Via: EDGAR
March 26, 1999
Securities and Exchange Commission
Judiciary Plaza
455 Street N.W.
Washington D.C. 20549
Attention: Filing Desk
Re: EMS Technologies, Inc. (the "Company")
File No. 0-6072 -- Definitive Proxy Material
Ladies and Gentlemen:
Accompanying this letter is the definitive form of Proxy
Statement being used in connection with the solicitation of
proxies for the Company's Annual Meeting to be held on April 30,
1999, together with the form of Proxy being used in connection
with such solicitation. These documents are submitted for filing
pursuant to Rule 14a-6(b) under the Securities Exchange Act of
1934.
The enclosed proxy materials are expected to be released to the
Company's shareholders on March 29, 1999, accompanied by the
Company's 1998 Annual Report to its shareholders. Seven copies
of that Report will be forwarded by mail to the Commission on
March 29, 1999.
Pursuant to Instruction 3 to Item 10 of Schedule 14A, the amended
version of the Company's 1997 Stock Incentive Plan, which is
being presented for approval of certain amendments by the
shareholders at the Annual Meeting, is attached as an appendix to
the filed version of the Proxy Statement. The common stock to be
offered under that Plan as a result of the amendments will be
registered on Form S-8 during 1999, prior to any such securities
being issued or becoming subject to exercisable options.
Please direct any inquiries concerning this filing to the
undersigned.
Very truly yours,
EMS TECHNOLOGIES, INC.
By: /s/William S. Jacobs
--------------------------------------
William S. Jacobs
Vice President and General Counsel
EMS TECHNOLOGIES, INC.
Formerly Named
ELECTROMAGNETIC SCIENCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1999
Notice is hereby given that the Annual Meeting of
Shareholders of EMS Technologies, Inc. (the "Company") will be
held at 4:00 p.m. local Atlanta time on April 30, 1999, at the
Atlanta Marriott Norcross, 475 Technology Parkway, N.W.,
Norcross, Georgia, for the following purposes:
1. To elect seven members of the Board of Directors to
serve during the ensuing year;
2. To consider amendments to the Company's 1997 Stock
Incentive Plan that (i) increase the number of shares available
thereunder, and (ii) increase the number of shares automatically
optioned each year to non-employee members of the Board of
Directors; and
3. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
Only holders of record of common stock of the Company at the
close of business on March 12, 1999, will be entitled to notice
of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
WILLIAM S. JACOBS, Secretary
Norcross, Georgia
March 26, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF
SHAREHOLDERS, YOU ARE REQUESTED TO FILL IN AND SIGN THE ENCLOSED
FORM OF PROXY AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO ATTEND
THE MEETING AND DECIDE THAT YOU WISH TO VOTE IN PERSON, YOU MAY
WITHDRAW YOUR PROXY.
EMS TECHNOLOGIES, INC.
660 Engineering Drive
Technology Park/Atlanta
Norcross, Georgia 30092
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1999
GENERAL INFORMATION
Shareholders' Meeting
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of EMS Technologies, Inc.
(the "Company") of proxies to be used at the Annual Meeting of
Shareholders to be held at 4:00 p.m. local Atlanta time on April
30, 1999, at the Atlanta Marriott Norcross, Norcross, Georgia.
This Proxy Statement is being mailed to shareholders on
approximately March 30, 1999.
Matters to be Acted Upon
The following matters will be acted upon at the Annual
Meeting of Shareholders:
1. The election of seven members of the Board of
Directors, each to serve a term of one year and thereafter until
his successor is duly elected and qualified;
2. To consider amendments to the Company's 1997 Stock
Incentive Plan that (i) increase the number of shares available
thereunder, and (ii) increase the number of shares automatically
optioned each year to non-employee members of the Board of
Directors; and
3. The transaction of such other business as may properly
come before the Meeting or any adjournment thereof.
Revocation of Proxies
A proxy form is enclosed herewith. Any shareholder who
executes and delivers a proxy may revoke it at any time prior to
its use by giving written notice of such revocation to the
Secretary of the Company at 660 Engineering Drive, Technology
Park/Atlanta, Norcross, Georgia 30092, or by executing and
delivering to the Secretary of the Company a proxy bearing a
later date. A proxy may also be revoked at the Annual Meeting by
any shareholder present at the Annual Meeting who elects to vote
in person.
Voting of Proxies
When the enclosed proxy is properly executed and returned,
the shares that it represents will be voted at the Annual Meeting
in accordance with the instructions noted thereon. In the
absence of such instructions, the shares represented thereby will
be voted in favor of the seven nominees for election to the Board
of Directors. The Board of Directors does not know of any other
business to be brought before the Meeting, and has not received
notice of any such matter within the time periods specified in
the Company's Bylaws or in rules of the Securities and Exchange
Commission governing discretionary voting authority; it is
intended that as to such other business, if any, a vote may be
cast pursuant to the proxy in accordance with the judgment of the
person or persons acting thereunder.
Only holders of record of issued and outstanding shares of
common stock of the Company at the close of business on March 12,
1999, are entitled to notice of, or to vote at, the Annual
Meeting. Each holder is entitled to one vote for each share of
common stock held on the record date. On March 12, 1999, there
were 8,706,668 shares of common stock outstanding and entitled to
vote.
Cost of Solicitation
The cost of soliciting proxies will be borne by the Company.
Officers, directors and employees of the Company may solicit
proxies by telephone, telegraph or personal interview.
Shareholder Proposals for the 2000 Annual Meeting
Any proposals by shareholders intended to be included in the
proxy materials for the 2000 Annual Meeting must be received by
the Company at its principal executive offices, attention of the
Secretary, no later than December 3, 1999.
In addition, for any proposal or nomination that a
shareholder wishes to present at the Meeting but is not seeking
to have included in the Company's proxy materials, notice as
required by the Company's Bylaws (including the information
specified in the Bylaws), must be received by the Secretary no
later than March 2, 2000; if such notice is not timely received,
the matter or nomination will not be considered at the 2000
Annual Meeting.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of members of
the Board of Directors shall be determined by the Board, which
has set that number at seven. Unless otherwise directed, it is
the intention of the persons named in the enclosed form of proxy
to vote such proxy in favor of the election of the seven persons
named below as directors of the Company. Each such person will
serve until the next Annual Meeting of Shareholders and
thereafter until his successor is elected and has qualified. In
case any named nominee should become unable to serve, or for good
cause will not serve, the persons named in the proxy will have
the right to use their discretion to vote for a substitute or
substitutes or to vote only for the remaining nominees.
Assuming the presence of a quorum at the Meeting, the
nominees will be elected by favorable vote of a plurality of the
shares actually voted. Abstentions and broker non-vote shares
will be considered as present for the purposes of determining the
presence of a quorum, but will not otherwise be considered in
determining the outcome of the vote. Shares for which authority
to cast a favorable vote is affirmatively withheld will be
treated as voting shares in determining whether the requisite
plurality has been achieved.
The following table lists the nominees and their ages, their
other positions with the Company, their principal occupations at
present and during the past five years, and the year each was
first elected as a director. Except for Mr. Hansen, all nominees
are currently directors of the Company and were elected by the
shareholders at the last Annual Meeting.
Year First
Name and Principal Occupations Elected
for the Last Five Years Age Director
- ------------------------------------------ --- -----------
Alfred G. Hansen 65 --
President, A.G. Hansen Associates, Inc.,
Marietta, Georgia, an aerospace marketing
and manufacturing consultant. From 1995
until 1998, Mr. Hansen served as Executive
Vice President of Lockheed martin Aeronautical
Systems, with broad operational resonsibilities
for its aerospace business, and as a Vice
President of its parent company, Lockheed
Martin Corporation; he previously (since
1991) had been Vice President for Airlift
Systems for the Aeronautical Systems unit.
Mr. Hansen retired from the U.S. Air Force
in 1989 as a four-star general, serving in
his last assignment as Commander of the
Air Force Logistics Command.
Jerry H. Lassiter 68 1978
Private investor organizing and managing
interests in finance and real estate.
John B. Mowell 64 1984
President, Mowell Financial Group, Inc.,
Tallahassee, Florida, an investment
counseling firm.
Don T. Scartz 56 1995
Senior Vice President and Chief
Financial Officer, Treasurer of the
Company.
Thomas E. Sharon, Ph.D. 53 1984
President and Chief Executive Officer
of the Company (since 1994); previously
President and Chief Operating
Officer of the Company.
Elvie L. Smith 73 1998
Mr. Smith is now retired. Until 1997,
he was a Director of Pratt & Whitney
Canada, Inc., a Canadian subsidiary of Pratt
& Whitney, Inc. engaged in the design and
manufacture of aircraft engines. Mr. Smith
was Chief Executive Officer of Pratt &
Whitney Canada, Inc. from 1980 to 1985, and
served as its Chairman from 1984 to 1994.
Since 1987, he has also served as a director
of EMS Technologies Canada, Ltd., a Canadian
sub-sidiary of the Company formerly known as
CAL Corporation.
Norman E. Thagard, M.D. 55 1998
Since 1996, Professor, Bernard F. Sliger
Eminent Scholar Chair, Florida State University,
Director of College Relations, College of
Engineering, Florida A&M University - Florida
State University, and aerospace consultant.
From 1978 until 1996, Dr. Thagard served as a
NASA astronaut, participating in four Shuttle
missions and one mission aboard the Russian Mir
Space Station, for a total of 140 days in space.
Committees and Meetings of the Board of Directors
The Board of Directors has designated a Compensation Committee,
which during the past year comprised Messrs. Lassiter, Mowell and
Smith. This committee reviews and recommends to the Board compensation
and benefits for the Company's executive officers, administers the
Company's stock option plans with respect to the participation of
employees who are officers and directors, and is responsible for
reviewing and approving any related party transactions involving the
Company. The Compensation Committee met four times during the last
fiscal year. The Board has also designated an Audit Committee composed
during the past year of Messrs. Lassiter and Smith; the principal
functions of this committee are to meet with the Company's independent
auditors, to review the Company's consolidated fiscal year financial
statements, to review the independence, qualifications and activities
of the independent auditors, and to recommend to the Board of Directors
the appointment of the independent auditors. This Committee met one
time during 1998, and its members also consulted on various occasions
during the year with members of the accounting staff and the
independent auditors. The Stock Incentive Plan Committee of the Board
consists of Dr. Sharon and Messrs. Mowell and Scartz; this committee,
which met two times during the last fiscal year, is generally
responsible for administering the Company's stock option plans with
respect to the participation of employees who are not officers or
directors. The Board does not maintain a standing nominating
committee.
During the last fiscal year, there were eight meetings of the
Company's Board of Directors. No director attended fewer than 75% of
the aggregate of all meetings of the Board and of all committees on
which he served, except that Mr. Smith attended five of the seven
meetings held during his partial year of service.
Compensation and Other Arrangements with Directors
Each director who is not an employee of the Company is paid $1,000
per meeting attended (excluding telephonic meetings) plus, during 1998,
$3,000 per quarter served, increasing to $4,000 per quarter in 1999.
Each director who is also an employee of the Company is paid $500 per
meeting attended (excluding telephonic meetings) and $500 per quarter
served. Committee meetings that are not held in conjunction with a
full Board meeting are separately compensated at the rate of $500 per
meeting, or $1,000 if participation requires substantially a full day's
commitment. Travel expenses are paid to out-of-town directors.
The Company grants to its non-employee directors options to
acquire shares of its common stock. Through 1998, the option grants
covered an initial grant of 10,000 shares, vesting 2,000 shares per
year for the first five years of participation, and subsequent grants
of 2,500 shares per year, beginning in the sixth year of participation.
All options are granted at the fair market value of the common stock on
the date of grant (which automatically occurs at the date of election).
The exercise price (together with any applicable taxes) may be paid in
cash, by delivery of shares of common stock (valued at their fair
market value at the time of exercise), or by a combination of cash and
stock. Upon the optionee ceasing to be a director for any reason,
these options terminate and are forfeited to the extent that they are
not exercisable at that time. Once exercisable, these options are
non-forfeitable and remain exercisable until the tenth anniversary of the
date of grant.
In 1999, the Board amended the 1997 Stock Incentive Plan (the
"Incentive Plan") to increase the annual automatic grant of options to
non-employee directors, to 3,000 shares per year. However, this
amendment, as well as an amendment to increase the overall number of
shares available for option under the Incentive Plan, are subject to
shareholder approval at the Annual Meeting. Please see the heading
Options for Non-Employee Directors in the section of this Proxy
Statement entitled Amendment of the 1997 Stock Incentive Plan. The
material at this heading includes additional detail concerning the
options granted to non-employee directors, the proposed amendment of
the Incentive Plan, and the number of option shares each nominee would
receive upon election at the Annual Meeting and approval of the
amendment by the shareholders.
The Company has a consulting arrangement with Mr. Mowell, who
provides assistance to the Company in connection with presentations to
the investment community, reviews of potential financial transactions,
and relations with financial analysts. For his services, Mr. Mowell
receives a consulting fee of $12,000 per year plus reimbursement of
expenses. The other members of the Compensation Committee annually
review the terms of this consulting arrangement.
Mr. Smith serves as a director of EMS Technologies Canada, Ltd., a
subsidiary of the Company. For this service, he is currently
compensated at the rate of Can$1,500 per year plus Can$1,000 per
meeting attended.
SECURITY OWNERSHIP
The following table sets forth certain information concerning
shares of the Company's common stock beneficially owned as of March 12,
1999 by the Company's directors and named officers, and as of December
31, 1998 by persons who beneficially own more than 5% of the common
stock. Except as otherwise indicated, each person possessed sole
voting and investment power with respect to the shares shown.
Amount of Approximate
Beneficial Percent of
Ownership Class
------------ -----------
Kopp Investment Advisors, Inc. 1,356,574 (1) 15.6%
6500 Wedgewood Road
Maple Grove, MN 55311
T. Rowe Price Associates, Inc. 848,500 (2) 9.8%
100 East Pratt Street
Baltimore, MD 21202
Dimensional Fund Advisors, Inc. 661,749 (3) 7.6%
1299 Ocean Avenue
Santa Monica, CA 90401
Brinson Partners, Inc. 627,300 (4) 7.2%
209 South LaSalle
Chicago, IL 60604-1295
Wellington Management Company LLP 520,100 6.0%
75 State Street
Boston, MA 02109
Jerry H. Lassiter 22,337 (5) *
John B. Mowell 36,425 (5) *
Don T. Scartz 47,998 (5) *
Thomas E. Sharon 135,286 (5) 1.5%
Elvie L. Smith 11,350 (5) *
Norman E. Thagard 3,000 (5) *
John J. Farrell 18,142 (5) *
William S. Jacobs 30,398 (5) *
Jeffrey A. Leddy 30,479 (5) *
All directors and executive officers
as a group (12 persons) 370,558 4.2%
- ---------------------------------------
* Percentage of shares beneficially owned does not exceed 1%
(1) Kopp Investment Advisors, Inc. has advised that it exercises
investment discretion as to 1,066,574 shares, but does not vote the
shares nor is it the owner of record.
(2) These securities are owned by various individual and
institutional investors for which T. Rowe Price Associates, Inc. (Price
Associates) serves as investment adviser with power to direct
investments and/or to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates expressly disclaims beneficial ownership of such securities.
(3) Dimensional Fund Advisors, Inc. (Dimensional) has advised that
the shares of which it is deemed to have beneficial ownership are owned
by investment companies advised by Dimensional and investment vehicles
managed by Dimensional. Dimensional disclaims beneficial ownership of
all such shares.
(4) Brinson Partners, Inc. disclaims beneficial ownership of such
shares.
(5) Includes shares that are subject to currently exercisable
options in the amounts of 15,000 for Mr. Lassiter, 26,925 for Mr.
Mowell, 24,000 for Mr. Scartz, 67,000 for Dr. Sharon, 2,350 for Mr.
Smith, 2,000 for Dr. Thagard, 8,750 for Mr. Farrell, 8,000 for Mr.
Jacobs, 23,000 for Mr. Leddy, and 194,775 for all directors and
officers as a group. For Mr. Mowell and Mr. Jacobs, these totals also
include 6,000 and 6,325 shares, respectively, as to which each person
shares voting and investment power with family members but disclaims
beneficial interest.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table discloses, for the years ended December 31,
1998, 1997 and 1996, the cash compensation paid by the Company and its
subsidiaries, as well as certain other compensation paid, accrued or
granted for those years, to the Chief Executive Officer and to each of
the other four most highly compensated executive officers.
<TABLE>
Summary Compensation Table
Long-Term Compensation All Other
Annual Compensation Awards Compensation (1)
------------------------------- --------------------------- -------------
Securities
Underlying
Name and Restricted Options/SAR's
Principal Position Year Salary Bonus Other(2) Stock (No. of Shares)
- ------------------ ---- ------ ----- ----- ----- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas E. Sharon 1998 $294,238 $ -0- $ -0- $ -0- 50,000 $23,777
President, Chief 1997 273,863 100,000 -0- -0- 15,000 22,856
Executive Officer 1996 252,603 25,000 -0- -0- 20,000 21,344
(from July 1994)
and Director
Don T. Scartz 1998 179,619 -0- -0- -0- 22,000 28,972
Senior Vice Presi- 1997 169,634 55,000 -0- -0- 8,000 29,571
dent and Chief 1996 157,321 20,000 -0- -0- 10,000 27,134
Financial Officer,
Treasurer
John J. Farrell 1998 214,240 15,000 -0- -0- 30,000 22,833
Senior Vice President 1997 194,539 50,000 -0- -0- 8,000 22,977
and President-Wireless 1996 180,863 20,000 -0- 78,000 9,500 21,918
Products Group
William S. Jacobs 1998 157,710 10,000 -0- -0- 7,000 30,033
Vice President, 1997 149,856 30,000 -0- -0- 5,000 28,368
General Counsel and 1996 144,398 15,000 -0- -0- 6,000 27,221
Secretary
Jeffrey A. Leddy 1998 160,014 -0- -0- -0- 7,000 9,234
Vice President 1997 159,053 40,000 -0- -0- 6,000 8,617
1996 129,626 25,000 -0- -0- 8,000 5,778
</TABLE>
Footnotes to Summary Compensation Table:
(1) For 1998, includes in the case of Dr. Sharon, $2,500 in
matching contributions under the 401(k) plan, $6,504 in benefits
associated with a split-dollar life insurance arrangement, and
$14,773 under the defined contribution retirement plan; in the
case of Mr. Scartz, $3,398 in matching contributions under the
401(k) plan and Employee Stock Purchase Plan, $8,074 under split-
dollar insurance arrangements, and $17,500 under the defined
contribution retirement plan; in the case of Mr. Farrell, $5,178
in matching contributions under the 401(k) and stock purchase
plans, $8,508 under split-dollar insurance arrangements, and
$9,147 under the defined contribution retirement plan; in the
case of Mr. Jacobs, $4,337 in matching contributions under the
401(k) and stock purchase plans, $11,111 under split-dollar
insurance arrangements, and $14,585 under the defined
contribution retirement plan; and in the case of Mr. Leddy,
$2,409 in matching contributions under the 401(k) plan and $6,825
under the defined contribution retirement plan. In each case,
the split-dollar insurance arrangement benefit is the sum of (i)
the premiums paid by the Company attributable to the term
insurance portion of the policy, plus (ii) the implicit value of
the balance of the premium, treating such balance as an interest-
free loan to the scheduled termination date of the arrangement,
based on interest and discount rates of 8%.
(2) Does not include personal benefits that do not exceed the
applicable reporting threshold for any officer.
Option Exercises During Last Fiscal Year and Year-End Option
Values
The following chart sets forth certain information with
respect to the named executives concerning the exercise in 1998
of options in the Company's common stock, and unexercised options
in the Company's stock held as of December 31, 1998:
<TABLE>
Number of Shares Under- Value of Unexercised
Year Ended lying Unexercised Options In-the-Money Options at
December 31, 1998 Held at December 31, 1998 December 31, 1998
Shares Acquired Value -------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Sharon 18,169 $316,389 67,000 85,000 $ 348,875 -
Don T. Scartz 11,500 201,250 24,000 54,906 180,750 96,188
John J. Farrell -0- -0- 5,000 77,500 5,000 15,000
William S. Jacobs 5,000 76,250 8,000 18,000 39,500 -
Jeffrey A. Leddy 4,000 33,250 23,000 21,000 202,500 -
</TABLE>
Option Grants During the Last Fiscal Year
<TABLE>
Number of Percentage of
Shares Total Options Exercise
Underlying Granted to or
Options Employees in Base Price Expiration Grant Date
Name Granted Fiscal 1998 Per Share Date Present Value (1)
- ------ ---------- ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Thomas E. Sharon 50,000 17.2% $18.63 1/30/04 $561,350
Don T. Scartz 22,000 7.6 18.63 1/30/04 246,944
John J. Farrell 30,000 10.3 18.63 1/30/04 336,810
William S. Jacobs 7,000 2.4 18.63 1/30/04 78,589
Jeffrey A. Leddy 7,000 2.4 18.63 1/30/04 78,589
</TABLE>
(1)Based upon the Black-Scholes option pricing model, assuming 0.60
expected volatility, a 4.8% weighted average risk-free rate of return, no
dividend yield, and 10 years to exercise.
Employment Agreements
The Company has an employment agreement with Dr. Sharon for services
as an executive officer. As amended during 1998, this agreement expires on
December 31, 2000, and specifies a minimum annual salary of $295,000. In
addition, Dr. Sharon is entitled to bonuses in amounts determined by the
Board of Directors. In the event of disability, the salary would be
continued at 100% less the amount of any other Company-sponsored disability
benefits. In the event of death, 50% of the salary amount would be paid to
Dr. Sharon's estate for the remainder of the contract term. In the event
of a change in control of the Company after which Dr. Sharon resigned or
his employment was terminated other than for cause or breach of the
agreement, or due to death or disability, the Company would be obligated to
pay to Dr. Sharon three times the greater of (i) his aggregate taxable
compensation for the calendar year preceding the calendar year in which his
employment expires, or (ii) his annualized salary for the calendar year in
which his employment expires plus the greater of his aggregate bonus paid
during either such year or the prior calendar year. However, the amount
payable to Dr. Sharon in connection with a change in control may not exceed
the maximum amount that the Company would be entitled to deduct as
compensation expense for federal income tax purposes.
During 1998, the Company entered into employment agreements with each
of Messrs. Farrell and Scartz. These agreements are substantially
identical to that with Dr. Sharon, except that the specified minimum annual
salaries are $215,000 and $180,000, respectively.
Compensation Committee Report
on Executive Compensation
The Compensation Committee of the Board of Directors has furnished
the following report with respect to certain aspects of executive
compensation:
The Compensation Committee believes the Company's compensation
policies should attract and retain experienced and well-qualified
executive officers, and provide significant incentives for
financial and business achievements that benefit the Company's
shareholders. As a result, the Compensation Committee seeks to
maintain the salary component of each officer's compensation at a
moderate level, provides bonuses based heavily on financial
performance, and also provides stock options whose value depends on
long-term appreciation in the market value of the Company's common
stock.
Base Salary. In determining 1998 base salaries, the Committee
reviewed executive salary data for comparably sized companies in
similar industries and information provided through the American
Electronics Association annual compensation survey, particularly
data for companies having revenues similar to those of the Company.
In exercising its judgment with respect to base salary adjustments,
the Committee has not used these survey materials in any pre-determined
mathematical manner. However, the Committee has sought
to maintain executive officer base salaries at levels near the
median for comparable positions in comparable companies, with
modest deviations based on evaluations of the experience,
qualifications and contributions of individual officers.
Annual Incentive Compensation. In 1997, the Committee
recommended to the Board of Directors, and the Board adopted, the
Company's Executive Annual Incentive Compensation Plan. Under this
Plan, a target bonus is designated, as a percentage of base salary,
for each executive officer at the beginning of each calendar year.
As amended and implemented for 1998, the target bonus is factored,
up or down, based on the Company's (or in the case of divisional
officers, the Company's and division's) financial performance
against predetermined targets, and also based on an individual
performance evaluation prepared by the CEO. The Committee retains
the right to modify, either up or down, the incentive compensation
otherwise payable based on the factoring process, to take into
account individual or Company/division performance on non-financial
objectives and, in the event of unusual circumstances as determined
by the Committee, based on financial performance.
The incentive compensation awards to executive officers, as
set forth in the Summary Compensation Table, were determined under
the Executive Annual Incentive Plan, reflecting that during 1998
the Company fell short of its financial performance objectives, and
failed to achieve threshold target levels of profitability. As a
result, the only cash bonuses were made for unusual individual
contributions or based on divisional financial performance above
threshold or target levels.
Long-Term Incentives -- Stock Options. The Company has from
time to time granted stock options to the CEO and other executive
officers, in order to provide long-term incentive compensation
directly linked to growth in shareholder value. As a result of the
Committee's review and the recommendations of its compensation
consultant, the Committee believes that options should be granted
annually and on a systematic basis at levels determined to be
competitively appropriate. However, the Committee has not adopted
a formal program for automatically granting options, and annual
grants remain in the Committee's discretion. In general, the
Committee believes that early in each year options should be
granted having a calculated value, based on the Black-Scholes
model, equal to a substantial percentage of each officer's base
salary. All options would be granted at exercise prices equal to
market value on the date of grant, and would require a substantial
period of service before they could be exercised. The Committee
also believes that the percentage of base salary that should be
used in determining annual stock option awards should increase with
an officer's level of responsibility and his or her potential to
affect shareholder value. The option awards included in the
Summary Compensation Table reflect the Committee's approach to
annual option grants, plus, in the case of half the options granted
to Mr. Farrell, a one-time grant based on his promotion to broader
responsibilities, and, in the case of approximately half the
options granted to Mr. Scartz, a one-time grant based on the 1997
recommendation of an independent compensation consultant.
Compensation of the Chief Executive Officer. For 1998, Dr.
Sharon's base salary was increased from $275,000 to $295,000 per
year. This increase occurred following review by the Committee of
compensation data for other public companies engaged in similar
businesses, and for companies included in the American Electronics
Association's 1997 executive compensation survey. In each case,
the data was analyzed based on company revenues. The Committee
based Dr. Sharon's salary increase on the available comparative
data, and on its favorable view of his contributions to the
Company's improved financial performance during 1997 and its
progress in developing commercial markets. Following the increase,
Dr. Sharon's base salary was at approximately the midpoint for
CEO's of similar-sized companies included in the AEA survey.
Dr. Sharon did not receive bonus compensation for 1998, due to
the Company's failure to attain the threshold earnings target in
effect for that year under the Executive Incentive Compensation
Plan.
As was the case in 1997, the Committee concluded that an
annual grant of stock options, having a Black-Scholes valuation of
approximately 90% of base salary, constituted an appropriate level
of long-term incentive compensation for the CEO. Half of the stock
options included in the Summary Compensation Table were granted
based on this approach. The other half reflects the 1997
recommendation of an independent compensation consultant that Dr.
Sharon receive a one-time additional option grant to bring his
aggregate option incentives closer to those of CEO's of comparable
companies.
Submitted by the members of the Compensation Committee:
Jerry H. Lassiter, Chairman
John B. Mowell
Elvie L. Smith
Shareholder Return
The annual changes for the five-year period shown in the
following graph are based on the assumption that $100 had been
invested in the common stock of EMS Technologies, Inc. and each
index on December 31, 1993.
Comparison of Five-Year Cumulative Total Return
EMS Technologies, Inc. Common Stock (ELMG)
S&P Composite-500 and S&P High Technology Composite Indices
Base Years Ending
Period ---------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
S&P 500 Index 100 101.32 139.40 171.40 228.59 293.91
Technology-500 100 116.55 167.88 238.17 300.32 519.48
ELMG 100 144.78 131.34 229.85 241.79 167.16
AMENDMENT OF THE
1997 STOCK INCENTIVE PLAN
The Board of Directors is seeking shareholder approval for
amendments to the EMS Technologies 1997 Stock Incentive Plan (the
"Incentive Plan" or the "Plan). The amendments would do two
things:
* Increase the number of available shares to 825,000 from
400,000 (this amendment is already effective as to
employees who are not executive officers, but requires
shareholder approval to be effective as to directors and
executive officers).
* Increase the number of shares automatically optioned to
non-employee directors to 3,000 per year, from the current
levels of 2,000 or 2,500 per year (depending on years of
service). Please see the heading Options for Non-Employee
Directors, below.
Background and Description
The Board of Directors believes that stock-based incentive
compensation is critical to the Company's ability to employ and
retain qualified managerial and other key personnel. The Incentive
Plan was adopted by the Board in January 1997, and approved by the
shareholders at the 1997 Annual Meeting. It provides for the
grant of options to purchase common stock ("Options"), and for the
issuance of shares of common stock ("Awards") that are subject to
restrictions, including the possibility of forfeiture under
certain circumstances. The Plan will expire on January 24, 2007,
but Options or awards granted prior to that date will remain in
effect according to their terms.
As originally adopted, the Incentive Plan provided for the
issuance of up to 400,000 shares of common stock upon exercise of
Options or grant of Awards, subject to adjustment upon changes in
capitalization. Of these available shares, up to 80,000 could be
granted as restricted stock Awards, and no more than 50,000 could
be optioned to a single participant during a single calendar year.
For the purpose of calculating the shares remaining available for
issue under the Incentive Plan, shares that had been optioned or
awarded but thereafter forfeited, and shares either withheld or
surrendered in payment of the exercise price of Options or of
withholding taxes related to an Option or Award, will not be
considered as having been optioned or awarded and will be
available for future Options or Awards.
In January 1999, the Board amended the Plan to increase the
number of available shares to 825,000, subject as to grants to
officers or directors to shareholder approval. As of March 12,
1999, 472,600 shares are subject to outstanding Options, none of
which are currently exercisable by their holders. The amendment
enables the Committee to continue to use the plan as part of the
Company's program to attract and incentivize key technical,
supervisory and non-executive managerial personnel and, subject to
shareholder approval, provides shares for grants by the
Compensation Committee of Options to executive officers, as well
as for the automatic annual Option grants to non-employee
directors that are described below at Options for Non-Employee
Directors. As is discussed in the Report of the Compensation
Committee included in this Proxy Statement, the Committee believes
that regular annual Option grants, in amounts related to an
officer's base salary and level of responsibility, constitute a
competitively appropriate and effective method of long-term
incentive compensation. The Committee's approach is reflected in
the Option grants reported in the Summary Compensation Table for
1997 and 1998, except that approximately half of the 1998 Options
granted to Dr. Sharon and Messrs. Farrell and Scartz were one-time
grants based on other considerations. The Compensation Committee
has not granted Options to the executive officers for 1999, but is
likely to do so upon approval of the Plan amendments by the
shareholders. That Committee expects that these grants would be
based on the general methodology used in 1997 and 1998, which
would result in Options for approximately 30,000 shares to Dr.
Sharon, 18,000 to Mr. Farrell, 8,000 to each of Messrs. Jacobs and
Leddy, 15,000 to Mr. Scartz, and 105,000 to nine executive
officers as a group.
During 1998, Options for 166,800 shares were granted to non-
executive officers. A similar level of grants during future
periods, combined with the shares likely to be optioned to
executive officers (approximately 105,000 in 1999) and the
additional 29,000 shares that would automatically be granted to
non-employee directors upon their election at the Annual Meeting,
would result in the shares available under the amended Plan being
exhausted during 2000, subject to the effects of forfeitures due
to employment terminations. As a result, further amendment of the
Incentive Plan, to increase the number of available shares, would
be required, but would not be effective as to the participation of
directors or executive officers without further shareholder
approval.
Options may be granted and Awards may be made only to
employees or directors of the Company or its subsidiaries. The
Plan is administered as to employees who are not executive
officers by a committee of the Board of Directors that selects the
recipients of Options and Awards. With respect to directors and
executive officers, the Plan is administered by the Compensation
Committee, which consists solely of directors who are "non-employee
directors" for the purposes of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. Under this Rule as
currently in effect, such directors are those who are not
currently officers or employees of the Company or its
subsidiaries, and who do not receive compensation for services
(except as a director), or otherwise have an interest in business
transactions or relationships, requiring proxy statement
disclosure. The appropriate committee (the "Committee") has the
authority to determine the terms of Options and Awards to the
extent not inconsistent with requirements of the Plan, to
interpret the Plan, to adopt and amend rules relating to it, and
to amend or replace outstanding Options and Awards, subject to
grantee approval and Plan requirements. The Incentive Plan
provides that Committee members shall not be liable to any person
for any actions taken in good faith.
The Board of Directors has the right at any time to terminate
or amend the Incentive Plan, but no such action may terminate
Options already granted or otherwise affect the rights of any
holder of an outstanding Option or shares issued pursuant to an
Award without the holder's consent. Without shareholder approval,
the Board may not amend the Plan to materially increase the total
number of shares available to directors or executive officers.
In addition, the provisions governing automatic grants of Options
to non-employee directors, as described below, may not be amended
more frequently than once every six months.
Stock Options. The Company receives no consideration upon
the granting of an Option. Options may be granted either as
incentive stock options (which qualify for certain favorable tax
consequences, as discussed below) or as non-qualified stock
options. The Committee determines the number of shares, exercise
price, term, any conditions on exercise, consequences of any
termination of employment, and other terms of each Option. In the
case of an Option intended to be an incentive stock option, the
term may not exceed ten years from the date of grant and the
exercise price may not be less than 100% of the fair market value
of the common stock on the date of grant. With respect to non-qualified
stock options, there is no limit on the term, but the
exercise price may not be less than 100% of fair market value on
the date of grant. Under applicable accounting rules as currently
in effect, no compensation expense is incurred by the Company,
either at the time of grant or upon exercise, with respect to an
Option granted to an employee at an exercise price equal to or
exceeding the fair market value of the common stock on the date of
grant.
The exercise price (together with any applicable taxes) is
payable in full upon exercise, and payment may be made in cash, by
delivery (or withholding in lieu of delivery) of shares of common
stock (valued at their fair market value at the time of exercise),
or by a combination of cash and stock. The market value per share
of the common stock on March 12, 1999, was $13.50, as determined
by reference to the closing sales price as reported in the
National Market System.
In the discretion of the Committee, Options under the
Incentive Plan may include a "reload option." However, none of
the options that have been granted under the Plan have included
this feature, and the Committee has no current plans to issue
reload options in the future. A reload option, if included in the
original Option, would be triggered when an optionee paid the
exercise price of, or withholding taxes related to, all or a
portion of the original Option by delivering or authorizing the
withholding of shares of common stock. In that event, the optionee
would automatically be granted an additional Option to acquire the
same number of shares as had been so delivered or withheld. The
reload option would be subject to all of the terms and conditions
of the original Option, except that the exercise price per share
would be equal to the fair market value of the common stock on the
date the original Option was exercised, and except that the
Committee could specify additional conditions or contingencies,
such as continued employment by the Company or holding of the
shares acquired upon exercise of the original Option for a
specified period of time.
Options granted under the Incentive Plan may not be
transferred by an optionee other than by will or by the laws of
descent and distribution, or pursuant to certain orders which may
be issued in connection with a divorce proceeding, or, in the
discretion of the Committee, to family members or family trusts or
similar estate-planning entities.
Options for Non-Employee Directors. Each current member of
the Board of Directors who is not an employee of the Company or
any subsidiary has previously been granted an Option for the
purchase of 10,000 shares of common stock. These Options have or
will become exercisable as to 2,000 shares on the date six months
following the date of grant and as to an additional 2,000 shares
on each of the first through fourth anniversaries of such
six-month date. Each non-employee director who has served five
years from the grant of this Option (and who thus may exercise the
Option as to all 10,000 shares), thereafter receives, upon each
reelection to a further annual term, a grant of Options for 2,500
shares, each of which becomes exercisable 6 months after the date
of grant.
The Board has amended the Incentive Plan, subject to
shareholder approval, to increase the numbers of shares
automatically optioned to non-employee directors. As amended,
each newly elected director would receive an Option for 15,000
shares, becoming exercisable as to 3,000 shares six months after
election, and during continued service as a director to an
additional 3,000 shares on each of the first through fourth
anniversaries of such six-month date. After the fifth year, a
director who continues to be elected would receive further Options
for 3,000 shares each on each election date, and these Options
would each become exercisable six months after the date of grant.
The Board adopted this amendment after reviewing survey data
concerning the compensation of non-employee directors, and in
order to assist the Company in attracting and retaining qualified
individuals to serve on the Board.
The Options automatically granted to directors each have an
exercise price equal to the fair market value of the common stock
on the date of grant. They become immediately exercisable in the
event of a third-party tender or exchange offer for the Company's
common stock, or if any person becomes the beneficial owner of 50%
or more of the outstanding common stock. The exercise price
(together with any applicable taxes) may be paid in cash, by
shares of common stock (valued at their fair market value at the
time of exercise), or by a combination of cash and stock. Upon
the optionee ceasing to be a director for any reason, these
Options terminate and are forfeited to the extent that they are
not exercisable at that time. Once exercisable, these Options are
non-forfeitable and remain exercisable until the tenth anniversary
of the date of grant.
Under applicable accounting rules as currently in effect, no
compensation expense is incurred by the Company with respect to
the automatic director Options. However, the Financial Accounting
Standards Board ("FASB") has announced its intention to issue a
proposed interpretation under which options granted to any non-employee
(including non-employee directors) would result in
accounting expense, even if granted at fair market value. The
expense would equal the "fair value" of the option (as calculated,
for example, using Black-Scholes valuation methodology) on the
date it becomes exercisable, and would be amortized over the
vesting period. The FASB has announced its intention for this
interpretation to become effective in September 1999, but such
pronouncements are subject to a period of public comment, and thus
it is not certain either whether or when the interpretation would
take effect. The Company does not expect that it would incur a
material accounting charge in 1999 for its directors' options,
even if the FASB interpretation becomes effective, but in future
years the required charge could become a significant portion of
the overall expense for non-employee directors. The Company
estimates that had the interpretation been in effect in 1998, the
pre-tax accounting charge for each 3,000-share Option granted to
non-employee directors would have been approximately $43,000.
If the Incentive Plan amendments are approved at the Annual
Meeting, and the Board's nominees are elected, each of Messrs.
Lassiter and Mowell will automatically receive an Option for 3,000
shares, and Mr. Hansen will receive an Option for 15,000 shares
becoming exercisable over five years. Each of Mr. Smith and Dr.
Thagard have completed one of the five years required for full
exercisability of their 10,000-share Options. Each would receive
an additional Option for 4,000 shares, becoming exercisable as to
1,000 shares during each of the next four years of service as a
director. These grants are summarized in the following table:
New Benefits
1999 Automatic Options for Non-Employee Directors
Under the 1997 Stock Incentive Plan
No. of Option
Shares
-------------
Non-Employee Directors as a Group 29,000
Awards of Restricted Shares. The recipient of an Award would
be issued shares of common stock ("Restricted Shares") in
consideration of services performed or to be performed as a
condition to the lapse of specified restrictions, but would not
make any monetary payment to the Company. The Company believes
that Restricted Shares can be a valuable tool in particular
circumstances, but the Committee has not awarded Restricted Shares
under the Incentive Plan, and does not have either current plans
to do so or an intention of doing so on a frequent basis.
Each Award will be governed by a restriction agreement
containing such conditions and restrictions applicable to the
Restricted Shares as the Committee may determine. The
restrictions may include forfeiture of some or all of the
Restricted Shares in certain circumstances, such as termination of
employment, and the Committee may require that Restricted Shares
be held by the Company or in escrow pending the lapse of
restrictions. Until any restrictions have lapsed, the Restricted
Shares are not transferrable except by the laws of descent and
distribution or pursuant to certain orders which may be issued in
connection with a divorce proceeding. Unless the Committee
determines otherwise, recipients of Restricted Shares will have
the right to vote the shares and to receive dividends or
distributions made with respect to them.
An Award of Restricted Shares would result in a compensation
expense to the Company in an amount equal to the fair market value
of the Restricted Shares (calculated without considering any
restrictions imposed in connection with the Award) at the time of
the Award. Such expense may be recognized ratably over the period
during which the restrictions continue in effect.
Federal Income Tax Consequences
Non-Qualified Stock Options. Generally, when a non-qualified
stock option is exercised, the optionee recognizes income in the
amount of the aggregate fair market value of the shares received
upon exercise, less the aggregate amount paid for those shares,
and the Company may deduct as an expense the amount of income so
recognized by the optionee, provided that the Company satisfies
certain tax withholding requirements. The holding period of the
acquired shares begins upon the exercise of the Option, and the
optionee's basis in the shares is equal to the fair market value
of the acquired shares on the date of the exercise.
If the optionee pays all or part of the purchase price by
delivering to the Company shares of common stock, there are no
federal income tax consequences to the optionee or the Company to
the extent of the number of shares so delivered. As to any
additional shares issued, the optionee recognizes income equal to
the aggregate fair market value of the additional shares received,
less any cash paid to the Company, and the Company is allowed to
deduct the amount of such income, provided that the Company
satisfies certain tax withholding requirements. The holding period
and basis of the new shares, to the extent of the number of old
shares delivered, is the same as for the old shares. The holding
period for the additional shares begins on the date the Option is
exercised, and the basis in those additional shares is equal to
their fair market value on the date of exercise.
Incentive Stock Options. There are no federal income tax
consequences to an optionee or to the Company on the granting of
an incentive stock option. When an optionee exercises an
incentive stock option, the optionee will not recognize any
taxable income at that time (although the exercise may impact the
optionee's alternative minimum tax calculation), and the Company
will not be entitled to a deduction. The optionee will recognize
capital gain or loss at the time of disposition of shares acquired
through the exercise of an incentive stock option if the shares
have been held for at least two years after the Option was granted
and one year after it was exercised. The Company will not be
entitled to a tax deduction if the optionee satisfies these
holding-period requirements. The federal income tax advantage to
the holder of incentive stock options who meets the holding-period
requirements is a deferral, until the acquired stock is sold, of
taxation of any increase in the stock's value from the time of
grant of the Option to the time of its exercise, and taxation of
such gain, at the time of sale, as capital gain rather than
ordinary income.
If the holding period requirements are not met, then upon
sale of the shares the optionee generally recognizes as ordinary
income the excess of the fair market value of the shares at the
date of exercise over the option price; any increase in the value
of the optioned stock subsequent to exercise is long or short-term
capital gain to the optionee, depending on the optionee's holding
period for the stock. However, if the sale is for a price less
than the value of the shares on the date of exercise, the optionee
may recognize ordinary income only to the extent the sales price
exceeded the option price. In either case, the Company is
entitled to a deduction to the extent of ordinary income
recognized by the optionee.
For the purpose of calculating tax upon disposition where
stock is surrendered in payment of the option price, the capital
gains holding period and basis of the new shares, to the extent of
the old shares surrendered, is the same as for the old shares; the
holding period for the additional shares (that is, the shares
received on exercise in excess of the old shares surrendered)
begins on the date the Option is exercised, and such additional
shares have a basis equal to the amount, if any, of the price of
the optioned stock paid in cash.
Awards of Restricted Shares. At the time of an Award a
recipient may elect to recognize taxable income equal to the fair
market value of the Restricted Shares (computed without regard to
the adverse effect on market value of any restrictions) on the
date of issuance. If such an election is made by the recipient,
the Company will be entitled at that time to a deduction equal to
the amount of taxable income recognized by the recipient. In the
absence of such an election, a recipient of Restricted Shares will
not recognize taxable income until the restrictions imposed with
respect to the Award lapse. At that time, the recipient will
recognize income equal to the fair market value of the Restricted
Shares on the date the restrictions lapse and the Company will
obtain a corresponding deduction. The amount of income recognized
by a recipient of Restricted Shares will constitute the basis of
his or her shares for income tax purposes.
The grantee of an Award is required to provide for the
payment of withholding taxes at the time his or her Award results
in taxable income. In the discretion of the Committee, an award
may provide for a payment of taxes by delivering already-owned
shares of common stock, or by authorizing the Company to withhold
and cancel a portion of the Restricted Shares, in each case based
on the fair market value of the common stock at that time.
Vote Required and Recommendation of the Board
Shareholder approval of the Plan amendments is not required
by the Company's Articles of Incorporation or Bylaws, or by
Georgia law. The amendments are being submitted for shareholder
approval pursuant to the requirements of the National Association
of Securities Dealers for securities traded on the National Market
System, and of Sections 162(m) and 422 of the Internal Revenue
Code. Section 162(m) of the Internal Revenue Code limits the
Company's tax deduction for compensation expense for any one
executive officer to $1 million per year, except that compensation
under certain shareholder-approved incentive compensation plans is
not subject to this limit; the Plan is structured with respect to
option grants to conform with the exception to Section 162(m), if
the amendments receive shareholder approval. Section 422 of the
Internal Revenue Code requires shareholder approval in order for
Options under the Plan to be treated as incentive stock options.
See Federal Income Tax Consequences -- Incentive Stock Options,
above.
The affirmative vote of the holders of a majority of the
shares of common stock present at the Annual Meeting and voting on
the matter is required to approve the Plan amendments, assuming
the presence of a quorum. Abstentions and broker non-votes will be
considered as present for the purposes of determining the presence
of a quorum, but will not otherwise be considered in determining
the outcome of the vote. Until such time as the amendments are
approved by the shareholders, no Options or Awards will be granted
to directors or executive officers and no incentive stock options
may be granted to any participant. Otherwise, the grant of
further Options or Awards under the Plan is not subject to
shareholder approval.
The Board of Directors unanimously recommends a vote "FOR"
approval of the amendments to the EMS Technologies, Inc. 1997
Stock Incentive Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act,
each executive officer, director and beneficial owner of 10% or
more of the Company's common stock is required to file certain
forms with the Securities and Exchange Commission. A report of
beneficial ownership of the Company's common stock on Form 3 is
due at the time such person becomes subject to the reporting
requirement and a report on Form 4 or 5 must be filed to reflect
changes in beneficial ownership occurring thereafter. Based on
written statements and copies of forms provided to the Company
during and for 1998 by persons subject to the reporting
requirements, the Company believes that all Forms 3, 4 and 5
required to be filed by such reporting persons during 1998 were
filed on a timely basis, except that two exercises by Jeffrey A.
Leddy of options to acquire a total of 4,000 shares, and which
involved the surrender or sale of a total of 2,822 shares, were
required to be reported on Forms 4 due October 10, 1998 and
January 10, 1999, but instead were reported on a Form 5, filed
March 25, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP acted as the Company's independent public
accountants during the last fiscal year and, it is anticipated,
will continue to act as such during the current fiscal year. A
representative of KPMG LLP is expected to be present at the Annual
Meeting to respond to appropriate questions, and will have the
opportunity to make a statement if he desires to do so.
AVAILABLE INFORMATION
The Company files Annual Reports on Form 10-K with the
Securities and Exchange Commission. A copy of the Annual Report
(including exhibits) for the fiscal year ended December 31, 1998
is available on the Company's website at www.ems-t.com. A
printed copy of the Annual Report (excluding exhibits) may be
obtained, free of charge, upon written request by any shareholder
to EMS Technologies, Inc., Attn: Don T. Scartz, Treasurer, 660
Engineering Drive, P. O. Box 7700, Norcross, Georgia 30091-7700.
Copies of all exhibits to the Annual Report are available upon a
similar request, subject to payment of a $.15 per page charge to
reimburse the Company for its expenses.
Norcross, Georgia
March 26, 1999
APPENDIX
As adopted January 24, 1997
and amended through
February 19, 1999
EMS TECHNOLOGIES, INC.
1997 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
(a) "Award" 1
(b) "Board" 1
(c) "Code" 1
(d) "Committee" 1
(e) "Company" 1
(f) "Director 2
(g) "Disinterested Person" 2
(h) "Employee" 2
(i) "Employer" 2
(j) "Fair Market Value" 3
(k) "Grantee" 3
(l) "ISO" 3
(m) "1934 Act" 3
(n) "Officer" 3
(o) "Option" 3
(p) "Option Agreement" 4
(q) "Optionee" 4
(r) "Option Price" 4
(s) "Parent" 4
(t) "Plan" 4
(u) "Purchasable" 4
(v) "Qualified Domestic Relations Order" 4
(w) "Reload Option" 4
(x) "Restricted Stock" 5
(y) "Restriction Agreement" 5
(z) "Stock" 5
(aa) "Subsidiary" 5
ARTICLE II THE PLAN 5
Section 2.1 Name 5
Section 2.2 Purpose 5
Section 2.3 Effective Date 5
Section 2.4 Termination Date 5
ARTICLE III ELIGIBILITY 6
ARTICLE IV ADMINISTRATION 6
Section 4.1 Duties and Powers of the Committee 6
Section 4.2 Interpretation; Rules 6
Section 4.3 No Liability 7
Section 4.4 Majority Rule 7
Section 4.5 Company Assistance 7
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN 7
Section 5.1 Limitations 7
Section 5.2 Antidilution 8
ARTICLE VI OPTIONS 9
Section 6.1 Types of Options Granted 9
Section 6.2 Option Grant and Agreement 10
Section 6.3 Optionee Limitations 10
Section 6.4 $100,000 Limitation 11
Section 6.5 Option Price 11
Section 6.6 Exercise Period 11
Section 6.7 Option Exercise 12
Section 6.8 Nontransferability of Option 13
Section 6.9 Termination of Employment 14
Section 6.10 Employment Rights 14
Section 6.11 Certain Successor Options 14
Section 6.12 Conditions to Issuing Option Stock 15
Section 6.13 Automatic Option Grants to Certain
Directors 15
ARTICLE VII RESTRICTED STOCK 17
Section 7.1 Awards of Restricted Stock 17
Section 7.2 Non-Transferability 18
Section 7.3 Lapse of Restrictions 18
Section 7.4 Termination of Employment 18
Section 7.5 Treatment of Dividends 18
Section 7.6 Delivery of Shares 19
Section 7.7 Payment of Withholding Taxes 19
ARTICLE VIII TERMINATION, AMENDMENT AND MODIFICATION OF PLAN 20
ARTICLE IX MISCELLANEOUS 20
Section 9.1 Replacement or Amended Grants 20
Section 9.2 Forfeiture for Competition 21
Section 9.3 Plan Binding on Successors 21
Section 9.4 Headings Not a Part of Plan 21
EMS TECHNOLOGIES, INC.
1997 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the
contrary:
(a) "Award" shall mean a grant of Restricted Stock.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Code" shall mean the United States Internal
Revenue Code of 1986, as amended, including effective date and
transition rules (whether or not codified). Any reference herein
to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
(d) "Committee" shall mean a committee of at least two
Directors appointed from time to time by the Board, having the
duties and authority set forth herein in addition to any other
authority granted by the Board; provided, however, that with
respect to any Options or Awards granted to an individual who is
also an Officer or Director, the Committee shall consist of at
least two Non-Employee Directors (who need not be members of the
Committee with respect to Options or Awards granted to any other
individuals), and all authority and discretion shall be exercised
by such Non-Employee Directors, and references herein to the
"Committee" shall mean such Non-Employee Directors insofar as any
actions or determinations of the Committee shall relate to or
affect Options or Awards made to or held by any Officer or
Director.
(e) "Company" shall mean EMS Technologies, Inc., a
Georgia corporation.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any employee of the Company
or any Subsidiary of the Company.
(h) "Employer" shall mean the corporation that employs
a Grantee.
(i) "Fair Market Value" of the shares of Stock on any
date shall mean
(i) the closing sales price, regular way, or in the
absence thereof the mean of the last reported bid and asked
quotations, on such date on the exchange having the greatest
volume of trading in the shares during the thirty-day period
preceding such date (or if such exchange was not open for trading
on such date, the next preceding date on which it was open); or
(ii) if there is no price as specified in (i), the
final reported sales price, or if not reported in the following
manner, the mean of the closing high bid and low asked prices, in
the over-the-counter market for the shares as reported by the
National Association of Securities Dealers Automatic Quotation
System or, if not so reported, then as reported by the National
Quotation Bureau Incorporated, or if such organization is not in
existence, by an organization providing similar services, on such
date (or if such date is not a date for which such system or
organization generally provides reports, then on the next
preceding date for which it does so); or
(iii) if there also is no price as specified in
(ii), the price determined by the Committee by reference to
bid-and-asked quotations for the shares provided by members of an
association of brokers and dealers registered pursuant to
subsection 15(b) of the 1934 Act, which members make a market in
the shares, for such recent dates as the Committee shall determine
to be appropriate for fairly determining current market value; or
(iv) if there also is no price as specified in
(iii), the amount determined in good faith by the Committee based
on such relevant facts, which may include opinions of independent
experts, as may be available to the Committee.
(j) "Grantee" shall mean an Employee, former employee
or other person who is an Optionee or who has received an Award of
Restricted Stock.
(k) "ISO" shall mean an Option that complies with and
is subject to the terms, limitations and conditions of Code
section 422 and any regulations promulgated with respect thereto.
(l) "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(m) "Non-Employee Director" shall have the meaning set
forth for such term or corresponding concept in Rule 16b-3 under
the 1934 Act, as the same may be in effect from time to time, or
in any successor rule thereto, and shall be determined for all
purposes under the Plan according to interpretative or "no-action"
positions with respect thereto issued by the Securities and
Exchange Commission or its staff; provided, however, that to the
extent it is determined and intended that Options qualify as
("performance-based compensation" within the meaning of section
162(m) of the Code, a person shall be a "Non-Employee Director"
only if he or she is also an "outside director" within the meaning
of such section 162(m).
(n) "Officer" shall mean a person who constitutes an
officer of the Company for the purposes of Section 16 of the 1934
Act, as determined by reference to such Section 16 and to the
rules, regulations, judicial decisions, and interpretative or "no-action"
positions with respect thereto of the Securities and
Exchange Commission or its staff, as the same may be in effect or
set forth from time to time.
(o) "Option" shall mean a contractual right to purchase
Stock granted pursuant to the provisions of Article VI hereof.
(p) "Option Agreement" shall mean an agreement between
the Company and an Optionee setting forth the terms of an Option.
(q) "Optionee" shall mean a person to whom an Option
has been granted hereunder.
(r) "Option Price" shall mean the price at which an
Optionee may purchase a share of Stock pursuant to an Option.
(s) "Parent", when used with respect to any subject
corporation, shall mean any other corporation that owns stock
possessing 50% or more of the total combined voting power of all
classes of stock of the subject corporation or that owns such
stock of another corporation in an unbroken chain of corporations
having such ownership of the stock of another corporation and
ending with the subject corporation.
(t) "Plan" shall mean the 1997 Stock Incentive Plan of
the Company.
(u) "Purchasable," when used to describe Stock, shall
refer to Stock that may be purchased by an Optionee under the
terms of this Plan on or after a certain date specified in the
applicable Option Agreement.
(v) "Qualified Domestic Relations Order" shall have the
meaning set forth in the Code or in the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations
promulgated under the Code or such Act.
(w) "Reload Option" shall mean an Option that is
granted, without further action of the Committee, (i) to an
Optionee who surrenders or authorizes the withholding of shares of
Stock in payment of amounts specified in paragraphs 6.7(c) or
6.7(d) hereof, (ii) for the same number of shares as is so paid,
(iii) as of the date of such payment and at an Option Price equal
to the Fair Market Value of the Stock on such date, and (iv)
otherwise on the same terms and conditions as the Option whose
exercise has occasioned such payment, subject to such
contingencies, conditions or other terms as the Committee shall
specify at the time such exercised Option is granted.
(x) "Restricted Stock" shall mean Stock issued, subject
to restrictions, to an Employee pursuant to Article VII hereof.
(y) "Restriction Agreement" shall mean the agreement
setting forth the terms of an Award, and executed by a Grantee as
provided in Section 7.1 hereof.
(z) "Stock" shall mean the $.10 par value common stock
of the Company or, in the event that the outstanding shares of
such stock are hereafter changed into or exchanged for shares of a
different class of stock or securities of the Company or some
other corporation, such other stock or securities.
(aa) "Subsidiary", when used with respect to any subject
corporation, shall mean any other corporation as to which the
subject corporation is a Parent.
ARTICLE II
THE PLAN
2.1 Name. This plan shall be known as the "EMS
Technologies, Inc. 1997 Stock Incentive Plan."
2.2 Purpose. The purpose of the Plan is to advance the
interests of the Company, its shareholders, and any Subsidiary of
the Company, by offering certain Employees and Directors an
opportunity to acquire or increase their proprietary interests in
the Company. Options and Awards will promote the growth and
profitability of the Company and any Subsidiary of the Company,
because Grantees will be provided with an additional incentive to
achieve the Company's objectives through participation in its
success and growth.
2.3 Effective Date. The Plan shall become effective on
January 24, 1997.
2.4 Termination Date. No further Options or Awards shall be
granted hereunder on or after January 24, 2007, but all Options or
Awards granted prior to that time shall remain in effect in
accordance with their terms.
ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall
consist only of Directors and those Employees whose participation
the Committee determines is in the best interests of the Company.
However, no ISO's may be granted, and no Options or Awards may be
granted to any Director or Officer, prior to the approval of this
Plan by the Company's shareholders. Persons who are not Employees
but who serve as directors of any Subsidiary of the Company shall
also be eligible to participate in this Plan, and references
herein to "Employee" shall be deemed to include any such persons
to the extent appropriate for him or her to become a Grantee.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be
administered by the Committee. The Committee shall select one of
its members as its Chairman and shall hold its meetings at such
times and places as it may determine. The Committee shall keep
minutes of its meetings and shall make such rules and regulations
for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent
in lieu of a meeting, and shall have the right to meet
telephonically. In administering the Plan, the Committee's
actions and determinations shall be binding on all interested
parties. The Committee shall have the power to grant Options or
Awards in accordance with the provisions of the Plan. Subject to
the provisions of the Plan, the Committee shall have the
discretion and authority to determine those individuals to whom
Options or Awards will be granted and whether such Options shall
be accompanied by the right to receive Reload Options, the number
of shares of Stock subject to each Option or Award, such other
matters as are specified herein, and any other terms and
conditions of an Option Agreement or Restriction Agreement. To
the extent not inconsistent with the provisions of the Plan, the
Committee shall have the authority to amend or modify an
outstanding Option Agreement or Restriction Agreement, or to waive
any provision thereof, provided that the Grantee consents to such
action.
4.2 Interpretation; Rules. Subject to the express
provisions of the Plan, the Committee also shall have complete
authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other
determinations necessary or advisable in the administration of the
Plan, including, without limitation, the amending or altering of
any Options or Awards granted hereunder as may be required to
comply with or to conform to any federal, state or local laws or
regulations.
4.3 No Liability. Neither any member of the Board nor any
member of the Committee shall be liable to any person for any act
or determination made in good faith with respect to the Plan or
any Option or Award granted hereunder.
4.4 Majority Rule. A majority of the members of the
Committee shall constitute a quorum, and any action taken by a
majority at a meeting at which a quorum is present, or any action
taken without a meeting evidenced by a writing executed by all the
members of the Committee, shall constitute the action of the
Committee.
4.5 Company Assistance. The Company shall supply full and
timely information to the Committee on all matters relating to
eligible persons, their employment, death, retirement, disability
or other termination of employment, and such other pertinent facts
as the Committee may require. The Company shall furnish the
Committee with such clerical and other assistance as is necessary
in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Shares subject to an Option or issued as
an Award may be either authorized and unissued shares or shares
issued and later acquired by the Company. Subject to any
antidilution adjustment pursuant to the provisions of Section 5.2
hereof, the maximum number of shares of Stock that may be issued
hereunder shall be 825,000 (of which a maximum of 80,000 shares
may be issued as Restricted Stock). Shares (i) covered by any
unexercised portion of an Option that has terminated for any
reason; (ii) covered by any forfeited portion of an Award (except
any portion as to which the Grantee has received, and not
forfeited, dividends or other benefits of ownership other than
voting rights); (iii) withheld in payment of the Option Price or
withholding taxes; or (iv) issued hereunder but equal to the
number of shares surrendered in payment of the Option Price or
withholding taxes or purchased by the Company for an aggregate
price not exceeding the aggregate cash received from Grantees in
payment of Option Prices or withholding taxes, may each again be
optioned or awarded under the Plan, and such shares shall not be
considered as having been optioned or issued in computing the
number of shares of Stock remaining available for option or award
hereunder.
5.2 Antidilution.
(a) In the event that the outstanding shares of Stock
are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of merger,
consolidation, reorganization, recapitalization, reclassification,
combination or exchange of shares, stock split or stock dividend,
or in the event that any spin-off, spin-out or other distribution
of assets materially affects the price of the Company's stock:
(i) The aggregate number and kind of shares of
Stock for which Options or Awards may be granted hereunder shall
be adjusted proportionately by the Committee; and
(ii) The rights of Optionees (concerning the
number of shares subject to Options and the Option Price) under
outstanding Options and the rights of the holders of Awards
(concerning the terms and conditions of the lapse of any then-remaining
restrictions), shall be adjusted proportionately by the
Committee.
(b) If the Company shall be a party to any
reorganization in which it does not survive, involving merger,
consolidation, or acquisition of the stock or substantially all
the assets of the Company, the Committee, in its discretion, may:
(i) notwithstanding other provisions hereof,
declare that all Options granted under the Plan shall become
exercisable immediately notwithstanding the provisions of the
respective Option Agreements regarding exercisability, that all
such Options shall terminate a specified period of time after the
Committee gives written notice of the immediate right to exercise
all such Options and of the decision to terminate all Options not
exercised within such period, and that all then-remaining
restrictions pertaining to Awards under the Plan shall immediately
lapse; or
(ii) notify all Grantees that all Options or Awards
granted under the Plan shall be assumed by the successor
corporation or substituted on an equitable basis with options or
restricted stock issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in paragraph 5.2(b),
the provisions of such paragraph shall apply. In all other
instances, the adoption of a plan of dissolution or liquidation of
the Company shall, notwithstanding other provisions hereof, cause
all then-remaining restrictions pertaining to Awards under the
Plan to lapse, and shall cause every Option outstanding under the
Plan to terminate to the extent not exercised prior to the
adoption of the plan of dissolution or liquidation by the
shareholders, provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted under the
Plan to be exercisable at any time on or before the fifth business
day following such adoption notwithstanding the provisions of the
respective Option Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through
(c) of this Section 5.2, and the manner of their application,
shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share
interests. The adjustments required under this Article V shall
apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring
such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. Within the limitations
provided herein, Options may be granted to one Employee at one or
several times or to different Employees at the same time or at
different times, in either case under different terms and
conditions, as long as the terms and conditions of each Option are
consistent with the provisions of the Plan. Without limitation of
the foregoing, Options may be granted subject to conditions based
on the financial performance of the Company or any other factor
the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted or
modified hereunder shall be evidenced (a) by either minutes of a
meeting or a written consent of the Committee, and (b) by a
written Option Agreement executed by the Company and the Optionee.
The terms of the Option, including the Option's duration, time or
times of exercise, exercise price, whether the Option is intended
to be an ISO, whether the Option is transferable under paragraph
6.8(b), and whether the Option is to be accompanied by the right
to receive a Reload Option, shall be stated in the Option
Agreement. Separate Option Agreements shall be used for Options
intended to be ISO's and those not so intended, but any failure to
use such separate Agreements shall not invalidate, or otherwise
adversely affect the Optionee's rights under and interest in, the
Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an
ISO to any person who, at the time the ISO would be granted:
(a) is not an Employee; or
(b) owns or is considered to own stock possessing more
than 10% of the total combined voting power of all classes of
stock of the Employer, or any Parent or Subsidiary of the
Employer; provided, however, that this limitation shall not apply
if at the time an ISO is granted the Option Price is at least 110%
of the Fair Market Value of the Stock subject to such Option and
such Option by its terms would not be exercisable after the
expiration of five years from the date on which the Option is
granted. For the purpose of this paragraph (b), a person shall be
considered to own (i) the stock owned, directly or indirectly, by
or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants, (ii) the stock
owned, directly or indirectly, by or for a corporation,
partnership, estate, or trust in proportion to such person's stock
interest, partnership interest or beneficial interest therein, and
(iii) the stock which such person may purchase under any
outstanding options of the Employer or of any Parent or Subsidiary
of the Employer.
6.4 Certain Limitations
(a) Limitation on Number of Shares. No Optionee shall
be granted, during any calendar year, Options to purchase in
excess of 50,000 shares of stock.
(b) $100,000 Limitation on ISO's. Except as provided
below, the Committee shall not grant an ISO to, or modify the
exercise provisions of outstanding ISO's held by, any person who,
at the time the ISO is granted (or modified), would thereby
receive or hold any incentive stock options (as described in Code
section 422) of the Employer and any Parent or Subsidiary of the
Employer, such that the aggregate Fair Market Value (determined as
of the respective dates of grant or modification of each option)
of the stock with respect to which such incentive stock options
are exercisable for the first time during any calendar year is in
excess of $100,000; provided, that the foregoing restriction on
modification of outstanding ISO's shall not preclude the Committee
from modifying an outstanding ISO if, as a result of such
modification and with the consent of the Optionee, such Option no
longer constitutes an ISO; and provided that, if the $100,000
limitation described in this Section 6.4 is exceeded, an Option
that otherwise qualifies as an ISO shall be treated as an ISO up
to the limitation and the excess shall be treated as an Option not
qualifying as an ISO. The preceding sentence shall be applied by
taking options intended to be ISO's into account in the order in
which they were granted.
6.5 Option Price. The Option Price under each Option shall
be determined by the Committee. However, the Option Price shall
not be less than the Fair Market Value of the Stock on the date
that the Option is granted (or, in the case of an ISO that is
subsequently modified, on the date of such modification).
6.6 Exercise Period. The period for the exercise of each
Option granted hereunder shall be determined by the Committee, but
the Option Agreement with respect to each Option intended to be an
ISO shall provide that such Option shall not be exercisable after
a date not more than ten years from the date of grant (or
modification) of the Option. In addition, no Option granted to an
Employee who is also an Officer or Director shall be exercisable
prior to the expiration of six months from the date such Option is
granted, other than in the case of the death or disability of such
Employee.
6.7 Option Exercise.
(a) Unless otherwise provided in the Option Agreement,
an Option may be exercised at any time or from time to time during
the term of the Option as to any or all whole shares that have
become Purchasable under the provisions of the Option, but not at
any time as to less than 100 shares unless the remaining shares
that have become so Purchasable are less than 100 shares. The
Committee shall have the authority to prescribe in any Option
Agreement that the Option may be exercised only in accordance with
a vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Treasurer of the Company at its principal office of written notice
of exercise with respect to a specified number of shares of Stock,
and (ii) payment to the Company at that office of the full amount
of the Option Price for such number of shares.
(c) The Option Price shall be paid in full upon the
exercise of the Option. The Committee may provide in an Option
Agreement that, in lieu of cash, all or any portion of the Option
Price may be paid by (i) tendering to the Company shares of Stock
duly endorsed for transfer and owned by the Optionee, or (ii)
delivering to the Company an attestation of the Optionee's then-current
ownership of a number of shares equal to the number
thereby authorized to be withheld by the Company from the shares
otherwise deliverable upon exercise of the Option, in each case to
be credited against the Option Price at the Fair Market Value of
such shares on the date of exercise (however, no fractional shares
may be so transferred, and the Company shall not be obligated to
make any cash payments in consideration of any excess of the
aggregate Fair Market Value of shares transferred over the
aggregate Option Price).
(d) In addition to and at the time of payment of the
Option Price, the Optionee shall pay to the Company in cash the
full amount of any federal, state and local income, employment or
other taxes required to be withheld from the income of such
Optionee as a result of such exercise. However, in the discretion
of the Committee any Option Agreement may provide that all or any
portion of such tax obligations, together with additional taxes
not exceeding the actual additional taxes to be owed by the
Optionee as a result of such exercise, may, upon the irrevocable
election of the Optionee, be paid by (i) tendering to the Company
whole shares of Stock duly endorsed for transfer and owned by the
Optionee, (ii) delivering to the Company an attestation of the
Optionee's then-current ownership of a number of shares equal to
the number thereby authorized to be withheld by the Company from
the shares otherwise deliverable upon exercise of the Option, or
(iii) authorizing the Company to withhold shares of Stock
otherwise issuable upon exercise of the Option, in either case in
that number of shares having a Fair Market Value on the date of
exercise equal to the amount of such taxes thereby being paid, in
all cases subject to such restrictions as the Committee may from
time to time determine, including any such restrictions as may be
necessary or appropriate to satisfy the conditions of the
exemption set forth in Rule 16b-3 under the 1934 Act.
(e) The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares of Stock
subject to the Option until such shares have been issued upon
exercise of the Option.
6.8 Nontransferability of Option.
(a) Except as provided in paragraph 6.8(b), no Option or
any rights therein shall be transferable by an Optionee other than
by will or the laws of descent and distribution, or (except for an
ISO) pursuant to a Qualified Domestic Relations Order. During the
lifetime of an Optionee, an Option granted to that Optionee shall
be exercisable only by such Optionee, by such Optionee's guardian
or other legal representative, should one be appointed, or by such
Optionee's transferee permitted under paragraph 6.8(b).
(b) The Committee may, in its discretion, provide that
all or a portion of an Option (other than an ISO) may be
transferred by the Optionee to (i) the spouse, children or
grandchildren of the Optionee ("Immediate Family Member"), (ii) a
trust or trusts for the exclusive benefit of such Immediate Family
Members, or (iii) a partnership in which the Optionee and or such
Immediate Family Members are the only partners. Following
transfer, any such Option shall continue to be subject to the same
terms and conditions as were applicable immediately prior to
transfer, including those terms and conditions governing transfer
and the effect on such Option of the termination of employment of
the Optionee. The Company shall have no obligation to any
transferee to provide notice of any termination of an Option as a
result of termination of the Optionee's employment. The Committee
may specify as a condition of any such transfer the manner in
which the Optionee shall remain responsible for the payment of
taxes required to be withheld as a result of the exercise of such
transferred Option.
6.9 Termination of Employment. The Committee shall have the
power to specify, with respect to the Options granted to any
particular Optionee, the effect upon such Optionee's right to
exercise an Option of the termination of such Optionee's
employment under various circumstances, which effect may include
(but is not limited to) immediate or deferred termination of such
Optionee's rights under an Option, or acceleration of the date at
which an Option may be exercised in full. With respect to an ISO,
such effects shall be consistent with applicable requirements for
treatment as an ISO.
6.10 Employment Rights. Options granted under the Plan shall
not be affected by any change of employment so long as the
Optionee continues to be an Employee. Nothing in the Plan or in
any Option Agreement shall confer on any person any right to
continue in the employ of the Company or any Subsidiary of the
Company, or shall interfere in any way with the right of the
Company or any such Subsidiary to terminate such person's
employment at any time.
6.11 Certain Successor Options. To the extent not
inconsistent with the terms, limitations and conditions of Code
section 422, and any regulations promulgated with respect thereto,
an Option issued in respect of an option held by an employee to
acquire stock of any entity acquired, by merger or otherwise, by
the Company (or by any Subsidiary of the Company) may contain
terms that differ from those stated in this Article VI, but solely
to the extent necessary to preserve for any such employee the
rights and benefits contained in such predecessor option, or to
satisfy the requirements of Code section 424(a).
6.12 Conditions to Issuing Option Stock. The Company shall
not be required to issue or deliver any Stock upon the full or
partial exercise of any Option prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all
stock exchanges on which the Stock is then listed;
(b) The completion of any registration or other
qualification of such shares that the Company shall determine to
be necessary or advisable under any federal or state law or under
the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, or the
Company's determination that an exemption is available from such
registration or qualification;
(c) The obtaining of any approval or other clearance
from any federal or state governmental agency that the Company
shall determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time
following exercise as shall be appropriate for reasons of
administrative convenience.
Unless the shares of Stock covered by the Plan shall be the
subject of an effective registration statement under the
Securities Act of 1933, as amended, stock certificates issued and
delivered to Optionees shall bear such restrictive legends as the
Company shall deem necessary or advisable pursuant to applicable
federal and state securities laws.
6.13 Automatic Option Grants to Certain Directors.
(a) Options for New Directors. Each person who is not
an Employee, or an employee of any Parent of the Company, shall
automatically, and without any action of the Board or the
Committee, be granted, on the first day on which such person
serves as a Director, an Option for the purchase of 10,000 shares
of Stock if such first day of service occurs prior to 1999, and of
15,000 shares if such first day occurs in 1999 or thereafter
(subject in all cases to automatic proportionate adjustment for
stock splits or stock dividends, and otherwise to proportionate
adjustment by the Committee as provided in Section 5.2). Each
such Option shall become exercisable as to one-fifth of the
subject shares on the date that is six months after the date of
grant, and as to an additional one-fifth of the subject shares on
each of the first, second, third and fourth anniversaries of such
six-month date. Persons receiving such Option prior to 1999 shall
also be granted, automatically and without further action of the
Board or Committee, upon election in 1999 to a further term of
service as a Director, an Option for 1,000 shares for each 2,000
shares of such original Option not yet exercisable as of such 1999
election, which additional Option shall become exercisable as to
1,000 shares on each date on which an additional 2,000 shares of
the original Option becomes exercisable.
(b) Additional Options for Continuing Service. Each
person who is not at that time an Employee, or an employee of any
Parent of the Company, shall automatically and without any action
of the Board or the Committee, be granted, on the date on which
such person is elected to a new one-year term of service beginning
after such person has completed five one-year terms of service (or
its equivalent) following the grant (whether under this Plan or
otherwise)to such person of options for at least 10,000 shares
that become exercisable based on continued service as a Director,
and on each subsequent date on which such person is elected to a
further term of service as a Director, an Option for the purchase
of 2,500 shares of Stock for election arriving prior to 1999, and
of 3,000 shares for elections occurring in 1999 and
thereafter(subject in all cases to automatic proportionate
adjustment for stock splits or stock dividends, and otherwise to
proportionate adjustment by the Committee as provided in Section
5.2). Each such Option shall become exercisable on the date that
is six months after the date of grant.
(c) Other Terms of Automatic Options. Each Option
automatically granted under this Section 6.13 shall not be an ISO,
shall not include the right to receive a Reload Option, and shall
have an Option Price equal to the Fair Market Value of the Stock
on the date of grant. Each such Option shall become immediately
exercisable in the event a party other than the Company or any
Parent or Subsidiary of the Company purchases or otherwise
acquires shares of Stock pursuant to a tender offer or exchange
offer for such shares, or any person or group becomes the
beneficial owner (for the purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of 50% or more of the
outstanding shares of the Stock. To the extent such an Option
shall have become exercisable, it shall be non-forfeitable and
shall remain exercisable until the tenth anniversary of its date
of grant, but if the Grantee ceases to be a Director for any
reason, any portion of such Option that is not at that time
exercisable shall immediately terminate and shall not thereafter
become exercisable. The Option Price for each such Option may be
paid in cash or in the manners specified in the second sentence of
paragraph 6.7(c) hereof. In addition, any taxes related to the
exercise of each such Option may be paid in the manner
contemplated in the second sentence of paragraph 6.7(d) hereof.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant
Awards of Restricted Stock upon determination by the Committee,
acting pursuant to the delegation hereby of the Board's authority
to make such determinations, that the value or other benefit to
the Company of the services of a Grantee theretofore performed or
to be performed as a condition of the lapse of restrictions
applicable to such Restricted Stock, or the benefit to the Company
of the incentives created by the issuance thereof, is adequate
consideration for the issuance of such shares. Each such Award
shall be governed by a Restriction Agreement between the Company
and the Grantee. Each Restriction Agreement shall contain such
restrictions, terms and conditions as the Committee shall, in its
discretion, determine, and may require that an appropriate legend
be placed on the certificates evidencing the subject Restricted
Stock.
Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted, provided that
the Grantee has executed the Restriction Agreement governing the
Award, the appropriate blank stock powers and, in the discretion
of the Committee, an escrow agreement and any other documents
which the Committee may require as a condition to the issuance of
such shares. If a Grantee shall fail to execute the foregoing
documents, within any time period prescribed by the Committee, the
Award shall be null and void. At the discretion of the Committee,
shares of Restricted Stock issued in connection with an Award
shall be held by the Company or deposited together with the stock
powers with an escrow agent designated by the Committee. Unless
the Committee determines otherwise and as set forth in the
Restriction Agreement, upon issuance of such shares, the Grantee
shall have all of the rights of a shareholder with respect to such
shares, including the right to vote the shares and to receive all
dividends or other distributions paid or made with respect to
them.
7.2 Non-Transferability. Until any restrictions upon
Restricted Stock awarded to a Grantee shall have lapsed in a
manner set forth in Section 7.3, such shares of Restricted Stock
shall not be transferable other than by will or the laws of
descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted
Stock awarded hereunder shall lapse at such time or times (but,
with respect to any award to an Employee who is also a Director or
Officer, not less than six months after the date of the Award) and
on such terms and conditions as the Committee shall, in its
discretion, determine at the time the Award is granted or
thereafter.
7.4 Termination of Employment. The Committee shall have the
power to specify, with respect to each Award granted to any
particular Employee, the effect upon such Grantee's rights with
respect to such Restricted Stock of the termination of such
Grantee's employment under various circumstances, which effect may
include (but is not limited to) immediate or deferred forfeiture
of such Restricted Stock or acceleration of the date at which any
then-remaining restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of
Restricted Stock is made the Committee may, in its discretion,
determine that the payment to the Grantee of any dividends, or a
specified portion thereof, declared or paid on such Restricted
Stock shall be (i) deferred until the lapsing of the relevant
restrictions, and (ii) held by the Company for the account of the
Grantee until such time. In the event of such deferral, there
shall be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year
at a rate per annum determined by the Committee. Payment of
deferred dividends, together with interest thereon, shall be made
upon the lapsing of restrictions imposed on such Restricted Stock,
and any dividends deferred (together with any interest thereon) in
respect of Restricted Stock shall be forfeited upon any forfeiture
of such Restricted Stock.
7.6 Delivery of Shares. Within a reasonable period of time
following the lapse of the restrictions on shares of Restricted
Stock, the Committee shall cause a stock certificate or
certificates to be delivered to the Grantee with respect to such
shares. Such shares shall be free of all restrictions hereunder,
except that if the shares of stock covered by the Plan shall not
be the subject of an effective registration statement under the
Securities Act of 1933, as amended, such stock certificates shall
bear such restrictive legends as the Company shall deem necessary
or advisable pursuant to applicable federal and state securities
laws.
7.7 Payment of Withholding Taxes.
(a) The Restriction Agreement may authorize the Company
to withhold from compensation otherwise due to the Grantee the
full amount of any federal, state and local income, employment or
other taxes required to be withheld from the income of such
Grantee as a result of the lapse of the restrictions on shares of
Restricted Stock, or otherwise as a result of the recognition of
taxable income with respect to an Award. At the time of and as a
condition to the delivery of a stock certificate or certificates
pursuant to Section 7.6, the Grantee shall pay to the Company in
cash any balance owed with respect to such withholding
requirements.
(b) In the discretion of the Committee, any Restriction
Agreement may provide that all or any portion of the tax
obligations otherwise payable in the manner set forth in paragraph
7.7(a), together with additional taxes not exceeding the actual
additional taxes to be owed by the Grantee with respect to the
Award, may, upon the irrevocable election of the Grantee, be paid
by tendering to the Company whole shares of Stock duly endorsed
for transfer and owned by the Grantee, or by authorizing the
Company to withhold and cancel shares of Stock otherwise
deliverable pursuant to Section 7.6, in either case in that number
of shares having a Fair Market Value on the date that taxable
income is recognized equal to the amount of such taxes thereby
being paid, in all cases subject to such restrictions as the
Committee may from time to time determine.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, (i) cause the Committee to cease
granting Options and Awards, (ii) terminate the Plan, or (iii) in
any respect amend or modify the Plan. However, the Board (unless
its actions are approved or ratified by the shareholders of the
Company within twelve months of the date the Board amends the
Plan) may not amend the Plan to materially increase the number of
shares of Stock available under the Plan to Directors or Officers.
No termination, amendment or modification of the Plan shall
affect adversely a Grantee's rights under an Option Agreement or
Restriction Agreement without the consent of the Grantee or his or
her legal representative.
From and after the first date on which an Option is
automatically granted pursuant to Section 6.13, the provisions of
such Section 6.13 may not be amended in any manner more frequently
than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations promulgated under the Code
or such Act.
ARTICLE IX
MISCELLANEOUS
9.1 Replacement or Amended Grants. At the sole discretion
of the Committee, and subject to the terms of the Plan, the
Committee may modify outstanding Options or Awards or accept the
surrender of outstanding Options or Awards on terms specified by
the Committee, which terms may include the grant of new Options or
Awards in substitution for them. However no modification of an
Option or Award shall adversely affect a Grantee's rights under an
Option Agreement or Restriction Agreement without the consent of
the Grantee or his or her legal representative.
9.2 Forfeiture for Competition. If a Grantee provides
services to a competitor of the Company or any of its
Subsidiaries, whether as an employee, officer, director,
independent contractor, consultant, agent or otherwise, such
services being of a nature that can reasonably be expected to
involve the skills and experience used or developed by the Grantee
while a Director or an Employee, then that Grantee's rights under
any Options outstanding hereunder shall be forfeited and
terminated, and any shares of Restricted Stock held by such
Grantee subject to remaining restrictions shall be forfeited,
subject in each case to a determination to the contrary by the
Committee.
9.3 Plan Binding on Successors. The Plan shall be binding
upon the successors of the Company.
9.4 Headings Not a Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference, and do
not constitute a part of the Plan.
PROXY CARD
EMS TECHNOLOGIES, INC.
The undersigned hereby appoints Thomas E. Sharon, Don T.
Scartz and William S. Jacobs, and each of them with individual
power of substitution, proxies to appear and vote all shares of
the common stock of EMS Technologies, Inc. that the undersigned
may be entitled to vote at the Annual Meeting of Shareholders to
be held on the 30th day of April, 1999, and at all adjournments
thereof, as indicated with respect to the following matters:
(1) To vote FOR [ ] or WITHHOLD AUTHORITY to vote for [ ]
electing the following seven members of the Board of Directors,
except as marked to the contrary.
Alfred G. Hansen, Jerry H. Lassiter, John B. Mowell, Don T.
Scartz, Thomas E. Sharon, Elvie L. Smith, Norman E. Thagard.
INSTRUCTIONS: If he or she so chooses, any shareholder may
withhold authority to vote for any nominee by lining through or
otherwise striking out the name of such nominee. The above-named
proxies will vote for the election of any nominee whose name is
not deleted.
(2) Proposal to approve amendments to the EMS Technologies, Inc.
1997 Stock Incentive Plan that would (i) increase the number of
shares available thereunder, and (ii) increase the number of
shares automatically optioned to non-employee members of the Board
of Directors, as described in the Proxy Statement for the Annual
Meeting under the heading "Amendment of the 1997 Stock Incentive
Plan."
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
LISTED NOMINEES AND PROPOSAL.
(3) In accordance with their best judgment upon such other
matters as may properly come before the Annual Meeting or any
adjournment thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY INSTRUCTIONS
INDICATED HEREON. IF NO INDICATION IS MADE, IT WILL BE VOTED
"FOR" THE LISTED NOMINEES AND PROPOSAL.
PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
EMS TECHNOLOGIES, INC.
The Board of Directors is not aware of any matters to be presented
for action at the Annual Meeting of Shareholders, other than the
election of Directors and the listed Proposal.
This proxy is revocable at any time prior to its use.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
To Shareholders:
Please mark this proxy on the reverse side, date and sign
this proxy below, and return it to us promptly in the enclosed
envelope, which requires no postage. Please sign exactly as your
name appears below and indicate any change of address.
Dated: , 1999
------------
----------------------- (L.S.)
----------------------- (L.S.)
Signature(s) should correspond
with name(s) on reverse side.
When signing in a fiduciary or
representative capacity, give
full title as such.
