent for the Initial
Transferor, and in lieu of transferring the Prohibited Shares and
Prohibited Distributions to the Agent shall transfer to the Agent the
Prohibited Distributions and the proceeds of such sale (the "Resale
Proceeds") except to the extent that the Agent grants written permission
to the Purported Acquirer to retain a portion of the Resale Proceeds not
exceeding the amount that would have been payable by the agent to the
Purported Acquirer pursuant to the following subparagraph (b)(2) if the
Prohibited Shares had been sold by the Agent rather than by the
Purported Acquirer. Any purported transfer of the Prohibited Shares by
the Purported Acquirer other than a transfer described in one of the two
preceding sentences shall not be effective or transfer any ownership of
the Prohibited Shares.
(2) The Agent shall sell in an arms-length transaction (through the
New York Stock Exchange if possible) any Prohibited Shares transferred
to the Agent by the Purported Acquirer, and the proceeds of such sale
(the "Sales Proceeds"), or the Resale Proceeds, if applicable, shall be
allocated to the Purported Acquirer up to the following amount; (i)
where applicable, the purported purchase price paid or value of
consideration surrendered by the Purported Acquirer for the Prohibited
Shares, and (ii) where the purported transfer of the Prohibited Shares
to the Purported Acquirer was by gift, inheritance, or any similar
purported transfer, the fair market value of the Prohibited Shares at
the time of such purported transfer. Subject to the succeeding
provisions of this subparagraph, any Resale Proceeds or Sales proceeds
in excess of the amount allocable to the Purported Acquirer pursuant to
the preceding sentence, together with any prohibited distributions,
shall be the property of the Initial Transferor. If the identify of the
Initial Transferor cannot be determined by the Agent through inquiry
made to the Purported Acquirer, the Agent shall publish appropriate
notice (in the Wall Street Journal, if possible) for seven consecutive
business days in an attempt to identify the Initial Transferor in order
to transmit any Resale Proceeds or Sales Proceeds or Prohibited
Distributions or Sales proceeds or Prohibited Distributions due to the
Initial Transferor pursuant to this subparagraph. The Agent may also
take, but is not required to take, other reasonable actions to attempt
to identify the Initial
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Transferor. If after 90 days following the final publication of such
notice the Initial Transferor has not been identified, any amounts due
to the Initial Transferor pursuant to this subparagraph may be paid over
to a court or government agency, if applicable law permits, or otherwise
shall be transferred to an entity designed by the Corporation that is
described in Section 501(c)(3) of the Code. In no event shall any such
amounts due to the Initial Transferor inure to the benefit of the
Corporation or the Agent, but such amounts may be used to cover expected
(including but limited to the expense of publication) incurred by the
Agent in an attempt to identify the Initial Transferor.
C. Prompt Enforcement Against Purported Acquirer. Within thirty (30)
business days of learning of a purported transfer of Prohibited Shares to a
Purported Acquirer, the Corporation throughout its Secretary shall demand
that the Purported Acquirer surrender to the Agent the certificates
representing the Prohibited Shares, or any Resale Proceeds, and any
Prohibited Distributions, and if such surrender is not made by the
Purported Acquirer within thirty (30) business days from the date of such
demand, the Corporation shall institute legal proceedings to comply such
transfer; provided, however, that nothing in this Paragraph C shall
preclude the Corporation in its discretion from immediately bringing legal
proceedings without a prior demand, and also provided that failure of the
Cooperation to act within that time period set out in this Paragraph shall
not constitute a waiver of any right of the Corporation to compel any
whatever of any right of the Corporation, to compel any transfer required
by subparagraph (b)(1) of this Section 8.
D. Additional Actions to Prevent Violation or Attempted Violation. Upon a
determination by the Board of Directors that there has bee or is threatened
a purported transfer o Prohibited Shares to a Purported Acquirer, the Board
of Directors may take such action in addition to any action required by the
preceding Paragraph as it deems advisable to give effect to the provisions
of this Section 8, including, without limitation, refusing to give effect
on the books of this Corporation to such purported transfer or instituting
proceedings to enjoin such purported transfer.
E. Obligation to Provide Information. The Corporation may require as a
condition to the registration of the transfer of any shares of its stock
that the proposed transferee furnish to the Corporation all information
reasonably requested by the Corporation with respect to all the proposed
transferee's direct or indirect ownership interests in, or options to
acquire, stock of the Corporation.
F. Legends. All certificates evidencing ownership of shares of stock of
this corporation that are subject to the restrictions on transfer contained
in this Section 8 shall bear a conspicuous legend referencing the
restrictions set forth in this Section 8.
G. Further Actions. Nothing contained in this Section 8 shall limit the
authority of the Board of Directors to take such other action to the extent
permitted by law as it deems necessary or advisable to protect the
Corporation and the interests of the holders of its securities in
preserving the Tax Benefits. Without limited the generality of the
foregoing or the first sentence of Section 8(a)(2), in the event of a
change in law making one or more of the following actions necessary or
desirable, the Board of Directors may (i) accelerate or extend the
Expiration Date, (ii) modify the Ownership Interest Percentage in the
Corporation specified in the first sentence of subparagraph (a)(i), or
(iii) modify the definitions of any terms set forth in this Section 8;
provided that the Board of directors shall determine in writing that such
acceleration, extension, change or modification is reasonably necessary or
desirable to preserve the Tax Benefits under the Code and the regulations
thereunder or that the continuation of these restrictions is no longer
reasonably necessary for the preservation of the Tax Benefits, which
determination shall be based upon an opinion of legal counsel to the
Corporation and which determination shall be filed with the Secretary of
the Corporation and mailed by the Secretary to shareholders of this
Corporation within ten days after the date of such determination."
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EXHIBIT C
PROPOSAL THREE
AMENDED AND RESTATED
LONG-TERM STOCK INCENTIVE PLAN
1. Purpose. The Purpose of the Plan is to provide additional incentive to
those directors, officers and other employees of the Company and its
Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts
will result in the long-term growth and profitability of the Company. The
purpose of the Plan is also to secure for the Company and its stockholders the
benefits of the incentive inherent in increased common stock ownership by the
members of the Board who are not employees of the Company or any of its
subsidiaries. To accomplish such purposes, the Plan provides that the Company
may grant Incentive Stock Options, Nonqualified Stock Options, Restricted
Stock Awards, Performance Units or Stock Appreciation Rights.
2. Definitions. For purposes of this Plan:
(a) "Award" means a grant of Restricted Stock, Performance Units or Stock
Appreciation Rights, or any or all of them.
(b) "Award Agreement" means the written agreement between the Company and
a Grantee evidencing the grant of an Award and setting forth the terms and
conditions thereof.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means the willful failure by an Optionee or Grantee to
perform his duties with the Company or with the Subsidiary or the willful
engaging in conduct which is injurious to the Company or any Subsidiary,
monetarily or otherwise.
(e) "Change in Capitalization" means any increase, reduction, change or
exchange of Shares for a different number or kind of shares or other
securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means a committee, consisting of at least two directors
of the Company, which is appointed by the Board to administer the Plan and
to perform the functions set forth herein; provided, however, that if the
Committee consists of less than the entire Board, each member shall be a
"Non-Employee Director" within the meaning of Exchange Act Rule 16b-3;
provided, further, however, that to the extent necessary for any Option or
Award intended to qualify as performance-based compensation under Section
162(m) of the Code to so qualify, each member of the Committee shall be an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
(h) "Company" means Axsys Technologies, Inc., a Delaware corporation.
(i) "Disability" means the condition which results when an individual has
become permanently and totally disabled within the meaning of Section
22(e)(3) of the Code.
(j) "Eligible Participant" means any director, officer or employee of the
Company or a Subsidiary designated by the Committee as eligible to receive
Options or Awards subject to the conditions set forth herein.
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(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means the fair market value of the Shares as
determined by the Committee in its sole discretion; provided, however, that
(A) if the Shares are admitted to trading on a national securities
exchange, or if the Shares are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or
other comparable quotation system and have been designated as a National
Market System ("NMS") security, Fair Market Value on any data shall be the
mean between the highest and lowest quoted selling prices reported for the
Shares on such exchange system on such date, or, if there were no sales on
such date but there were sales on dates within a reasonable period both
before and after such data, the Fair Market Value shall be determined by
taking a weighted average of the means between the highest and lowest sales
on the nearest date before and the nearest date after such date (weighted
inversely by the respective numbers of trading days between the selling
dates and such date), or (B) if the Shares are admitted to quotation on
NASDAQ and have not been designated a NMS security, Fair Market Value on
any date shall be the average of the highest bid and lowest asked prices of
the Shares on such system on such date.
(m) "Grantee" means a person to whom an Award has been granted under the
Plan.
(n) "Incentive Stock Option" means an Option that is intended to satisfy
the requirements of Section 422 of the Code and is designated an Incentive
Stock Option at the time of grant.
(o) "Nonqualified Stock Option" means an Option which is designated at
the time of grant as not constituting an Incentive Stock Option.
(p) "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or either or both of them.
(q) "Option Agreement" means the written agreement between the Company
and an Optionee evidencing the grant of an Option and setting forth the
terms and conditions thereof.
(r) "Optionee" means a person to whom an Option has been granted under
the Plan.
(s) "Parent" means any corporation that, with respect to the Company, is
described in section 424(e) of the Code.
(t) "Performance Unit" means a performance unit granted under Section 9
of the Plan.
(u) "Plan" means the Vernitron Corporation Long-Term Stock Incentive Plan
as set forth in this instrument and as it may be amended from time to time.
(v) "Restricted Stock" means Shares issued or transferred to an Eligible
Participant which are subject to restrictions as provided in Section 8
hereof.
(w) "Shares" means the common stock, par value $.01 per shares, of the
Company (including any new, additional or different stock or securities
resulting from a Change in Capitalization).
(x) "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of shares of Common Stock as provided
in Section 7 hereof.
(y) "Subsidiary" means any corporation that, with respect to the Company,
is described in Section 424(f) of the Code.
(z) "Successor Corporation" means a corporation, or a Parent or
Subsidiary thereof, which issues or assumes a stock option in a transaction
to which Section 424(a) of the Code applies.
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3. Administration.
(a) The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum and a majority of a quorum may authorize
any action. No member of the Committee shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, the Options or the Awards, and all members of the Committee shall be
fully indemnified and held harmless by the Company with respect to any such
action, determination or interpretation.
(b) Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(1) to determine those Eligible Participants to whom Options shall be
granted under the Plan and the number of Shares subject to Incentive Stock
Options and/or Nonqualified Options to be granted to each Eligible
Participant and to prescribe the terms and conditions (which need not be
identical) of each Option, including the purchase price per share of each
Option;
(2) to select those Eligible Participants to whom Awards shall be granted
under the Plan and to determine the number of Performance Units, shares of
Restricted Sock and/or Stock Appreciation Rights to be granted pursuant to
each Award, the terms and conditions of each Award, including the
restrictions or performance criteria relating to such units, shares or
rights, the purchase price per share, if any, of Restricted Stock, the
maximum value, if any, of the amount payable pursuant to each Performance
Unit and whether Stock Appreciation Rights will be granted alone or in
conjunction with an Option;
(3) to construe and interpret the Plan and the Options and Awards granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all decisions
and determinations by the Committee in the exercise of this power shall be
final and binding upon the Company or a Subsidiary, the Optionees and the
Grantees, as the case may be;
(4) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee or Grantee without constituting a termination
of employment or service for purposes of the Plan; and
(5) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interest of the Company
with respect to the Plan.
4. Stock Subject to Plan.
(a) The maximum number of Shares that may be issued or transferred pursuant
to Options and Awards under this Plan is 400,000 (or the number and kind of
shares of stock or other securities which are substituted for those Shares or
to which those Shares are adjusted upon a Change in Capitalization) and the
Company shall reserve for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly out
of each, such number of Shares as shall be determined by the Board.
(b) Whenever any outstanding Option or portion thereof expires, is cancelled
or is otherwise terminated (other than by exercise of the Option or any
related Stock Appreciation Right), the shares of Common Stock allocable to the
unexercised portion of such Option may again be the subject of Options and
Awards hereunder.
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(c) Whenever any Shares subject to an Award or Option are resold to the
Company, or are forfeited for any reason pursuant to the terms of the Plan, or
any Shares are delivered to pay the exercise price of an Option, any such
Shares may again be the subject of Options and Awards hereunder.
(d) An executive officer may not be granted Options and Awards in the
aggregate in respect of more than 60,000 Shares per calendar year and no
Eligible Participant (other than an executive officer) may be granted Options
and Awards in the aggregate in respect of more than 60,000 Shares per calendar
year.
5. Eligibility. Subject to the provisions of the Plan, the Committee shall
have full and final authority to select those Eligible Participants who will
receive Options and/or Awards; provided, however, that no Eligible Participant
shall receive any Incentive Stock Option unless he is an employee of the
Company or a Subsidiary at the time the Incentive Stock Option is granted.
6. Stock Options. The Committee may grant Options in accordance with the
Plan, the terms and conditions of which shall be set forth in an Option
Agreement. Each Option and Option Agreement shall be subject to the following
conditions:
(a) Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall be
set forth in the Option Agreement.
(b) Duration. Options granted hereunder shall be for such term as the
Committee shall determine. The Committee may, subsequent to the granting of
any Option, extend the term thereof.
(c) Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will or the
laws of descent and distribution, and an Option may be exercised during the
life time of such Optionee only by the Optionee or his guardian or legal
representative. The terms of such Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of the
Optionee.
(d) Vesting. Subject to Section 12(c) hereof, each Option shall be
exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Option
Agreement. To the extent not exercised, installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the Option expires. The Committee
may accelerate the exercisability of any Option or portion thereof at any
time.
(e) Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number
of Shares to be purchased and accompanied by payment therefor and otherwise
in accordance with the Option Agreement pursuant to which the Option was
granted. The purchase price for any Shares purchased pursuant to the
exercise of an Option shall be paid in full upon such exercise in cash, by
check, or at the discretion of the Committee and upon such terms and
conditions as the Committee shall approve, by transferring Shares to the
Company. Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Option Agreement evidencing the
Option and the Option Agreement evidencing any related Stock Appreciation
Right to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such agreement(s), to the Optionee. No less
than 100 Shares may be purchased at any time upon the exercise of an Option
unless the number of Shares so purchased constitutes the total number of
Shares then purchasable under the Option.
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(f) Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered the shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of
records on the books of the Company. Thereupon, the Optionee shall have
full voting, dividend and other ownership rights with respect to such
Shares.
(g) Termination of Employment. In the event that an Optionee ceases to be
employed by the Company or any Subsidiary, any outstanding Options held by
such Optionee shall, unless the Option Agreement evidencing such Option
provides otherwise, terminate as follows:
(1) If the Optionee's termination of employment is due to his death or
Disability, the Option (to the extent exercisable at the time of the
Optionee's termination of employment) shall be exercisable for a period
of one (1) year following such termination of employment, and shall
thereafter terminate;
(2) If the Optionee's termination of employment is by the Company or a
Subsidiary for Cause, the Option shall terminate on the date of the
Optionee's termination of employment;
(3) (a) If the Optionee's termination of employment is by the Company
or any Subsidiary for any other reason (including an Optionee's ceasing
to be employed by a Subsidiary as a result of the sale of such
Subsidiary or an interest in such Subsidiary), the Option (to the extent
exercisable at the time of the Optionee's termination of employment)
shall be exercisable for a period of ninety (90) days following such
termination of employment, and shall thereafter terminate; and
(b) If the Optionee's termination of employment is by the Optionee
(other than as set forth in paragraph (1) above) the Option (to the
extent exercisable at the time of the Optionee's termination of
employment) shall be exercisable for a period of ten (10) days following
such termination of employment and shall thereafter terminate; and
(4) If the Optionee's employment terminates due to Disability (as
described in paragraph (1) above) or under circumstances described in
paragraph (3) above, and the Optionee dies prior to the permissible
period of exercise for any outstanding Option then held by the Optionee,
the Option (to the extent exercisable at the time of the Optionee's
death) shall be exercisable for a period of one (1) year following the
Optionee's termination of employment, and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide, either at
the time an Option is granted or thereafter, that the Option may be
exercised after the periods provided for in this Section 6(g), but in no
event beyond the term of the Option.
(h) Subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options (to the
extent not exercised) and grant new Options in substitution therefor.
Notwithstanding the forgoing, no modification of an Option shall alter or
impair any rights or obligations under the Option without the Optionee's
consent.
7. Stock Appreciation Rights. The Committee may, in its discretion, either
alone or in connection with the grant of an Option, grant Stock Appreciation
Rights in accordance with the Plan, the terms and conditions of which shall be
set forth in an Award Agreement. If granted in connection with an Option, a
Stock Appreciation Right shall cover the same Shares covered by the Option (or
such lesser number of Shares as the Committee may determine) and shall, except
as provided in this Section 7, be subject to the same terms and conditions as
the related Option.
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(a) Time of Grant. A Stock Appreciation Right may be granted:
(1) at any time if unrelated to an Option; or
(2) if related to an Option, either at the time of grant, or at any
time thereafter during the term of the Option.
(b) Stock Appreciation Rights Related to an Option.
(i) Payment. A Stock Appreciation Right granted in connection with an
Option shall entitle the holder thereof, upon exercise of the Stock
Appreciation Right or any portion thereof, to receive payment of an
amount computed pursuant to Section 7(b)(iii).
(ii) Exercise. A Stock Appreciation Right granted in connection with
an Option shall be exercisable at such time or times and only to the
extent that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be
transferable. A Stock Appreciation Right granted in connection with an
Incentive Stock Option shall be exercisable only if the Fair Market
Value of a Share on the date of exercise exceeds the purchase price
specified in the related Incentive Stock Option.
(iii) Amount Payable. Except as otherwise provided in an Award
Agreement (as contemplated by Section 12(c)), upon the exercise of a
Stock Appreciation Right related to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the excess
of the Fair Market Value of a Share on the date of exercise of such
Stock Appreciation Right over the per Share purchase price under the
related Option, by (b) the number of Shares as to which such Stock
Appreciation Right is being exercised. Notwithstanding the foregoing,
the Committee may limit in any manner the amount payable with respect to
any stock Appreciation Right by including such a limit in the Award
Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(iv) Treatment of Related Options and Stock Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of
the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with
a Stock Appreciation Right or the surrender of such Option as may be
provided for in any Option Agreement, the Stock Appreciation Right shall
be cancelled to the extent of the number of Shares as to which the
Option is exercised or surrendered.
(v) Cumulative Exercise of Stock Appreciation Right and Option. The
Committee may provide, either at the time a Stock Appreciation Right is
granted in connection with a Nonqualified Stock Option or thereafter
during the term of the Stock Appreciation Right, that, upon exercise of
such Option or the surrender of the Option as may be provided for in any
Option Agreement, the Stock Appreciation Right shall automatically be
deemed to be exercised to the extent of the number of Shares as to which
the Option is exercised or surrendered. In such event, the Grantee shall
be entitled to receive the amount described in Section 7(b)(iii) or, if
otherwise provided for in the Award Agreement, as set forth therein, in
addition to the Shares acquired or cash received pursuant to the
exercise or surrender of the Option. The inclusion in an Award Agreement
evidencing a Stock Appreciation Right of a provision described in this
Section 7(b)(v) may be in addition to and not in lieu of the right to
exercise the Stock Appreciation Right as otherwise provided herein and
in the Award Agreement.
(c) Stock Appreciation rights Unrelated to an Option. The Committee may
grant to Eligible Participants Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall contain such
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terms and conditions as to exercisability, vesting and duration as the
Committee shall determine. Except as otherwise provided in an Award
Agreement (as contemplated by Section 12(c)), the amount payable upon
exercise of such Stock Appreciation Rights shall be determined in
accordance with Section 7(b)(iii), except that "Fair Market Value of a
Share on the date of the grant of the Stock Appreciation Right" shall be
substituted for "purchase price under the related Option."
(d) Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Award Agreement evidencing the Stock Appreciation
Right being exercised and the Option Agreement evidencing any related
Option to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such agreement(s) to the Grantee.
(e) Form of Payment. Payment of the amount determined under Sections
7(b)(iii) or 7(c), shall be made, at the sole discretion of the Committee,
either (i) solely in whole shares of Common Stock in a number determined at
their Fair Market Value on the date of exercise of the Stock Appreciation
Right, (ii) solely in cash, (iii) by delivery of a Note or other security,
or (iv) in a combination of any of the foregoing. If the Committee decides
to make full payment in Shares, and the amount payable results in a
fractional Share, payment for the fractional Share will be made in cash.
8. Restricted Stock. The Committee may grant Awards of Restricted Stock
which shall be evidenced by an Award Agreement between the Company and the
Grantee. Each Award Agreement shall contain such restrictions, terms and
conditions as the Committee may require and (without limiting the generality
of the foregoing) such Award Agreements may require that an appropriate legend
be placed on Share certificates. Awards of Restricted Stock shall be subject
to the following terms and provisions:
(a) Rights of Grantee.
(i) Shares of Restricted Stock granted pursuant to an Award hereunder
shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted and the purchase price, if any,
is paid by the Grantee, provided that the Grantee has executed an Award
Agreement evidencing the Award, an escrow agreement, appropriate stock
powers and any other documents which the Committee, in its absolute
discretion, may require as a condition to the issuance of such Shares.
If a Grantee shall fail to execute the Award Agreement evidencing a
Restricted Stock Award, an escrow agreement or appropriate blank stock
powers or shall fail to pay the purchase price, if any, for the
Restricted Stock, the Award shall be null and void. Shares issued in
connection with a Restricted Stock award shall be deposited together
with the stock powers with an escrow agent designated by the Committee.
Except as restricted by the terms of the Award Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the
rights of a stockholder with respect to such Shares, including the right
to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
(ii) If a Grantee receives any dividends or other distributions with
respect to any Shares which were awarded to him as Restricted Stock
prior to the lapsing of restrictions imposed upon such Shares, such
dividends and distributions shall be held by the escrow agent subject to
the restrictions and obligations (including forfeiture provisions)
provided by this Plan. Any such dividends and distributions shall be
held by the escrow agent for the account of the Grantee prior to the
earlier of (i) the lapsing of restrictions imposed upon such Shares and
(ii) the forfeiture of such Shares; and, upon the lapsing of such
restrictions, there shall
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be credited to the Grantee interest at a rate to be determined by the
Committee on any cash dividend paid thereon for the period held by the
escrow agent pursuant hereto.
(b) Non-Transferability. Until any restrictions upon the Shares of
Restricted Stock award to a Grantee shall have lapsed in the manner set
forth in Section 8(c), such Shares hall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated,
nor shall they be delivered to the Grantee. Upon the termination of
employment of the Grantee, all of such Shares with respect to which
restrictions have not lapsed shall be resold by the Grantee to the Company
at the same price, if any, paid by the Grantee for such Shares or shall be
forfeited and automatically transferred to and reacquired by the Company at
no cost to the Company if no purchase price had been paid for such Shares.
The Committee may also impose such other restrictions and conditions on the
Shares as it deems appropriate.
(c) Lapse of Restrictions.
(i) Restrictions upon Shares of Restricted Stock awarded hereunder
shall lapse at such time or times and on such terms, conditions and
satisfaction of performance criteria as the Committee may determine;
provided, however, that the restrictions upon such Shares shall lapse
only if the Grantee on the date of such lapse is then and has
continuously been an employee of the Company or a Subsidiary from the
date the Award was granted.
(ii) In the event of termination of employment as a result of the
death or Disability of a Grantee, the Committee, in its absolute
discretion, may determine that the restrictions upon some or all Shares
of Restricted Stock awarded to the Grantee shall thereupon immediately
lapse. The Committee may also decide at any time, in its absolute
discretion and on such terms and conditions as it deems appropriate, to
remove or modify the restrictions upon Shares of Restricted Stock
awarded hereunder.
(d) Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions.
9. Performance Units. The Committee may grant Performance Units, the terms
and conditions of which shall be set forth in an Award Agreement between the
Company and the Grantee. Each Performance Unit shall represent the right to
receive a Share, or a cash payment equal to the Fair Market Value thereof,
contingent upon the Company's attainment of specified performance objectives
within a specified award period. Each Award Agreement shall specify the number
of the Performance Units to which it relates, the performance objectives which
must be satisfied in order for the Performance Units to vest, and the award
period within which such objectives must be satisfied.
(a) Performance Objectives. Performance objectives may be expressed in
terms of (a) net earnings or net worth, (b) return on equity or assets, (c)
earnings per Share, (d) Share price, (e) pre-tax profits, (f) gross
revenues, (g) EBITDA, (h) dividends, (i) market share or market penetration
or (j) any combination of the foregoing, and may be determined before or
after accounting changes, special charges, foreign currency effects,
acquisitions, divestitures or other extraordinary events. Performance
objectives may be absolute or relative and may be expressed in terms of a
progression within a specified range, with the Grantee being entitled to
all Performance Units covered by an Award only in the event a specified
maximum objective is met or surpassed but being entitled to a percentage of
such Performance Units in the event a specified minimum objective is met or
surpassed and to increasing percentages of such Performance Units in the
event specified intermediate objectives are met or surpassed.
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(b) Vesting and Forfeiture. A Grantee shall become vested with respect to
the Performance Units to the extent that the performance objectives set
forth in the Award Agreement are satisfied within the award period. Subject
to the terms of any Award Agreement (as contemplated by Section 12(c)
hereof), if the specified performance objectives are not satisfied within
the award period, the Grantee's rights with respect to the Performance
Units shall be forfeited.
(c) Payment of Awards. Subject to the terms of any Award Agreement (as
contemplated by Section 12(c)), payments to Grantees in respect of vested
Performance Units shall be made within the later of (x) 2 weeks after the
availability of financial statements for the award period to which such
Award relates; provided, however, that prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Performance
Unit intended to qualify as performance-based compensation under Section
162(m) of the Code, the Committee shall certify in writing that the
applicable performance objectives have been satisfied. Such payments may be
made entirely in Shares, entirely in cash, or in a combination of Shares
and cash, in each case as the Committee shall determine. Except as provided
in the terms of any Award Agreement (as contemplated by Section 12(c)), if
payment is made in the form of cash, the amount payable in respect of any
Share shall be equal to the Fair Market Value of such Share on the last day
of the award period.
(d) Termination of Employment. In the event that a Grantee ceases to be
employed by the Company or a Subsidiary prior to the expiration of an award
period for any reason, any nonvested Performance Units previously awarded
to said Eligible Participant shall be forfeited unless the Committee in its
discretion determines that some part or all of said Performance Units shall
continue in effect under the Plan to the extent the applicable performance
objectives are satisfied within the award period.
(e) Non-transferability. No amounts payable under this Plan in respect of
Performance Units shall be transferable by the Grantee otherwise than by
will or by the laws of descent and distribution provided that the Grantee
may designate a beneficiary to receive such amounts in the event of the
Grantee's death.
10. Loans.
(a) The Company or any Subsidiary may make loans to a Grantee or Optionee
in connection with the purchase of Share pursuant to an Award or in
connection with the exercise of an Option, subject to the following terms
and conditions and such other terms and conditions not inconsistent with
the Plan including the rate of interest, if any, as the Committee shall
impose from time to time.
(b) No loan made under the Plan shall exceed the sum of (i) the aggregate
purchase price payable pursuant to the Option or Award with respect to
which the loan is made plus (ii) the amount of the reasonably estimated
income taxes payable by the Optionee or Grantee with respect to the Option
or Award. In no event may any such loan exceed the Fair Market Value, at
the date of exercise, of any such Shares.
(c) No loan shall have an initial term exceeding ten (10) years;
provided, that loans under the Plan shall be renewable at the discretion of
the Committee; and provided, further, that the indebtedness under each loan
shall become due and payable, as the case may be, on a date no later than
(i) one (1) year after termination of the Optionee's or Grantee's
employment due to death, retirement or Disability, or (ii) the date of
termination of the Optionee's or Grantee's employment for any reason other
than death, retirement or Disability.
(d) Loans under the Plan may be satisfied by an Optionee or Grantee, as
determined by the Committee, in cash or, with the consent of the Committee,
in whole or in part by the transfer to the Company of Shares whose Fair
Market Value on the date of such payment is equal to the cash amount due
and payable under such loans.
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(e) A loan shall be secured by a pledge of Shares with a Fair Market
Value of not less than the principal amount of the loan. After partial
repayment of a loan, pledged Shares no longer required as security may, at
the discretion of the Committee, be released to the Optionee or Grantee.
(f) Every loan shall meet all applicable laws, regulations and rules of
the Federal Reserve Board and any other governmental agency having
jurisdiction.
11. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the maximum
number and class of shares of stock with respect to which Options or Awards
may be granted under the Plan, the number and class of shares or units as
to which Options or Awards may be granted under the Plan, the number and
class of shares or units as to which Options or Awards have been granted
under the Plan, and the purchase price therefor, if applicable.
(b) Any such adjustment in the Shares or other securities subject to
outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the code and only to the
extent otherwise permitted by Section 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to new, additional or different shares of stock,
securities or Performance Units (other than rights or warrants to purchase
securities), such new additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria
which were applicable to the Shares or units pursuant to the Award prior to
such Change in Capitalization.
12. Effect of Certain Transactions. (a) In the event of (i) a merger or
consolidation in which the Company is not the surviving corporation or (ii)
the sale or disposition of all or substantially all of the Company's assets,
the Company shall have the authority to make provision in connection with such
transaction (x) for the assumption of Options or Awards theretofore granted
under the Plan, or the substitution for such Options or Awards of new options
or awards of the Successor Corporation, with appropriate adjustment as to the
number and kind of shares and the purchase price for shares thereunder, or (y)
for the surrender of outstanding Options and Awards and the payments of cash
in consideration therefor at their fair market value.
(b) Notwithstanding any other provisions of the Plan to the contrary, in
the event any Option or Award is granted to any Eligible Participant who is
a non-employee director of the Company (a "Non-Employee Director"), the
Committee, in its sole discretion, shall determine at the time of grant,
and shall set forth in the applicable Award Agreement or Option Agreement,
as the case may be, appropriate provisions with respect to the effect of
the termination of the Non-Employee Director's service, including, without
limitation, with respect to the exercisability or vesting of each such
Option or Award.
(c) Except with respect to awards intended to qualify as performance-
based compensation under Section 162(m) of the Code, the Committee may, in
its sole discretion, accelerate or agree to accelerate the exercisability
or vesting of any Option, Restricted Stock, Performance Unit or Stock
Appreciation Right granted under the Plan, or any or all of them, or any
portion thereof, at any time, for any reason, including, but not limited
to, the occurrence of a change of control (as defined by the Committee in
its sole discretion), and provide or agree to provide for payments in
consideration for the exercise of, surrender or repurchase of an Option or
Award (at such times and in such amounts determined by the Committee in its
sole discretion, which amounts, in the case of a
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change of control, may be based upon the highest price per share paid in
the transaction even if greater than the Fair Market Value at the time of
exercise, surrender or repurchase). Any such determination by the Committee
may be set forth in the applicable Option Agreement, Award Agreement or
otherwise. With respect to Options and Awards intended to qualify as
performance based compensation under Section 162(m) of the Code, the
Committee shall set forth in the applicable Option Agreement or Award
Agreement any terms as to acceleration of the exercisability or vesting of
the Option or Award (including, but not limited to, acceleration upon the
occurrence of a change of control (as defined in the applicable Option
Agreement or Award Agreement)).
13. Release of Financial Information. A copy of the Company's annual report
to stockholders shall be delivered to each Optionee and Grantee at the time
such report is distributed to the Company's stockholders. Upon request, the
Company shall furnish to each Optionee and Grantee a copy of its most recent
annual report and each quarterly report and current report filed under the
Exchange Act, since the end of the Company's prior fiscal year.
14. Termination and Amendment of the Plan. The Plan shall terminate on the
day preceding the tenth anniversary of its effective date and no Option or
Award may be granted thereafter. The Board may sooner terminate or amend the
Plan at any time, and from time to time and in any manner. Except as provided
in Sections 11 and 12 hereof, rights and obligations under any Option or Award
granted before any amendment of the Plan shall not be altered or impaired by
such amendment, except with the consent of the Optionee or Grantee, as the
case may be.
15. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall
not be construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.
16. Limitation of Liability. As illustrative of the limitations of liability
of the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:
(a) give any person any right to be granted an Option or Award other than
at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;
(c) limit in any way the right of the Company or a Subsidiary to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or implied,
that the Company or any Subsidiary will employ any person in any particular
position at any particular rate of compensation or for any particular
period of time.
17. Regulations and Other Approvals; Governing Law.
(a) This Plan and the rights of all persons claiming any interest hereunder
shall be construed and determined in accordance with the laws of the State of
Delaware without giving effect to the choice of law principles thereof, except
to the extent that such law is preempted by federal law.
(b) The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities
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laws, and the obtaining of all such approvals by governmental agencies as may
be deemed necessary or appropriate by the Committee.
(c) Except as otherwise provided in Section 15, the Board may make such
changes as may be necessary or appropriate to comply with the rules and
regulations of any government authority, or to obtain for Eligible
Participants granted Incentive Stock Options the tax benefits under the
applicable provisions of the Code and regulations promulgated thereunder.
(d) Each Option and Award is subject to the requirement that, if at any time
the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by 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 grant of an Option or
the issuance of Shares, no Options shall be granted or payment made or Shares
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
(e) In the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, or regulations thereunder,
and the Committee may require any individual receiving Shares pursuant to the
Plan, as a condition precedent to receipt of such Shares (including upon
exercise of an Option), to represent to the Company in writing that the Shares
acquired by such individual are acquired for investment only and not with a
view to distribution.
18. Miscellaneous.
(a) Multiple Agreements. The terms of each Option or Award may differ from
other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Participant during the term of the Plan, either in addition to,
or in substitution for, one or more Options or Awards previously granted to
that Eligible Participant. The grant of multiple Options and/or Awards may be
evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.
(b) Withholding of Taxes. The Company shall have the right to deduct from
any distribution of cash to any Optionee or Grantee an amount equal to the
federal, state and local income taxes and other amounts required by law to be
withheld with respect to any Option or Award. Notwithstanding anything to the
contrary contained herein, if any Optionee or Grantee is entitled to receive
Shares upon exercise of an Option or pursuant to an Award, the Company shall
have the right to require such Optionee or Grantee, prior to the delivery of
such Shares, to pay to the Company the amount of any federal, state or local
income taxes and other amounts which the Company is required by law to
withhold. The Plan Agreement evidencing any Incentive Stock Options granted
under this Plan shall provide that if the Optionee makes a disqualifying
disposition, within the meaning of Section 421(b) of the Code and the
regulations promulgated thereunder, of any Share or Shares issued to him or
her pursuant to his or her exercise of the Incentive Stock Option he or she
shall, within ten (10) days of such disqualifying disposition, notify the
Company thereof and immediately deliver to the Company any amount of federal
income tax withholding required by law.
(c) Designation of Beneficiary. Each Optionee and Grantee may, with the
consent of the Committee, designate a person or persons to receive in the
event of his/her death, any Option or Award or any amount payable pursuant
thereto, to which he/she would then be entitled. Such designation will be made
upon forms supplied by and delivered
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to the Company and may be revoked by the Optionee or Grantee in writing. If an
Optionee or Grantee fails effectively to designate a beneficiary, then his/her
estate will be deemed to be the beneficiary.
19. Interpretation.
(a) Rule 16b-3. The Plan is intended to comply with Exchange Act Rule 16b-3
and the Committee shall interpret and administer the provisions of the Plan or
any Option Agreement or Award Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan. The Board is authorized to amend the Plan and
to make any such modifications to Option Agreements or Award Agreements to
comply with Exchange Act Rule 16b-3, as it may be amended from time to time,
and to make any other such amendments or modifications deemed necessary or
appropriate to better accomplish the purposes of the Plan in light of any
amendments made to Exchange Act Rule 16b-3.
(b) Section 162(m) of the Code. Unless otherwise expressly stated in the
relevant Option Agreement or Award Agreement, each Option, Stock Appreciation
Right and Performance Unit granted under the Plan to an executive officer of
the Company is intended to be performance-based compensation within the
meaning of Section 162(m)(4)(C) of the Code (except that, upon a change of
control (as defined in the applicable Option Agreement or Award Agreement),
payment of an Option or Award to an Eligible Participant who remains a
"covered employee" with respect to such payment within the meaning of Section
162(m)(3) of the Code may not qualify as performance-based compensation). The
Committee shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options and Awards if the ability to
exercise such discretion or the exercise of such discretion itself would cause
the compensation attributable to such Options and Awards to fail to qualify as
performance-based compensation. Notwithstanding anything to the contrary in
the Plan, the provisions of the Plan may at any time be bifurcated by the
Board or the Committee in any manner so that certain provisions of the Plan or
any Option or Award intended (or required in order) to satisfy the applicable
requirements of Section 162(m) of the Code are only applicable to persons
whose compensation is subject to Section 162(m).
20. Pooling Transaction. Notwithstanding anything contained in the Plan or
any Option Agreement or Award Agreement to the contrary, in the event of a
change of control which is also intended to be treated as a "pooling of
interests" under generally accepted accounting principles (a "Pooling
Transaction"), the Committee shall take such actions, if any, as are
specifically recommended by an independent accounting firm retained by the
Company to the extent reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including, without limitation, (i) deferring
the vesting, exercise, payment, settlement or lapsing of restrictions with
respect to any Option or Award, (ii) providing that the payment or settlement
in respect of any Option or Award be made in the form of cash, Shares or
securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (iii) providing for the extension of the term of any Option or
Award to the extent necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option or Award.
21. Effective Date. The effective date of the Plan shall be the date of its
adoption by the Board, subject only to the approval by the affirmative vote of
a majority of the votes eligible to be cast at a meeting of stockholders of
the Company to be held within twelve (12) months of such adoption.
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AXSYS TECHNOLOGIES, INC.
SPECIAL MEETING OF STOCKHOLDERS - OCTOBER 14, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Louis D. Mattielli and Raymond F.
Kunzmann, and each of them, the attorneys and proxies of the undersigned (each
with power to act without the other and with power of substitution) to vote, as
designated on the reverse side, all shares of Common Stock of Axsys
Technologies, Inc., a Delaware corporation (the "Company"), which the
undersigned may be entitled to vote at the Special Meeting of the Stockholders
to be held at the offices of Republic National Bank, Lower Level Conference
Room, 452 Fifth Avenue, New York, New York 10018, on the 14th day of October,
1997, at 10:00 a.m., and any adjournment thereof, upon all matters which may
properly come before said Special Meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS ONE,
TWO AND THREE.
(Continued, and to be dated and signed, on reverse side.)
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FOLD AND DETACH HERE
<PAGE>
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THE BOARD OF DIRECTORS RECOMMENDS VOTING PLEASE MARK YOUR VOTES AS
FOR PROPOSALS ONE, TWO AND THREE. INDICATED IN THIS EXAMPLE [X]
1. Proposal to amend the Certificate of Incorporation of the Company to
increase the number of shares of authorized Common Stock to 30,000,000
shares.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. Proposal to amend the Certificate of Incorporation of the Company to delete
Section 8.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to approve the Amended and Restated Axsys Technologies, Inc.
Long-Term Stock Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
(The signature(s) on your proxy card should agree with the names(s) shown at the
left. If the stock is held jointly, all joint owners should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title as such.)
Dated: , 1997
-------------------------
(L.S)
- -------------------------------
(L.S)
- -------------------------------
Signature(s) of Stockholder(s)
SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
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FOLD AND DETACH HERE
