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 ss. 240.14a-11(c) or ss. 240.14a-12
AXSYS TECHNOLOGIES
------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LETTERHEAD OF AXSYS TECHNOLOGIES]
April 10, 1998
Dear Axsys Technologies Stockholder:
On behalf of the Board of Directors and management, I cordially invite you
to attend the Annual Meeting of Stockholders on May 5, 1998, at 10:00 a.m., at
the offices of Republic National Bank, 452 Fifth Avenue, Third Floor, New York,
New York.
The accompanying Notice of Annual Meeting and Proxy Statement describes
the proposals to be considered at the meeting.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend personally, please complete and mail the enclosed proxy
card in the return envelope.
Very truly yours,
/s/ Stephen W. Bershad
Stephen W. Bershad
Chairman of the Board
Chief Executive Officer
<PAGE>
[LOGO] AXSYS
TECHNOLOGIES
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1998
The Annual Meeting of Stockholders of Axsys Technologies, Inc. (the
"Company") will be held on May 5, 1998 at 10:00 a.m., at the offices of Republic
National Bank, 452 Fifth Avenue, Third Floor, New York, New York 10018 for the
following purposes:
1. To elect four directors to the Board of Directors;
2. To ratify the selection of Arthur Andersen LLP as independent
accountants of the Company for the fiscal year ending December 31,
1998; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 3, 1998,
will be entitled to notice of and to vote at the meeting and any adjournments
thereof. A list of such stockholders will be open for examination by any
stockholder for any purpose germane to the meeting, during ordinary business
hours, for ten days prior to the meeting at the offices of the Company, 910
Sylvan Avenue, Suite 180, Englewood Cliffs, New Jersey 07632.
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
April 10, 1998
<PAGE>
[LOGO] AXSYS
TECHNOLOGIES
PROXY STATEMENT
This proxy statement, which is first being mailed to stockholders on or
about April 10, 1998, is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Axsys Technologies, Inc. (the
"Company"), 910 Sylvan Avenue, Suite 180, Englewood Cliffs, New Jersey 07632,
for use at the Annual Meeting of Stockholders to be held at 10:00 a.m., on May
5,1998, and for all adjournments thereof (the "Annual Meeting"), at the offices
of Republic National Bank 452 Fifth Avenue, New York, New York 10018.
Only stockholders of record at the close of business on April 3,1998, the
record date for the Annual Meeting, will be entitled to notice of and to vote at
the Annual Meeting. As of the record date, 4,118,767 shares of the Company's
common stock, par value $.01 per share ("Common Stock"), were outstanding and
entitled to vote at the Annual Meeting. Each share of Common Stock is entitled
to one vote.
A majority of the outstanding shares of Common Stock constitutes a quorum.
If a share is represented for any purpose at the meeting, it is deemed to be
present for all other matters. Abstentions and shares held of record by a broker
or its nominee ("Broker Shares") that are voted on any matter are included in
determining the number of votes present. Broker Shares that are not voted on any
matter will not be included in determining whether a quorum is present. The
election of each nominee for director, as set forth in Proposal No. 1 below, and
the ratification of the selection of Arthur Andersen LLP as independent
accountants, as set forth in Proposal No. 2 below, each require the affirmative
vote of a majority of the votes cast.
Stockholders are encouraged to specify the way they wish to vote their
shares by marking the appropriate boxes on the enclosed proxy. Shares
represented by proxies that are properly executed and returned will be voted as
specified on the proxy. If no choice is specified, the shares will be voted FOR
Proposals 1 and 2 described in this Proxy Statement. A stockholder may revoke a
proxy at any time before it is actually voted by delivering written notice of
revocation to the Secretary of the Company, by submitting a properly executed
proxy bearing a later date, or by attending the meeting and voting in person.
The Board of Directors does not intend to present any matters for a vote
at the meeting except the proposals described in this Proxy Statement. The
persons named in the proxy will, however, have discretionary voting authority
regarding any other business that may properly come before the 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.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws provide for a Board of Directors of not less than
two directors, as determined from time to time by resolution of the Board. The
Board currently consists of four directors. As noted above, proxies will be
voted, unless authority is withheld, FOR the election as directors of the four
nominees listed below, who are the current directors, to serve until the next
annual meeting of stockholders and until their respective successors shall be
duly elected and qualified. If any nominee should become unavailable for
election, proxies will be voted, unless authority is withheld, for an alternate
or alternates, if any, designated by the Board. The Board has no reason to
believe that any nominee will become unavailable for election.
The name, age and principal occupation of each nominee, the nominee's
length of service as a director of the Company, the names of the other public
companies of which the nominee is a director and certain other biographical
information are set forth below.
The Board of Directors recommends a vote FOR the election as directors of
all nominees (Proposal No. 1).
Stephen W. Bershad, 56
Stephen W. Bershad has been Chairman of the Board and Chief Executive
Officer of the Company since he joined the Company in December 1986. Prior to
joining the Company, he was a Managing Director of Lehman Brothers, Inc. and its
predecessor firms, where he held a series of senior management positions in
merchant banking and mergers and acquisitions. Mr. Bershad is a director of
Emcor Group, Inc., an electrical and mechanical construction and facilities
services company.
Anthony J. Fiorelli, Jr., 68
Anthony J. Fiorelli has been a director of the Company since February
1988. He has been a private investor since January 1, 1997. From December 1985
until June 1997, Mr. Fiorelli was President of Strategic Management Consulting
Services, Inc., a management consulting firm. Prior to that time, Mr. Fiorelli
was President and Chief Executive Officer of General Defense Corporation, a
diversified engineering and manufacturing company.
Eliot M. Fried, 65
Eliot M. Fried has been a director of the Company since 1994. He is a
Managing Director of Lehman Brothers, Inc. where he has been employed for 21
years and is a member of its Investment Committee and Investment Banking
Commitment Committee. Mr. Fried is a director of Bridgeport Machines, Inc., L-3
Communications Corporation, a communications equipment company, and Walter
Industries, Inc., a conglomerate of basic industries.
Richard V. Howitt, 53
Richard V. Howitt has been a director of the Company since June 1997,
following the Company's acquisition of Teletrac, Inc. ("Teletrac"). Mr. Howitt
is a co-founder of Teletrac and has been President of Teletrac for 19 years.
Prior to his full-time employment at Teletrac, he was a member of the technical
staff and Section Head of Optical Metrology at Santa Barbara Research Center.
There are no family relationships among any of the directors and executive
officers of the Company.
The Board of Directors met five times during 1997. The Audit Committee,
the Compensation Committee and the Stock Incentive Plan Committee are the
standing committees of the Board. The Audit Committee reviews internal and
external audit procedures of the Company. Messrs. Fiorelli and Fried are members
of the Audit Committee. The Audit Committee met once in 1997. The Compensation
Committee oversees compensation policies of the Company. Its members are Messrs.
Fiorelli and Fried. The Compensation Committee met two times in 1997. The Stock
Incentive Plan Committee administers the Axsys Technologies, Inc. Long-Term
Stock Incentive Plan. Messrs. Fiorelli and Fried are members of the Stock
Incentive Plan Committee. The Stock Incentive Plan Committee met four times in
1997.
2
<PAGE>
All meetings of the Board, except one, and of the Committees, were
attended by all directors. 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. In 1997, each of
Messrs. Fried and Fiorelli were also granted options to purchase 2,000 shares of
Common Stock at an exercise price of $15 with an expiration date of February 11,
2007, which are fully vested, and 2,500 shares of Common Stock at an exercise
price of $27 with an expiration date of October 21, 2007, which options vest at
the rate of 20% per year over a five-year period from the date of grant.
Non-employee directors may be granted additional options from time to time for
their services as directors. Directors who are employees of the Company or any
subsidiary do not receive fees or other compensation for their services as
directors. All directors are reimbursed for travel and other expenses incurred
in the performance of their duties.
STOCK OWNERSHIP OF
DIRECTORS AND OFFICERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock of the Company by each of the Company's
directors, each of the executive officers of the Company named in the Summary
Compensation Table below (the "Named Executive Officers"), and all of the
directors and executive officers of the Company as a group as of April 1, 1998.
Shares Beneficially Owned
Directly or Indirectly(1)
--------------------------------
Name Number Percent(2)
- ---------------------------------------------- --------------- ---------------
Stephen W. Bershad (3)..................... 1,257,171 29.80%
Raymond F. Kunzmann (4) (5)................ 4,800 *
Louis D. Mattielli (5)..................... 0 *
Kenneth F. Stern (6)....................... 8,800 *
Richard V. Howitt (7)...................... 39,760 *
Anthony J. Fiorelli, Jr. (8)............... 15,885 *
Eliot M. Fried (9)......................... 2,000 *
All officers and directors as a group (7
persons).................................. 1,328,416 31.49%
- ----------
* Less than 1%.
(1) Except as set forth in the footnotes to this table, 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 shareholder.
(2) Applicable ownership percentage is based on 4,218,767 shares of Common
Stock, consisting of 4,118,767 shares outstanding on April 1, 1998 and
100,000 shares issuable to Teletrac. See "Certain Transactions."
(3) Includes 8,360 shares of Common Stock underlying options which are
exercisable as of April 1, 1998 or within 60 days after such date. Mr.
Bershad owns 658,047 shares of Common Stock directly and 590,764 shares of
Common Stock indirectly through SWB Holding Corporation, of which he is
the sole shareholder and Chairman. Mr. Bershad's address is 910 Sylvan
Avenue, Suite 180, Englewood Cliffs, New Jersey 07632. Excludes 5,410
shares representing his interest in the Axsys Technologies, Inc. 401(k)
Retirement Plan (the "401(k) Plan").
3
<PAGE>
(4) Represents 4,800 shares of Common Stock underlying options which are
exercisable as of April 1, 1998, or within 60 days after such date.
Excludes 1,986 shares representing his interest in the 401(k) Plan.
(5) Raymond F. Kunzmann and Louis D. Mattielli, who are executive officers of
the Company, are the sole trustees of the 401(k) Plan and may be deemed to
beneficially own such 401(k) Plan shares. Each of them disclaims
beneficial ownership of such 401(k) Plan shares, except to the extent of
his interest therein, if any. See "Principal Stockholders."
(6) Includes 2,800 shares of Common Stock underlying options which are
exercisable as of April 1, 1998, or within 60 days after such date.
Excludes 1,212 shares representing his interest in the 401(k) Plan.
(7) Represents 22,260 of Common Stock received by Mr. Howitt in the Teletrac
acquisition and 17,500 shares representing Mr. Howitt's proportional
interest in 100,000 shares issuable to the Teletrac Minority Shareholders.
See "Certain Transactions."
(8) Includes 2,000 shares of Common Stock underlying options which are
exercisable as of April 1, 1998, or within 60 days after such date.
(9) Represents 2,000 shares of Common Stock underlying options which are
exercisable as of April 1, 1998, or within 60 days after such date.
PRINCIPAL STOCKHOLDERS
The Company knows of no person who, as of April 1, 1998, beneficially
owned more than five percent of the Common Stock outstanding, except for Mr.
Bershad and except as set forth below.
Nature of Amount and
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- --------------------------------------- -------------------- ----------------
Axsys Technologies, Inc. 401(k)
Retirement Plan(1)
Axsys Technologies, Inc.
910 Sylvan Avenue, Suite 180 227,674
Englewood Cliffs, NJ 07632 shares 5.3%
John W. Gildea(2)
Gildea Management Company
115 East Putnam Avenue 270,000
Greenwich, CT 06830 shares 6.3%
- ----------
(1) Messrs. Kunzmann and Mattielli are the sole trustees of the 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, if any.
(2) On March 11, 1998, Mr. Gildea, Network Fund III, Ltd ("III") and Network
Fund IV, LLC ("IV") filed a report on Schedule 13G with the Securities and
Exchange Commission reflecting holdings of the Company's Common Stock, and
the merger of IV into III. The amount shown includes 245,000 shares of
Common Stock beneficially owned by 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 shareholder 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 25,000
shares of Common Stock in his individual capacity.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation during
the years ended December 31, 1995, 1996 and 1997 for services in all capacities
awarded to, earned by or paid to the Company's Chief Executive Officer and the
other highly compensated executive officers of the Company whose aggregate cash
compensation exceeded $100,000 during the year ended December 31, 1997
(collectively, the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------- --------------
Number of
Securities
Underlyng All Other
Name and Principal Bonus Options Compensation
Position Year Salary ($) ($)(1) (# of Shares)(2) ($)(3)
- ---------------------- ----- --------- ------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Stephen W. Bershad.... 1997 300,000 161,500 10,400 5,814
Chairman of the 1996 262,500 157,500 -- 7,576
Board and Chief 1995 262,500 100,000 -- 6,258
Executive Officer
Raymond F. Kunzmann(4) 1997 146,922 84,196 32,000 10,383
Vice 1996 141,385 85,000 -- 10,603
President-Finance 1995 120,635 45,000 -- 7,197
and Chief Financial
Officer
Kenneth F. Stern(5)... 1997 138,173 79,777 32,000 9,560
Vice 1996 130,269 52,500 -- 10,439
President-Strategic 1995 120,000 25,000 -- 4,429
Planning
Louis D. Mattielli(6). 1997 97,596 39,500 14,000 1,047
Vice President, 1996 -- -- -- --
Secretary and 1995 -- -- -- --
General Counsel
</TABLE>
- ----------
(1) Reflects payments under the Company's Annual Incentive Plan.
(2) Reflects awards under the Axsys Technologies, Inc. Long-Term Stock
Incentive Plan (the "Stock Incentive Plan").
(3) Reflects matching contributions under the Company's 401(k) Plan which in
1997 totaled $4,081 for Mr. Bershad, $4,545 for Mr. Kunzmann, $5,009 for
Mr. Stern and no payment for Mr. Mattielli. Also reflects payments under
the Company's executive health insurance plan which in 1997 totaled $1,733
for Mr. Bershad, $5,838 for Mr. Kunzmann, $4,551 for Mr. Stern and $1,047
for Mr. Mattielli. 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.
(4) Raymond F. Kunzmann joined the Company in June 1994 and currently serves
as Vice President-Finance and Chief Financial Officer. Prior to joining
the Company, from January 1994 until May 1994, he was Group Controller at
Mannesmann Capital Corporation, a diversified manufacturing company, and
from January 1987 until December 1993, was Controller and held other
positions at Lear Siegler, Inc., a diversified manufacturing/service
company. Prior to that, Mr. Kunzmann was employed by Deloitte, Haskins &
Sells.
5
<PAGE>
(5) Kenneth F. Stern joined the Company in October 1994 and currently serves
as Vice President-Strategic Planning. Prior to joining the Company, from
December 1992 to October 1994, he was a management consultant specializing
in strategic planning and corporate development for technology companies
at Monitor Company, and prior to December 1992, at Lorne Weil Inc.
(6) Louis D. Mattielli joined the Company in June 1997 as Vice President,
Secretary and General Counsel. Prior to joining the Company, Mr. Mattielli
was a consultant to Liberty Brokerage, Inc. from September 1996 to May
1997. From June 1994 to September 1996, he was Senior Vice
President-Administration, Secretary and General Counsel of The Pullman
Company. From September 1993 to June 1994, he was Senior Vice
President-Administration of and then consultant to Herzog, Heine, Geduld,
Inc. From May to September 1993, he served as Vice President and General
Counsel of Hat Brands, Inc. Prior to that, from June 1992 to May 1993, he
was Senior Vice President and General Counsel of and then consultant to
Lear Siegler, Inc. His annual salary is $175,000.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding the options
granted pursuant to the Stock Incentive Plan during the year ended December 31,
1997, to the Named Executive Officers. No options were exercised in that period
by such executive officers.
<TABLE>
<CAPTION>
Percent of
Total
Number of Options
Securities Granted Exercise Grant Date
Underlying to Employees or Present
Options through Base Price Expiration Value
Name Granted (#) December 31, 1997 ($/Shares) Date (S)(1)
- ------------------ ----------- ----------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Stephen W. Bershad 8,400(2)(3) 5.0% $4.15 2/11/2002 101,892
2,000(3) 1.2% $16.50 2/11/2002 14,280
Raymond F. Kunzmann 2,000(3) 1.2% $15.00 2/11/2007 16,540
30,000(4) 17.8% $27.00(3) 10/20/2007 446,700
Louis D. Mattielli 4,000(3) 2.4% $17.75 6/8/2007 39,160
10,000(4) 5.9% $27.00(5) 10/20/2007 148,900
Kenneth F. Stern 2,000(3) 1.2% $15.00 2/11/2007 16,540
30,000(4) 17.8% $27.00(6) 10/20/2007 446,700
</TABLE>
- ----------
(1) The estimated grant date present value used was estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions: expected volatility of 50%; risk-free interest rate of 5.8%;
expected life of 6 years (5 years as to Mr. Bershad's options) and no
dividend yield. The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, the Black-Scholes
model requires the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's stock-based awards
to employees have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion,
the existing model does not necessarily provide a reliable single measure
of the fair value of awards pursant to the Company's Stock Incentive Plan.
(2) Represents the extension of options which were originally granted in
September 1991.
6
<PAGE>
(3) These options are exercisable to the extent of 40% thereof after one year
from the date of grant and an additional 30% at the end of each year
thereafter.
(4) These options vest at the rate of 20% per year over a five-year period
from the date of grant.
1997 FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the value of
unexercised stock options granted pursuant to the Stock Incentive Plan as of
December 31, 1997, held by the Named Executive Officers; no options were
exercised by such Named Executive Officers during the year ended December 31,
1997:
Fiscal Year-End Option Values
-----------------------------
Number of Securities Value of Unexercised
Underlying In-the Money
Unexercised Options Options at Fiscal
at Fiscal Year-End (#) Year-End ($) (1)
------------------------------ --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- ------------- ----------- -------------
Stephen W. Bershad 7,560 7,040 105,651 73,684
Raymond F. Kunzmann 4,000 32,000 57,500 6,250
Louis D. Mattielli -- 14,000 -- 1,500
Kenneth F. Stern 2,000 32,000 28,750 6,250
- ----------
(1) Includes only those options whose exercise prices are lower than $18.125
per share, the average of the high and low reported sales prices for the
Common Stock on December 31, 1997.
TERMINATED PENSION PLAN
The Company had a defined benefit pension plan which was terminated on
July 31, 1989. The estminated annual benefits payable upon retirement to Mr.
Bershad, the only executive officer participating in such plan, are $22,121,
assuming retirement at age 65.
CERTAIN TRANSACTIONS
On May 30, 1997, the Company, Teletrac and Mr. Howitt and the other then
shareholders of Teletrac (collectively, the "Sellers") entered into a Stock
Purchase Agreement pursuant to which the Sellers sold 177,937 Teletrac shares to
the Company for a purchase price of approximately $7.7 million and the issuance
of 153,000 shares of Common Stock, 53,000 of which were issued at closing. The
Company was granted the right to acquire the remaining 29,880 shares of
Teletrac's capital stock retained by the Sellers in exchange for 100,000 shares
of Common Stock issuable pursuant to the Stockholder Agreement described below.
Mr. Howitt, who was elected director of the Company following the closing of the
transaction, sold 82,053 Teletrac shares to the Company and retained 5,229
shares. The 53,000 shares of Common Stock issued at closing are subject to
registration rights.
7
<PAGE>
On May 30, 1997, the Company, on the one hand, and Mr. Howitt and certain
other Teletrac shareholders (collectively, the "Minority Shareholders"), on the
other hand, entered into a stockholder agreement (the "Stockholder Agreement")
relating to the 29,880 Teletrac shares retained by the Minority Shareholders.
Pursuant to the Stockholder Agreement, the Minority Shareholders have the
option, exercisable on written notice to the Company, to elect to sell any
remaining Teletrac shares to the Company in exchange for an aggregate of 100,000
shares of the Company's Common Stock (3.3467 shares of the Company's Common
Stock for each Teletrac share) for a period of three years from the date of the
Stockholder Agreement. In addition, pursuant to the terms of the Stockholder
Agreement, the Company has the option, exercisable on written notice to each
Minority Shareholder, to elect to purchase each Minority Shareholder's Teletrac
shares, in exchange for an aggregate of 100,000 shares of the Company's Common
Stock (3.3467 shares of the Company's Common Stock for each Teletrac share) at
any time after three years from the date of the Stockholder Agreement or, on a
prior date, upon certain other circumstances. Such shares of Common Stock, when
issued, will be entitled to certain registration rights. Mr. Howitt's retained
shares are exchangeable for 17,500 shares of Common Stock. Under the Stockholder
Agreement, the Company was appointed as proxy to vote the Teletrac shares
retained by the Minority Shareholders for the term of the agreement expiring on
May 30, 2007.
In connection with the purchase of Teletrac, Teletrac entered into an
employment agreement with Mr. Howitt dated May 30, 1997 (the "Employment
Agreement") and Mr. Howitt also executed a Non-Competition Agreement (the
"Non-Competition Agreement") in favor of the Company under which he has agreed
not to compete with or solicit customers or employees from the Company for a
period of six years expiring in June 2003.
Pursuant to the terms of the Employment Agreement, Mr. Howitt is entitled
to receive an annual salary of $225,000 and a bonus in accordance with the terms
of the Teletrac Management Incentive Compensation Plan (the "Teletrac Plan"), as
determined by the committee administering the Plan. Mr. Howitt's employment is
for a period of three years expiring June 1, 2000. Under the terms of the
Employment Agreement, Teletrac may terminate Mr. Howitt's employment upon Mr.
Howitt's death or "disability" or for "cause", and Mr. Howitt may terminate his
employment with Teletrac at any time without Teletrac's consent or for "good
reason" (as such terms are defined in the Employment Agreement). If the
Employment Agreement is terminated by Teletrac for death, "disability" or
"cause" or by Mr. Howitt without "good reason," Teletrac is obligated to pay Mr.
Howitt (or his estate) all amounts earned but not paid to such termination date
and certain other benefits accrued to such termination date pursuant to
Teletrac's benefit plans. If the Employment Agreement is terminated by the
Company other than for death, "disability" or "cause" or by Mr. Howitt with
"good reason", Mr. Howitt will be entitled to receive all amounts earned and not
paid to such date, the salary payable after such date for the balance of the
term of the Employment Agreement, 40% of any amounts payable after such
termination date pursuant to the Teletrac Plan and certain medical, dental and
insurance benefits during the balance of the term of the Employment Agreement.
Throughout his employment, Mr. Howitt is bound by a covenant not to compete with
Teletrac and not to disclose "confidential information" (as defined in the
Employment Agreement).
Under the Teletrac Plan, Teletrac may make certain cash bonus awards
("Awards") to employees of Teletrac who are senior officers, members of senior
management or key employees and consultants to Teletrac. 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 $3,000,000 and
$1,100,000, 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
8
<PAGE>
administering the Teletrac Plan. In addition, in accordance with the employment
agreement between Teletrac and Mr. Howitt, if such agreement is terminated for
certain reasons, Mr. Howitt will be entitled to receive an Award of 40% of all
amounts payable to him under the Plan after such termination date. The 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
adversely affecting 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 Plan are entitled to receive an amount equal to $4,100,000 less all amounts
previously paid as Incentive Compensation Pools and Additional Incentive
Compensation Pools unless certain conditions are satisfied. Mr. Howitt received
Awards under the Teletrac Plan for the year ended December 31, 1997 in the
amount of $335,000.
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 agreed to pay
Messrs. Stern and Kunzmann up to one year's base compensation and certain other
benefits in the event of termination by the Company other than for cause.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, composed of Messrs.
Fiorelli and Fried, has furnished the following report on executive
compensation.
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies which
seek to enhance the profitability of the Company, and thus shareowner value, by
aligning closely the financial interests of the Company's senior managers with
those of its shareowners. In furtherance of these goals, the Company relies to a
large degree on annual bonus and longer-term stock incentive compensation to
attract and retain executive officers and other key employees and to motivate
them to perform to the full extent of their abilities. Both types of incentive
compensation are not guaranteed and are variable and closely tied to corporate,
business unit and individual performance in a manner designed to encourage a
sharp and continuing focus on building profitability and shareowner value. The
annual bonus and stock incentive compensation is more closely tied to the
Company's success in achieving significant financial and other
performance-oriented goals. The Committee considers the total compensation
(earned or potentially available) of each of the executive officers and the
other senior managers in establishing each element of compensation. Eligible
persons must be employed by the Company at the time bonus compensation is
awarded.
In evaluating the performance and setting the incentive compensation of
the Chief Executive Officer, the Committee took note of the Company's success in
identifying and executing the Teletrac acquisition in May 1997, the successful
public offering of the Company's Common Stock in October 1997 and its successful
performance against budget discussed below. The Committee also took note of the
Company's success in improving sales,
9
<PAGE>
operating income, bookings and backlog and in repositioning the Company for
growth in its served markets. In its review of other senior management incentive
compensation for 1997, the Committee took into account management's performance
against budget for net income before taxes, bookings and return on investment,
which were weighted 65%, 20% and 15% respectively, and its participation in
executing the successful public offering of the Company's Common Stock in
October 1997, and the Teletrac acquisition in May 1997.
Based on its evaluation of these factors, the Committee believes that the
senior management of the Company is dedicated to achieving significant
improvements in long-term financial performance and that the compensation
policies the Committee has implemented and administered have contributed to
achieving this management focus.
During each fiscal year, the Stock Incentive Plan Committee considers the
desirability of recommending that the Board of Directors grant senior
executives, including executive officers, awards under the Stock Incentive Plan,
which provides the flexibility to grant longer-term incentives in a variety of
forms, including performance units, stock options, stock appreciation rights and
restricted stock. At December 31, 1997, 195,100 options had been awarded under
the Stock Incentive Plan. In respect of 1997, the Stock Incentive Plan Committee
determined to recommend the grant of additional awards under the Stock Incentive
Plan to Mr. Bershad in the amount of 2,000 options, to Mr. Kunzmann in the
amount of 34,000 options, to Mr. Stern in the amount of 34,000 options and to
Mr. Mattielli in the amount of 14,000 options. In respect of 1998, the Stock
Incentive Plan Committee recommended the grant of options to acquire an
additional 71,700 shares, including 7,500 shares to Mr. Bershad, and 4,000
shares to each of Messrs. Kunzmann, Stern and Mattielli. The Board of Directors
ratified and approved the grants recommended in 1997 and 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Messrs. Fiorelli and
Fried. The Stock Incentive Plan Committee is comprised of Messrs. Fiorelli and
Fried. Mr. Bershad, who served as a member of the Compensation Committee in
1997, is Chairman of the Board and Chief Executive Officer of the Company. He
was replaced on the Committee in February 1998 by Mr. Fried. There are no
Compensation Committee interlocks between the Company and any other entities
involving the Company's executive officers and directors who serve as executive
officers of such entities.
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<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The information in the foregoing report and the following graph shall not
be incorporated by reference (by any general statement incorporating this proxy
statement by reference or otherwise) into any prior or future filing under the
Securities Exchange Act of 1934 (the "Exchange Act") or the Securities Act of
1933, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The following graph shows the value of a $100 investment in Common Stock
from December 1992 through December 31, 1997, as of the dates indicated,
compared with the value of a similar investment in the Nasdaq Stock Market
Index, the Nasdaq Non-Financial Stock Index and the S&P High Technology
Composite Index at such times. The Nasdaq Stock Market Index is a broad market
index comprising all domestic shares traded on the Nasdaq National Market and
the Nasdaq Small-Cap Market. The Nasdaq Non-Financial Stock Index is an index
comprising all non-financial common shares traded on the Nasdaq National Market
and the Nasdaq Small-Cap Market. The S&P High Technology Composite Index is an
index comprising common shares of companies in the aerospace/defense,
communications equipment, electronics and office equipment and supplies
industries. The Nasdaq Stock Market Index, the Nasdaq Non-Financial Stock Index
and the S&P High Technology Composite Index are calculated on a total return
basis to include the reinvestment of dividends.
11
<PAGE>
[THE FOLLOWING INFORMATION WAS REPRESENTED
AS A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Axsys Technologies, Inc.
Common Stock $100 $ 38 $ 38 $ 62 $138 $227
- ------------------------------------------------------------------------------------------
Nasdaq Stock Market Index $100 $115 $112 $159 $195 $240
- ------------------------------------------------------------------------------------------
Nasdaq Non-Financial Index $100 $115 $111 $155 $188 $221
- ------------------------------------------------------------------------------------------
S&P High Technology Composite
Index $100 $121 $140 $199 $281 $353
- ------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each of Messrs. Howitt and Mattielli was late in filing one report under
Section 16(a) of the Exchange Act, in each case, his initial report on Form 3
indicating his beneficial ownership of securities of the Company.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors, upon
the recommendation of its Audit Committee, has selected Arthur Andersen LLP as
independent accountants to audit the consolidated books and accounts of the
Company for the period beginning January 1, 1998, and ending December 31, 1998.
A representative of Arthur Andersen LLP will be present at the meeting and will
have the opportunity to make a statement and to respond to appropriate
questions.
The Board of Directors recommends a vote FOR the ratification of Arthur
Andersen LLP as independent accountants of the Company for the indicated period
(Proposal No. 2).
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 shareholders
must comply with the rules and regulations of the Securities and Exchange
Commission then in effect. Such proposal must be received by the Secretary of
the Company at 910 Sylvan Avenue, Suite 180, Englewood Cliffs, New Jersey 07632
no later than December 15, 1998, in order to be considered for inclusion in the
Company's proxy statement for the next annual meeting.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's annual report on Form 10-K for 1997, as filed with
the Securities and Exchange Commission, will be provided to stockholders without
charge upon receipt of a written request to: Investor Relations, Axsys
Technologies, Inc., 910 Sylvan Avenue, Suite 180, Englewood Cliffs, New Jersey
07632.
April 10, 1998
13
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AXSYS TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- May 5, 1998
PROXY
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.,
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders to be held at the offices of Republic National Bank, Third Floor,
452 Fifth Avenue, New York, New York 10018, on the 5th day of May, 1998, at
10:00 a.m., and any adjournment thereof, upon all matters which may properly
come before said Annual Meeting.
Unless otherwise specified, this proxy will be voted FOR the election of
all nominees as Directors and FOR Proposal 2.
(Continued, and to be dated and signed, on reverse side.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
The Board of Directors recommends voting FOR Proposals 1 and 2.
Please mark your votes as indicated in this example |X|
1. ELECTION OF DIRECTORS
|_| FOR ALL NOMINEES LISTED TO THE RIGHT (except as marked to the contrary)
|_| WITHHOLD AUTHORITY to vote for all nominees listed to the right
2. RATIFICATION OF AUDITORS
|_| FOR
|_| AGAINST
|_| ABSTAIN
Messrs. Stephen W. Bershad, Anthony J. Fiorelli, Jr., Eliot M. Fried and Richard
V. Howitt. (INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(The signature(s) on your proxy card should agree with the name(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:_________________________, 1998
_____________________________________ (L.S.)
_____________________________________ (L.S.)
Signature(s) of Stockholder(s)
Sign, Date and Return the Proxy Card
Promptly Using the Enclosed Envelope.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
