<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary proxy statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GTS DURATEK, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
Diane R. Brown, Corporate Secretary
- --------------------------------------------------------------------------------
(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 the 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 filling 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>
GTS DURATEK, INC.
10100 Old Columbia Road
Columbia, Maryland 21046
_________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 1999
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of GTS
Duratek, Inc. (the "Company") will be held at 10100 Old Columbia Road, Columbia,
Maryland 21046 on the 19th day of May, 1999 at 10:30 a.m., Eastern Standard
Daylight Savings Time, for the following purposes:
1. To elect seven Directors of the Company to serve until the next Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualify.
2. To approve an amendment to the Certificate of Designation of the 8%
Cumulative Convertible Redeemable Preferred Stock, par value $.01 per share, to
extend the mandatory redemption date from January 24, 2002 until February 5,
2004
3. To approve the appointment of KPMG LLP, independent certified public
accountants, as the Company's independent auditors for the year ending December
31, 1999.
4. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Holders of record of Common Stock and 8% Cumulative Convertible Redeemable
Preferred Stock as of the close of business on March 19, 1999 are entitled to
receive notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Diane R. Brown
Secretary
Columbia, Maryland
April 19, 1998
Whether or not you expect to be present at the Annual Meeting of
Stockholders, please fill in, date and sign the enclosed Proxy and return it
promptly in the enclosed return envelope.
<PAGE>
GTS DURATEK, INC.
10100 Old Columbia Road
Columbia, Maryland 21046
________
Columbia, Maryland April 19, 1999
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of GTS Duratek, Inc., a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at 10100
Old Columbia Road, Columbia, Maryland 21046 on the 19th day of May, 1999 at
10:30 a.m. Eastern Standard Daylight Savings Time, and at any adjournments
thereof. The approximate date on which this Proxy Statement and the
accompanying Proxy were first given or sent to security holders was April 19,
1999.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter, by written notice to that effect to the Company, attention of
the Secretary, prior to the Annual Meeting, or in person to the Chairman of, or
the Inspectors of Election at, the Annual Meeting, or by the execution and
return of a later-dated Proxy, except as to any matter voted upon prior to such
revocation.
The Proxies in the accompanying form will be voted in accordance with the
specifications made thereon and where no specifications are given, such Proxies
will be voted FOR the nominees for election as directors named herein, for the
amendment of the Certificate of Designations of the 8% Cumulative Convertible
Redeemable Preferred Stock, par value $.01 per share, to extend the mandatory
redemption date from January 24, 2002 until February 5, 2004, and FOR the
approval of the appointment of KPMG LLP as the Company's independent auditors.
In the discretion of the proxy holders, the Proxies will also be voted FOR or
AGAINST such other matters as may properly come before the meeting. The
management of the Company is not aware that any other matters are to be
presented for action at the meeting.
The terms of the Company's 8% Cumulative Convertible Redeemable Preferred
Stock, par value $.01 per share (the "Convertible Preferred Stock"), provide
that the holders thereof, voting as a separate class, shall have the right to
elect a majority of the Company's Board of Directors so long as The Carlyle
Group and its affiliates ("Carlyle") own shares of capital stock having 20% or
more of the votes that may be cast at annual or special meetings of
stockholders. The remaining directors shall be elected by the vote of the
holders of the Company's common stock, par value $.01 per share (the "Common
Stock"), and the Convertible Preferred Stock, voting together as a single class.
With respect to the election of the majority of the Board of Directors by the
holders of the Convertible Preferred Stock, voting as a separate class, such
directors shall be elected by a plurality of the votes cast by the holders of
shares of Convertible Preferred Stock present in person or represented by proxy
at the Annual Meeting. In the election of the remaining directors by the
holders of the Common Stock and the Convertible Preferred Stock, voting together
as a single class, such directors shall be elected by a plurality of the votes
cast by the holders of shares of Common Stock and Convertible Preferred Stock
present in person or represented by proxy at the Annual Meeting. For purposes
of the election of directors, abstentions and broker non-votes are not
considered to be votes cast and do not affect the plurality vote required for
directors. With respect to the proposal to amend the Certificate of
Designations of the Convertible Preferred Stock to extend the mandatory
redemption date from January 24, 2002 to February 5, 2004, the unanimous vote of
the holders of the Convertible Preferred Stock, voting as a separate class, and
the affirmative vote of the holders of a majority of the outstanding shares of
the Convertible Preferred Stock and Common Stock, voting together as a single
class, are required to approve the matter. On this matter, abstentions and
broker non-votes will have the same effect as a vote against the proposal. On
all other matters, including the approval of the appointment
<PAGE>
of the Company's independent auditors, a majority of the votes cast at the
meeting, with a quorum present, is required to approve the matter. Accordingly,
abstentions and broker non-votes will not be considered to be votes cast and
will have no effect on the outcome of the matter.
The solicitation of proxies generally will be by mail and by directors,
officers, and regular employees of the Company. In some instances, solicitation
may be made by telephone or other means. All costs incurred in connection with
the solicitation of proxies will be borne by the Company. Arrangements may be
made with brokers and other custodians, nominees and fiduciaries to send proxies
and proxy material to their principals, and the Company may reimburse them for
reasonable out-of-pocket and clerical expenses in forwarding such material.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 19, 1999 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting. The issued and outstanding stock of the
Company on March 19, 1999 consisted of 13,862,670 shares of Common Stock and
157,788 shares of Convertible Preferred Stock. For all matters, each share of
Common Stock is entitled to one vote, except that in the election of directors,
each share of Common Stock is entitled to cast one vote for each director to be
elected; cumulative voting is not permitted. For all matters in which the
holders of shares of Convertible Preferred Stock vote with the holders of the
Common Stock as a single class, each share of Convertible Preferred Stock
entitles the holder thereof to cast the number of votes equal to the number of
votes which could be cast in such vote by a holder of the number of the shares
of Common Stock into which such share of Convertible Preferred Stock is
convertible. The current number of shares of Common Stock into which each share
of Convertible Preferred Stock is convertible is 33-1/3. Accordingly, the
outstanding shares of Convertible Preferred Stock represent 5,259,600 votes in
the aggregate when voting with the shares of Common Stock as a single class. A
quorum of the stockholders is constituted by the presence, in person or by
proxy, of holders of record of voting stock, representing a majority of the
number of votes entitled to be cast.
Carlyle beneficially owns 145,162 shares of Convertible Preferred Stock
outstanding and 3,101,551 shares of Common Stock outstanding, or an aggregate of
41.5% of the outstanding voting securities of the Company. GP Strategies
Corporation (formerly National Patent Development Corporation), a Delaware
corporation ("GPS"), beneficially owns 916,222 shares of the outstanding Common
Stock, representing 6.6% of the outstanding voting securities of the Company.
Carlyle and GPS have entered into a stockholders' agreement dated as of January
24, 1995 (the "Stockholders' Agreement") whereby each agreed that they would
vote the shares of stock beneficially owned by them so that the Company's Board
of Directors would be comprised of the Carlyle designees representing a majority
of the designees to the Board of Directors, the Company's president and the
remaining members designated by GPS. GPS has subsequently waived its rights
under the Stockholders Agreement to designate members to the Company's Board of
Directors. See "Security Ownership of Certain Beneficial Owners and
Management."
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
On January 24, 1995, the Company issued for $16 million 160,000 shares of
Convertible Preferred Stock, and an option (the "Company Option") to purchase up
to an additional 1.25 million shares of newly issued Common Stock from the
Company at any time prior to January 24, 1999 at $3.75 per share to investment
partnerships sponsored and controlled by Carlyle. The Company option was
exercised in full in September 1998. The Convertible Preferred Stock is
convertible into Common Stock at a conversion price of $3 per share. In
addition, as part of this financing transaction (the "Financing Transaction"),
Carlyle acquired 1,666,667 shares of Common Stock of the Company owned by GPS,
the Company's largest stockholder at that time, for $3 per share and had the
option (the "NPD Option") to purchase up to an additional 500,000 shares of the
Company's Common Stock from GPS at any time prior to January 24, 1996 at an
exercise price of $3.75 per share. Carlyle exercised the NPD Option in full on
December 22, 1995.
Assuming the conversion of all of the Convertible Preferred Stock into
Common Stock, Carlyle would own 41.5% of the Common Stock of the Company,
excluding the effects of the exercise of all other outstanding warrants,
convertible securities and employee stock options.
The terms of the Convertible Preferred Stock provide that the holders of a
majority of the Convertible Preferred Stock have the right to elect a majority
of the Company's Board of Directors so long as Carlyle owns shares of capital
stock having 20% or more of the votes that may be cast at annual or special
meetings of stockholders. As part of the Financing Transaction and the sale of
the Company's Common Stock from GPS to Carlyle, the Company, Carlyle and GPS
entered into the Stockholders' Agreement whereby, among other things, GPS agreed
to vote the remaining shares of Common Stock that it owns in favor of the
Carlyle designees to the Company's Board of Directors. As a result of the
Financing Transaction, Carlyle has the ability, through its stock ownership, the
terms of the Convertible Preferred Stock and the terms of the Stockholders'
Agreement, to elect a majority of the Company's Board of Directors and
effectively control the Company.
The following table sets forth, at March 19, 1999, the amount and
percentage of the Company's outstanding Common Stock and Convertible Preferred
Stock beneficially owned by each director and nominee for director, each
executive officer named in the Summary Compensation Table, all directors and
officers as a group and by all persons, to the knowledge of the Company,
beneficially owning more than five percent (5%) of the Company's Common Stock or
Convertible Preferred Stock.
3
<PAGE>
<TABLE>
<CAPTION>
Common Stock Convertible Preferred Stock
--------------------------------------------------------
Number Percent of Number Percent of
of Class of Class
Name Shares Outstanding Shares Outstanding
- ---- ------ ------------ ------ -----------
<S> <C> <C> <C> <C>
Daniel A. D'Aniello 3,101,551(1) 22.4% 145,162(1) 92.0%
Robert E. Prince 389,400(2) 2.7% - -
Earle C. Williams 8,200 * - -
Admiral James D. Watkins 900 * - -
George V. McGowan 1,200 * - -
J. A. Brothers 6,000 * - -
Dr. Francis J. Harvey 7,000 * - -
Robert F. Shawver 119,550(2) * - -
C. Paul Deltete 82,550(2)
Leslie M. Hill 8,000
Ian S. Howard 0
Directors and Executive Officers
as a Group (13 persons) 3,762,851(3) 26.2% 145,162 92.0%
Name and Address of Other 5%
Holders of Common Stock or
Convertible Preferred Stock
- ---------------------------
The Carlyle Group 3,101,551(4) 22.4% 145,162(5) 92.0%
1001 Pennsylvania Avenue, NW
Washington, DC 20004-2505
GP Strategies 916,222(6) 6.6% - -
9 West 57th Street, Suite 4170
New York, NY 10019
BNFL Inc. 1,381,575(7) 9.1% - -
9302 Lee Highway, Suite 950
Fairfax, VA 22031
The Capital Group Companies 811,100 5.9% - -
333 South Hope Street
Los Angeles, CA 90071
Soros Capital Offshore 198,773 1.4% 9,308 5.9%
Partners LDC
c/o Coutts & Co. Limited
West Bay Road, George Town
Grand Cayman, Cayman Islands
British West Indies
- -----------
</TABLE>
* The number of shares owned is less than one percent of the outstanding
shares of Common Stock.
4
<PAGE>
(1) Mr. D'Aniello is Managing Directors of Carlyle and, as a result, may be
deemed to beneficially own the shares (3,101,551) of Common Stock and
Convertible Preferred Stock beneficially owned by Carlyle. However, Mr.
D'Aniello disclaims beneficial ownership of such shares.
(2) Includes options to purchase 313,100, 94,250, 68,750, and 5,000 shares of
Common Stock for Messrs. Prince, Shawver, Deltete, and Hill respectively, which
are exercisable within 60 days.
(3) Includes 506,100 shares that may be issued upon the exercise of options and
warrants outstanding and beneficially owned by the executive officers and
directors as a group.
(4) Represents (i) 1,961,162 shares of Common Stock purchased from GPS in the
Financing Transaction and upon the exercise of the NPD Option and (ii) does not
include shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock. The shares of Convertible Preferred Stock are convertible into
4,838,733 shares of Common Stock. Assuming the conversion of the Convertible
Preferred Stock into Common Stock, Carlyle would own 7,940,284 shares of Common
Stock or 41.5% of the Common Stock. In all instances, the shares are owned by
partnerships sponsored and controlled by Carlyle.
(5) Represents shares of Convertible Preferred Stock acquired by Carlyle in the
Financing Transaction. In all instances, the shares are owned by partnerships
sponsored and controlled by Carlyle.
(6) GPS has granted to certain of its officers, directors and employees,
options which are presently exercisable at an average price of $2.13 per share,
to purchase 135,800 shares of the Company's Common Stock owned by it. If all of
the options were exercised, GPS would own 780,422 shares of Common Stock of the
Company (5.6%).
(7) Represents shares of Common Stock issuable upon the conversion of the
convertible debenture issued by the Company to BNFL Inc. on November 7, 1995 for
$10.0 million.
5
<PAGE>
ELECTION OF DIRECTORS
Seven directors will be elected at the meeting to hold office until the
next Annual Meeting of Stockholders and until their respective successors are
duly elected and qualify. It is intended that the Proxies will be voted for the
following nominees, but the holders of the Proxies reserve discretion to cast
votes for individuals other than the nominees for director named below in the
event of the unavailability of any such nominee. The Company has no reason to
believe that any of the nominees will become unavailable for election. Set
forth below are the names of the nominees, age, position with the Company, the
year in which first elected a director of the Company, principal occupation and
certain other information concerning each of the nominees.
The terms of the Convertible Preferred Stock provide that the holders
thereof voting as a separate class, have the right to elect a majority of the
Company's Board of Directors so long as Carlyle owns shares of capital stock
having 20% or more of the votes that may be cast at annual or special meetings
of stockholders. Messrs. D'Aniello, Williams, Brothers, and Harvey are the
designees of the holders of the Convertible Preferred Stock to the Company's
Board of Directors. The remaining directors shall be elected by the vote of the
holders of the Common Stock and the Convertible Preferred Stock voting together
as a single class. In addition, Carlyle and GPS have entered into the
Stockholders' Agreement whereby each agreed that they would vote the shares of
stock beneficially owned by them so that the Company's Board of Directors would
be comprised of the Carlyle designees representing a majority of the designees
to the Board of Directors, the Company's president and the remaining members
designated by GPS. GPS has subsequently waived its right under the
Stockholder's Agreement to designate members to the Company's Board of
Directors.
Convertible Preferred Stock Designees
- -------------------------------------
Daniel A. D'Aniello, 52, has been Chairman of the Board and a director of
the Company since January 1995. He has been a Managing Director and a founding
partner for The Carlyle Group, a Washington, D.C. based private merchant bank,
since 1987. Mr. D'Aniello was Vice President, Finance and Development for
Marriott Corporation, a hospitality company, from 1981 to 1987. He currently
serves on the Board of Directors for Baker & Taylor, Inc., IT Group and
Pharmaceutical Research Associates. Mr. D'Aniello is a magna cum laude graduate
of Syracuse University, where he was a member of Beta Gamma Sigma, and a
graduate of the Harvard Business School, where he was a Teagle Foundation
Fellow.
Earle C. Williams, 69, has been a director of the Company since January
1995. He served on the Board of Directors of BDM International, Inc. from 1972
until 1997 and was the President and Chief Executive Officer of that company
from 1972 until 1992. Mr. Williams also serves on the Board of Directors of the
following companies, Gamma-A Technologies, Inc., Parsons Corporation, and BTG,
Inc.
J. A. "Fred" Brothers, 58, has been a director of the Company since April
1998. He has served as Executive Vice President of Ashland Inc., a diversified
petroleum and chemical products company, since 1996 and has been with Ashland
companies since 1967. Mr. Brothers also serves on the Board of Directors of the
following organizations, The Geon Company, the Defense Enterprise Fund and on
the Board of Trustees of Children's Hospital in Columbus, Ohio. Mr. Brothers
earned his doctorate in chemical engineering at Virginia Polytechnic Institute
and an advanced management degree from Harvard Business School.
6
<PAGE>
Dr. Francis J. Harvey, 55, has been director since January 1999. Dr.
Harvey is the former Chief Operating Officer of Westinghouse Electric
Corporation's Industries and Technology Group. Dr. Harvey earned his doctorate
in Metallurgy and Material Sciences from University of Pennsylvania and his B.S.
at the University of Notre Dame for Metallurgy Engineering and Material Science.
Remaining Nominees
- ------------------
Admiral James D. Watkins, 72, has been a director of the Company since
April 1997. Admiral Watkins has been the President of the Joint Oceanographic
Institutions, Inc. since 1993 and President of the Consortium Oceanographic
Research and Education since 1994. Admiral Watkins was appointed Chief of Naval
Operations in 1982 by President Reagan and served as Secretary of Energy under
President Bush from 1989 to 1993. Admiral Watkins currently serves as a
director of Edison International Corp. and Southern California Edison Company,
and IT Group.
George V. McGowan, 71, has been a director of the Company since April 1997.
Mr. McGowan served as Chairman of the Board and Chief Executive Officer of
Baltimore Gas and Electric Company and Chairman of the Board of Constellation
Holdings, Inc., from 1988 to 1992. Mr. McGowan currently serves as a director
of Baltimore Gas and Electric Company and Scientech, Inc. Mr. McGowan currently
serves as Chairman of the Executive Committee of Baltimore Gas and Electric and
is and a member of the Committee on Nuclear Power.
Robert E. Prince, 52, has been President and Chief Executive Officer of the
Company since 1990 and a director since 1991. He founded General Technical
Services, Inc., the predecessor to the Company, in October 1984 and was
President and Chief Executive Officer from 1987 to 1990. Mr. Prince, a graduate
of the U.S. Naval Academy, served as an officer on nuclear submarines. He also
has a Masters in Business Administration from the Wharton School of Finance of
the University of Pennsylvania. Mr. Prince is a certified naval nuclear
engineer.
Information Regarding the Board of Directors and Certain Committees
During 1998 there were 10 meetings of the Board of Directors of the
Company. Each director attended at least 75% of the combined total number of
meetings of the Board and the Board committees of which he was a member. The
Board of Directors of the Company has an Executive Committee, Compensation
Committee and Audit Committee.
The Executive Committee, currently consisting of Daniel A. D'Aniello,
Chairman, and Robert E. Prince, meets on call and has authority to act on most
matters during the intervals between Board meetings. The Executive Committee
met twice during 1998.
The Compensation Committee, currently consisting of Admiral James Watkins,
Chairman, Dr. Francis Harvey, and Daniel A. D'Aniello, establishes the
compensation for the executive officers of the Company, generally reviews
benefits and compensation for all of the Company's officers, and administers the
Company's Stock Option Plan. The Compensation Committee met twice in 1998.
7
<PAGE>
The Audit Committee, currently consisting of Earle C. Williams, Chairman,
George V. McGowan, and J. A. Fred Brothers, reviews the internal controls of the
Company and the objectivity of its financial reporting. It meets with
appropriate Company financial personnel and the Company's independent certified
public accountants in connection with these reviews. This committee recommends
to the Board of Directors the appointment of the independent certified public
accountants, subject to the ratification by the stockholders at the Annual
Meeting, to serve as auditors for the following year in examining the corporate
accounts of the Company. The Audit Committee met twice in 1998.
Compensation of Directors
For 1998, Admiral Watkins, Mr. McGowan, Mr. Brothers and Mr. Williams each
received a total of $20,000 for their service on the Board of Directors and the
board committees on which they serve. No other director received any
compensation for his service on the Board of Directors or any committees thereof
during 1998.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information concerning the
compensation for the last three completed fiscal years of the chief executive
officer and the next four most highly compensated executive officers of the
Company. No stock appreciation rights ("SARs") were granted during 1998 nor have
any SARs been granted at any time in prior years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation(1) Awards
--------------------------------------------------------------------
Securities
Underlying
Restricted Options All Other
Stock Granted Compensation
Name and Principal Position Year Salary $ Bonus $ Award(s)($) (#)(2) (3) ($)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Prince 1998 214,533 30,500 - 10,000 4,946
President and Chief Executive 1997 209,300 60,697 - 10,000 4,750
Officer 1996 202,000 - - - 4,862
Robert F. Shawver 1998 156,130 16,500 - 7,000 4,869
Executive Vice President and 1997 150,850 32,810 - 5,000 4,750
Chief Financial Officer 1996 145,600 3,200 - - 4,750
C. Paul Deltete(4) 1998 139,415 15,000 - 22,000 4,649
Senior Vice President 1997 134,700 29,297 - 15,000 4,664
1996 130,000 2,850 - 65,000 1,622
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Leslie M. Hill(4) 1998 144,900 15,500 - 37,000 975
Senior Vice President 1997 92,147 30,450 - 20,000 -
1996 - - - - -
Ian S. Howard(4) 1998 101,012 9,500 - 17,000 3,031
</TABLE>
(1) No executive officer named above received any perquisites and other personal
benefits the aggregate amount of which exceeded the lesser of either $50,000
or 10% of the total annual salary and bonus reported for 1998 in the Summary
Compensation Table.
(2) Represents options to purchase Common Stock that were granted to Messrs.
Prince, Shawver, Deltete, Hill, and Howard on May 19, 1998. The options
granted become exercisable in four equal annual installments commencing May
19, 1999. Messrs. Deltete, Hill, and Howard also received options to
purchase Common Stock that were granted on December 16, 1998.
(3) Consists of Company matching contributions to the Company's 401(k) Savings
Plan.
(4) Mr. Deltete joined the Company January 16, 1996 and Mr. Hill joined the
Company May 1, 1997. Mr. Howard became an executive officer in 1998.
Options Granted in Last Fiscal Year
The following table sets forth certain information relating to options
granted in 1998 to purchase shares of Common Stock of the Company.
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable
Securities Total Exercise Value at Assumed
Underlying Options or Base Annual Rates of Stock
Options Granted in Price (Per Expiration Price Appreciation for
Name Granted (#) Fiscal Year Share) (1) Date Option Term (3)
- ---- ----------- ----------- ---------- ---- ---------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Robert E. Prince 10,000 6% $10.625 5/19/03 29,550 64,850
Robert F. 7,000 4.2% $10.625 5/19/03 20,685 45,395
Shawver
C. Paul Deltete 7,000 4.2% $10.625 5/19/03 20,685 45,395
15,000 9% $5.50 12/15/03 22,800 50,400
Leslie Hill 7,000 4.2% $10.625 5/19/03 20,685 45,395
30,000 18% $5.50 12/15/03 45,600 100,800
Ian S. Howard 2,000 1.2% $10.625 5/19/03 5,910 12,970
15,000 9% $5.50 12/15/03 22,800 50,400
</TABLE>
The 5% and 10% assume rates of stock appreciation used to calculate
potential gains to optionees are mandated by the rules of the Securities and
Exchange Commission.
9
<PAGE>
(1) Options were granted at 100% of fair market value on the date of
the grant.
(2)These dollar amounts are the result of calculations of assumed annual
rates of stock price appreciation from May 19, 1998 (the dates of the grants of
the option awards) to May 19, 2003 and December 15, 2003 respectively (the date
of the expiration of such options) of 5% and 10%, the two assumed rates being
required under the rules of the Securities and Exchange Commission. Based on
these assumed annual rates of stock price appreciation of 5% and 10%,
respectively, the Company's stock price at May 19, 2003 is projected to be
$13.58 and $17.11, respectively, and the Company's stock price at December 15,
2003 is projected to be $7.02 and $8.86, respectively. These assumptions are not
intended to forecast future appreciation of the Company's stock price. Indeed,
the Company's stock price may increase or decrease in value over the time period
set forth above. The potential realizable value computation does not take into
account federal or state income tax consequences of option exercises or sales of
appreciated stock.
Aggregated Option Exercises and Fiscal Year-End Option Values Table
The following table sets forth certain information concerning the exercise
of stock options, the number of unexercised options and the value of unexercised
options at the end of 1998 for the executive officers whose compensation is
reported in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES
DURING 1998 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In the
Share Options at Money Options at
Acquired December 31, 1998 December 31, 1998(1)
on Value Exercisable Exercisable
Name Exercise (#1) Realized ($) Unexercisable Unexercisable
- ---- ------------- ------------ ---------------------- ----------------------
<S> <C> <C> <C> <C>
Robert E. Prince 32,400 $216,850 313,100/17,500 $446,643/$0
Robert F. Shawver 36,000 $184,626 94,250/10,750 $133,734/$0
C. Paul Deltete 0 0 68,750/33,250 $ 0
Leslie M. Hill 0 0 5,000/52,000 $ 0
Ian S. Howard 0 0 0/17,000 $ 0
</TABLE>
(1) Calculated based on the closing price of the Company's Common Stock
($4.938) as reported by Nasdaq National Market on December 31,1998. An "In-
the-Money" option is an option for which the option price of the underlying
stock is less than the market price at December 31, 1998, and all of the
value shown reflects stock price appreciation since the granting of the
option.
10
<PAGE>
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
In connection with the closing of the Financing Transaction, the Company
entered into employment agreements with Messrs. Prince and Shawver. Under the
terms of the employment agreement between the Company and Mr. Prince, he will
hold the offices of President, Chief Executive Officer and will serve as a
member of the Board of Directors. As compensation for his services, Mr. Prince
will receive an initial base salary of $200,000 per annum. The employment
agreement between the Company and Mr. Shawver provides that he will hold the
offices of Executive Vice President and Chief Financial Officer and will receive
an initial base salary of $140,000 per annum. Increases in the base salaries of
Messrs. Prince and Shawver may be upwardly adjusted by the Compensation
Committee in its discretion. In January 1996, the Company entered into an
employment agreement with Mr. Deltete. Under the terms of the employment
agreement between the Company and Mr. Deltete, he will hold the office of Senior
Vice President of Operations and will receive an initial base salary of $130,000
per annum. In December 1998, the Company entered into an employment agreement
with Mr. Howard. Under the terms of the agreement between the Company and Mr.
Howard, he will hold the office of Vice President and will receive an initial
base salary of $105,000 per annum. Increases in the base salary may be upwardly
adjusted by the Compensation Committee in its discretion. The agreements with
Messrs. Prince, Shawver, Deltete, and Howard provide that the Compensation
Committee shall consider in good faith the amount of bonus which each may
receive and the amount of such bonus shall be determined with reference to the
performance of each executive and the performance and results of operations of
the Company.
The agreements may be terminated by the Company (i) upon the long-term
disability of the employee, (ii) upon the employee's death, (iii) for cause or
for good reason (each as defined in the agreements), or (iv) upon six months
notice to the employee. Messrs. Prince or Shawver may terminate their employment
agreements under certain circumstances upon six months notice. If the agreements
are not terminated, they shall terminate upon the third anniversary from the
date of the agreements, provided that if neither party has given a notice to the
other not to extend the agreement, such employment agreements will be
automatically extended, on a day-by-day basis, to a date which is six months
after the date on which a notice not to extend is first given. Neither the
Company nor Messrs Prince, Shawver or Deltete have provided a notice not to
continue the respective employment agreements. Accordingly, the employment
agreements for Messrs Prince, Shawver and Deltete are continuing on a day-to-day
basis until six months after either party to each such agreement provides an
notice not to extend the agreement.
Under the terms of these agreements, if the employee is terminated for good
reason or without cause upon the discretion of the Company or the employee
resigns with justification. The Company shall pay to the employee all
compensation, at the rate then in effect, through the date of such termination,
the base salary of the employee, then in effect, for a period of one year from
the date of termination and will maintain certain employee benefits for a period
of one year from the date of termination.
11
<PAGE>
The employment agreements also contain certain non-competition provisions
prohibiting the employees, for certain periods of time, from engaging in, or
being employed by, businesses that derive revenues from vitrification or
remediation of any form of waste or derive revenues from the remediation of any
form of wastes that then accounts for at least ten percent (10%) of the revenues
of the Company's technology group irrespective of the remediation technology
being used.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for establishing the compensation
for the executive officers of the Company, reviewing benefits and compensation
for all of the Company's officers and administering the Company's Stock Option
Plan. The Compensation Committee's executive compensation policies are designed
to enhance the financial performance of the Company, and thus stockholder value,
by significantly aligning the financial interest of the key executives with
those of stockholders. The Compensation Committee reviews the financial
performance and increases to stockholder value annually and adjusts the
compensation of key executives based on the improvements achieved.
During 1997, the Company adopted an Executive Compensation Plan in order to
formalize the determination of the annual compensation of the Company's
executive officers. The purpose of the plan is to attract, retain and motivate
key management and to align the financial interests of the Company's executive
officers with those of the Company's stockholders. Under the plan, the
executive officers' compensation is structured in such a way so that a
meaningful portion is "at risk," with annual and long-term incentives intended
to provide between 20% and 40% of total compensation. All Senior Vice
Presidents and above are eligible to participate in the Executive Compensation
Plan and for 1998 the eligible participants consisted only of the executive
officers named in the Summary Compensation Table. The Executive Compensation
Plan is administered and all salary and bonuses are at the sole discretion of
the Compensation Committee.
The Executive Compensation Plan consists of three components of
compensation: base salary, annual cash performance bonus and long-term incentive
stock option grants. The base salary and any raises for the Company's Chief
Executive Officer are determined by the Compensation Committee. The base salary
and raises for the other executive officers are determined by the Chief
Executive Officer. The annual cash performance bonus is designed to reward
executive officers for their contributions to corporate and business unit
objectives, and for individual performance. The bonus is expressed as a
percentage of the executive officer's base for such fiscal year. The amount of
the bonus earned by each executive officer, as a percentage of the executive
officer's base salary, is dependent upon the performance of the Company during
the fiscal year as compared to budgeted amounts. The specific factors examined
include the Company's operating profit, free cash flow, earnings per share and a
specific personal objective for each executive officer. The first three factors
are each weighted 30% with the personal objective criteria weighted 10% in
determining the amount of the annual cash performance bonus. In addition to
salary and cash bonus, the Compensation Committee can award options to purchase
shares of the Company's Common Stock. Although the Compensation Committee has a
guideline to award an aggregate of 30,000 to 40,000 options to the participants
in the Executive Compensation Plan, all option awards are at the sole discretion
of the Compensation Committee.
The Company has certain broad-based employee benefit plans in which all
employees, including the named executive officers, are permitted to participate
on the same terms and conditions relating to eligibility
12
<PAGE>
and subject to the same limitations on amounts that may be contributed. In 1998,
the Company also made a matching contribution for those participants to the
Company's 401(k) Savings Plan.
Mr. Prince's 1998 Compensation. Mr. Prince's 1998 compensation was
determined pursuant to the terms of the Executive Compensation Plan and
consistent with the terms of his employment agreement with the Company. Mr.
Prince's base salary for 1998 was $214,533. Mr. Prince received an annual cash
performance bonus of approximately $30,500 for 1998, based upon the Company
exceeding its budget for operating income, and for satisfying his personal
objective. In considering whether Mr. Prince satisfied his personal objective,
the Compensation Committee considered the integration and improvement in
operations of The Scientific Ecology Group, Inc. (SEG) acquired in 1997, the
award of the second phase contract for the Hanford Tank Waste Remediation
Project and the Big Rock commercial power plant decommissioning contracts. The
Compensation Committee awarded Mr. Prince options to purchase 10,000 shares of
the Company's Common Stock.
Compensation of other Executive Officers and Employees. The compensation of
the other executive officers of the Company named in the Summary Compensation
Table was determined consistent with the terms of the Executive Compensation
Plan, including the fact that the Company exceeded its budget for operating
income, and taking into account the individual performance. In addition, the
Compensation Committee awarded to Messrs. Shawver, Deltete, Hill, and Howard
options to purchase 7,000, 22,000, 37,000 and 17,000 shares of the Company's
Common Stock, respectively. Mr. Hill joined the Company during 1997 following
the Company's acquisition of SEG.
The Compensation Committee continuously reviews the compensation policies
of the Company to attract, retain and provide appropriate incentives for the
highest quality professional personnel in order to maintain the Company's
competitive position in the environmental technology and services industries,
and thereby seek to provide for long-term success of the Company and the
interests of its stockholders.
The Securities and Exchange Commission requires Compensation Committees of
public companies, or other committees performing similar functions, to state
their compensation policies with respect to the federal income tax laws that
limit to $1 million the deductibility of compensation paid to executive officers
named in the proxy statement of such companies. In light of the current level of
compensation for the Company's named executive officers, the Compensation
Committee has not adopted a policy with respect to the deductibility limit, but
will adopt such a policy should it become relevant.
Admiral James D. Watkins, (Chairman)
Daniel A. D'Aniello
Francis J. Harvey
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, Admiral Watkins and Mr. D'Aniello served as members of the
Compensation Committee. No director or executive officer of the Company is a
director or executive officer of any other corporation that has a director or
executive officer who is also a director or a board committee member of the
Company.
PERFORMANCE GRAPH
As part of the proxy statement disclosure requirements mandated by the
Securities and Exchange Commission, the Company is required to provide a five-
year comparison of the cumulative total stockholder return on its Common Stock
with that of a broad equity market index and either a published industry index
or a company-constructed peer group index. The following graph compares the
performance of the Company's Common Stock for the periods indicated with the
performance of the CRSP Index for the Nasdaq Stock Market (non-financial) and
the Pollution Control Industry Group compiled by Research Data Group (which
includes all companies with primary SIC codes 4950, 4953 and 4955 whose stock
has been publicly-traded for all of 1998). The comparison assumes $100 was
invested on December 31, 1993 in the Company's Common Stock and in each of the
foregoing indices and the reinvestment of dividends.
[INSERT PERFORMANCE GRAPH HERE]
Research Data Group Peer Group Total Return Worksheet
Gts Duratek Inc (DRTK)
<TABLE>
<CAPTION>
Cumulative Total Returns
----------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
<S> <C> <C> <C> <C> <C> <C>
GTS DURATEK, INC. 100 86 308 281 292 107
PEER GROUP 100 105 127 165 188 168
NASDAQ NON-FINANCIAL 100 96 134 163 191 280
DOW JONES POLLUTION CONTROL/WASTE MANAGEMENT 100 103 116 124 134 146
</TABLE>
14
<PAGE>
CERTAIN TRANSACTIONS
On November 7, 1995, the Company and BNFL Inc. ("BNFL") entered into a
strategic alliance to jointly pursue up to five major United States Department
of Energy ("DOE") waste treatment projects. The terms of the strategic alliance
provide that BNFL pays to the Company a fee of $1.0 million each time the two
companies agree to exclusively pursue a waste treatment project together. To
date, the Company and BNFL have agreed to jointly pursue three major DOE
environmental remediation projects and have been jointly awarded projects, the
Hanford Tank Waste Remediation System Project and the Idaho Advanced Mixed Waste
Treatment Project. As part of the strategic alliance, BNFL invested $10.0
million in the Company in the form of a convertible debenture. The debenture
accrues non-cash interest during the first five years at the one-year London
Interbank Offered Rate (LIBOR) and is convertible at the option of BNFL into
1,381,575 shares of the Company's Common Stock prior to November 7, 2000. If the
debenture is not converted or extended, the Company must repay principal and
installments over the five-year period beginning on November 8, 2000. BNFL also
agreed to provide the Company with research and development funding of at least
$500,000 per year over the five years. The two parties will mutually agree on
how the Company will retain the rights to the vitrification processes that it
develops through this funding. The Company has agreed as part of the strategic
alliance to sublicense its radioactive waste vitrification technologies to BNFL
for use only in the United Kingdom. In addition, BFNL has funded $17 million to
design, construct, own and operate a pilot DuraMelter/TM/ at the Company's
headquarters. See "Security Ownership of Certain Beneficial Owners and
Management."
The Company has advanced loans to Mr. Prince and Mr. Shawver. The loans
bear interest at market rates and are due by December 31, 1999. At December 31,
1998 the balance of the loans were $465,000 and $275,000 for Mr. Prince and Mr.
Shawver, respectively.
APPROVAL OF AMENDMENT TO TERMS OF CONVERTIBLE PREFERRED
STOCK TO EXTEND THE MANDATORY REDEMPTION DATE
On March 16, 1999 the Board of Directors declared advisable and recommended
that the Company's stockholders approve a proposed amendment to Section VI of
the Certificate of Designations of the Convertible Preferred Stock (the
"Certificate of Designations") which would extend the mandatory redemption date
of the Convertible Preferred Stock from January 24, 2002 to February 5, 2004.
All other terms of the Convertible Preferred Stock will remain unchanged. The
full text of the proposed amendment to Section VI of the Certificate of
Designations is set forth as Exhibit A hereto.
Currently, the terms of the Convertible Preferred Stock, as provided in the
Certificate of Designations, provide that the Company shall redeem all of the
outstanding Convertible Preferred Stock on January 24, 2002, at $100 per share
plus accrued and unpaid dividends, payable only from funds legally available
therefore, in a lump sum, unless such shares have been converted into Common
Stock prior thereto. The Company is current in the payment of all dividends with
respect to the outstanding shares of Convertible Preferred Stock.
15
<PAGE>
In February 1999, the Company obtained a $60 million bank credit facility
which includes (i) a $35 million revolving line of credit, based on eligible
accounts receivable (as defined in the credit agreement), to refinance existing
indebtedness and to fund working capital requirements, (ii) a $20 million line
of credit to finance acquisitions or stock repurchases, and (iii) a $5 million
line of credit to finance up to 75% of new equipment purchases. Substantially
all of the Company's assets, excluding real property and inventory, have been
pledged as collateral. Borrowings under the old credit facility were repaid from
this credit facility. Borrowings outstanding under the revolving line of credit
bear interest at either the bank's base rate, as defined, as plus 1% (8.75% at
December 31, 1998) or the London Interbank Offered Rate (LIBOR) plus 2.25%
(7.32% at December 31, 1998). The interest rate is subject to adjustment after
June 30, 1999, depending upon the Company's ration of debt to operating income.
In addition, the Company's bank has also issued letters of credit in the
aggregate amount of $15.3 million to the State of Tennessee to provide security
for the Company's obligation to clean and remediate its Bear Creek, Tennessee
facility upon its closure. The new credit facility has a five year term. In
connection with this new facility, the Company has agreed to seek stockholder
approval at the Annual Meeting to extend the mandatory redemption date of the
Convertible Preferred Stock beyond the maturity date of this new facility.
If the stockholder approval of this proposal is obtained, the Company's new
credit facility will remain a five year facility, the mandatory redemption date
of the Convertible Preferred Stock will be extended to February 5, 2004 and the
holders of the Convertible Preferred Stock will receive dividends on the
outstanding Convertible Preferred Stock, at the rate of 8.0% per annum, for an
additional two years, unless previously converted. All other rights of existing
stockholders will remain unchanged. If stockholder approval of this proposal is
not obtained at this Annual Meeting, the credit facility converts to a three
year term. As a result, the Company will be required to enter into a new credit
facility at that time , which may or may not be available to the Company on
favorable terms, if at all. There are 157,788 outstanding shares of Convertible
Preferred Stock. Carlyle beneficially owns 92% outstanding shares of Convertible
Preferred Stock. See "Security Ownership of Certain Beneficial Owners and
Management."
The Board of Directors recommends that you vote in favor of the proposal to
amend the terms of the Convertible Preferred Stock to extend the mandatory
redemption date of the Convertible Preferred Stock from January 24, 2002 to
February 5, 2004.
APPROVAL OF SELECTION OF KPMG LLP AS AUDITORS
The Board of Directors has selected KPMG LLP to audit the accounts of the
Company for the year ending December 31, 1999. KPMG LLP has no financial
interest in the Company and neither it nor any member or employee of the firm
has had any connection with the Company in the capacity of promoter,
underwriter, voting trustee, director, officer or employee. KPMG LLP has audited
the accounts of the Company since 1987. The Delaware General Corporation Law
does not require the approval of the selection of auditors by the Company's
stockholders, but in view of the importance of the financial statements to the
stockholders, the Board of Directors deems it desirable that they pass upon its
selection of auditors. In the event the stockholders disapprove the selection,
the Board of Directors will consider the selection of other auditors. The Board
of Directors recommends that you vote in favor of the above proposal in view of
the familiarity of KPMG LLP with the Company's financial and other
16
<PAGE>
affairs acquired during its previous service as auditors for the Company.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, with the opportunity to make a statement if he desires to do so, and is
expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 annual meeting
of stockholders must be received by the Company for inclusion in the Company's
proxy statement and proxy relating to that meeting no later than December 17,
1999 and must otherwise be in compliance with applicable Securities and Exchange
Commission regulations.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented for action at the meeting other than that mentioned above. However, if
any matters properly come before the meeting, it is intended that the persons
named in the accompanying proxy will vote on such other matters in accordance
with their judgment of the best interests of the Company.
17
<PAGE>
EXHIBIT A
If the stockholders approve the proposed amendment, Section VI of the
Certificate of Designations would be amended to read as follows:
VI. MANDATORY REDEMPTION
The Corporation shall redeem 100% of the Convertible Preferred Stock on
February 5, 2004, at $100 per share plus accrued and unpaid dividends, payable
only from funds legally available therefore, in a lump sum, unless such shares
have been converted prior thereto. To the extent that such redemption shall not
be permitted under the provisions of Section 160 of the Delaware General
Corporation Law (or any successor provision) ("Section 160"), the Corporation
shall redeem those shares which it is permitted to redeem under Section 160, and
then on the earliest date or dates subsequent thereto when the Corporation shall
be permitted under Section 160 to effect any such redemption, it shall effect
such redemption.
<PAGE>
GTS DURATEK, INC.
10100 Old Columbia Road
Columbia, Maryland 21046
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR PREFERRED STOCKHOLDERS
--------------------------------
Revoking any such prior appointment, the undersigned hereby appoints Robert
E. Prince and Daniel A. D'Aniello and each of them, attorneys and agents, with
power of substitution, to vote as Proxy for the undersigned, as herein stated,
at the Annual Meeting of Stockholders of GTS Duratek, Inc., to be held at 10100
Old Columbia Road, Columbia, Maryland 21046 on Wednesday May 19, 1999 at 10:30
a.m., and at any adjournments thereof, with respect to the number of shares the
undersigned would be entitled to vote if personally present.
The Board of Directors Recommends a vote "FOR" all nominees in Items 1 and 2 and
"FOR" Items 3 and 4.
1. ELECTION of the following Nominees as Directors: Daniel A. D'Aniello, Earle
C. Williams, J. A. Brothers and Dr. Francis J. Harvey.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY to vote for all Nominees
WITHHOLD AUTHORITY to vote for the following Nominees only: (Write the name of
Nominee(s) in the space below.)
________________________________________________________________________________
2. ELECTION of the following Nominees as Directors: Admiral James D. Watkins,
George V. McGowan and Robert E. Prince.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY to vote for all Nominees
WITHHOLD AUTHORITY to vote for the following Nominees only: (Write the name of
Nominee(s) in the space below.)
________________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3. To approve an amendment to the Certificate of Designations of the 8%
Cumulative Convertible Redeemable Preferred Stock, par value $.01
per share, to extend the mandatory redemption date from January 24, FOR AGAINST ABSTAIN
2002 until February 5, 2004. [ ] [ ] [ ]
__________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
4. Appointment of KPMG LLP as auditors of the Company for the year ending FOR AGAINST ABSTAIN
December 31, 1999. [ ] [ ] [ ]
</TABLE>
5. Upon any other matters which may properly come before the meeting or any
adjournment thereof.
<PAGE>
The proxy when properly executed will be voted FOR the election of Directors,
FOR the amendment of Certificate of Designations of the 8% Cumulative
Convertible Redeemable Preferred Stock, FOR the appointment of KPMG LLP as
auditors, and on any other matters in accordance with the discretion of the
named attorneys and agents, if no instructions to the contrary are indicated on
the reverse side hereof.
The undersigned hereby acknowledges receipt of a copy of the Company's 1998
Annual Report and Notice of Annual Meeting and Proxy Statement relating to such
Annual Meeting.
x...............................................................................
(Signature)
x...............................................................................
(Signature)
Date............................................................................
Please mark, date and sign as your name appears above and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by a duly authorized officer. If shares are
held jointly each shareholder named should sign.
<PAGE>
GTS DURATEK, INC.
10100 Old Columbia Road
Columbia, Maryland 21046
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR COMMON STOCKHOLDERS
-----------------------------
Revoking any such prior appointment, the undersigned hereby appoints Robert E.
Prince and Daniel A. D'Aniello and each of them, attorneys and agents, with
power of substitution, to vote as Proxy for the undersigned, as herein stated,
at the Annual Meeting of Stockholders of GTS Duratek, Inc., to be held at 10100
Old Columbia Road, Columbia, Maryland 21046 on Wednesday May 19, 1999 at 10:30
a.m., and at any adjournments thereof, with respect to the number of shares the
undersigned would be entitled to vote if personally present.
The Board of Directors Recommends a vote "FOR" all nominees in Items 1 and 2 and
"FOR" Items 3 and 4.
1. ELECTION of the following Nominees as Directors: Daniel A. D'Aniello, Earle
C. Williams, J. A. Brothers and Dr. Francis J. Harvey.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY to vote for all Nominees
WITHHOLD AUTHORITY to vote for the following Nominees only: (Write the name of
Nominee(s) in the space below.)
________________________________________________________________________________
2. ELECTION of the following Nominees as Directors: Admiral James D. Watkins,
George V. McGowan and Robert E. Prince.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY to vote for all Nominees
WITHHOLD AUTHORITY to vote for the following Nominees only: (Write the name of
Nominee(s) in the space below.)
________________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3. To approve an amendment to the Certificate of Designations of the 8% FOR AGAINST ABSTAIN
Cumulative Convertible Redeemable Preferred Stock, par value $.01 per share, [ ] [ ] [ ]
to extend the mandatory redemption date from January 24, 2002 until February
5, 2004.
___________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
4. Appointment of KPMG LLP as auditors of the Company for the year ending FOR AGAINST ABSTAIN
December 31, 1999. [ ] [ ] [ ]
</TABLE>
5. Upon any other matters which may properly come before the meeting or any
adjournment thereof.
<PAGE>
The proxy when properly executed will be voted FOR the election of Directors,
FOR the amendment of Certificate of Designations of the 8% Cumulative
Convertible Redeemable Preferred Stock, FOR the appointment of KPMG LLP as
auditors, and on any other matters in accordance with the discretion of the
named attorneys and agents, if no instructions to the contrary are indicated on
the reverse side hereof.
The undersigned hereby acknowledges receipt of a copy of the Company's 1998
Annual Report and Notice of Annual Meeting and Proxy Statement relating to such
Annual Meeting.
x...............................................................................
(Signature)
x...............................................................................
(Signature)
Date............................................................................
Please mark, date and sign as your name appears above and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by a duly authorized officer. If shares are
held jointly each shareholder named should sign.
