SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.1a-11(c)
or Section 240.1a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
E-SYSTEMS, INC.
-------------------------------------------------
(Name of Registrant as Specified In Its Charter)
E-SYSTEMS, INC.
-------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
(Name of Person(s) Filing Proxy Statement if other than
the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11; (Set forth
the amount on which the filing fee is calculated and state
how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of E-Systems, Inc. will be
held at its Corporate Offices, 6250 LBJ Freeway, Dallas, Texas, on
Wednesday, April 26, 1995 at 10:00 a.m., Dallas time, for the
following purposes:
(1) To elect three directors, each to hold office for a term
of three years.
(2) To consider and vote upon the proposed 1995 Directors'
Stock Option Plan.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of E-Systems, Inc. Common Stock of record at the
close of business on March 3, 1995 are entitled to notice of and to
vote at the meeting.
By Order of the Board of Directors,
Michael C. Eberhardt
Secretary
Dallas, Texas
March 24, 1995
P. O. Box 660248 Dallas, Texas 75266-0248 Phone (214)661-1000
<PAGE>
E-SYSTEMS, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 26, 1995
This Proxy Statement and the accompanying form of proxy are
first being mailed on or about March 24, 1995 to stockholders of
E-Systems, Inc. (the "Company") to solicit proxies for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held
April 26, 1995. The accompanying proxy is being solicited on behalf
of the Board of Directors of the Company.
Proxies in the accompanying form which are properly executed
and returned will be voted at the meeting and any adjournments
thereof in accordance with the instructions thereon. Any proxy upon
which no instructions have been indicated with respect to a
specified matter will be voted as follows: (a) FOR the election as
directors the three persons named under "Election of Directors--
Nominees for Directors"; (b) FOR the approval of the 1995 Directors'
Stock Option Plan; and (c) at the discretion of the proxy holders,
on any other matter that may properly come before the meeting or any
adjournment. Any proxy given by a stockholder may be revoked by the
stockholder at any time prior to the voting of the proxy by delivering
a written notice of revocation to the Secretary of the Company, by
executing and delivering a later-dated proxy or by attending the
Annual Meeting and voting in person.
RECORD DATE AND VOTING SECURITIES
The record date for stockholders entitled to vote at the
meeting is the close of business on March 3, 1995, at which time the
Company had issued and outstanding 34,129,500 shares of $1.00 par
value Common Stock ("Common Stock").
QUORUM AND VOTING
A majority of the shares of the Common Stock, present in person
or represented by proxy, shall constitute a quorum for purposes of
the Annual Meeting. With regard to the election of directors, votes
may be cast in favor or withheld; votes withheld will be excluded
entirely from the vote and will have no effect. With regard to the
approval of the 1995 Directors' Stock Option Plan, abstentions will be
counted as present for purposes of determining quorum and will be
treated as a vote against the proposal. A broker non-vote will have
no effect on the outcome of the election of directors or the
proposal to approve the 1995 Directors' Stock Option Plan. A holder
of Common Stock shall be entitled to one vote for each share held on
all matters coming before the Annual Meeting.
In order to be elected a director, a nominee must receive the
affirmative vote of the holders of a plurality of the shares
represented and entitled to vote at the meeting. The Board of
Directors recommends that the stockholders vote FOR each of the three
nominees set forth under "Election of Directors--Nominees for
Directors".
The affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote at the meeting is required to adopt
the 1995 Directors' Stock Option Plan. The Board of Directors
recommends that the stockholders vote FOR the adoption of the 1995
Directors' Stock Option Plan.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth persons known to the Company to
own beneficially 5% or more of the total outstanding Common Stock as
of the record date.
<TABLE>
<CAPTION>
Name and Address Title of Amount and Nature of Percent of
of Beneficial Owner Class Beneficial Ownership Class of
------------------ ----------- ----------------- -----------
<S> <C> <C> <C>
E-Systems, Inc.
Employee Stock
Ownership Trust and
Employees' Common
Retirement Trusts(1) Stock 5,829,181 Shares 17.07%
P.O. Box 660248
Dallas, Texas 75266-0248
-----------------------------
<FN>
(1) Under the terms of the Company's Employee Stock Ownership
Plan (the "ESOP") shares of the Company's Common Stock owned by the
Company's Employee Stock Ownership Trust (the "ESOT") are, until
allocated to accounts of participating employees, voted by the
trustees of the ESOT as directed by a committee of employees (the
"Committee") appointed by the Board of Directors. The shares of the
Company's Common Stock held by the ESOT and allocated to accounts of
participating employees are required to be voted by the trustees in
accordance with the instructions of such employees. If no such
instructions are received, the allocated shares are to be voted as
the Committee in its discretion may direct. The Company has been
advised by the members of the Committee that they will instruct the
trustees of the ESOT to vote all of the shares of Common Stock which
they are entitled to vote for the election as directors the persons
named under "Election of Directors -- Nominees for Directors" and for
the approval of the 1995 Directors' Stock Option Plan. There were
were 4,354,589 shares held by the ESOT as of the record date.
Shares of the Company's Common Stock held by the
Employees' Retirement Trusts (the "Retirement Trusts") are voted as
the trustees of such trusts in their discretion shall determine.
The trustees are appointed by the Board of Directors of the Company
and may be removed by the Board of Directors at any time without
cause. The trustees of the Retirement Trusts are Michael C. Eberhardt,
Art E. Hobbs and James W. Pope all of whom are Vice Presidents of
the Company. The Company has been advised by the trustees that the
Retirement Trusts will vote all shares of Common Stock held by the
Retirement Trusts for the election as directors the persons named
under "Election of Directors -- Nominees for Directors" and for the
approval of the 1995 Directors' Stock Option Plan. There were
1,474,592 shares held by the Retirement Trusts as of the record
date.
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the Common Stock of the Company
beneficially owned as of February 3, 1995 by each Director, each
nominee for Director, by each of the named Executive Officers and by
all Executive Officers and Directors as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class(1)
------------------------ -------------------- -----------
<S> <C> <C>
James A. Bitonti 1,000 *
E. F. Buehring 10,000 *
Brian D. Cullen 23,044(2) *
James W. Crowley 65,593(3) *
Charles A. Gabriel 500 *
C. Roland Haden -0-
Terry W. Heil 61,895(4) *
Martin R. Hoffmann 1,500 *
E. Gene Keiffer 70,256(5) *
S. Lee Kling 17,000 *
A. Lowell Lawson 111,430(6) *
Peter A. Marino 19,185(7) *
Francine I. Neff 800 *
David R. Tacke 24,366 *
All Executive Officers
and Directors as a Group
(20 persons) 573,289(8) 1.65%
----------------------
<FN>
* Ownership of less than 1% of the outstanding Common Stock.
(1) Percent was determined using an aggregate of 34,410,649
shares of Common Stock to be outstanding, which includes shares
subject to options which are exercisable within 60 days.
(2) Includes 10,834 shares covered by options exercisable
within 60 days and 941 shares allocated to Mr. Cullen's ESOP account.
(3) Includes 49,834 shares covered by options exercisable
within 60 days and 7,326 shares allocated to Mr. Crowley's ESOP
account.
(4) Includes 55,334 shares covered by options exercisable
within 60 days and 761 shares allocated in Dr. Heil's ESOP account.
(5) Includes 30,000 shares covered by options exercisable
within 60 days and 79 shares allocated to Mr. Keiffer's ESOP account.
(6) Includes 63,334 shares covered by options exercisable
within 60 days and 6,046 shares allocated in Mr. Lawson's ESOP account.
(7) Includes 13,333 shares covered by options exercisable
within 60 days and 351 shares allocated in Mr. Marino's ESOP
account.
(8) Of the shares of Common Stock indicated as beneficially
owned by the officers and directors as a group, 322,138 shares
represent the aggregate number of shares the group has the right to
acquire beneficial ownership within sixty days; and 29,518 shares
represent the shares allocated to their individual ESOP accounts.
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
General
The Certificate of Incorporation provides that the term of each
director elected at the Annual Meeting of Stockholders is three
years. At present the Company's Board of Directors consists of ten
directors, of whom three have terms of office expiring in 1995,
three have terms of office expiring in 1996 and four have terms of
office expiring in 1997.
Nominees for Directors
The following are nominees for election as directors of the
Company for a term of office expiring at the Annual Meeting of
Stockholders in 1998 or until their respective successors shall have
been elected and qualified. Should any nominee become unable or
unwilling to accept nomination or election, the person or persons
voting the proxy will vote for the election of such other person as
the Board of Directors may recommend. The Board of Directors has no
reason to believe that any of the nominees will be unable or
unwilling to serve if elected, and to the knowledge of the Board of
Directors, each of the nominees intends to serve the entire term for
which election is sought.
Nominees for Election for a Three-Year Term Ending in 1998
James A. Bitonti, age 64, has been a director since 1988. Mr.
Bitonti is Chairman and Chief Executive Officer of BITCO
International, Inc., a start-up company with offices in
Poughkeepsie, New York and Fairfax, Virginia. He is also Chief
Executive Officer and President of TCOM, L.P., a company specializing in
electronic security technology. Until his retirement in July 1987, Mr.
Bitonti had been employed in various executive capacities with
International Business Machines Corporation. Mr. Bitonti is a director
of Crompton & Knowles Corporation, a specialty chemical company. Mr.
Bitonti was elected to the Board of Directors of the Company in December
1988 to fill an existing vacancy on the Board. He is a member of the
Audit Committee and a member of the Compensation and Benefits Committee
of the Board of Directors.
S. Lee Kling, age 66, has been a director since 1978. Mr. Kling is
Chairman of the Board of Kling Rechter & Co., a merchant banking
company. He served as Chairman of the Board of Landmark Bancshares
Corp., a bank holding company located in St. Louis, Missouri from 1974
through December 1991, when the company merged with Magna Group, Inc.
He served additionally as the company's Chief Executive Officer from
1974 through October 1990. He is a director of Bernard Chaus, Inc., a
women's apparel manufacturer; Top Air Manufacturing Company, a
manufacturer of spraying equipment for the agricultural industry; Falcon
Products, Inc., a furniture manufacturer; Hanover Direct, Inc., mail
order merchandiser; Lewis Galoob Toys, Inc.; National Beverage Company,
a manufacturer and distributor of cola and multi-branded soft drinks,
and Magna Group, Inc., a bank holding company. He is a member of
the Audit Committee and Chairman of the Compensation and Benefits
Committee of the Board of Directors.
<PAGE>
David R. Tacke, age 72, has been a director since 1969. Mr. Tacke is a
rancher and investor. He served the Company as Chairman of the Board of
Directors from April 22, 1987 until his retirement in April 1989. He
also held the position of Chief Executive Officer of the Company from
April 1987 until April 1989. Mr. Tacke served as President and Chief
Operating Officer of the Company from November 1983 to April 1987;
Executive Vice President from July 27, 1983 until November 1983; Senior
Vice President-Electronics Systems Group from April 1977 until July
1983; and Vice President and General Manager of the Garland Division
from April 14, 1969 to May 1977. He was first elected to the Board of
Directors on April 25, 1969 to fill a vacancy created by the
resignation of a predecessor. Mr. Tacke is a member of the Executive
Committee of the Board of Directors.
Directors Continuing in Office Until the 1996 Annual Meeting of
Stockholders
E. F. Buehring, age 79, has been a director since 1965. Mr. Buehring
was Vice Chairman of the Board of Directors from 1969 until his
retirement in 1973, and was President and Chief Executive Officer of the
Company from its beginning in 1965 until 1969. He began his aerospace
career with North American Aviation Company in 1942, and later joined
Texas Engineering and Manufacturing Company (TEMCO), an E-Systems
predecessor company, where he served in various positions of increasing
responsibility. Mr. Buehring is a former director and past president of
the National Aerospace Services Association. Over the years, he has
been actively involved in various community service organizations in
Greenville, Texas, where he and his wife reside.
Charles A. Gabriel, age 67, has been a director since 1990. General
Gabriel joined the Board on March 28, 1990 to fill a vacancy created
by the death of John W. Dixon. Following General Gabriel's retirement
as Chief of Staff of the United States Air Force in June 1986, until
March 1990 he served as Executive Vice President, and subsequently,
Vice Chairman, of Hicks & Associates, a management consulting firm
located in McLean, Virginia. Before becoming U.S. Air Force
Chief of Staff, he served as Commander in Chief of U.S. Air Forces
in Europe and Commander of Allied Air Forces, Central Europe.
General Gabriel served as Chairman of the Board of Flight
International Group, Inc., an aviation services fixed base operator
from September 1, 1991 to September 4, 1992. He is a director of CORE
Software Technology, GEC-Marconi Electronic Systems, Inc. and Greenwich
Air Services, Inc., a company that repairs, refurbishes and overhauls
gas turbine engines. General Gabriel is a member of the Audit Committee
of the Board of Directors.
<PAGE>
A. Lowell Lawson, age 57, has been a director since 1983. Mr. Lawson is
Chairman of the Board and Chief Executive Officer of the Company. He
has held the position of Chief Executive Officer since January 27, 1994
and was elected Chairman of the Board of Directors on August 24, 1994.
Mr. Lawson is also President of the Company and has held that position
since April 25, 1989. Prior to that, Mr. Lawson was Executive Vice
President since April 1987 and had served in various senior executive
positions for more than five years. Mr. Lawson was first elected to
the Board of Directors on November 1, 1983 to fill a vacancy created
by the retirement of a predecessor. He is Chairman of the Executive
Committee of the Board of Directors.
Directors Continuing in Office Until the 1997 Annual Meeting of
Shareholders
C. Roland Haden, age 54, has been a director since 1994. Dr. Haden is
Vice Chancellor and Dean of Engineering, Texas A&M University, College
Station, Texas. He has held that position since 1993. From 1991 to
1993, he was Vice Chancellor for Academic Affairs and Provost, Louisiana
State University, Baton Rouge, Louisiana. Prior to that time he was
Professor and Dean of Engineering and Applied Sciences from 1989 to
1991; Provost, ASU West Campus, from 1988 to 1989; Vice President
for Academic Affairs from 1987 to 1988 and from 1978 to 1987,
Professor and Dean of Engineering and Applied Sciences, Arizona
State University, Tempe, Arizona. He is a fellow of the Institute
of Electrical and Electronic Engineers and the American Society for
Engineering Education. He is a director of Inter-Tel, Inc., which
manufactures, sells and installs digital phone systems and Wave Phone,
Inc., which manufactures and sells digital telecommunications equipment.
Dr. Haden was elected a member of the Board on April 27, 1994 to fill a
vacancy created by the death of Dr. LeVan Griffis.
Martin R. Hoffmann, age 63, has been a director since 1987. Mr.
Hoffmann, Attorney-at-Law, is a Senior Visiting Fellow, Center for
Technology, Policy and Industrial Development, Massachusetts
Institute of Technology, Cambridge, Massachusetts. From May 1989
until April 1993, Mr. Hoffmann served as Vice President, General
Counsel and Secretary of Digital Equipment Corporation, Maynard,
Massachusetts, a manufacturer and marketer of computer systems.
Prior to that time he was a partner in the law firm of Gardner,
Carton and Douglas of Washington, D.C. for more than ten years. Mr.
Hoffmann has held various executive positions with the Federal
Government, including that of Secretary of the Army from August 1975
to February 1977 and General Counsel to the Department of Defense
from March 1974 to August 1975. He is a member of the Board of
Advisors of Lincoln Laboratories, Boston, Massachusetts and a director
of Sea-Change Technology, Inc. and VISystems, Inc., both of which are
computer software companies. Mr. Hoffmann was first elected to the
Board of Directors in April 1987 to fill a newly created directorship.
<PAGE>
E. Gene Keiffer, age 65, has been a director since 1983. Mr.
Keiffer served the Company as Chairman of the Board of Directors from
April 1989 until his retirement in August 1994. He also held the
position of Chief Executive Officer of the Company from April 25, 1989
until January 26, 1994. Mr. Keiffer served as President of the Company
from April 22, 1987 to April 1989; Senior Vice President-Electronic
Systems Group from November 1983 to April 1987; as Vice President
and General Manager of the Garland Division from September 1975 to
November 1983. He was first elected to the Board of Directors on
November 1, 1993 to fill a vacancy created by the retirement of
a predecessor. Mr. Keiffer is a member of the Executive Committee
of the Board of Directors.
Francine I. Neff, age 69, has been a director since 1978. Mrs. Neff
is Vice President of NETS, Inc., Albuquerque, New Mexico, a
privately held investment company, a position she has held for at
least the past five years. She was a Vice President of Rio Grande
Valley Bank of Albuquerque, New Mexico from September 1977 until
December 1981. Mrs. Neff is a former Treasurer of the United States
and was the National Director, United States Savings Bond Division,
United States Treasury. Mrs. Neff is also a director of Hershey
Foods Corporation, D. R. Horton, Inc., homebuilders, and Louisiana-
Pacific Corporation, which produces timber and timber-related
products. She is a member of the Audit Committee and was recently
elected Chairman of the Committee. She is also a member of the
Compensation and Benefits Committee of the Board of Directors.
Meetings of the Board of Directors and Committees
The Board of Directors met eleven times during 1994. The Board
of Directors has a standing Audit Committee and a Compensation and
Benefits Committee, but does not have a Nominating Committee. Among
its functions, the Audit Committee recommends to the Board the
appointments of the firm elected to be independent certified public
accountants for the Company; reviews with the independent certified
public accountants the Company's annual audit, annual financial
statements and the independent certified public accountants' letter
to management on internal controls and other matters; reviews the
adequacy of the Company's internal controls, accounting systems and
the impact of proposed accounting policies; and reviews the
Company's credit and financial arrangements. Messrs. Gabriel,
Bitonti, Kling and Mrs. Neff are members of the Audit Committee.
The Audit Committee met three times during 1994.
<PAGE>
The Compensation and Benefits Committee recommends to the Board
of Directors the salaries for all Company officers, and approves and
sets the salaries for all employees whose annual salary exceeds
$125,000. The Committee determines and authorizes the annual
incentive compensation for officers and other employees. The
Committee also grants stock options and restricted stock awards to
certain key employees under the Company's Stock Option Plans. Mrs.
Neff and Messrs. Kling and Bitonti are members of the Compensation and
Benefits Committee. The Committee met four times and acted by unanimous
written consent twelve times during 1994.
<PAGE>
EXECUTIVE COMPENSATION
The following table shows cash compensation of the Chief Executive
Officer, the retired Chief Executive Officer and the four other most
highly compensated executive officers of the Company (the "Named
Executive Officers") whose cash compensation exceeds $100,000, for
the fiscal years 1994, 1993 and 1992.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Awards
--------------------------------
Annual Compensation Securities
---------------------------------- Under- All
Other Restricted lying Other
Name and Annual Stock options Compen-
Principal Fiscal Salary Bonus Compensa- Awards SAR's sation
Position Year ($) ($)(1) tion(2) ($)(3) (#)(4) ($)(5)
-------- ------ ------ ------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
A. Lowell
Lawson 1994 477,738 425,000 0 386,250(7) 40,000/0(7) 4,625
Chairman of
the Board, 1993 409,461 345,000 0 84,500 25,000/0 5,938
Chief Executive
Officer 1992 381,539 345,000 0 0 0 5,598
and President
E. Gene
Keiffer 1994 383,385 0 39,990 0 0 46,596
Retired
Chairman of 1993 559,230 440,000 0 126,750 40,000/0 8,108
the Board and
Chief 1992 519,134 440,000 0 0 0 7,366
Executive Officer
Brian D.
Cullen(6) 1994 242,629 175,000 0 0 0 3,641
Senior Vice
President 1993 205,000 140,000 0 63,375 10,000/0 4,619
1992 202,919 165,000 0 0 0 4,531
Terry W.
Heil(6) 1994 304,980 240,000 0 0 0 3,946
Senior Vice
President 1993 291,653 225,000 0 63,375 10,000/0 5,588
1992 287,135 225,000 0 0 0 5,345
Peter A.
Marino(6) 1994 294,980 225,000 0 84,375 0 3,674
Senior Vice
President 1993 281,653 175,000 0 63,375 10,000/0 5,347
1992 280,288 165,000 60,031 0 0 5,135
James W.
Crowley 1994 286,653 190,000 0 0 0 4,705
Vice President,
General 1993 276,654 180,000 0 42,250 10,000/0 5,907
Counsel and
Secretary 1992 270,842 175,000 0 0 0 6,243
____________________
<FN>
(1) The Company, in keeping with its compensation practices, uses the
term "incentive compensation" rather than "bonus".
(2) Other Annual Compensation for Mr. Marino includes relocation and
moving expenses for the year ended December 31, 1992 and for Mr.
Keiffer for the year ended December 31, 1994, $25,272 for income
tax preparation expense. Perquisites and other personal benefits,
securities or property, totaling less than $50,000 or 10% of total
annual salary and bonus reported are not included.
(3) Dividends are paid on restricted stock awards at the same time and
at the same rate as paid to all stockholders. On December 30,
1994, Mr. Keiffer held no restricted shares; Mr. Lawson held
17,400 restricted shares having a then current value of $706,875;
Dr. Heil held 5,800 restricted shares having a then current value
of $235,625; Mr. Marino held 5,500 restricted shares having a then
current value of $223,437.50; Mr. Cullen held 5,850 restricted
shares having a then current value of $237,656.25, and Mr. Crowley
held 5,000 restricted shares having a then current value of
$203,125.
(4) None of the named individuals holds SAR's, and the Company does
not intend to grant SAR's.
(5) Included for each individual is $2,936 allocated in the E-Systems,
Inc. Employee Stock Ownership Plan, a qualified ERISA plan, and split
dollar premiums paid as follows: Mr. Keiffer, $3,774; Mr. Lawson, $1,689;
Dr. Heil, $1,010; Mr. Marino, $738; Mr. Cullen, $705 and Mr. Crowley, $1,769.
The split dollar life insurance maintained by the Company pays two times the
annual salary life insurance benefit to active executives and a
two times final salary to retired executives. The amount included
is calculated in accordance with tax regulations from actuarial
tables, which factors are multiplied by the current amount of the
benefit due the executive based on current compensation or in the
case of retired executives, final compensation. Includes for Mr.
Keiffer $39,886 accrued vacation pursuant to termination of
employment.
(6) Messrs. Cullen, Heil and Marino collectively assumed many of the
responsibilities for operations that were previously the
responsibility of President and Chief Operating Officer in January
1994 upon the promotion of Mr. Lawson to Chief Executive Officer.
(7) Upon Mr. Lawson's promotion to Chairman of the Board in August
1994, he was provided a special long-term award in recognition of
his promotion and added responsibilities.
</TABLE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information on option
grants in fiscal 1993 to the Named Executive Officers. The Company does
not have any outstanding SAR's.
<TABLE>
<CAPTION>
Individual Grants
--------------------
Number of Percent of Exer-
Securities Total Options/ cise Grant
Underlying SAR's Granted or Base Expira- Date
Options/SARS's to Employees Price tion Present
Name Granted(#)(1) In Fiscal Year ($/Sh) Date Value($)(2)
----------------- ------------- -------------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
A. Lowell Lawson 40,000(3) 54.7% 39.63 08/23/2004 $562,400
E. Gene Keiffer 0 0% 0 0 0
Brian D. Cullen 0 0% 0 0 0
Terry W. Heil 0 0% 0 0 0
Peter A. Marino 0 0% 0 0 0
James W.Crowley 0 0% 0 0 0
------------------
<FN>
(1) The option listed was granted pursuant to the 1988 Stock Option
Plan. Option exercise prices are at the market price when granted; the
options have a term of ten years and vest in one-third increments over a
three year period beginning with the first anniversary date of the
grant. The exercise price and federal tax withholding may be paid in
cash or with shares of Common Stock.
(2) Based on the Black-Scholes option pricing model expressed as a
ratio (.3549 for options granted on August 24, 1994) times the
exercise price of $39.63 which yields a per share value of $14.06
multiplied by the number of shares. The actual value, if any, an
executive may realize will depend on the excess of the stock price
over the exercise price on the date the option is exercised, so
that there is no assurance the value realized by an executive will
be at or near the value estimated by the Black-Scholes model.
With respect to the 1994 option grant, the following assumptions
were used in the Black-Scholes model: market price of stock,
$39.63; exercise price of option, $39.63; stock volatility,
24.98%; risk-free rate of return, 7.5% and future dividend yield,
2.81%.
(3) Upon Mr. Lawson's promotion to Chairman of the Board in August
1994, he was provided a special long-term award in recognition of
his promotion and added responsibilities.
</TABLE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT DECEMBER 31, 1994
Shown below is information with respect to the exercise of
stock options during fiscal year 1994 and certain information with
respect to unexercised options to purchase the Company's Common
Stock granted under the 1982 Employee Stock Option Plan and the 1988
Employee Stock Option Plan to the Named Executive Officers and held
by them at December 31, 1994.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
Shares 1994 1994
Acquired Value ------------- -------------
on Exer- Real- Exercisable/ Exercisable/
Name cise(#) ized($) Unexercisable Unexercisable
--------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
A. Lowell
Lawson 0 0 63,334/56,666 519,775/79,800
E. Gene
Keiffer 16,667 187,379 30,000/26,666 134,245/0
Brian D.
Cullen 0 0 10,834/6,666 58,907/0
Terry W.
Heil 0 0 55,334/6,666 499,250/0
Peter A.
Marino 0 0 13,334/6,666 68,750/0
James W.
Crowley 0 0 49,834/6,666 476,332/0
-----------------------
<FN>
(1) The value of the unexercised in-the-money options represents
the difference between the exercise price and the market price on
December 31, 1994.
</TABLE>
<PAGE>
COMPENSATION AND BENEFITS COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors
(the "Committee"), which is composed entirely of independent outside
directors, has established a compensation philosophy that seeks to
enhance the performance of the Company and thus shareholder value, by
linking executive compensation with Company performance. The Committee
has the responsibility of establishing appropriate compensation levels
for Company officers which are consistent with our compensation
philosophy resulting in total compensation that is both competitive and
reflective of individual and overall Company performance.
During the course of performing its duties, the Committee reviews
the compensation data and analysis provided by both internal
compensation specialists and independent professional compensation
consulting firms. In addition, as needed the Committee is advised and
furnished information by independent outside compensation consultants
concerning the Company's overall approach to executive compensation.
In designing the compensation program, the Committee has
established the following:
(1) Compensation levels should be such that the Company can
effectively attract, reward and retain talented and well-qualified executives.
(2) Executive compensation should relate meaningfully to value
created for shareholders and achievement of the Company's short-term
and long-term objectives.
(3) A significant portion of executive compensation should be
based on factors which emphasize a pay for performance approach.
(4) Stock ownership should be encouraged to align the financial
interests of the Company's executives with those of its shareholders.
The Company's executive compensation is based on the following
major components, which are intended to serve the overall compensation
philosophy.
<PAGE>
Base Salary
The Committee annually reviews each officer's salary. In
determining the appropriate salary amount, the Committee considers
levels of responsibility, experience, time in position, individual
performance, internal equity and external competitive pay practices, to
ensure that base salaries are competitive with market practices and are
appropriate considering the Company's relative size and performance,
comparisons are made with salaries paid to executives with similar
responsibilities at peer companies in our industry. A regression
analysis is used to adjust for the relative size differences among the
peer companies and to establish an appropriate salary range for each
Company executive position. The mid-point of the salary range is based
on the adjusted survey data and the results of the regression analysis
which predicts a base salary level at the 50th percentile.
The peer companies represented in the market salary survey
analysis are electronics and defense industry companies that are
included in various compensation surveys which are conducted and
provided by independent outside executive compensation consultants.
These primary survey sources include the MCS Project 777 Survey and the
Summit Survey. The peer companies used in the market salary survey
analysis were: Hughes Aircraft Co., Rockwell International Corp.,
Lockheed Corp., Raytheon Co., TRW Inc., Texas Instruments Incorporated,
Honeywell Inc., Martin Marietta Corp., Textron, Inc., Litton Industries,
Inc., Northrop Grumman Corp., Loral Corp., Harris Corp. and The Perkin-
Elmer Corporation. Companies comprising Standard & Poor's
Aerospace/Defense group used in the performance graph are: The Boeing
Co., General Dynamics Corp., Lockheed Corp., Martin Marietta Corp.,
McDonnell Douglas Corp., Northrop Grumman Corp., Raytheon Co., Rockwell
International Corp. and United Technologies Corp. The difference in
peer group companies is due to the availability of required data used in
the market salary survey analysis.
Incentive Compensation
The annual incentive award is that portion of compensation which
may be adjusted upward or downward based on performance. The Committee
places a significant portion of the executive's total cash compensation
in this category in order to focus management attention on annual
performance results that in turn enhance shareholder value.
At the beginning of each year, the Chief Executive Officer
presents to the Board a proposed business plan which contains specific
performance goals. The principal financial performance measures
includes sales, profits, bookings and backlog. Generally, profits have
a greater relative importance but in any given year the relative
importance of performance measures may vary due to business factors.
After review and consideration, the approved plan is accepted by the
Board as an appropriate standard for measuring performance during the
forthcoming year. In addition to the comparison of actual performance
against the business plan, the Committee also considers other
performance measures such as return on assets, return on equity, return
on capital and profitability. The Company's performance is evaluated in
each of these categories and compared with the performance of peer
companies in our industry to establish a relative performance position.
Other general management performance dimensions such as leadership,
teamwork and other discretionary considerations are also considered.
The Committee does not use a specific formula with weightings of the
various performance criteria, but instead considers all of the criteria
collectively in reaching a decision as to how the Company performed.
In determining the amount of incentive compensation to be paid
executive officers, the Committee considers the performance measures
previously described and other compensation survey data to ensure that
incentive compensation awards are in keeping with the stated
compensation philosophy and that, when added to base salaries, result in
a reasonable and competitive total cash compensation package that
appropriately reflects the Company's relative size and performance.
<PAGE>
Long-Term Incentives
Long-term incentives are provided to align the financial interests
of the Company's executives, and other key individuals who contribute to
the success of the Company, with those of the shareholders. To
accomplish this, the Company primarily uses stock options as its long-
term incentive vehicle.
Stock options are granted at 100 percent of the prevailing market
value on the day of grant and to encourage a longer term perspective,
become exercisable in one-third increments over a three-year period
following the date of grant. Therefore, the options are of value to the
recipients only if shareholders also benefit form stock price
appreciation. It should also be noted that the Committee has not
repriced outstanding options, again reinforcing the philosophy that
recipients do not benefit from stock price appreciation unless
shareholders also benefit.
In limited circumstances and for special long-term incentives,
restricted stock awards are used. Generally, these restricted stock
awards contain a ten-year vesting restriction which also encourages
long-term employment with the Company.
The number of stock options and/or restricted stock awards granted
is based on the recipient's position and level of responsibility, the
resulting opportunity to impact on the success of the Company and
competitive practices as reported in an extensive survey of Long-term
Incentive Compensation Practices conducted annually by a major
consulting firm.
Stock options are granted to key management and technical
employees whose performance contributes significantly to the successful
results of the Company. The last general stock option award was
November 16, 1993 and at that time 3.4 percent of the total employee
population received awards. The less frequently used restricted stock
awards were granted at the same time to less than one percent of the
total employee population. Each of the restricted award recipients has
been identified by management and confirmed by the Committee as
individuals for whom special long-term performance incentive and
employment retention is desirable.
Executive Compensation
In determining the CEO and other executive officer's compensation
for 1994, the Committee took into account all of the performance
measures and other factors previously described as well as their
perception of the executive officer's past and expected future
contributions. In January of 1994, Mr. Lawson was promoted to Chief
Executive Officer and President. Upon Mr. Keiffer's retirement in
August of 1994, the Board of Directors selected Mr. Lawson to succeed
Mr. Keiffer as Chairman of the Board and Chief Executive Officer. At
the time of Mr. Lawson's promotions and increased responsibility, the
Compensation and Benefits Committee approved base salary increases and
in addition, at the time of his promotion, to Chairman of the Board a
special long-term award was approved that was designed to provide a
total compensation package that is competitive with compensation
provided for similar positions at other companies.
The Committee placed special emphasis on Mr. Lawson's personal
dedication to assuring the Company's on-going success during the
leadership transition that occurred during 1994 in making adjustments to
his base salary and the determination of his annual incentive award.
While profits moderately decreased, due primarily to one time
write-offs associated with new business activities, the Committee took
into account the record high annual new business bookings and record
high year end backlog that were achieved despite the continuing
reduction in the U.S. Defense budget and program cancellations
throughout the defense electronics and intelligence communities. The
strong bookings performance has positioned the Company for future
growth. Also, dividends were increased by nine percent thus benefiting
all shareholders.
<PAGE>
Based on review of peer company compensation survey data, the
total cash compensation of the Company's Chief Executive Officer is
below the survey's predicted value and below the median compensation
level paid to executive officers at peer companies.
Federal Income Tax Considerations
In 1993, the Internal Revenue Code was amended to place a $1
million cap on the deductibility of compensation paid to executives of
publicly held corporations. The Committee took this change into
account, however upon review of the available regulations and
interpretations, decided that it would not make the deductibility of the
Company's compensation for federal income tax purposes a criterion to be
used in establishing compensation to the named executives during the
present cycle. The Committee took into consideration the belief that
very little, if any, of the current compensation levels of these
executives will be subject to the cap. The Committee continues to
recognize that compensation should meet standards of reasonableness and
necessity, which have been part of the Internal Revenue Code for many
years.
This report of the Compensation and Benefits Committee shall not
be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934,
except to the extent it shall be specifically incorporated by reference;
and shall not otherwise be deemed filed under such Acts.
S. Lee Kling
Francine I. Neff
James A. Bitonti
<PAGE>
The following graph reflects a comparison of the cumulative total
return (change in stock price plus reinvested dividends) of the
Common Stock with Standard & Poor's 500 Stock Index and Standard &
Poor's Aerospace/Defense Index for the years 1989 through 1994. The
graph is constructed on the assumption that $100 was invested on
December 1, 1989, in each of the Company's Common Stock, the S&P 500
Stock Index and the S&P Aerospace/Defense index.
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
E-Systems, Inc., S&P 500 and S&P Aerospace/Defense Indices
<CAPTION>
Base
Year
1989 1990 1991 1992 1993 1994
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E-Systems, Inc. $100 $114.20 $128.33 $143.32 $155.11 $153.23
S&P 500 100 96.90 126.42 138.05 149.76 151.74
S&P Aerospace/
Defense 100 104.39 124.79 131.28 170.75 184.70
</TABLE>
PENSION PLAN TABLE
Salaried Retirement Plan
The following table indicates the estimated annual benefits
payable upon retirement at age 65 for the Named Executive Officers in a
specified compensation and years of service classifications under the E-
Systems, Inc. Salaried Retirement Plan (the "Salaried Retirement Plan"),
a defined benefit plan. These benefits are not subject to any Social
Security offset.
For purposes of calculating benefits pursuant to this plan, the
1994 compensation for the individuals listed in the Summary Compensation
Table is $150,000 each, which is the maximum permitted by law and
regulation.
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------
Remuneration(a) 15 20 25 30 35
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 400,000 $30,000 $42,000 $54,000 $66,000 $78,000
$ 500,000 30,000 42,000 54,000 66,000 78,000
$ 600,000 30,000 42,000 54,000 66,000 78,000
$ 700,000 30,000 42,000 54,000 66,000 78,000
$ 800,000 30,000 42,000 54,000 66,000 78,000
<FN>
(a) Covered Remuneration consists of base salary and incentive compensation
paid in the calendar year and differs from the amounts set forth in
the Summary Compensation Table, which reflects incentive compensation and
certain other benefits on an accrual, rather than paid, basis. For
purposes of calculating benefits pursuant to this plan, the 1994
compensation for the individuals listed in the Summary Compensation
Table is $150,000 each, which is the maximum permitted by law and
regulation.
</TABLE>
Year years of "benefit service" for the individuals listed in the
Summary Compensation Table are as follows: Mr. Lawson: 30 years; Dr.
Heil: 6 years; Mr. Cullen: 9 years; Mr. Marino: 4 years and Mr. Crowley:
24 years.
Since the foregoing table applies only to the Named Executive Officers,
it does not identify the retirement benefits to other salaried personnel.
In 1994, the Company contributed $38,516,000 to the Salaried Retirement
Plan, which covers approximately 12,000 employees. Because of the
$150,000 limited permitted by law and regulation, the Company implemented
on December 1, 1993, a non-qualified Supplemental Retirement Plan to
provide additional retirement benefits to those employees otherwise
covered by the Salaried Retirement Plan.
Supplemental Executive Retirement Plan
Effective June 1, 1982 the Board of Directors of the Company
adopted the E-Systems, Inc. Supplemental Executive Retirement Plan (the
"Supplemental Executive Plan") for the purposes of providing to
selected executive employees of the Company retirement income as a
supplement to compensation and employee benefits otherwise payable.
The participants are those persons selected by the Board of Directors
with the approval of the Chairman of the Board and Chief Executive
Officer and the Compensation and Benefits Committee of the Board of
Directors. Only officers and other key employees, who are expected
to contribute materially to the success of the Company's business by
their ability, ingenuity and industry, are eligible to participate.
Benefits payable under the Supplemental Executive Retirement Plan
constitute general obligations of the Company. The Supplemental
Executive Retirement Plan may be amended or discontinued by the
Board of Directors at any time; however, such amendment or
discontinuance shall not adversely affect the rights of, or reduce the
benefits payable to, a participant (or beneficiary) under the
Supplemental Executive Retirement Plan who has been selected for
participation prior to the effective date of such amendment or
discontinuance.
Each of the persons named in the Summary Compensation Table
and five other Corporate Officers are covered by the Supplemental
Executive Retirement Plan, which provides for a retirement benefit
equal to a specified percentage of the participant's "Average Monthly
Compensation". Amounts payable under the Supplemental Executive
Retirement Plan are reduced by payments under the Salaried Retirement
Plan and the recipient's primary Social Security benefit. "Average
Monthly Compensation" is defined as the sum of (i) the salary paid the
employee during the three consecutive years out of the ten years
preceding retirement or disability which yields the highest monthly
amount when divided by 36 and (ii) the incentive compensation paid the
employee during the three consecutive years out of the ten years
preceding retirement or disability which yields the highest monthly
amount when divided by 36. The amounts of compensation given on an
annual basis in the Summary Compensation Table for each of the persons
covered by the Supplemental Executive Retirement Plan somewhat overstate
the covered compensation used in calculating the Average Monthly
Compensation, primarily because of the difference between the accrual
method required by the Summary Compensation Table and the cash basis
used in the Supplemental Executive Retirement Plan calculations.
The estimated annual supplemental benefit for the individuals
named in the Summary Compensation Table based on their current
compensation levels and assuming retirement at age 65, are as follows:
Mr. Lawson $518,201; Mr. Cullen $211,617; Dr. Heil $309,167; Mr. Marino
$298,224 and Mr. Crowley $218,007.
The Company has placed an amount of funds approximately equivalent
to the actuarial present value of benefits payable under the
Supplemental Executive Retirement Plan and certain employment contracts
for retirement, disability and survivor's benefits in two trusts with
an independent trustee who will distribute the benefit as required
under the Supplemental Plan and such employment contracts. The trusts
are irrevocable and have received favorable rulings by the Internal
Revenue Service. The funds in the trusts would be subject to the claims
of the creditors of the Company in the event of the Company's insolvency
or bankruptcy. The establishment and funding of the trusts will not
increase the benefits due to any participant.
<PAGE>
Employment Agreements
Mr. Keiffer retired from the Company effective September 1, 1994.
He was employed under an agreement effective October 25, 1989, whereby
he has agreed to render his exclusive services to the Company for a
period ending August 25, 1994, when he attains the mandatory retirement
age of 65. His monthly retirement benefit, as defined in the
Supplemental Plan, equals 65% of his Average Monthly Compensation. Mr.
Keiffer and his wife are to receive medical, hospital and surgical
insurance coverage in accordance with levels maintained by the Company
for its executive officers for the remainder of their lives. On Mr.
Keiffer's death, his widow is to receive 50% of the retirement amount
for the remainder of her life.
Mr. Keiffer's employment agreement also provides for the continuation
of certain of his business and other perquisites after retirement.
These include dues, fees and assessments, and business, but not personal,
expenses to maintain membership in two specified country clubs; preparation
of federal and state income tax returns, and upon death, preparation of the
estate tax returns; estate planning services; home security service,
including monitoring and neighborhood patrol as applicable; not less
than $250,000 accidental death and dismemberment insurance coverage; and
business travel accident insurance in an amount of not less than
$300,000 for Mr. Keiffer and $150,000 for his wife.
The Company has agreed to furnish Mr. Keiffer as well as other
corporate officers, including those persons named in the Summary
Compensation Table, certain pre- and post-retirement life insurance
benefits. An amount equal to two times their respective annual
salaries is to be provided prior to retirement for all corporate
officers and for all, except Mr. Keiffer, following their retirement.
The Company is to provide life insurance benefit to Mr. Keiffer equal to
two times his annual salary and incentive compensation for the most
recent completed year prior to his retirement. The value of this
insurance benefit has been included in the Summary Compensation Table.
Mr. Lawson is employed under an agreement which extends January 16,
1998. Under the agreement, he has agreed to render his exclusive services
to the Company. The agreement provides for full vesting of Mr. Lawson's
benefits under the Supplemental Executive Retirement Plan, which he may
receive upon retirement following his attaining age 60 on January 16, 1998.
The terms and benefits of his employment agreement are otherwise
essentially identical to those described for Mr. Keiffer, except that
the minimum annual compensation is the base salary most recently
approved by the Board of Directors.
In December 1990 the Board approved an employment contract for
Dr. Heil, which replaced a previous contract that expired October
12, 1988. The new agreement provides for a term through February 24, 2000
and an automatic renewal for an additional three years to February 24,
2003 if neither Dr. Heil nor the Company notify the other that no
renewal is to occur. As of November 22, 1993, Dr. Heil's agreement was
amended, effective December 1, 1993, vesting his benefits under the
Supplemental Executive Retirement Plan, which he may receive on
February 24, 1998 when he will be 60 years old. Whereupon he will
receive a retirement benefit equal to 50 percent of Average Monthly
Compensation as that term is defined in the Supplemental Executive
Retirement Plan. If Dr. Heil retires on or after February 24, 2000,
the benefit will increase to 55 percent of Average Monthly Compensation,
and if the agreement is extended to February 24, 2003 and Dr. Heil
retires on or after such date, the benefit will be increased to 65
percent of Average Monthly Compensation. Other terms of the employment
contract are essentially identical to those described previously
previously for Mr. Keiffer, except that the minimum annual compensation
is the base salary most recently approved by the Board of Directors.
Mr. Crowley has been employed under an agreement effective June
28, 1978, as amended, whereby he agreed to render his exclusive
services to the Company for a period ending February 1990. The
benefits under this contract are fully vested. Terms of the employment
contract are essentially identical to that described for Mr. Keiffer,
except that the minimum annual compensation is the base salary most
recently approved by the Board of Directors. Mr. Crowley retired from
the Company effective March 1, 1995.
<PAGE>
Mr. Marino is employed under an agreement dated October 14, 1991
and amended on December 1, 1993. The agreement provides for a term to
October 13, 2001 and an automatic renewal for an additional two years
to February 3, 2004 and three years to February 3, 2007, respectively,
if neither Mr. Marino nor the Company notify the other that no renewal
is to occur. If the contract is not extended beyond February 3, 2001,
he may retire and receive a retirement benefit equal to 50 percent of
Average Monthly Compensation as that term is defined in the Supplemental
Executive Retirmement Plan. If Mr. Marino completes the second renewal
period to age 62, the retirement benefit increases to 55 percent of
Average Monthly Compensation, and if he completes the third renewal
period to age 65, the retirement benefit will be 65 percent of
Average Monthly Compensation. Effective December 1, 1993, Mr. Marino's
rights to benefits payable under the Supplemental Executive Retirement
Plan became nonforfeitable. Other terms of the employment contract
are essentially identical to those described previously for Mr. Keiffer,
except that the minimum annual compensation is the base salary most
recently approved by the Board of Directors.
Mr. Cullen is employed under an agreement dated October 14, 1991
and amended on November 22, 1993. The agreement provides for a term to
November 8, 2000 and an automatic renewal for an additional to years to
November 8, 2002, and three years to November 8, 2005, respectively, if
neither Mr. Cullen nor the Company notify the other that no renewal is
to occur. On November 8, 2000, Mr. Cullen will be 60 years of age. At
that time he may retire and receive a retirement benefit equal to 50
percent of Average Monthly Compensation as that term is defined in the
Supplemental Executive Retirement Plan. If Mr. Cullen completes the
second renewal period to age 62, the retirement benefit increases to
55 percent of Average Monthly Compensation, and if he completes the
third renewal period to age 65, the retirement benefit will be 65
percent of Average Monthly Compensation. Effective December 1, 1993,
Mr. Cullen's rights to benefits payable under the Supplemental Executive
Retirement Plan became nonforfeitable. Other terms of the employment
contract are essentially identical to those described for Mr. Keiffer,
except that the minimum annual compensation is the base salary most
recently approved by the Board of Directors.
In each of the aforementioned employment contracts, the Company
has assumed the obligation to pay certain fees and expenses of
counsel incurred if legal action is required by an executive to
enforce his rights under the contract.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and
greater than ten-percent shareholders are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to
the Company, the Company believes that during the fiscal year ended
December 31, 1994 all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners
were complied with; except that one report, covering one transaction
involving 500 shares was filed late by General Charles A. Gabriel, a
director of the Company.
Director's Compensation and Retirement
Directors of the Company are paid a retainer fee of $2,000 per
month and $1,200 for each board meeting attended. Directors are also
paid $1,200 per committee meeting for meetings attended, except that the
Chairman of the committee is paid $1,500. Directors who are officers
of the Company and Mr. Tacke and Mr. Keiffer receive no additional
compensation for their services as Directors or committee members.
<PAGE>
In August of 1987 the Board of Directors established a retirement
policy. Directors with ten years or more of service on the Board
at the time of retirement are eligible for post-retirement remuneration
equal to 100% of the annual Board retainer in effect at the time of
retirement payable monthly for a term equal to the length of service
of such director on the Board. Upon the director's death, the
surviving spouse is entitled to receive the amount of the remainder
of such term or until the spouse's death, whichever occurs first.
In addition, during active service and the retirement period, a death
benefit in the amount of $100,000 payable to the director's surviving
spouse is provided. The mandatory retirement age for management
directors who are corporate officers, including the Chairman of the
Board and Chief Executive Officer, is 65. For outside directors,
the mandatory retirement age is 70. All incumbent 1987 directors
were excepted from mandatory retirement, although each may avail
himself or herself of the provisions of the retirement policy as
adopted. If a director has served five years or more on the Board
but has not attained retirement age, a pro rata benefit is payable
to the director or surviving spouse upon inability to continue service
due to illness, disability or infirmity. No retirement benefit or
death benefit is payable to a management director who is a participant
in the Supplemental Executive Retirement Plan or is receiving
supplemental pension benefits payable pursuant to an employment
contract.
See the following section captioned "Proposal to Approve the 1995
Directors' Stock Option Plan" for a description of certain benefits to
be provided in the form of options and restricted stock awards as part
of directors' compensation.
<PAGE>
PROPOSAL TO APPROVED THE
1995 DIRECTORS' STOCK OPTION PLAN
On October 26, 1994, the Board of Directors of the Company
adopted, subject to approval by the stockholders, the 1995 Directors'
Stock Option Plan (the "1995 Plan") for eligible directors
("Participating Directors") of the Company. If approved, the 1995 Plan
will be effective January 1, 1995 and 50,000 shares of the authorized
but unissued shares of Common Stock of the Company will be reserved for
the automatic grants of stock options and restricted awards to
Participating Directors of the Company. No stock options or restricted
stock awards have been granted under the 1995 Plan. A copy of the 1995
Plan is attached as Exhibit I.
Purpose of the Plan
Management of the Company believes that granting of options and
restricted awards to Participating Directors will promote the growth and
prosperity of the Company by attracting and retaining the best available
people to serve as independent directors and encourage stock ownership
by such individuals and thus increase their personal interest in the
Company's success.
Eligibility
Every Director elected to the Board of Directors of the Company
will be eligible for options and awards under the 1995 Plan except a
"Management Director". A Management Director is any Director who is an
employee or officer of the Company, or a retired officer or employee of
the Company who is receiving benefits under the Company's Supplemental
Executive Retirement Plan or is receiving supplemental pension benefits
payable pursuant to an employment contract with the Company.
Participating Directors would currently include nominees for election
as a director at the 1995 Annual Meeting of Shareholders, S. Lee Kling
and James A. Bitonti, and incumbent directors, E. F. Buehring, Charles A.
Gabriel, C. Roland Haden, Martin R. Hoffmann and Francine I. Neff.
Stock Option Grants
If the 1995 Plan is approved by the stockholders at the 1995 Annual
Meeting of Stockholders, each Participating Director will be granted an
option to purchase 500 shares of Common Stock. Thereafter, immediately
following each Annual Meeting of Stockholders beginning with the 1996
Annual Meeting, upon each Participating Director's election or re-election
to the Board of Directors, he or she will receive an option to purchase
500 shares of Common Stock. Each option granted under the 1995 Plan
will vest over a three year period, with one third of the number of
shares subject to the option becoming exercisable on each of the first,
second and third anniversaries of the date of grant, and all options will
expire ten years after the date of grant. The exercise price of each
option granted under the 1995 Plan will be 100% of the fair market value
of the Common Stock (the average of the high and low sales prices of
the Common Stock of the New York Stock Exchange) on the date the option
is granted. The options are not transferable except by will and by the
laws of descent and distribution. In the event that an Option holder
shall cease to be a Director of the Company for any reason other than
death, provision is made in the 1995 Plan for exercise of those options
exercisable at the date of cessation within six months after the
termination date as a Director, but no later than the expiration of
the term of each Option. Share subject to an option which is terminated
or which expires will again be available for grants under the 1995
Plan. In addition, options may be granted under the 1995 Plan to
persons holding existing options under the 1995 Plan or any other plans
of the Company.
Restricted Stock Awards
The 1995 Plan provides that, in addition to stock options, immediately
following each Annual Meeting of Stockholders beginning with the 1995
Annual Meeting, each incumbent Participating Director will be granted
an award of 100 shares of Common Stock. The shares of Common Stock will
be registered in their names and placed in escrow as restricted stock awards.
Voluntary disposition of such shares by the Participating Director will
be restricted prior to the earliest to occur of the following events:
(a) the Participating Director's retirement from the Board pursuant to
the Board's retirement policies, or resignation from the Board under its
disability policy; (b) the Participating Director's death; (c) six
months after the completion of a term as a Director for which the
Participating Director was either not renominated for a successive term,
or for which he or she was nominated but not elected to a successive
term; or (d) ten years following the date of the award.
<PAGE>
The Board may permit a Participating Director to pay the exercise
price for an option or an award and any required withholding tax by
delivering shares of the Company's Common Stock valued at current market
prices in exchange for additional shares upon exercise of the
Participating Director's option or award.
Federal Income Tax Consequences
For federal income tax purposes, the grant of an option under the
1995 Plan will not result in taxable income to the Participating
Director and no taxable income will be recognized by a Participating
Director who receives a restricted stock award pursuant to the 1995 Plan
until the time at which the restrictions terminate. The exercise of
options granted under the 1995 Plan, and the delivery from escrow of
shares awarded pursuant to such plan, are conditioned upon the
Participating Director's paying the amount of any withholding tax
imposed at the time under any provision of the Internal Revenue Code or
any law of any other taxing jurisdiction requiring payment of such
taxes. The spread between the market value of the shares on the date of
option exercise, or on the date award shares are delivered from escrow,
and the price paid for the shares or the option price is taxable to the
Participating Director as ordinary income under current federal tax
laws. In the case of restricted awards, the Participating Director may
either pay the withholding tax or instruct the escrow holder to sell for
the Participating Director's account, at the best reasonably obtainable
price, so many of the shares as may be necessary to obtain the amount to
pay such tax and to deliver the balance of the shares to the
Participating Director.
The 1995 Plan is specifically designed for the granting of stock
options which do not qualify as "incentive stock options" under the
applicable federal tax statutes.
Adjustments
Adjustments may be made in the number of shares authorized, as
well as the number and price of shares subject to outstanding options
and awards by the Board of Directors in the event of a stock dividend,
stock split or share combination or any other reclassification or
reorganization of the Company.
Amendment, Termination and Administration of the Plan
The Board of Directors may amend, alter or discontinue the 1995
Plan, but may not, without the approval of, or ratification by, the
stockholders, increase the number of shares authorized to be issued
under the 1995 Plan, materially increase the benefits accruing to
participants in the 1995 Plan, or change the class of Directors who are
eligible to participate in the 1995 Plan. Without further action of the
Board of Directors, the 1995 Plan will terminate on December 31, 2004,
and no options or awards will be granted after that date under the 1995
Plan.
The closing price of the Company's Common Stock on the New York
Stock Exchange on March 3, 1995, was $43.75 per share.
Shareholder Approval
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or by proxy and entitled to
vote at the 1995 Annual Meeting of Stockholders is required for approval
of the 1995 Plan. If such approval is obtained, subject to compliance
with the limitations set forth in the regulations promulgated under
under Section 16 of the Securities and Exchange Act of 1934 (the "Act"),
as amended, transactions with respect to options granted under the Plan
will be exempt from Section 16(b) of such Act.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1995
DIRECTORS' STOCK OPTION PLAN.
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP, certified
public accountants, who have been the independent public accountants
for the Company since 1965, to continue in that capacity for the
year 1995. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting and will be afforded an opportunity to
make remarks if they desire to do so and will respond to appropriate
questions.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The date by which shareholder proposals must be received by the
Company for possible inclusion in the proxy materials relating to
the 1996 Annual Meeting of Stockholders is November 22, 1995.
MISCELLANEOUS
The management knows of no matter other than those described
herein that will be presented for consideration at the meeting. If,
however, other matters come before the meeting, the proxy holders
intend to vote the proxy in accordance with their best judgment in
the interest of the Company.
The cost of solicitation of proxies, including the cost of
reimbursing brokers for forwarding proxies and proxy statements to
their principals, will be borne by the Company. Proxies may be
solicited without extra compensation by officers and employees of
the Company by telephone, telegraph or personally. Arrangements may
also be made with brokerage houses and other custodians, nominees
and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the
Company may reimburse them for reasonable out-of-pocket expenses
incurred by them in connection therewith.
The Company has also retained D. F. King & Co., Inc., 77 Water
Street, New York, New York 10005 to aid in the solicitation of
proxies from the holders of its Common Stock and will pay D. F. King
& Co., Inc. a sum of approximately $16,500 as a fee for its services
and will reimburse it for its out-of-pocket expenses.
The Annual Report to Stockholders covering the year 1994, which
includes financial statements, is being mailed to stockholders with
this Proxy Statement but does not constitute a part of the proxy
solicitation materials.
Please date, sign and return the proxy at your earliest
convenience in the enclosed envelope. No postage is required for
mailing in the United States. A prompt return of your proxy will be
appreciated as it will save the expense of further mailings.
By Order of the Board of Directors,
MICHAEL C. EBERHARDT
Secretary
Dallas, Texas
March 24, 1995
<PAGE>
E-SYSTEMS, INC.
6250 LBJ Freeway
Dallas, Texas 75240
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints A. Lowell Lawson and Michael C. Eberhardt,
or either of them, with power of substitution, as Proxies to vote
all stock of E-Systems, Inc., owned by the undersigned at the Annual
Meeting of Shareholders to be held at 6250 LBJ Freeway, Dallas,
Texas, on Wednesday, April 26, 1995, at 10:00 Dallas time, upon the
matters as specified herein:
Election of Directors Nominees: (change of address)
James A. Bitonti, S. Lee Kling and -------------------------
David R. Tacke -------------------------
-------------------------
-------------------------
(If your address has changed,
please provide new address
and mark the box on the
reverse side of this card.)
You may specify your choices by marking the boxes on the reverse
side, but you do not need to mark any boxes if you want to vote as
recommended by the Company's Board of Directors. The proxies cannot
vote your shares unless you sign and return this proxy card.
<PAGE>
/x/ Please mark your
votes as in this
example.
1. Election of Directors
(See Reverse)
For Withheld
/ / / /
------------------------------------
For, except as marked to the contrary above.
2. Approval of the 1995 Directors' Stock Option Plan
For Against Abstain
/ / / / / /
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
/ / Change of
Address Provided
SIGNATURE(S) --------------------------------- DATE ----------
Please sign EXACTLY as your name appears above. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by an authorized person.
EXHIBIT I
E-SYSTEMS, INC.
1995 DIRECTORS' STOCK OPTION PLAN
This 1995 Directors' Stock Option Plan adopted by the Board of
Directors of E-Systems, Inc., on October 26, 1994, effective January 1,
1995.
WITNESSETH:
1. Purpose. The purposes of the E-Systems, Inc. 1995 Directors'
Stock Option Plan ("the Plan") are to promote the growth and prosperity
of E-Systems, Inc. (the "Company"), to attract and retain the best
available people to serve as independent directors of the Company and to
encourage stock ownership by such individuals and thus increase their
personal interest in the Company's success.
2. Administration.
(a) The Plan shall be administered by the Board of Directors of
the Company (the "Board"). The Board may from time to time prescribe,
amend and rescind such rules, regulations, provisions and procedures,
consistent with the terms of the Plan, as may be advisable in its
opinion in the administration of the Plan, and subject to the terms of
the Plan shall prescribe the provisions of the stock option and award
agreements to be issued hereunder and make all other determinations and
interpretations necessary or advisable for administering the Plan and
the stock option and award agreements.
(b) A majority of the Board shall constitute a quorum, and the
acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all members of the
Board, shall be the acts of the Board. All decisions, determinations
and interpretations of the Board shall be final and binding on all
persons interested in the Plan.
3. Shares and Options under the Plan
(a) The stock to be subject to stock options ("Options") and
awards of stock ("Awards") under the Plan shall be shares of the
Company's Common Stock, par value $1.00 per share, (the "Common Stock"),
either authorized and unissued or treasury stock.
(b) In the event of a merger, consolidation, reorganization,
recapitalization, subdivision, or any other similar change affecting the
Common Stock of the Company, an appropriate and equitable adjustment to
reflect any such change shall be made in the total number and class of
shares for which Options and Awards may be granted and the number and
class of shares and the price per share of any Option theretofore
granted to the extent unexercised. Such adjustment shall be as
determined by the Board, provided, however, that any such computation
shall be rounded to the nearest whole share and no such modification
shall require the issuance of fractional shares.
(c) the total amount of stock reserved for issuance under this
Plan shall be 50,000 shares (subject to adjustment in accordance with
Section 3[b]) of Common Stock.
(d) in the event any outstanding Option for any reason expires,
is canceled or otherwise terminates, the shares allocable to the
unexercised portion of such Option shall again be available for issuance
under this Plan. In the event that shares subject to an Award are
transferred to the Company in accordance with this Plan, such shares
shall again be available for issuance under this Plan.
(e) Nothing in the Plan or in any Option or Award granted
pursuant to the Plan shall confer on any individual any right to
continue as a Director of the Company or interfere in any way with the
removal of such person as a Director in accordance with the Company's
Certificate of Incorporation and Bylaws.
4. Eligibility. Every Director elected to the Board of Directors
of the Company shall be eligible for Options and Awards as set forth in
this Plan except a "Management Director", which shall mean any Director
who is an employee or Officer of the Company, or a retired Officer or
employee of the Company who is receiving benefits under the Company's
Supplemental Executive Retirement Plan or is receiving supplemental
pension benefits payable pursuant to an employment contract with the
Company.
No Option or Award shall be granted or made to any person who is
the beneficial owner of 5% or more of the total combined voting power or
value of all classes of stock of the Company or one or more of its
subsidiaries; or who upon exercise of the Option granted or upon receipt
of the Award awarded would become the beneficial owner of 5% or more of
such combined voting power or value of all classes of stock of the
Company or one or more of its subsidiaries.
5. Options and Awards
(a) Each eligible Director of the Company ("Participating
Director") shall automatically be granted an Option to purchase 500
shares of Common Stock immediately following the 1995 Annual Meeting of
Stockholders of the Company, with the date of grant to be the date of
such meeting. Following the initial grant, each Participating Director
then serving shall automatically be granted Options and Awards as
follows:
Immediately following each Annual Meeting of Stockholders of
the Company held prior to the expiration of the Plan, commencing with
the 1996 Annual Meeting, where a Participating Director is elected
to a term of office (either three years, or a lesser term for a
Director who replaces an outgoing Director for the remainder of a three-
year term), he or she shall be granted an Option to purchase
500 shares of Common Stock (with the date of grant to be the
date of such meeting). These grants are to continue with each
successive re-election to a term as Director.
Immediately following each Annual Meeting of Stockholders of
the Company held prior to the expiration of the Plan,
commencing with the 1995 Annual Meeting, each incumbent
Participating Director shall be granted an Award in the amount
of 100 shares of Common Stock (with the date of grant to be the date
of such meeting), which stock shall be subject to the restrictions
specified in this Plan.
(b) It is intended that Options to purchase shares of the
Company's stock under the Plan shall constitute nonqualified Options,
not incentive stock options, within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
6. Price
(a) The price at which shares may be purchased under each Option
shall be 100% of the fair market value of the Common Stock on the date
the Option is granted. Such fair market value shall be the average of
the high and low sales prices of Common Stock on the New York Stock
Exchange on the date of grant of the Option as reported in the Wall
Street Journal or other data source.
(b) An amount of shares equal to one-third of the total shares
subject to an Option shall become available for exercise on the first,
second and third anniversary dates of the grant, respectively. If the
total number of shares is not devisable by three without resulting in a
fractional share, fractional shares may not be issued and the amount of
such fraction shall be dropped from the first increment and the
following adjustment(s) made in the number of shares in the second or
third (or both) increments:
- if the fractions aggregate one whole share the third
increment shall be increased by one share;
- if the fractions aggregate two whole shares, the second
and third increments shall each be increased by one share.
In no event shall the aggregate number of shares of all three
vesting increments exceed the total number of Option shares granted.
(c) Each Option shall expire, except as to portions exercised,
ten years after date of grant.
7. Special Provisions as to Awards. The following special
provisions apply to the grant of Awards of Common Stock.
(a) Shares of Common Stock awarded pursuant to this Plan shall be
issued and registered in the name of the Participating Director and
placed in escrow. The Participating Director may not sell, pledge,
hypothecate or otherwise transfer such Award shares prior to, and the
Award shares shall not be delivered to the Participating Director until,
the earliest of the following events:
(i) the Participating Director's retirement from the Board
pursuant to the Board's retirement policies, or resignation
from the Board under its disability policy;
(ii) the Participating Director's death;
(iii) six months after the completion of a term as a
Director for which the Participating Director was either not
renominated for a successive term, or for which he or she
was nominated but not elected to a successive term;
(iv) ten years following the date of grant.
If a Participating Director ceases to be a member of the Board
other than in accordance with clauses (i), (ii), or (iii) immediately
above before the tenth anniversary of the date of the grant of an Award,
the shares subject to such Award shall be forfeited and transferred and
delivered to the Company.
(b) The consideration for each share of Common Stock subject to
an Award shall be $1.00.
(c) In order to administer restrictions required or permitted on
the release and delivery of Award shares to a Participating Director,
the certificates evidencing such shares awarded hereunder, although
issued in the name of the Participating Director, shall be held in
escrow by an escrow agent appointed from time to time by the Company,
subject to delivery to the Participating Director at such times and in
such amounts as shall be specified in this Plan. A Participating
Director's acceptance of an Award of shares pursuant to the Plan shall
constitute such Participating Director's irrevocable power of attorney
to the escrow agent to cause the transfer and delivery to the Company of
any such Award shares which are required to be so transferred and
delivered pursuant to the provisions of this Plan.
(d) The voting rights on Award shares shall belong to each
Participating Director with respect to those share awards held in
escrow. Dividends, if any, on shares held in escrow shall be paid to
each Participating Director.
8. Exercise of Options
(a) Who May Exercise. During the lifetime of the Participating
Director an Option may be exercised only by the Participating Director.
If there is any attempt to transfer, assign, pledge, dispose of, or upon
the levy by reason of any attachment or similar process, the Option
shall become null and void.
If the Participating Director dies while serving on the Board of
Directors of the Company, the remaining unexercised shares shall become
fully vested as of the date of death and such Option may be exercised by
the Participating Director's estate or a person who has acquired the
right to exercise the Option by the Participating Director's will or by
the laws of descent and distribution at anytime or times prior to the
termination date specified in Section 6(c); provided such exercise must
occur within two years following the date of death.
(b) Termination as a Director. In the event that an Option
holder shall cease to be a Director of the Company for any reason other
than death, such person may exercise his or her Option or Options to the
extent of all vested installments within six months after the
termination date as a Director, but no later than the expiration of the
term of each Option. No further vesting of installments under any
Option shall occur after the termination of the Participating Director
as a Director of the Company. If the Option holder dies within the six
months after his or her termination as a Director of the Company, any
vested Options may be exercised by the Participating Director's estate
or a person who has acquired the right to exercise the Option or Options
by the Participating Director's will or by the laws of descent and
distribution prior to the termination date specified in Section 6(c);
provided such exercise must occur within two years following the date of
death.
9. Payments and Withholding Tax.
(a) As to Option shares, full payment for shares purchased upon
exercise of an Option shall be made at the time of exercise. Any
federal, state or local taxes required to be paid by or withheld from
the Participating Director at the time of exercise shall be paid by the
Company withholding from the shares of Common Stock to be issued to the
Participating Director the number of shares (rounded to the nearest
whole share) necessary to satisfy the Company's obligation to withhold
taxes, that determination to be based on the shares' current market
value as of the date the tax withholding is to be made. The exercise
price of an Option may be paid by delivering shares of the Company's
Common Stock valued at current market prices upon exercise of a
Participating Director's Option. Payment may also be made by delivering
a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount
of sale or loan proceeds to pay the exercise price in connection with
such exercise. No Option shall confer any rights as a stockholder until
such shares are issued upon exercise of the Option.
(b) Provision for or payment by the Participating Director of any
state, federal or local withholding taxes attributable to the delivery
of Award shares shall be made in a manner satisfactory to the Company.
(c) As to Award shares, upon the satisfaction of any conditions
for delivery to the Participating Director otherwise set forth in this
Plan, shares will be delivered to the Participating Director only upon
payment by him or her to the Company of the amount of any withholding
tax which may be imposed thereon under the provisions of the Internal
Revenue Code as then in effect or any law of any other taxing
jurisdiction requiring payment of any such taxes or withholding tax.
10. Amendment and Discontinuance. The Board may at any time
amend this Plan, provided that no amendment without the approval of
stockholders shall: (a) materially increase the benefits accruing to
participants under the Plan; (b) materially increase the number of
securities which may be issued under the Plan; or (c) materially modify
the requirements as to eligibility for participation in the Plan. The
Board may terminate the Plan at any time but such termination shall not
affect Options or Awards already granted and such Options or Awards
shall remain in full force and effect as if the Plan had not been
terminated. Notwithstanding any other provision hereof, in no event
shall the provisions of this Plan be amended more frequently than once
every six months other than to comport with changes in the Internal
Revenue Code of 1986, as amended from time to time, and the Employee
Retirement Income Security Act, as amended from time to time, or the
rules thereunder.
11. Reservation of Shares. During the term of the Plan and any
Option exercisable thereunder, the Company shall at all times reserve
and keep available, and will obtain from any regulatory body having
jurisdiction any requisite authority in order to issue or sell such
number of shares of its Common Stock as shall be sufficient to satisfy
the requirements of the Plan. Inability of the Company to obtain any
authority deemed by the Company's counsel to be necessary to the lawful
issuance or sale of any shares of its stock hereunder shall relieve the
Company of any liability in respect of the non-issuance or sale of such
stock as to which such authority shall not have been obtained.
12. Securities Act of 1933. Unless (i) the shares to be issued
upon exercise of an Option or Award granted under the Plan have been
effectively registered under the Securities Act of 1933 as now in force
or hereafter amended (the "Act"); or (ii) in the opinion of the
Company's General Counsel no such registration is necessary, the Company
shall be under no obligation to issue any shares covered by any Option
or Award.
13. Nontransferability. Notwithstanding any provision of this
Plan to the contrary, Options and Awards may not be transferred other
than by will or the laws of descent and distribution.
14. Section 16. With respect to persons subject to Section 16 of
the Securities Exchange Act of 1934 ("Exchange Act"), transactions under
this Plan are intended to comply with all applicable provisions of Rule
16b-3 or its successors under the Exchange Act. To the extent any
provision of this Plan or action by the Board fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Board.
15. Effective Date: Term of Plan. This Plan shall become
effective upon approval by the affirmative vote of the holders of a
majority of the Company's Common Stock present, or represented, and
entitled to vote at the 1995 Annual Meeting of Stockholders of the
Company. The Plan shall terminate on December 31, 2004, unless sooner
terminated as provided in the Plan. At the end of such term, the Plan
shall expire except for Options or Awards then outstanding.
