<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GTI CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
GTI CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
------------------------
NOTICE
------------------------
To the Stockholders:
The Annual Meeting of the Stockholders (the "Annual Meeting") of GTI
Corporation, a Delaware corporation (the "Company"), will be held at the San
Diego Marriott La Jolla, 4240 La Jolla Village Drive, La Jolla, California, on
Thursday, May 15, 1997, at 10:00 a.m., local time, for the following purposes:
(1) To elect a Board of Directors of five members;
(2) To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for 1997;
(3) To approve an amendment to the Company's Certificate of Incorporation
to increase the authorized number of shares of the Company's common
stock from 12,000,000 shares to 12,750,000 shares;
(4) To approve an amendment to the Company's Certificate of Incorporation
to change the name of the Company from GTI Corporation to Valor Inc.
(5) To approve the GTI Corporation 1996 Stock Option Plan II for a
Non-Employee Director for 25,000 shares of the Company's Common Stock;
and
(6) To transact any and all other business which may properly come before
the Annual Meeting or any adjournment or adjournments thereof.
A Proxy Statement containing information for stockholders is annexed hereto
and a copy of the Annual Report of the Company for the fiscal year ended
December 31, 1996, is enclosed herewith.
Stockholders of record at the close of business on March 21, 1997, will be
entitled to notice of and to vote at the Annual Meeting and any and all
adjournments thereof. A list of stockholders entitled to vote at the Annual
Meeting will be available for inspection by stockholders at the Company's
corporate offices, located at 9715 Business Park Avenue, San Diego, California
92131. Stockholders may examine the list during ordinary business hours during
the 10-day period before the Annual Meeting. The list will also be available for
inspection at the Annual Meeting.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING AND DESIRE TO
HAVE THEIR STOCK VOTED AT THE ANNUAL MEETING ARE REQUESTED TO COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE, IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
Bruce C. Myers
Secretary
April 9, 1997
San Diego, California
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... 1
Purposes of the Annual Meeting...................................................... 1
PROPOSAL ONE
ELECTION OF DIRECTORS (Item 1 on the Proxy Card).................................... 2
Nominees for Election as Directors.................................................. 2
Information Regarding Nominees...................................................... 2
Vote Required....................................................................... 3
Aggregate Stock Ownership of Directors and Officers................................. 3
Principal Stockholders.............................................................. 4
Board Committees.................................................................... 5
Board and Committee Meeting Attendance.............................................. 5
Compensation Committee Interlocks and Insider Participation......................... 5
Certain Relationships and Related Transactions...................................... 6
COMPENSATION AND OTHER TRANSACTIONS WITH OFFICERS AND DIRECTORS....................... 7
Summary Compensation Table.......................................................... 7
Compensation Committee Report....................................................... 8
Employment Agreements and Severance and Retirement Arrangements..................... 10
Stock Options....................................................................... 12
Directors' Compensation............................................................. 14
Compliance with Section 16 of the Exchange Act...................................... 16
CUMULATIVE TOTAL STOCKHOLDER RETURN................................................... 16
PROPOSAL TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS (Item 2 on the Proxy Card)......... 17
PROPOSAL THREE
APPROVAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF THE COMPANY'S AUTHORIZED SHARES OF COMMON STOCK FROM 12,000,000 TO 12,750,000
SHARES (Item 3 on the Proxy Card)................................................. 18
PROPOSAL FOUR
APPROVAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF
THE COMPANY FROM GTI CORPORATION TO VALOR INCORPORATED (Item 4 on the Proxy
Card)............................................................................... 19
PROPOSAL FIVE
APPROVAL OF THE GTI CORPORATION 1996 STOCK OPTION PLAN II FOR A NON-EMPLOYEE
DIRECTOR (Item 5 on the Proxy Card)............................................... 20
METHODS AND EXPENSES OF SOLICITATION.................................................. 21
STOCKHOLDERS' PROPOSALS............................................................... 21
</TABLE>
i
<PAGE> 4
GTI CORPORATION
9715 BUSINESS PARK AVENUE
SAN DIEGO, CALIFORNIA 92131-1642
(619) 537-2500
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of GTI Corporation, a Delaware corporation
(the "Company"), to be voted at the Annual Meeting of the Stockholders of the
Company (the "Annual Meeting") to be held on Thursday, May 15, 1997, at 10:00
a.m., local time, at the San Diego Marriott, 4240 La Jolla Village Drive, La
Jolla, California, and at any and all adjournments thereof.
The only business that the management of the Company intends to present, or
knows that others will present, at the Annual Meeting is specified in the
accompanying notice. If other matters are properly presented at the Annual
Meeting; however, such matters will be considered and acted upon, and the
persons named in the proxies being solicited will vote such proxies in
accordance with their best judgment on such matters.
This Proxy Statement and the accompanying notice and form of proxy will be
mailed to stockholders on or about April 8, 1997.
Stockholders of record at the close of business on March 21, 1997 (the
"Record Date") will be entitled to vote at the Annual Meeting. On the Record
Date, there were outstanding 8,973,475 shares of the Company's Common Stock, par
value $0.04 per share (the "Common Stock"), and 8,110 shares of the Company's
$35.00 Cumulative Convertible Preferred Stock, par value $1.00 per share (the
"Preferred Stock"). Holders of Common Stock are entitled to one vote per share,
while holders of Preferred Stock are entitled to 234.314 votes per share. In
electing directors of the Company and approving the other proposals presented,
holders of Common Stock and holders of Preferred Stock will vote together as a
single class. The presence, in person or by proxy, of the holders of shares
representing at least 5,436,881 votes at the Annual Meeting shall constitute a
quorum.
All shares represented by properly executed and unrevoked proxies will be
voted at the Annual Meeting. Shares represented by proxies marked as abstentions
on any matter will not be voted on that matter, although they will be counted
for quorum purposes and to determine voting results. Broker's shares held in
"street name" and not voted by such broker will be counted for quorum purposes
but will not be counted to determine voting results. The proxy accompanying this
Proxy Statement may be revoked at any time prior to voting by providing written
notice to the Secretary of the Company or by appearance at the Annual Meeting
and voting in person.
There are no dissenters' rights of appraisal with respect to any matter to
be acted upon at the Annual Meeting.
INTRODUCTION
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are to: (1) elect five directors to
serve on the Company's Board of Directors (the "Board of Directors") for a term
of one year and until their successors are duly elected and qualified; (2) to
ratify the selection of Arthur Andersen LLP as the Company's independent public
accountants for 1997; (3) to approve an amendment to the Company's Certificate
of Incorporation to increase
<PAGE> 5
the number of the Company's authorized shares of Common Stock from 12,000,000 to
12,750,000 shares; (4) to approve an amendment to the Company's Certificate of
Incorporation to change the Company's name from GTI Corporation to Valor Inc.;
(5) to approve the adoption of the GTI Corporation 1996 Stock Option Plan II for
a Non-Employee Director for 25,000 shares of the Company's Common Stock; and (6)
transact any and all other business which may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
PROPOSAL ONE
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
NOMINEES FOR ELECTION AS DIRECTORS
At the Annual Meeting, five directors are to be elected to serve on the
Board of Directors for a term of one year and until their successors are duly
elected and qualified. The Board of Directors currently consists of five
members. The By-laws of the Company provide that the occurrence of a vacancy on
the Board of Directors which is not filled by action of the Board of Directors
will constitute a determination by the Board of Directors that the number of
directors is reduced so as to eliminate such vacancy, unless the Board of
Directors specifies otherwise. Accordingly, the Board of Directors will consist
of five members upon the election of the five nominees listed below. All five of
the nominees are currently serving as directors of the Company. It is intended
that all proxies in the enclosed form will be voted for the nominees listed
below, unless otherwise directed. If any of the nominees listed below is unable
to serve for any reason not presently known, a substitute or substitutes will be
nominated by the Company's Board of Directors and the proxies will be voted for
such substitute or substitutes. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
VOTING "FOR" THE FIVE NOMINEES LISTED BELOW.
INFORMATION REGARDING NOMINEES
The following table sets forth the name, age, principal occupation for the
periods indicated, and other directorships of each of the current nominees at
the Annual Meeting:
Timothy M. Curtis, age 54, has been a director since 1994. Since February
1992, Mr. Curtis has been the Chief Executive and a director of Telemetrix PLC,
a United Kingdom corporation, which is listed on the London Stock Exchange and
is engaged in the manufacture and sale of advance electronics products. From
1991 through 1993, he was a Non-Employee Director of TVS Entertainment, a United
Kingdom-based commercial television station, from 1994 to 1996 a Non-Employee
Director of Bournemouth and West Hamphsire Water PLC, and from 1994 to 1995 a
Non-Executive Director of Dobson Park Industries PLC. He is currently a
Non-Executive Director of Pace Micro Technology PLC.
Edmund B. Fitzgerald, age 71, has been a director since 1993. Mr.
Fitzgerald is currently Managing Director of Woodmont Associates of Nashville,
Tennessee, a business advisory services firm which he founded in 1990. He is
also an Adjunct Professor of Management at the Owen Graduate School of
Management of Vanderbilt University in Nashville, Tennessee. From 1985 to 1989,
Mr. Fitzgerald was Chairman and Chief Executive Officer of Northern Telecom
Limited and from 1989 to 1990, he was Chairman of the Board.
Albert J. Hugo-Martinez, age 51, has served as President, Chief Executive
Officer and a director of the Company since March 1996. From 1988 to 1995, Mr.
Hugo-Martinez was President and Chief Executive Officer of Applied Micro
Circuits Corp. in San Diego, California. Prior thereto, he held various
management positions with TRW, Burr Brown Corporation and Motorola
Semiconductor. Mr. Hugo-Martinez is a director of Microchip Corp. and the UCSD
Cancer Center.
Kenneth E. Maud, age 52, has been a director since 1995. Mr. Maud served as
a interim President and Chief Executive Officer of the Company from January 1996
to March 1996. Mr. Maud also has served as the Chairman of Peek plc ("Peek"), a
multi-national group of companies specializing in advanced electronic traffic
management systems and field data systems, since April 1991. From September 1986
to April 1991,
2
<PAGE> 6
Mr. Maud served as the Chief Executive of Peek. For the past 19 years, Mr. Maud
has been directly involved in the development of publicly-owned electronics
groups in different parts of the world. Mr. Maud is a director and Chairman of
Atlantis Corporation.
Robert E. Venter, age 36, has been a director since 1993. Mr. Venter has
been a senior executive with Allied Electronics Corporation Limited, a South
African corporation, ("Allied") since September 1990, most recently serving as
Chief Executive of and a director of Power Technologies Limited, a Johannesburg
Stock Exchange listed electrical engineering company, and an affiliate of Allied
(see Note 1 to "Principal Stockholders"). Previously, he was a Vice President of
Corporate Finance of Bear Stearns Co., Inc. from 1988 to 1990. Mr. Venter is
also a director of Ventron Corporation, which is listed on the Johannesburg
Stock Exchange, as well as a director of Telemetrix PLC.
VOTE REQUIRED
Directors will be elected by a plurality of the votes represented by the
Common Stock and Preferred Stock, voting together as a single class, present in
person or by proxy at the Annual Meeting and entitled to vote. Telemetrix PLC,
which as of the Record Date beneficially owned 47.9% of the outstanding shares
of Common Stock and 100% of the outstanding shares of Preferred Stock,
collectively, representing approximately 57% of the vote, has indicated its
intention to vote for all five of the above nominees.
AGGREGATE STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 1, 1997, by (i) each director of the
Company and each of the executive officers of the Company named below in the
"Summary Compensation Table" (collectively, the "Named Officers"), and (ii) all
directors and executive officers of the Company as a group. One hundred percent
(100%) of the Preferred Stock is held by Telemetrix PLC. (See "Principal
Stockholders.") The table is based upon information supplied by directors and
officers of the Company. Unless otherwise indicated, each of the listed persons
has sole voting and sole investment power with respect to the shares
beneficially owned, subject to community property laws where applicable.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL CLASS AS OF TOTAL VOTING
OR IDENTITY OF GROUP OWNERSHIP MARCH 1, 1997 POWER
---------------------------------------------- ---------- ------------- ------------
<S> <C> <C> <C>
Timothy M. Curtis(3).......................... 10,000(1) * *
Kirk M. D'Orazio(8)........................... 11,250(4) * *
Edmund B. Fitzgerald.......................... 15,000(5) * *
Andre R. Horn(10)............................. 1,000 * *
Albert J. Hugo-Martinez(9).................... 22,500(4) * *
Henry N. Huta(11)............................. 1,500(6) * *
Earnest R. Jensen(13)......................... 12,875(4) * *
Aurelio Lucci(12)............................. 250(4) * *
Kenneth E. Maud............................... 60,000(1)(2) * *
William Stauton(13)........................... 0 * *
Jesse Rifkind(11)............................. 10,000(5) * *
Robert E. Venter(3)........................... 12,000(1) * *
All directors and executive officers as a
group (12 persons)(7)....................... 156,375(7) 1.7% 1.4%
</TABLE>
- ---------------
* Less than 1%.
3
<PAGE> 7
(1) Includes 10,000 shares that such director has the right to acquire under
the GTI Corporation 1989 Stock Option Plan for Non-Employee Directors, as
amended (the "1989 Directors Plan").
(2) Includes 25,000 shares that such director has the right to acquire under
the GTI Corporation 1996 Stock Option Plan for a Non-Employee Director and
25,000 shares such director has the right to acquire, subject to
Shareholder approval, under the GTI Corporation 1996 Stock Option Plan II
for a Non-Employee Director.
(3) Messrs. Curtis and Venter are members of the Board of Directors of
Telemetrix PLC. Telemetrix PLC beneficially owns 4,294,300 shares of Common
Stock and 8,110 shares of Preferred Stock.
(4) Represents shares that such Named Officer has the right to acquire under
stock options exercisable within 60 days of March 1, 1997.
(5) Includes 10,000 shares that such director has a right to acquire under the
GTI Corporation 1985 Stock Option Plan for Non-Employee Directors, as
amended (the "1985 Directors Plan").
(6) Held jointly with his wife in the Henry N. and Sharon L. Huta Trust.
(7) Includes 146,375 shares that the current directors and officers have the
right to acquire under stock options exercisable within 60 days of March 1,
1997.
(8) Mr. D'Orazio ceased to act as an executive officer of the Company on
January 25, 1996, when he was named as the President and Chief Operating
Officer of Promptus Communications, Inc.
(9) Mr. Hugo-Martinez became the President, Chief Executive Officer and a
director of the Company on March 13, 1996.
(10) Mr. Horn resigned as a director of the Company on December 11, 1996.
(11) Messrs. Huta and Rifkind did not stand for re-election as directors with
the Company in May 1996.
(12) Mr. Lucci resigned as an officer of the Company effective January 12, 1997.
(13) Such individuals are included as a Named Officers; however, they are not
officers of the Company, but are officers of Valor Electronics, Inc.
PRINCIPAL STOCKHOLDERS
To the knowledge of the Company's management, only the following persons
owned of record or beneficially more than five percent of the outstanding shares
of Common Stock and Preferred Stock as of March 1, 1997:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF PERCENT OF PERCENT OF
BENEFICIAL OWNER OR BENEFICIAL CLASS AS OF TOTAL VOTING
IDENTITY OF GROUP TITLE OF CLASS OWNERSHIP MARCH 1, 1997 POWER
------------------------------- --------------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Telemetrix PLC................. Common Stock 4,294,300 (1)(2)(4) 47.9% 39.5%
Knaves Beech Estate Preferred Stock 8,110 (3) 100.0% 17.5%
----
Loudwater, High Wycombe, Total 57.0%
====
Bucks, HP10 9QZ,
United Kingdom,
Dimensional Fund Advisors
Inc. ........................ Common Stock 475,600 5.3% 4.4%
1299 Ocean Avenue,
11th Floor
Santa Monica, CA 90401
</TABLE>
- ---------------
(1) The Company has been advised that 47.1% of the capital stock of Telemetrix
PLC is owned by Dr. William P. Venter (a citizen of South Africa), related
family trusts and corporations and Allied Electronics Corporation Limited
("Allied"), a publicly held South African corporation of which Dr. Venter
owns more than a majority of the outstanding shares of capital stock. Dr.
Venter is also a director of Telemetrix PLC as are Messrs. Curtis and R.E.
Venter. (See Note 2 of "Aggregate Stock Ownership of Directors and
Officers.")
4
<PAGE> 8
(2) Of these shares, 3,844,300 shares of Common Stock are held by Telemetrix
Investments Limited, a wholly owned subsidiary of Telemetrix PLC, and
450,000 shares of Common Stock are held by Telemetrix Overseas Investments
BV, another wholly owned subsidiary of Telemetrix PLC.
(3) Each share of Preferred Stock is currently convertible into 234.314 shares
of Common Stock and entitled to 234.314 votes. All such shares are held by
Telemetrix Investments Limited, a wholly owned subsidiary of Telemetrix PLC.
(4) The above referenced shares exclude a warrant exercisable for 250,000 shares
of the Company's Common Stock. The warrant was issued on February 11, 1997
(See "Certain Relationships and Related Party Transactions").
BOARD COMMITTEES
The Board of Directors has three standing committees: the Audit Committee,
the Nominating Committee and the Executive Compensation and Stock Option
Committee (the "Compensation Committee").
Audit Committee
The members of the Audit Committee are Messrs. Curtis, Fitzgerald
(Chairman), and Venter. The Audit Committee primarily oversees and reviews the
Company's financial reporting and accounting practices and consults with the
Company's independent public accountants with respect thereto. The Audit
Committee also recommends to the Board of Directors and the stockholders the
retention or replacement of the Company's independent public accountants.
Nominating Committee
The current members of the Nominating Committee are Messrs. Venter and
Fitzgerald. The functions of the Nominating Committee are to recommend nominees
for directors to be elected by the stockholders at their annual meeting and to
recommend nominees to fill vacancies on the Board of Directors that may exist
from time to time. The Nominating Committee will consider recommendations for
nominees that are submitted in writing to the Company by stockholders.
Compensation Committee
The current members of the Compensation Committee are Messrs. Maud
(Chairman) and Venter. The functions of the Compensation Committee are to review
and approve changes in salaries of employees who report directly to the Chief
Executive Officer and to review from time to time the compensation structure of
the Company. The compensation of the Chief Executive Officer is reviewed by the
full Board of Directors.
BOARD AND COMMITTEE MEETING ATTENDANCE
During 1996, the Board of Directors met six times at five regularly
scheduled meetings and one special telephonic meeting. The Audit Committee met
three times, the Nominating Committee did not meet, and the Compensation
Committee met once. Each incumbent director attended at least 75% of all
meetings of the Board of Directors in 1996 and the committees of the Board of
Directors on which he served, except Mr. Venter who attended four of the six
meetings of the Board of Directors during 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Maud and Venter served on the Compensation Committee during 1996.
No member of the Compensation Committee was at any time during the 1996 fiscal
year or at any other time an officer or employee of the Company. Messrs. Venter
and Curtis serve as directors of Telemetrix PLC. (See Note 2 to the table under
"Aggregate Stock Ownership of Directors and Officers."). No other director of
the Company served on a compensation committee of a Board of Directors of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or the Compensation Committee.
5
<PAGE> 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1996, Mr. Aurelio Lucci had outstanding indebtedness to
the Company in the amount of $120,000, pursuant to the terms of a Note and
Security Agreement dated January 6, 1995. Such indebtedness is secured by 80,000
shares of Common Stock of Promptus Communications, Inc. ("Promptus") which are
owned by Mr. Lucci. Payments on the outstanding indebtedness shall be made
concurrently with the sale by Mr. Lucci to the Company of certain shares of
Promptus common stock pursuant to the terms of a certain Management Shares
Agreement entered into by the Company and certain minority shareholders of
Promptus in January 1995 (the "Management Shares Agreement"), which governs the
contingent purchase by the Company of the remaining 28% of the outstanding
capital stock of Promptus.
In March 1997, the Company and Promptus entered into a certain Stock
Purchase Agreement (the "Stock Purchase Agreement") whereby Promptus will
purchase 100% of the shares of Promptus common stock held by the Company,
subject to the closing of the sale of certain assets for approximately $20.0
million which is subject to regulatory approval. Upon the closing of the Stock
Purchase Agreement, the Management Shares Agreement will be terminated and all
of Mr. Lucci's indebtedness and security to the Company will be assumed by
Promptus. The Company anticipates that the sale of certain assets for
approximately $20.0 million and the Stock Purchase Agreement transactions to
close during the quarterly period ended June 28, 1997.
In February 1997, the Company and Valor Electronics, Inc. a wholly-owned
subsidiary of the Company ("Valor") entered into a certain Note Purchase
Agreement (the "Note") and related Common Stock Purchase Warrant Agreement with
Telemetrix PLC. According to the terms of the Note, Telemetrix PLC loaned to
Valor $2.5 million to be repaid in four equal semi-annual installments
commencing in August 1997 plus interest at the prime rate of interest plus 4%
(12.5% at March 1, 1997). Additionally, the Company granted to Telemetrix PLC a
warrant (the "Warrant") for 150,000 shares of Common Stock at an exercise price
of $6.00 per share. The Warrant is exercisable on the date of shareholder
approval to amend the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 12 million to 12.75 million
shares, and the Warrant expires 30 days after the Note is paid in full. If the
Company's interest in Promptus is not sold before April 1, 1997, the number of
shares of Common Stock under the Warrant will increase to 250,000 shares. The
Company believes that the terms and conditions of such financing transaction
were as favorable to the Company as those it would have received from an
unrelated third party.
During 1996, Zetex PLC, a wholly-owned subsidiary of Telemetrix PLC, sold
electronic components with an approximate value of $95,000 to Valor Electronics,
Inc. and its affiliates. The Company believes that the terms and conditions of
such sales transactions were as favorable to the Company as those it would have
received from an unrelated third party. (See "Principal Stockholders.")
6
<PAGE> 10
COMPENSATION AND OTHER TRANSACTIONS
WITH OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation received
by certain of the Named Officers during the years ended December 31, 1996, 1995
and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------- OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(2) (# OF SHARES) ($)(1)
- ----------------------------------- ---- -------- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick(3)................... 1996 -0- -0- -0- -0- -0-
President and CEO, 1995 $312,600 -0- $1,280,975(9) -0- $4,620
GTI Corporation 1994 312,600 -0- 10,215 38,000 4,620
Albert J. Hugo-Martinez............ 1996 $234,231 $26,064 $ 1,501 200,000 $7,200
President and CEO, 1995 -0- -0- -0- -0- -0-
GTI Corporation 1994 -0- -0- -0- -0- -0-
Douglas J. Downs(8)................ 1996 $160,526 $85,000 $ 148,530(10) 45,750(11) $5,891
Vice President Finance, 1995 156,300 -0- 8,750 25,000 4,620
Chief Financial Officer, 1994 156,300 -0- 8,750 17,000 4,497
Treasurer and Secretary,
GTI Corporation
Kirk M. D'Orazio(5)................ 1996 $120,000 -0- $ 9,500 10,000(11) -0-
President, Chief Operating Officer, 1995 120,000 $48,000 8,813 -0- $4,620
Promptus Communications, Inc. 1994 -0- -0- -0- 7,500 -0-
Earnest R. Jensen(12).............. 1996 $153,175 $30,000 $ 2,897 35,000 $6,602
Vice President of Engineering 1995 125,000 -0- 2,798 12,000 -0-
Valor Electronics, Inc. 1994 117,847 73,259 2,721 7,000 -0-
Aurelio Lucci(6)................... 1996 $149,916 -0- $ 9,500 1,000(11) -0-
Vice President, GTI Corporation; 1995 140,000 $23,166 8,400 2,000 $2,138
Chief Executive Officer, 1994 -0- -0- -0- -0- -0-
Promptus Communications, Inc.
William Stauton(12)................ 1996 $ 79,327 $84,000 -0- 40,000 -0-
Vice President of Quality 1995 -0- -0- -0- -0- -0-
Valor Electronics, Inc. 1994 -0- -0- -0- -0- -0-
R. Bert McClung(7)................. 1996 $ 15,000(7) -0- -0- -0- -0-
Vice President, GTI Corporation; 1995 134,750 -0- $ 8,844 -0- $4,620
President, Distribution Group 1994 130,250 -0- 2,215 -0- 4,620
Richard C. Barron(4)............... 1996 -0- -0- -0- -0- -0-
Vice President, GTI Corporation; 1995 $191,568 -0- $ 140,200(4) -0- $1,851
President, Valor Electronics, Inc. 1994 46,154 -0- -0- -0- -0-
</TABLE>
- ---------------
(1) The amounts shown include automobile allowances or reimbursed income taxes
owed for the value of automobiles provided by the Company.
(2) Represents the amount contributed by the Company to the Amended and
Restated Cash or Deferred Profit Sharing Plan for Employees of GTI
Corporation and its affiliates.
(3) Mr. Luick's employment with the Company terminated on January 2, 1996.
(4) Mr. Barron became an officer of the Company on October 12, 1994. The
amounts disclosed for 1994 reflect all compensation that he received from
the Company since he commenced employment with the Company on October 6,
1994 through December 31, 1994. Mr. Barron's employment with the Company
terminated on November 6, 1995. The amounts disclosed as "Other Annual
Compensation" for 1995 reflect Mr. Barron's entire severance compensation
accrued in 1995. (See "Employment Agreements and Severance and Retirement
Arrangements")
7
<PAGE> 11
(5) Mr. D'Orazio became an executive officer of the Company on February 15,
1995. The amounts disclosed for 1995 reflect Mr. D'Orazio's entire
compensation for 1995. On January 25, 1996, Mr. D'Orazio was appointed as
the President and Chief Operating Officer of Promptus and ceased to act as
an executive officer of the Company.
(6) Mr. Lucci became an executive officer of the Company on February 15, 1995.
The amounts disclosed for 1995 reflect Mr. Lucci's entire compensation for
1995. Mr. Lucci resigned as an officer of the Company on January 12, 1997.
(7) Mr. McClung's employment with the Company terminated on February 16, 1996.
The amounts disclosed reflect Mr. McClung's entire compensation for 1996.
(8) Mr. Down's employment with the Company terminated on November 18, 1996.
(9) The amount of "Other Annual Compensation" for Mr. Luick in 1995 represents
amounts accrued in 1995 but to be received by Mr. Luick during 1996 and
1997. These amounts are $468,900 in severance payments and $921,059 in a
lump sum payment in connection with his rights under the GTI Corporation
Key Executive Long Term Incentive Plan. These amounts include certain
amounts due to Mr. Luick in 1996 and 1997 as described below in "Employment
Agreements and Severance and Retirement Arrangements."
(10) The amount of "Other Annual Compensation" for Mr. Downs in 1996 represents
amounts accrued in 1996 but to be received by Mr. Downs during 1996 and
1997. These amounts are $57,623 in severance payments and $98,650 in a lump
sum payment in connection with his rights under the GTI Corporation Key
Executive Long Term Incentive Plan. These amounts include certain amounts
due to Mr. Downs in 1997 as described below in "Employment Agreements and
Severance and Retirement Arrangements".
(11) These shares were granted in connection with options that were subject to
grants of repriced stock options in May 1996 (See "Stock Options -- Stock
Incentive Plan" for additional disclosure regarding the repriced stock
option grants.)
(12) Such individual is included as a Named Officer; however, they are not
officers of the Company, but are officers of Valor Electronics, Inc. (a
wholly-owned subsidiary of the Company).
COMPENSATION COMMITTEE REPORT
The Compensation Committee determines the specific forms and levels of
compensation for executive officers of the Company and administers the Company's
stock incentive and option plans.
The following is the Compensation Committee's report to the stockholders
with respect to the Company's executive compensation policies and with respect
to the compensation of the Chief Executive Officer for 1996. In accordance with
the rules of the Securities and Exchange Commission (the "Commission"), this
report shall not be incorporated by reference into any of the Company's
registration statements, reports or filings under the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
GTI CORPORATION (THE "COMPANY")
1996 COMPENSATION COMMITTEE REPORT
The Company's compensation policies are strongly oriented toward incentives
designed to encourage the Chief Executive Officer and other executive officers
to maximize the potential of the Company and ultimately enhance stockholder
value. Specific corporate-performance objectives are established reflecting the
Company's belief that the contribution of the Chief Executive Officer and the
other executive officers to stockholder value is derived from maximizing
operating performance and earnings on an overall company level and, if
applicable, an individual segment or operating unit level. The Compensation
Committee, while desiring to provide compensation to the Company's executive
officers at competitive levels in order to retain and attract qualified
executive officers, believes that achieving planned operating-profit objectives
is critical to the Company's success. In reviewing the compensation structure
for the Chief Executive Officer and the other
8
<PAGE> 12
executive officers of the Company, the Compensation Committee has utilized the
services of outside independent compensation consultants.
The compensation of the Chief Executive Officer and other executive
officers of the Company in 1996 principally consisted of three elements: base
salary, a cash-bonus plan, and stock options. The base salary component
represents the basic rate of pay provided to an executive officer for carrying
out the overall responsibilities of the job. The base salary is determined using
comparisons with other companies of similar size revenues, market dynamics, and
organizational complexity. Additional determinants weighed in the consideration
of base salary for the Chief Executive Officer and other executive officers
include employment agreements, scope of responsibilities, experience, and other
factors as may be deemed appropriate. For 1996, Mr. Hugo-Martinez's base salary
was $300,000.
The Company has a cash-bonus incentive plan in which the Chief Executive
Officer participates. At the beginning of each year, performance goals are
established for the purposes of determining annual bonuses, with the principal
emphasis being the achievement of planned operating-profit objectives and
certain financial objectives. In calculating the Chief Executive Officer's
bonus, substantial weight is given to earnings per share goals for the Company's
Common Stock. Under this plan, no bonus based on the categories of
operating-profit or on financial objectives is awarded unless at least 100% of
the operating-profit objective is achieved. If these established goals are met,
the Chief Executive Officer could receive target bonuses up to 50% of his base
salary. If performance goals are exceeded, the Chief Executive Officer could be
entitled to receive additional bonus amounts, subject to a maximum bonus of 75%
of the target bonus. The Chief Executive Officer did not receive a cash bonus
during 1996 in connection with the above cashbonus incentive plan. There was no
cash bonus incentive plan in place for the other officers of the Company or key
employees during 1996.
The GTI Corporation Stock Incentive Plan (1989), as amended (the "Stock
Incentive Plan"), was the only stock option plan of the Company during which the
Chief Executive Officer and the other executive officers could participate in
1996. (See "Compensation and Other Transactions with Officers and Directors --
Stock Options.") The Compensation Committee believes that the Stock Incentive
Plan helps recruit, retain, and motivate executive personnel. Moreover, the
Compensation Committee views stock options and stock ownership by the Chief
Executive Officer and other executive officers as an important component of
performance-based compensation, as the value of stock options directly relates
to the price of the Company's Common Stock and provides the Chief Executive
Officer and other executive officers with an incentive to enhance stockholder
value. Stock options are granted on a periodic basis, with interim rewards being
made in the case of new employees, promotions, or a significant increase in job
responsibilities. The number of shares granted under stock options to
participants in the Stock Incentive Plan (including the Chief Executive Officer
and the other executive officers) is calculated using a formula based on the
base salary of the participant, which in turn depends on the factors enumerated
above, including comparisons to other companies, scope of responsibilities and
experience. To determine the number of shares to be granted under options, a
range of dollar values is assigned to each level in the organization, which
equates to a multiple of the individual's base salary that is then divided by
the average price of the Company's Common Stock for the 12 months preceding the
date of grant. Such formula was used in determining the stock options granted in
1996 as shown on the table entitled "Options/SAR Grants in Last Fiscal Year."
The Chief Executive Officer was granted stock options for an aggregate of
200,000 shares of the Company's Common Stock in 1996. (See "Compensation and
Other Transactions with Officers and Directors -- Stock Options.") Options
granted in 1996 vest over a period of four years from the date of grant, at the
rate of 25% per year, in order to provide incentives for the executive officer
to perform over the long term and enhance stockholder value, except for 20,000
of 100,000 shares granted to Mr. Hugo-Martinez which vested upon his employment
with the Company.
As and to the extent compensation of the Chief Executive Officer and other
executive officers increase, the Company intends to comply with Rule 162(m) of
the Internal Revenue Code and the regulations promulgated thereunder to fully
preserve the Company's compensation deduction.
9
<PAGE> 13
The Compensation Committee will continue to review and evaluate the
Company's executive compensation structure at least annually. When appropriate,
the Compensation Committee will also continue to consult with independent
compensation consultants, law firms and accounting firms with respect to its
executive-compensation structure and its effectiveness in attaining the
objectives set by the Committee.
Compensation Committee
By: Kenneth E. Maud
Robert E. Venter
EMPLOYMENT AGREEMENTS AND SEVERANCE AND RETIREMENT ARRANGEMENTS
Gary L. Luick. In April 1989, the Company and Mr. Luick entered into an
employment agreement (the "Luick Employment Agreement"), which provided for,
among other things, an annual base salary and a bonus arrangement based upon
achievement of certain goals of the Company. Mr. Luick's base salary was
$312,600 for 1995 (unchanged from 1994) consistent with the factors set forth in
the 1995 Compensation Committee Report. Pursuant to the Luick Employment
Agreement, Mr. Luick was granted nonstatutory stock options under the Company's
1980 Employees Stock Option Plan to purchase an aggregate of 50,000 shares of
Common Stock at $3.50 per share (all of which have been exercised as of March 1,
1996), and nonstatutory stock options under the Company's 1982 Employees Stock
Option Plan to purchase an aggregate of 50,000 shares of Common Stock at $3.50
per share (all of which have been exercised as of March 1, 1996). All of the
above options are fully vested at this time. The Luick Employment Agreement
further provided that, upon termination of Mr. Luick's employment for any reason
other than a change of control after more than five years of employment, Mr.
Luick would be entitled to severance pay equal to his annual base salary at the
time of termination.
In March 1995, the Company and Mr. Luick entered into an amendment to the
Luick Employment Agreement (the "Luick Amendment"), which provided that, under
certain conditions, Mr. Luick would be entitled to receive on a monthly basis
certain payments and benefits for a period of 18 months from the date of
termination of his employment with the Company (the "Termination Date"),
including payment of his annual base salary as of the date of the Luick
Amendment ($312,600), adjusted for Federal and state tax withholdings, and
certain medical and insurance benefits. In addition, under the Luick Amendment,
Mr. Luick was granted the right to receive certain out-placement services and
continued vesting on a pro-rata basis in the Executive Plan (described below)
until the Termination Date.
Mr. Luick's employment with the Company terminated on January 2, 1996. By
virtue of this termination, Mr. Luick became entitled to receive (i) the above
referenced benefits under the Luick Amendment and (ii) certain benefits under
the Executive Plan as described below under "Employment Agreements and Severance
and Retirement Arrangements -- Executive Plan."
Richard C. Barron. Effective November 6, 1995, Mr. Barron, the Company and
Valor, entered into a separation agreement, pursuant to which Mr. Barron's
employment as President and Chief Executive Officer of Valor and as Vice
President of the Company terminated. Such separation agreement provides that,
among other things, Mr. Barron is entitled to receive (i) payments in the
aggregate amount of $153,840 payable in equal installments from November 1995
though and including August 1996, and (ii) certain placement services with a
value of up to $12,000 (or the cash equivalent).
Douglas J. Downs. Pursuant to an agreement entered into in January 11,
1996, Mr. Downs is entitled to receive a payment equal to six months of his base
salary ($85,000) if Mr. Downs remains in the employ of the Company through June
30, 1996. Mr. Downs remained in the employ of the Company through June 30, 1996
and received the above mentioned amount.
Effective November 18, 1996, Mr. Downs and the Company entered into a
separation agreement, pursuant to which Mr. Downs' employment as Vice President
and Chief Financial Officer of the Company terminated. Such separation agreement
provides that, among other things, Mr. Downs is entitled to receive (i) payments
in the aggregate amount of $43,590 payable in equal installments from November
1996 though
10
<PAGE> 14
and including February 1997, (ii) certain benefits under the Executive Plan as
described below under "Employment Agreements and Severance and Retirement
Arrangements -- Executive Plan", and (iii) certain placement services with a
value of up to $10,000.
Albert J. Hugo-Martinez. In March 1996, the Company and Mr. Hugo-Martinez
entered into an at-will employment agreement, pursuant to which Mr.
Hugo-Martinez became the President and Chief Executive Officer of the Company on
March 13, 1996. Such employment agreement provides that Mr. Hugo-Martinez will
receive a hiring bonus of $15,000 (net of taxes) and an annual base salary of
$300,000. In addition, Mr. Hugo-Martinez is entitled to receive bonus
compensation consisting of 50% of his base salary (pro-rated for 1996) if the
specified annual bonus target is achieved and up to a maximum of 75% of his base
salary if the bonus target is exceeded by 20%. Mr. Hugo-Martinez was also
granted options under the Stock Incentive Plan to purchase 100,000 shares of
Common Stock at the fair market value of $8.75 per share on March 13, 1996 (See
"Stock Options -- Stock Incentive Plan."). Twenty percent of such options vested
upon the commencement of his employment. The remaining options will vest 20% per
year on the four respective anniversaries of the date of grant. Mr.
Hugo-Martinez is also entitled to receive certain fringe benefits including a
monthly automobile allowance in the amount of $800. In the event that his
employment is terminated for reasons other than gross misconduct, death or
disability, Mr. Hugo-Martinez is eligible to receive severance payments in an
aggregate amount equal to 12 months of his annual base salary which will be paid
over a 12-month period.
Kirk M. D'Orazio. In December 1996, the Company and Mr. D'Orazio entered
into a cash incentive compensation arrangement whereby Mr. D'Orazio will receive
cash compensation in the event that the Company sells Promptus, in order to
incent Mr. D'Orazio to increase the Company's shareholder value and maximize the
Company's financial liquidity from the Promptus proceeds. The Company intends to
pay Mr. D'Orazio $250,000, if Promptus is sold under the terms currently
contemplated. In March 1997, the Company's Board of Directors approved this cash
incentive compensation arrangement.
Executive Plan
Effective January 1, 1994, the Company implemented the GTI Corporation Key
Executive Long Term Incentive Plan (the "Executive Plan"), pursuant to which no
executive officer is presently entitled to receive a deferred compensation award
funded by life insurance policies assigned to a rabbi trust. There are no
executive officers of the Company currently participating in the Executive Plan.
The Executive Plan benefits generally vest in accordance with the following
schedule: years 1 to 4 -- 10% per year; and years 5 through 7 -- 20% per year.
Funding of the Executive Plan occurs through policies purchased on the life of
the participant, which are assigned to a rabbi trust, the trustee of which is
Union Bank.
If the participant dies prior to normal retirement age, whether or not
employed at death, his beneficiary will be paid one lump sum equal to the death
benefits under the policy in the trust purchased on behalf of the participant
less the amount of premiums paid for such policy. In addition, the Company will
pay to the participant's beneficiary the full value of any tax savings that the
Company receives as a result of the payment. If the participant dies after
normal retirement, the participant's beneficiary will receive the lump sum
actuarial equivalent of his remaining retirement payments under the Executive
Plan. Upon termination by the Company except for "cause," the participant is
entitled to receive payment of a termination benefit under the Executive Plan
and the Company will pay the participant an amount sufficient to pay any taxes
incurred by the participant resulting from his receipt of such termination
benefit. If the participant's employment is terminated for "cause," all benefits
under the Executive Plan will be forfeited; and the trustee will distribute all
trust assets attributable to the terminated participant to the Company, unless
instructed to hold the assets for the benefit of the Company.
Mr. Gary L. Luick, the former Chief Executive Officer of the Company whose
employment with the Company terminated on January 2, 1996, was a participant
under the Executive Plan. Pursuant to the Executive Plan and in connection with
such termination of employment, Mr. Luick received on February 28, 1996 a lump
sum payment in the amount of $921,059. Mr. Luick continues to be entitled to
certain death benefits under the Executive Plan for the 18 months following the
date on which his employment with the Company terminated.
11
<PAGE> 15
Mr. Douglas J. Downs, the former Chief Financial Officer of the Company
whose employment with the Company terminated on November 18, 1996, was a
participant under the Executive Plan. Pursuant to the Executive Plan and in
connection with such termination of employment, Mr. Downs received on December
13, 1996, a lump sum payment in the amount of $98,650. Mr. Downs no longer
retains any future benefits under the Executive Plan.The Company intends to
terminate the Executive Plan in 1997.
Aurelio Lucci. Effective January 1, 1993, Promptus adopted a Supplemental
Executive Retirement and Severance Plan (the "Promptus SERP"), for the purpose
of providing supplemental retirement benefits to Mr. Lucci in consideration for
his performance as a key executive of Promptus. The Promptus SERP provides that
Mr. Lucci will be entitled to an annual benefit equal to 70% of his "final
average annual compensation" (i.e., the average of Mr. Lucci's annual
compensation for the three years during which such compensation was highest over
the five consecutive year period ending upon the earlier to occur of Mr. Lucci's
retirement or death). The meaning of "retirement" under the Promptus SERP
includes (i) the termination of employment (whether voluntary or involuntary) on
or after the attainment of age 64 or (ii) the termination of employment prior to
age 64 on account of (x) involuntary termination or (y) voluntary termination
for "good cause" (i.e., the occurrence of certain circumstances after a "change
in control" as set forth in the Promptus SERP). Payments under the Promptus SERP
will be made on a monthly basis for ten years (120 payments) upon retirement or
death. The obligations of Promptus under the Promptus SERP are secured at all
times pursuant to a rabbi trust to be established and maintained by Promptus.
Pursuant to the Promptus SERP and in connection with the Company and
Promptus entering into a certain Stock Purchase Agreement whereby Promptus will
purchase 100% of the shares of Promptus common shares held by the Company, upon
the closing to the above transaction, Mr. Lucci will receive approximately
$800,000 as a lump sum payment. Thereafter, Mr. Lucci will no longer retain any
future benefits under the Promptus SERP.
STOCK OPTIONS
The Company has one stock option plans for its officers and other
management employees: the GTI Corporation Stock Incentive Plan (1989), as
amended (the "Stock Incentive Plan"). The Company also has three stock option
plans for non-employee directors. (See "Compensation and Other Transactions with
Officers and Directors -- Directors Compensation.")
Stock Incentive Plan
The Stock Incentive Plan currently provides that a maximum of 1,200,000
shares of Common Stock from the Company's authorized but unissued shares of
Common Stock or from shares acquired by the Company, including shares purchased
in the open market, are available for issuance by the Company in connection with
awards of stock options, reload options, stock appreciation rights, performance
shares and shares of restricted stock, subject to adjustment. Whenever an award
under the Stock Incentive Plan is terminated or forfeited for any reason, the
shares of Common Stock covered by such award will again become available for
award under the Stock Incentive Plan. Also, whenever the exercise price of a
stock option is paid for, in whole or in part, with shares of Common Stock, the
number of shares available for award will only be decreased by the excess of the
number of shares issued to the participant over the number of shares the
participant surrendered. Shares may be awarded to any key employee of the
Company or any subsidiary of the Company who, in the opinion of the committee
administering the Stock Incentive Plan (currently the Compensation Committee),
has the capacity to contribute in a substantial measure to the successful
performance of the Company. The Stock Incentive Plan became effective on
December 13, 1989, and no awards may be granted under the Stock Incentive Plan
after December 13, 1999.
In May 1996, the Board of Directors offered the right to existing stock
option holders (at the holders' sole option) to cancel their then outstanding
stock option grants in exchange for a replacement grant for one-half of the
number of shares underlying the original stock option grants at the then market
value of $7.938 per share. All of the terms of the replacement grant remain
unchanged from the original stock option grants, including the vesting
provisions, except that the employee must remain in the employ of the Company
until
12
<PAGE> 16
May 14, 1997 and the replacement grant may not be exercised before such date in
order to enjoy the benefits of the replacement grant. If the repriced stock
option grant is exercised within the first year, the number of shares issuable
and price revert back to the original stock option grant.
Approximately 112 persons are currently eligible to participate in the
Stock Incentive Plan. As of March 1, 1997, awards covering 726,250 and 248,050
shares were outstanding and available, respectively, for grant under the Stock
Incentive Plan.
The following table sets forth information concerning stock options granted
during the fiscal year ended December 31, 1996, to each of the Named Officers,
all current executive officers as a group, and all employees, including all
current officers who are not executive officers, as a group:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)(2)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- -------------------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS/SARS OPTIONS/SARS APPRECIATION
GRANTED GRANTED TO EXERCISE OR FOR OPTION TERM
(# OF EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME SHARES) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------ ------------ ------------ ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Albert J.
Hugo-Martinez......... 100,000(2) 13.58% $ 8.75 3/13/06 $550,000 $1,395,000
100,000 13.58 5.25 12/11/06 330,000 837,000
Douglas J.
Downs(5)(6)........... 45,750 6.21 7.938 5/14/96 228,000 579,000
Kirk M.
D'Orazio(4)(6)........ 10,000 1.36 7.938 5/14/06 50,000 127,000
Earnest R. Jensen(8).... 20,000 2.72 7.938 5/14/06 100,000 253,000
15,000 2.04 5.25 12/11/06 50,000 126,000
Aurelio Lucci(6)(7)..... 1,000 0.14 7.938 5/14/06 5,000 13,000
William Stauton(8)...... 25,000 3.40 7.938 5/14/06 125,000 316,000
15,000 2.04 5.25 12/11/06 50,000 126,000
All current executive... 100,000 13.58 8.75 3/13/06 -- (3) -- (3)
officers as a group 100,000 13.58 5.75 12/11/06 -- (3) -- (3)
All employees,
including............. 100,000 13.58 8.75 3/13/06 -- (3) -- (3)
all current officers 299,500 40.67 7.938 5/14/06 -- (3) -- (3)
who are not executive 9,000 1.22 6.375 7/16/06 -- (3) -- (3)
officers, as a group 10,000 1.36 6.375 7/19/06 -- (3) -- (3)
5,000 0.68 6.625 7/22/06 -- (3) -- (3)
5,000 0.68 6.125 8/01/06 -- (3) -- (3)
5,000 0.68 5.75 8/26/06 -- (3) -- (3)
20,000 2.72 5.625 9/17/06 -- (3) -- (3)
5,000 0.68 6.875 10/14/06 -- (3) -- (3)
278,000 37.73 5.25 12/11/06 -- (3) -- (3)
</TABLE>
- ---------------
(1) The stock options granted during the fiscal year ended December 31, 1996
(all of which were nonstatutory stock options) were granted under the Stock
Incentive Plan and become exercisable in whole or in part, from time to
time, with respect to the shares underlying the stock options as follows
(and except as noted in (2) below): during year one, 0%; during year two,
25%; during year three, 50%; during year four, 75%; and during year five and
until expiration, 100%. The stock options were granted for a term of 10
years, subject to earlier termination in certain events as provided in the
Stock Incentive Plan. No Stock appreciation rights were granted during 1996.
(2) Stock option issued to Mr. Hugo-Martinez in connection with his employment
agreement dated March 13, 1996 vest as follows: 20% upon commencement of
employment, 20% an the conclusion of year one, 20% at the conclusion of year
two, 20% at the conclusion of year three, and 20% at the conclusion of year
four.
13
<PAGE> 17
(3) Such disclosure is not required.
(4) On January 25, 1996, Mr. D'Orazio was appointed as the President and Chief
Operating Officer of Promptus and ceased to act as an executive of the
Company.
(5) Mr. Down's employment with the Company terminated on November 18, 1996.
(6) These shares were granted in connection with options that were subject to
grants of repriced stock options in May 1996 (See "Stock Options -- Stock
Incentive Plan" for additional disclosure regarding the repriced stock
option grants).
(7) Mr. Lucci resigned as an officer of the Company on January 12, 1997.
(8) Such individuals are included as Named Officers; however, they are not
officers of the Company, but are officers of Valor.
The following table sets forth information concerning stock options
exercised during the fiscal year ended December 31, 1996 by each of the Named
Officers, the aggregate number of options held by each Named Officer and the
value realized from exercised options and inherent in unexercised options at
December 31, 1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF
OPTIONS/SARS UNEXERCISED
AT IN-THE-MONEY
FY-END OPTIONS/SARS AT
(# OF SHARES) FY-END ($)
SHARES ACQUIRED -------------- ----------------
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (# OF SHARES) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------- ---------------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
Albert J. Hugo-Martinez........... -0- -0- 20,000/180,000 -0-/-0-
Douglas J. Downs(1)............... -0- -0- 43,750/-0- -0-/-0-
Kirk M. D'Orazio(2)............... -0- -0- 11,275/6,250 -0-/-0-
Earnest R. Jensen(4).............. -0- -0- 12,875/22,125 -0-/-0-
Aurelio Lucci(3).................. -0- -0- 250/750 -0-/-0-
William Stauton(4)................ -0- -0- -0-/35,000 -0-/-0-
</TABLE>
- ---------------
(1) Mr. Down's employment with the Company terminated on November 18, 1996.
Exercisable stock options previously granted to Mr. Downs terminated on
February 16, 1997.
(2) Mr. D'Orazio was appointed President and Chief Operating Officer of Promptus
on January 25, 1996. In connection with this appointment Mr. D'Orazio ceased
to act as an officer of the Company.
(3) Mr. Lucci resigned as an officer of the Company effective January 12, 1997.
(4) Such individuals are included as Named Officers; however, they are not
officers of the Company, but are officers of Valor.
DIRECTORS' COMPENSATION
Director Remuneration
Each director of the Company, except Mr. Maud and Mr. Hugo-Martinez, is
paid an annual retainer of $18,000, plus $600 for each time that he attends a
meeting of the Board of Directors. Each member of the Audit Committee and the
Compensation Committee is paid $500 for each time that he attends a meeting of
each such committee. Mr. Maud is paid an annual stipend of $50,000, payable
quarterly, for his service as Chairman of the Board of Directors.
14
<PAGE> 18
Non-Employee Director Stock Options
The GTI Corporation 1985 Stock Option Plan for Non-Employee Directors, as
amended (the "1985 Directors Plan"), provides for the automatic grant of
nonstatutory stock options covering an aggregate of 100,000 shares of Common
Stock to members of the Board of Directors who have been elected by the
Company's stockholders and who are not full-time employees of the Company or any
of its subsidiaries, subject to the limitation that no eligible director may be
granted nonstatutory stock options for more than 10,000 shares. The 1985
Directors Plan provides that the exercise price of each nonstatutory stock
option must not be less than the fair-market value of the Common Stock on the
date of grant. As of March 1, 1996, stock options covering 20,000 shares of
Common Stock are outstanding under the 1985 Directors Plan. No additional stock
options can be granted under the 1985 Directors Plan as of December 13, 1995.
The GTI Corporation 1989 Stock Option Plan for Non-Employee Directors, as
amended (the "1989 Directors Plan"), provides for the automatic grant of
nonstatutory stock options with respect to 10,000 shares of Common Stock to
directors of the Company who first become directors after the effective date of
the 1989 Directors Plan (December 13, 1989), who are not otherwise full-time
employees of the Company or any subsidiary of the Company for any part of the
preceding fiscal year and who never received stock options under the 1985
Directors Plan. A maximum of 100,000 shares of Common Stock of the Company's
authorized but unissued shares of Common Stock or treasury stock are available
for issuance under the 1989 Directors Plan, subject to adjustment. Mr. Maud
received a grant of 10,000 shares upon appointment as director in May 1995. As
of March 1, 1997, stock options covering 10,000 shares have been exercised,
60,000 shares were available for future grant, and stock option covering 30,000
shares were outstanding under the 1989 Directors Plan. No stock options under
the 1989 Directors Plan may be granted on or after December 13, 1999.
The GTI Corporation 1996 Stock Option Plan for a Non-Employee Director (the
"1996 Plan") provides for the grant of nonstatutory stock options covering a
member of the Board of Directors who has been elected by the Company's
stockholders and who is not a full-time employee of the Company or any of its
subsidiaries, subject to the limitation that no eligible director may be granted
nonstatutory stock options for more than 25,000 shares. The 1996 Plan provides
that the exercise price of each nonstatutory stock option must not be less than
the fair-market value of the Common Stock on the date of grant. Further, the
options are exercisable immediately and have a 10 year term. Mr. Maud received a
grant of 25,000 shares under the 1996 Plan in May 1996. As of March 1, 1997,
there were stock options for 25,000 shares outstanding under the 1996 Plan and
there were no additional shares under the 1996 Plan available for future grant.
The GTI Corporation 1996 Stock Option Plan II for a Non-Employee Director
(the "1996 Plan II") provides for the grant of nonstatutory stock options
covering a member of the Board of Directors who has been elected by the
Company's stockholders and who is not a full-time employee of the Company or any
of its subsidiaries, subject to the limitation that no eligible director may be
granted nonstatutory stock options for more than 25,000 shares. The 1996 Plan
provides that the exercise price of each nonstatutory stock option must not be
less than the fair-market value of the Common Stock on the date of grant.
Further, the options are exercisable immediately and have a 10 year term. Mr.
Maud received a grant of 25,000 shares under the 1996 Plan II in December 1996.
As of March 1, 1997, there were stock options outstanding under the 1996 Plan II
for 25,000 shares and there were no additional shares under the 1996 Plan II
available for future grant.
15
<PAGE> 19
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and the Nasdaq National Market System. Officers,
directors, and holders of more than 10% of the Common Stock are required by
regulations promulgated by the Commission under the Exchange Act to furnish the
Company with copies of all Section 16(a) forms they file. The Secretary of the
Company will assist beneficial owners of more than 10% of the Common Stock in
complying with the reporting requirements of Section 16(a) of the Exchange Act.
Based solely on its review of the copies of such forms received by it, the
Company believes that, since January 1, 1996, its directors, officers and
greater than 10% beneficial owners complied with all applicable Section 16(a)
reporting requirements, except for one Form 4 transaction of which the Company
is aware that was filed late by Mr. McClung.
CUMULATIVE TOTAL STOCKHOLDER RETURN
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Russell 2000 Index and the Nasdaq Electronic
Components Index (measured in accordance with the rules of the Commission), for
the period of five calendar years commencing January 1, 1992 and ending December
31, 1996. In accordance with the rules of the Commission, this presentation
shall not be incorporated by reference into any of the Company's registration
statements, reports, or filings under the Securities Act or the Exchange Act.
GTI CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE SHAREHOLDER TOTAL RETURN*
AMONG GTI CORPORATION, THE RUSSELL 2000 INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ ELECTRONIC
(FISCAL YEAR COVERED) GTI CORPORATION RUSSELL 2000 COMPONENTS
<S> <C> <C> <C>
1/1/92 100 100 100
12/31/92 263 119 156
12/31/93 270 141 215
12/31/94 163 139 237
12/31/95 173 178 393
12/31/96 48 207 679
</TABLE>
16
<PAGE> 20
PROPOSAL TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2 ON THE PROXY CARD)
Arthur Andersen LLP served as the Company's independent public accountants
in 1995 and 1996 and, upon recommendation of the Audit Committee, has been
selected by the Board of Directors to serve in the same capacity for 1997,
subject to the ratification of such selection at the Annual Meeting. If the
stockholders do not ratify the selection of Arthur Andersen LLP, the appointment
of the independent public accountants will be reconsidered by the Board of
Directors. Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, may make a statement at the Annual Meeting if they so desire, and will
be available to respond to appropriate questions at the Annual Meeting.
Ratification of the selection of Arthur Andersen LLP as the Company's
independent public accountants for 1997 requires the affirmative vote of the
holders of a majority of the votes represented by the outstanding shares of
Common Stock and Preferred Stock, voting together as a single class, present in
person or by proxy at the Annual Meeting and entitled to vote thereon.
Telemetrix PLC, which as of the Record Date beneficially owned 47.9% of the
outstanding shares of Common Stock and 100% of the outstanding shares of
Preferred Stock, collectively, representing approximately 57% of the voting
securities, has indicated its intention to ratify such selection.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
17
<PAGE> 21
PROPOSAL THREE
APPROVAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF THE COMPANY'S AUTHORIZED SHARES OF
COMMON STOCK FROM 12,000,000 TO 12,750,000 SHARES
(ITEM 3 ON THE PROXY CARD)
The Company's stockholders are being asked to approve an amendment to the
Company's Certificate of Incorporation (the "Amendment") to increase the number
of the Company's authorized shares of common stock from 12,000,000 to 12,750,000
shares. The Board of Directors approved the Amendment, subject to stockholder
approval. The increase in the number of authorized shares of Common Stock is
necessary in order to ensure the required number of shares of Common Stock are
available for issuance pursuant to (i) a certain Common Stock Warrant Agreement
(the "Warrant") issued to Telemetrix PLC in February 1997 for up to 250,000
shares of Common Stock (See "Certain Relationships and Related Transactions")
and (ii) the GTI Corporation 1996 Stock Option Plan II for a Non-Employee
Director covering 25,000 shares of Common Stock. At March 1, 1997, of the
12,000,000 shares of Common Stock authorized for issuance, 8,973,475 shares were
outstanding, 1,900,287 shares were reserved for the conversion of the cumulative
convertible Preferred Stock, and 1,174,300 shares of Common Stock were reserved
for issuance under certain stock option plans of the Company. Further, the Board
of Directors believes that the availability of additional authorized but
unreserved shares of Common Stock will provide the Company with flexibility in
future financial arrangements (of which none are currently being assessed).
Upon the approval of the Amendment, Article Fourth of the Company's
Certificate of Incorporation will be revised as follows:
"FOURTH: The total number of shares that the corporation shall have
authority to issue is:
Twelve million seven hundred and fifty thousand (12,750,000) shares
of Common Stock, par value Four Cents($0.04) per share; and
One million (1,000,000) shares of Preferred Stock, par value One
Dollar ($1.00) per share,
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of the Article FOURTH, to provide for the issuance of the
shares of Preferred Stock in series, and by filling a certificate of
designations pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations and powers, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof."
Approval to amend the Company's Certificate of Incorporation to increase
the number of the Company's authorized shares of Common Stock from 12,000,000 to
12,750,000 shares requires the affirmative vote of the holders of a majority of
the votes represented by the outstanding shares of Common Stock and Preferred
Stock, voting together as a single class, present in person or by proxy at the
Annual Meeting and entitled to vote thereon. Telemetrix PLC, which as of the
Record Date beneficially owned 47.9% of the outstanding shares of Common Stock
and 100% of the outstanding shares of Preferred Stock, collectively,
representing approximately 57% of the voting securities, has indicated its
intention to approve the amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF THE
COMPANY'S AUTHORIZED SHARES OF COMMON STOCK FROM 12,000,000 TO 12,750,000
SHARES.
18
<PAGE> 22
PROPOSAL FOUR
APPROVAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME
OF THE COMPANY FROM GTI CORPORATION TO
VALOR INC.
(ITEM 4 ON THE PROXY CARD)
The Company's stockholders are being asked to approve an amendment to the
Company's Certificate of Incorporation (the "Name Change Amendment") to change
the name of the Company from GTI Corporation to Valor Inc. The Board of
Directors approved the Name Change Amendment, subject to stockholder approval.
The name change of the Company from GTI Corporation to Valor Inc. is consistent
with management's focus on Valor. During 1995, 1996 and 1997, the Company has
divested itself of its non-core businesses and business segments that were not
synergistic with Valor. In December 1995, the Company sold its electronic
components and equipment segment, in February 1996, the Company sold its
distribution products segment, and in April 1997, the Company sold its 72%
interest in Promptus; therefore, the remaining business owned by the Company is
Valor.
Upon the approval of the Name Change Amendment, the Company's officers will
have the authority to effect the Name Change Amendment at any time during 1997
as it deems appropriate. The Company's officers will have the authority not to
effect the Name Change Amendment in the event that Promptus is not sold, or if
other events occur that would make the Name Change Amendment not appropriate. If
the Name Change Amendment is not affected, Article First of the Company's
Certificate of Incorporation will be revised as follows:
"FIRST: The name of the corporation is:
Valor Inc."
Approval to amend the Company's Certificate of Incorporation to change the
name of the Company from GTI Corporation to Valor Inc. requires the affirmative
vote of the holders of a majority of the votes represented by the outstanding
shares of Common Stock and Preferred Stock, voting together as a single class,
present in person or by proxy at the Annual Meeting and entitled to vote
thereon. Telemetrix PLC, which as of the Record Date beneficially owned 47.9% of
the outstanding shares of Common Stock and 100% of the outstanding shares of
Preferred Stock, collectively, representing approximately 57% of the voting
securities, has indicated its intention approve the amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE
COMPANY FROM GTI CORPORATION TO VALOR INC.
19
<PAGE> 23
PROPOSAL FIVE
APPROVAL OF THE GTI CORPORATION 1996 STOCK OPTION PLAN II FOR A NON-
EMPLOYEE DIRECTOR FOR 25,000 SHARES OF THE COMPANY'S COMMON STOCK
(ITEM 5 ON THE PROXY CARD)
The Company's stockholders are being asked to approve and adopt the GTI
Corporation 1996 Stock Option Plan II For a NonEmployee Director (the "Plan")for
25,000 shares of the Company's Common Stock. The Board of Directors approved the
adopted the Plan on December 11, 1996, subject to stockholder approval. The Plan
will become effective December 11, 1996 upon such stockholder approval. The
Board of Directors believes that the approval and adoption of the Plan are in
the best interests of the Company and its stockholders in order to retain and
compensate the non-employee director for whom the Plan was created.
Pursuant to the Plan, on December 11, 1996, Mr. Ken Maud was granted an
option for 25,000 shares of the Company's Common Stock at an exercise price of
$5.25 per share (the "Grant"), which was the closing price of the Company's
Common Stock as quoted on Nasdaq Market National System on December 11, 1996.
The Grant is subject to the vote and approval of the Plan by the Company's
stockholders. In addition, the NASD By-Laws require stockholder approval for the
establishment of the Plan, because the Grant would cause the number of shares of
Common Stock underlying options granted to Mr. Maud during the past 12 month
period to exceed 25,000 shares. In the event that the stockholders fail to
approve the Plan, the Board of Directors will consider alternative means of
compensating Mr. Maud in lieu of the Grant.
See Exhibit 10.1 for a copy of the Plan and section "Directors
Compensation -- Non-Employee Director Stock Options" for a summary overview of
the Plan.
Approval of the GTI Corporation 1996 Stock Option Plan II for a
Non-Employee Director requires the affirmative vote of the holders of a majority
of the votes represented by the outstanding shares of Common Stock and Preferred
Stock, voting together as a single class, present in person or by proxy at the
Annual Meeting and entitled to vote thereon. Telemetrix PLC, which as of the
Record Date beneficially owned 47.9% of the outstanding shares of Common Stock
and 100% of the outstanding shares of Preferred Stock, collectively,
representing approximately 57% of the voting securities, has indicated its
intention to approve the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE GTI CORPORATION 1996 STOCK OPTION PLAN II FOR A NON-EMPLOYEE DIRECTOR.
20
<PAGE> 24
METHODS AND EXPENSES OF SOLICITATION
The cost of solicitation of the enclosed form of proxy will be borne by the
Company. Solicitation will be made primarily through the use of the mails, but
directors, officers and regular employees of the Company may solicit proxies
personally, by mail, or by telephone and telegraph. The Company will reimburse
banks, brokers and other custodians, nominees and fiduciaries for their
reasonable expenses incurred in sending proxy material to beneficial owners and
obtaining their proxies.
FORM 10-K
A copy of the Company's annual report for the year ended December 31, 1996
is included with this proxy statement to shareholders entitled to notice of the
Meeting. At any shareholder's written request, the Company will provide without
charge, a copy of Company's Annual Report on Form 10-K, which incorporates the
Company's 1996 annual report to shareholders by reference, as filed with the
SEC. If copies of exhibits are requested, a copying charge of $0.15 per page
will be charged. All requests should be sent to: Investor Relations, GTI
Corporation, 9715 Business Park Avenue, San Diego, California 92131.
STOCKHOLDERS' PROPOSALS
Any stockholder who intends to submit a proposal for action at the 1998
Annual Meeting of Stockholders must provide notice to the Company, which must be
received on or before December 10, 1997, in order for the proposal to be
included in management's proxy statement and form of proxy relating to the 1998
Annual Meeting of Stockholders.
By Order of the Board of Directors,
Bruce C. Myers
Secretary
April 9, 1997
San Diego, California
21
<PAGE> 25
EXHIBIT 10.1
GTI CORPORATION
1996 STOCK OPTION PLAN II
FOR A NON-EMPLOYEE DIRECTOR
I. PURPOSE
This GTI Corporation 1996 Stock Option Plan II for Non-Employee Directors
(the "Plan") is designed to promote the interests of GTI Corporation (the
"Corporation") and its stockholders by attracting and retaining highly qualified
independent directors through an investment interest in the Corporation's future
success.
II. ADMINISTRATION
The Plan shall be administered by a Committee of at least three (3) persons
appointed by the Board of Directors of the Corporation. The Committee shall have
the power to grant options, to construe the Plan, to determine all questions
arising thereunder, to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable, to amend the terms of any
outstanding options (subject to applicable legal restrictions and to the consent
of the optionee), and to otherwise take any other actions deemed necessary or
advisable to carry out the intent and terms of the Plan. The interpretation and
construction by the Corporation of any provision of the Plan or of any option
granted under it shall be final.
III. ELIGIBILITY
Each director of the Corporation who, as of the effective date of the Plan
(or, if first elected as a director by the stockholders thereafter, as of the
effective date of such election), is not otherwise a full-time employee of the
corporation (or of any subsidiary of the Corporation) and has not been a
full-time employee of the Corporation (or any subsidiary of the Corporation) for
all of any part of the preceding fiscal year (an "Eligible Director") shall be
eligible to receive, as of the effective date of the Plan, or, if later, the
date on which such director becomes an Eligible Director, a grant of stock
options to purchase shares of the Corporation's Common Stock under the Plan, as
described in Article V.
IV. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
The shares that may be issued under the Plan shall be authorized and
unissued shares or treasury shares of the common stock, par value $0.04 per
share, of the Corporation (the "Common Stock"). The aggregate number of shares
of Common Stock shall be 25,000 shares, unless an adjustment is required in
accordance with Article VI or unless subsequently increased by action of the
Board of Directors.
In the event that any outstanding option granted under the Plan expires by
reason of lapse of time or is terminated prior to its exercise for any reason,
then the shares of Common Stock subject to such unexercised option shall not be
charged against this aggregate limit and may again become available as part of
the pool of shares of Common Stock for which options under the Plan may be
granted.
V. STOCK OPTIONS
A. Grant of Stock Options. Grants of stock options shall be made under the
Plan in accordance with all the terms and conditions contained herein. Each
option granted under the Plan shall be evidenced by an option agreement duly
executed on behalf of the Corporation and by the director to whom such options
is granted, which option agreements may but need not be identical and shall
comply with and be subject to the terms and conditions of the Plan.
22
<PAGE> 26
B. Term of Options and Effect of Termination. Subject to Section 3(f), but
notwithstanding any other provisions of the Plan, no option granted under the
Plan shall be exercisable after the expiration of ten years from the date of its
grant. In the event that any outstanding option under the Plan expires by reason
of lapse of time or is otherwise terminated without exercise for any reason,
then the shares of Common Stock subject to any such option which have not been
issued pursuant to the exercise of the option shall again become available in
the pool of shares of Common Stock for which options under the Plan may be
granted.
C. Terms and Conditions of Options. Options granted pursuant to the Plan
shall be evidenced by agreements in such form as the Committee shall from time
to time determine, which agreements shall comply with the following terms and
conditions:
1. Each option agreement shall state the number of shares to which the
option pertain and the period(s) during which vesting of the options shall
occur.
2. Each option agreement shall state the option price per share, which
shall be equal to 100% of the fair market value (as determined under the
Plan) of a share of the Common Stock on the date such option is granted.
3. The option price shall be payable upon the exercise of an option in
the legal tender of the United States, or, at the election of the optionee,
by surrender to the Corporation of previously owned shares of Common Stock
with an aggregate fair market value (on the date of the exercise) equal to
the option price to be paid. Upon receipt of payment, the Corporation shall
deliver to the optionee (or person entitled to exercise the option) a
certificate or certificates for the shares of Common Stock to which the
option pertains.
To the extent that an option has become exercisable, it may, subject to the
restrictions and limitations set forth in this Plan and in the option agreement,
be exercised in whole or in part. If exercised in part, the unexercised portion
of an option shall continue to be held by the optionee and may thereafter be
exercised as herein provided.
4. In the event that an optionee shall cease to be a director of the
Corporation for any reason, his option shall be exercisable, to the extent
it was exercisable at the date he ceased to be a director, for a period of
one year after such date, and shall then terminate.
5. In the event of the death of an optionee while such optionee is a
director of the Corporation or within the one year period after termination
of such status during which he is permitted to exercise an option, such
option may be exercised within one year of the date of the optionee's
death, without regard to the original term of the option, by any person or
persons designated by the optionee as the executors or administrators of
the optionee's estate or by any person or persons who shall have acquired
the option directly from the optionee by his will or the applicable law of
descent and distribution.
D. Non-statutory Stock Options. All options granted under the Plan shall be
non-statutory options not entitled to special tax treatment under Sections 422A
of the Internal Revenue Code, as amended.
E. Nonassignability. No option shall be assignable or transferable by the
optionee except by will or by the laws of the descent and distribution. During
the lifetime of the optionee, the option shall be exercisable only by the
optionee, and no other person shall acquire any rights therein.
VI. RECAPITALIZATIONS AND REORGANIZATIONS
In the event that the Committee, in its discretion, shall determine that
any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination, exchange
of shares, warrants or rights offering to purchase Common Stock at a price
substantially below fair market value, or other similar corporate event affects
the Common Stock such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be made available under this Plan or
avoid an enlargement of the rights of optionees, then the Committee shall, in
its sole discretion, and in such manner as the Committee may deem equitable,
adjust any or all of (1) the number and kind of shares which thereafter
23
<PAGE> 27
may be optioned and sold under the Plan, (2) the number and kind of shares
subject to outstanding options, and (3) the exercise price with respect to any
option and/or, if deemed appropriate, make provision for a cash payment to a
Participant or a person who has an outstanding option; provided, however, that
the number of shares subject to any option shall always be a whole number.
The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merger or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
VII. TAX WITHHOLDING
The Corporation shall have the right to require participants to remit to
the Corporation an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any shares of Common Stock
acquired by the exercise of options granted under the Plan.
VIII. AMENDMENT AND TERM OF PLAN
A. Amendment of the Plan. The Board of Directors of the Corporation may
suspend or discontinue the Plan or revise or amend it in any respect whatsoever,
except that no such amendment shall alter or impair or diminish any rights or
obligations under any option theretofore granted under the Plan without the
consent of the person to whom such option was granted.
B. Term of Plan. No options may be granted under the Plan on or after June
26, 2006, the tenth anniversary of the effective date of the plan and the plan
shall terminate on such date. Notwithstanding the foregoing, each option granted
under the Plan shall remain in effect until such option has been exercised or
terminated in accordance with its terms and the terms of the Plan.
IX. MISCELLANEOUS PROVISIONS
A. Rights As A Shareholder. An optionee or a transferee of an option shall
have no rights as a shareholder with respect to any shares covered by an option
until the date of the receipt of payment (including any amounts required by the
Corporation pursuant to of Article VII) by the Corporation. No adjustments shall
be made as to any option for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to such date.
B. Purchase for Investment. Unless the shares of Common Stock to be issued
upon exercise of any option granted under the Plan have been effectively
registered under the Securities Act of 1933 as now in force or hereafter
amended, the Corporation shall be under no obligation to issue any shares of
Common Stock covered by any option unless the person who exercises such option,
in whole or in part, shall give a written representation and undertaking to the
Committee which is satisfactory in form and scope to counsel to the Corporation
and upon which, in the option of such counsel, the Corporation may reasonably
rely, that he is acquiring the shares of Common Stock issued to him pursuant to
such exercise of the option for his own account as an investment and not with a
view to, or for sale in connection with, the distribution of any such shares of
Common Stock, and that he will make no transfer of the same except in compliance
with any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares of
Common Stock are issued without such registration, a legend to this effect may
be endorsed upon the securities so issued.
C. Other Provisions. The option agreements authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the option or restrictions required by any applicable securities
laws, as the Committee shall deem advisable.
D. Definition of "Fair Market Value". For purposes of this Plan, the term
"fair market value," when used in reference to the purchase of shares of Common
Stock pursuant to the exercise of an option shall be
24
<PAGE> 28
(a) if the Common Stock is listed on a national securities exchange the closing
price of the Common Stock on the relevant date or, if no sale shall have been
made on such exchange on that date, on the next preceding day on which there was
a sale, or (b) if the Common Stock in the over-the-counter market as quoted on
NASDAQ on such date, or (c) if the Common Stock is not then listed on an
exchange or quoted on NASDAQ, an amount determined in good faith by the
Committee.
E. Restrictions. All options granted under the Plan shall be subject to the
requirement that, if at any time the Corporation shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to options granted under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such option or the issuance, if any, or purchase of shares
in connection therewith, such option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Corporation.
Effective Date of the Plan. The effective date of this Plan shall be
December 11, 1996, the date on which the plan was adopted by the Board of
Directors. The adoption of the Plan shall be subject to subsequent approval by
the stockholders of the Corporation at the next Annual Meeting of the
Corporation's Stockholders to the extent such approval is then required by
either (i) Securities and Exchange Commission Rule 16b-3 or any other rules or
regulations promulgated by the Securities and Exchange Commission under Section
16(b) of the Securities and Exchange Act of 1934, as amended, or (ii) any
requirements imposed by the rules of the American Stock Exchange or any other
stock exchange on which shares of the Common Stock are then listed.
25
<PAGE> 29
COMMON STOCK
PROXY
GTI CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 15, 1997
The undersigned hereby appoints Timothy Curtis, Edmund B. Fitzgerald,
Albert J. Hugo-Martinez, Kenneth Maud and Robert E. Venter, and each of them,
with power of substitution in each, as proxies or proxy to represent the
undersigned at the Annual Meeting of the Stockholders of GTI Corporation (the
"Company") to be held at the San Diego Marriott La Jolla, 4240 La Jolla Village
Drive, La Jolla, California, on Thursday, May 15, 1997, at 10:00 a.m. local
time, and at any adjournment or adjournments thereof, and to vote the number of
shares of Common Stock, which the undersigned would be entitled to vote if
personally present, (a) in the manner designated on the reverse side hereof with
respect to the election of directors and the other identified proposals and (b)
in their discretion on such other matters as may properly come before the
meeting or any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted "FOR" all nominees and
proposals listed on the reverse side hereof.
(Continued and to be marked, dated, and signed on the other side.)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
GTI CORPORATION ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 15, 1997
10:00 A.M.
SAN DIEGO MARRIOTT LA JOLLA
4240 LA JOLLA VILLAGE DRIVE
LA JOLLA, CALIFORNIA
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND DESIRE TO HAVE THEIR
STOCK VOTED AT THE MEETING ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ABOVE
PROXY ON THE REVERSE SIDE AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 30
Please mark
your votes as /x/
indicated in
this example
(1) ELECTION OF DIRECTORS:
Timothy M. Curtis, Edmund B. Fitzgerald, Albert J. Hugo-Martinez,
Kenneth E. Maud, and Robert E. Venter
FOR ALL
NOMINEES
listed except as WITHHOLD
otherwise indicated AUTHORITY
with respect to to vote for all I PLAN TO ATTEND
individual nominees. nominees listed. THIS MEETING
/ / / / / /
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE HIS NAME ON
THE FOLLOWING LINE.)
---------------------------------------------------------
(2) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:
Ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants for 1997.
FOR AGAINST ABSTAIN
/ / / / / /
(3) Approval to Amend the Company's Certificate
of Incorporation to Increase the Number of
Authorized Common Stock
FOR AGAINST ABSTAIN
/ / / / / /
(4) Approval to Amend the Company's Certificate of
Incorporation to Change the Name of the Company
FOR AGAINST ABSTAIN
/ / / / / /
(5) Approval of the GTI Corporation 1996 Stock
Option Plan II for a Non-Employee Director
FOR AGAINST ABSTAIN
/ / / / / /
DATED:
---------------------------------
---------------------------------
---------------------------------
Signature(s)
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, guardian, etc., or as officer of a
corporation, give full title. For joint accounts obtain both signatures.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 31
PREFERRED STOCK
PROXY
GTI CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 15, 1997
The undersigned hereby appoints Timothy Curtis, Edmund B. Fitzgerald,
Albert J. Hugo-Martinez, Kenneth Maud, and Robert E. Venter, and each of them,
with power of substitution in each, as proxies or proxy to represent the
undersigned at the Annual Meeting of the Stockholders of GTI Corporation (the
"Company") to be held at the San Diego Marriott La Jolla, 4240 La Jolla Village
Drive, La Jolla, California, on Thursday, May 15, 1997, at 10:00 a.m. local
time, and at any adjournment or adjournments thereof, and to vote the number of
shares of $35.00 Cumulative Convertible Preferred Stock, which the undersigned
would be entitled to vote if personally present, (a) in the manner designated on
the reverse side hereof with respect to the election of directors and the other
identified proposals and (b) in their discretion on such other matters as may
properly come before the meeting or any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted "FOR" all nominees and
proposals listed on the reverse side hereof.
(Continued and to be marked, dated, and signed on the other side.)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
GTI CORPORATION ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 15, 1997
10:00 A.M.
SAN DIEGO MARRIOTT LA JOLLA
4240 LA JOLLA VILLAGE DRIVE
LA JOLLA, CALIFORNIA
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND DESIRE TO HAVE THEIR
STOCK VOTED AT THE MEETING ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ABOVE
PROXY ON THE REVERSE SIDE AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 32
Please mark
your votes as /x/
indicated in
this example
(1) ELECTION OF DIRECTORS:
Timothy M. Curtis, Edmund B. Fitzgerald, Albert J. Hugo-Martinez,
Kenneth E. Maud, and Robert E. Venter
FOR ALL
NOMINEES
listed except as WITHHOLD
otherwise indicated AUTHORITY
with respect to to vote for all I PLAN TO ATTEND
individual nominees. nominees listed. THIS MEETING
/ / / / / /
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE HIS NAME ON
THE FOLLOWING LINE.)
---------------------------------------------------------
(2) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:
Ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants for 1997.
FOR AGAINST ABSTAIN
/ / / / / /
(3) Approval to Amend the Company's Certificate
of Incorporation to Increase the Number of
Authorized Common Stock
FOR AGAINST ABSTAIN
/ / / / / /
(4) Approval to Amend the Company's Certificate of
Incorporation to Change the Name of the Company
FOR AGAINST ABSTAIN
/ / / / / /
(5) Approval of the GTI Corporation 1996 Stock
Option Plan II for a Non-Employee Director
FOR AGAINST ABSTAIN
/ / / / / /
DATED:
---------------------------------
---------------------------------
---------------------------------
Signature(s)
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, guardian, etc., or as officer of a
corporation, give full title. For joint accounts obtain both signatures.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
