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 [ ]
Filed by a party other than the registrant [X]
Check the appropriate box:
[ ] Preliminary proxy statement
[X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
EA Engineering, Science, and Technology, Inc.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rule 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 0-22:(1)
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
[X] Check the 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: $ -0-
(2) Form, schedule, or registration statement no.:
(3) Filing party: EA Engineering, Science, and Technology, Inc.
(4) Date filed: November 12, 1995
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC.
11019 McCormick Road
Hunt Valley, Maryland 21031
NOTICE OF ANNUAL MEETING
JANUARY 10, 1996
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of EA
Engineering, Science, and Technology, Inc. will be held on January 10, 1996, at
9:00 a.m. EST, at the Company's General Offices, 11019 McCormick Road, Hunt
Valley, Maryland, for the following purposes:
1. To elect four directors to serve until the next annual
meeting and until their successors are elected and qualified;
2. To approve an increase in the number of shares of Common
Stock reserved for issuance under the Company's Amended and
Restated Stock Option Plan;
3. To ratify the appointment of Arthur Andersen LLP as
independent public accountants for the Company for the fiscal
year ending August 31, 1996;
4. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only holders of record of Common Stock as of the close of business on
November 14, 1995, are entitled to receive notice of and vote at the meeting or
any adjournment or adjournments thereof.
By Order of the Board of Directors
/s/ Stephen J. Hammalian
Stephen J. Hammalian
Executive Vice President and Secretary
Dated at Baltimore, Maryland
November 14, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE SIGN, DATE, AND RETURN THE ACCOMPANYING PROXY
PROMPTLY IN THE ENCLOSED POSTAGE PAID RETURN ENVELOPE.
<PAGE>
EA ENGINEERING, SCIENCE, AND TECHNOLOGY, INC.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of EA Engineering, Science, and
Technology, Inc. (together with its wholly-owned subsidiaries, the "Company") of
proxies from the holders of the Company's Common Stock for use at the Annual
Meeting (the "Meeting") to be held on January 10, 1996, and any adjournment or
adjournments thereof. The giving of a proxy does not affect your right to vote
should you attend the Meeting in person, and the proxy may be revoked at any
time before it is voted by giving the Secretary of the Company a signed
instrument revoking the proxy or a signed proxy of a later date. Each properly
executed proxy not revoked will be voted in accordance with instructions
thereon. If no instructions are specified in the proxy, it is the intention of
the persons named in the accompanying proxy to vote FOR the election of the
nominees named herein as directors of the Company and FOR the matters described
in Items 2 and 3 in the Notice of Annual Meeting.
The Company's Annual Report to Stockholders for the fiscal year ended
August 31, 1995 (the "Annual Report"), containing audited consolidated financial
statements and the message of the Chief Executive Officer, is being mailed to
stockholders along with the Notice of Annual Meeting and Proxy Statement. The
consolidated financial statements and discussion and analysis by management of
the Company's financial condition and results of operations contained in the
Annual Report are incorporated herein by reference.
The mailing address of the Company's principal executive office is:
11019 McCormick Road, Hunt Valley, Maryland 21031, and the approximate date on
which this Proxy Statement and the form of proxy are first being sent to
stockholders is December 11, 1995.
Only holders of record of the Company's common stock, par value $.01 per
share (the "Common Stock"), at the close of business on November 14, 1995, are
entitled to vote at the Meeting, one vote for each share of Common Stock so
held. On that date there were 6,103,000 shares of Common Stock outstanding.
PRINCIPAL SHAREHOLDERS
The following table shows, as of November 1, 1995, the total number of
shares of Common Stock beneficially owned by each person who was known by the
Board of Directors to own more than 5% of the Common Stock:
Shares Beneficially
Name and Address of Owned Directly or Percent of
Beneficial Owner Indirectly Common Stock
The Depository Trust Company (1) 2,854,900 46.8
Box 20, Bowling Green Station
New York, New York 10004
Loren D. Jensen 1,553,000 25.4
10 Burnbrae Road
Towson, Maryland 21204
Cleaveland D. Miller, Trustee(2) 702,000 11.5
250 W. Pratt Street
Baltimore, Maryland 21201
- ----------
(1) Cede & Co., the nominee of The Depository Trust Company, holds shares of
Common Stock for the accounts of various institutions participating in the
facilities of The Depository Trust Company.
(2) Cleaveland D. Miller is the trustee of irrevocable trusts for the
benefit of each of Loren D. Jensen's three children.
1
<PAGE>
ELECTION OF DIRECTORS
The four persons named in the following table have been designated as
nominees for election to the Board of Directors, each to serve for a one-year
term and until his successor is duly elected and qualified. All of the nominees
listed below currently serve as directors of the Company. If any of such
nominees declines or becomes unable to serve, the persons named in the proxy
will vote for the election of any substitute nominee designated by the Board of
Directors. The Company has no reason to believe that any nominee will decline or
be unable to serve.
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Served as Shares
during Past Five Years, and Director Beneficially Owned (1)
Other Corporate Directorships Since -------------------------------------
Amount Percent(3)
<S> <C> <C> <C>
Edmund J. Cashman, Jr., Age 59; Senior Executive 1987 44,875 *
Vice President and Director of Legg Mason, Inc.;
Senior Executive Vice President of Legg Mason Wood
Walker, Incorporated; Director of Worldwide Value
Fund, Inc.
Loren D. Jensen, Ph.D., Age 58; Chairman 1973 1,553,000 24.9%
and Chief Executive Officer of the Company
Rudolph P. Lamone, Ph.D., Age 64; Chairman 1987 10,450 *
of the Board, Michael D. Dingman Center for
Entrepreneurship, University of Maryland
College of Business and Management
George G. Radcliffe, Age 71; Retired Chairman 1990 10,900 *
of the Board, The Baltimore Life Insurance Company;
Trustee Emeritus of The Johns Hopkins University;
Director of The Baltimore Life Insurance Company,
Life of Maryland, Inc., MNC Financial, Inc.,
NationsBank Trust Company, N.A.
All executive officers and directors of the Company as 1,763,700(2) 28.3%
a group (6 individuals)
</TABLE>
- --------------
* Less than 1%
(1) Based upon information supplied by each executive officer and director of
the Company as of November 1, 1995. Unless otherwise noted, all shares
indicated are held with sole voting and sole investment power.
(2) Includes 1,732,200 shares for which directors and executive officers have
sole voting and dispositive powers, 1,500 exercisable options by the
Company's executive officers, and 30,000 exercisable options by the
Company's non-employee directors.
(3) Shares subject to presently exercisable options held by directors and
executive officers are deemed to be outstanding for the purpose of computing
the percentage of outstanding common stock beneficially owned by all
directors and executive officers as a group.
2
<PAGE>
Certain Transactions
The Company leases approximately 32,400 square feet of office space which
serves as its Mid-Atlantic Operations facilities in Sparks, Maryland, from
Ecolair Limited Partnership ("Partnership"), a Maryland limited partnership of
which Loren D. Jensen is the general partner and also a limited partner. The
remaining limited partners are Dr. Jensen's three children. For the year ended
August 31, 1995, the Company's rent payments (including operating expenses) to
the Partnership were approximately $689,100. The lease commenced December 1,
1991, and is for a 10-year period.
The Company leases approximately 42,100 square feet of office space in Hunt
Valley, Maryland, from Merrymack Limited Partnership, a Pennsylvania limited
partnership of which Loren D. Jensen is the general partner and Ecolair Limited
Partnership is the limited partner. This space serves as the Company's corporate
headquarters, along with its training center, as well as providing office
facilities for certain professional, technical, and administrative staff for
some of its operations staff. The leases for this space are for an initial term
of 10 years expiring at various time throughout 2003. Total rent payments
(including operating expenses) for the year ended August 31, 1995 for this lease
were approximately $680,600.
On March 1, 1990, the Company leased a 16,500 square foot facility adjacent
to its existing facility in Sparks, Maryland, from ARE Sparks Limited
Partnership, a Pennsylvania limited partnership of which Loren D. Jensen is the
general partner and Ecolair Limited Partnership is the limited partner. In March
1991, the facility renovation was completed and now serves as the Company's
laboratory. The lease is for an initial period of 10 years. Total rent payments
(including operating expenses) during fiscal 1995 under this lease were
approximately $615,600.
Legg Mason Capital Management Group, with which Edmund J. Cashman is
affiliated, provides investment advice to the Company from time to time.
Management of the Company believes that the terms and conditions of the
transactions between the Company and entities with which certain of its
directors are associated were on terms and conditions at least as favorable to
the Company as could have been obtained elsewhere.
The Board of Directors recommends a vote "FOR" the election of the above
nominees as directors of the Company.
BOARD ORGANIZATION AND COMPENSATION
Organization
The Board of Directors held five meetings during the fiscal year ended
August 31, 1995. Each incumbent director attended at least 75% of the meetings
of the Board of Directors and of its committees of which he was a member. In
addition, the Company has an Audit Committee and a Compensation Committee, but
does not have a Nominating Committee.
The Audit Committee of the Board of Directors, composed of Messrs. Radcliffe
(Chairman), Cashman, and Lamone, met once during the fiscal year ended August
31, 1995. The Audit Committee, which is appointed annually, reviews with Arthur
Andersen LLP, the Company's independent auditors, the audit plan and the
internal accounting controls for the Company and its subsidiaries, as well as
the Company's consolidated financial statements and management letter. The Audit
Committee reports to the Board of Directors. It also recommends to the Board of
Directors the selection of independent auditors for the Company.
The Compensation Committee of the Board of Directors, composed of Messrs.
Radcliffe (Chairman), Cashman, and Lamone, met three times during the fiscal
year ended August 31, 1995. This Committee periodically reviews the Company's
management compensation and reports its actions or recommendations to the Board
of Directors. The Committee also approves the general salary scale for employees
of the Company.
3
<PAGE>
In addition, the Committee has been authorized to grant options
under the Company's Amended and Restated Stock Option Plan and to make
stock awards under the Company's 1995 Stock Incentive Plan. See
"Compensation of Directors and Executive Officers."
Compensation
Each non-employee director of the Company receives a fee of $1,000 for each
meeting of the Board of Directors of the Company which he attends. In addition,
each non-employee director receives $1,000 for attendance at each meeting of any
directors' committee on which he serves that is not held on the day of a Board
meeting.
EXECUTIVE MANAGEMENT COMPENSATION
Compensation Committee Report
The Compensation Committee (the "Committee") of the Board of Directors of
the Company is pleased to present its report on executive compensation. The
Committee report outlines the components of the Company's Executive Officer
Compensation programs, including the specific relationship of corporate
performance to executive compensation and describes the Committee's basis for
the Chief Executive Officer's compensation for 1995.
General
The Committee is responsible for developing and implementing the Company's
executive compensation policies. These policies are designed to enhance the
profitability of the Company while at the same time providing competitive levels
of compensation to attract and retain highly qualified executives. By closely
aligning the financial interests of the executive officers with those of the
Company's shareholders, the Committee seeks to increase shareholder value and to
provide meaningful incentives to the executives.
The Committee seeks to realize this objective both by the use of short-term
incentives in the form of base salary and incentive compensation--and long-term
incentives in the form of stock option grants.
Base Salary
Salaries of executive officers are initially based on experience and
competitive conditions. Salaries are reviewed annually and adjusted to reflect
the performance of the executive and by considering salaries for comparable
positions in other companies. In fiscal 1995, base salaries for executive
officers were increased approximately 3% over the salaries paid in fiscal 1994.
Incentive Compensation
An incentive compensation plan (the "Incentive Plan") was established in
fiscal 1992 in order to provide a quarterly incentive to executive officers and
employees to work toward meeting financial milestones that will increase
shareholder value. The primary criteria for the payment of incentive
compensation are the achievement of the Company's financial performance goals
and the executive's performance.
At the beginning of each fiscal year, the Board of Directors approves a
business plan for the Company which provides for two incentive compensation
pools--an all-employee incentive pool and a management incentive pool. Under the
plan, incentive compensation accrues quarterly based on the Company's
achievement of the planned financial objectives. The all-employee incentive is
paid to eligible employees, including executives, after the end of each quarter.
The management incentive pool is paid after the end of the fiscal year. Both
pools are subject to increases or decreases based on the actual performance of
the Company compared to the established goals.
4
<PAGE>
Management incentive compensation was paid for fiscal 1993 and 1994 as a
result of the Company's meeting and exceeding its profit targets. Moreover, in
order to further align the interests of Company executives with the interests of
shareholders, approximately 15% of the payments made to executives pursuant to
the Incentive Plan for fiscal 1993 and 1994 were in the form of the Company's
common stock. However, as the Company did not meet its targets in fiscal 1995,
no senior executive received any management incentive compensation.
Stock Options
The Company must, in order to compete with other companies in the
environmental industry, attract and retain highly qualified managers,
scientists, engineers, and technicians. There is keen competition in the
environmental industry for these professionals, particularly those who are both
highly trained and able to create business opportunities. Hence, the Company
grants stock options to a wide range of employees, particularly key management,
believing it is desirable to provide valuable employees with long-term
incentives tied to the Company's performance and shareholder values.
The Committee uses the grant of stock options under the Company's Stock
Option Plan to provide long-term incentives to raise shareholder values. In
determining the number of options to grant, the Committee bases its decision on
the performance of the individual executive and the executive's potential to
improve shareholder value. Typically, options do not immediately vest at the
time the options are granted. Vesting occurs in equal installments over a three-
year period.
Chief Executive Officer Compensation
The Committee established the salary of Dr. Jensen for fiscal year 1995 on
the basis of the Committee's assessment of his performance, measured by the
Company's financial condition, results of operation, and success in achieving
strategic objectives. The Committee also considered the responsibilities
associated with Dr. Jensen's position, as well as the level of compensation paid
to the chief executive officers of other companies in the environmental
industry. During fiscal year 1995, Dr. Jensen received a 3% increase in his base
salary.
During 1995 Dr. Jensen received total bonuses of $4,300 pursuant to the
Company's quarterly all-employee incentive plan, based upon the Company's
financial results in the first two quarters of fiscal 1995 and Dr. Jensen's role
in helping to achieve those results.
The Compensation Committee
George G. Radcliffe, Chairman
Edmund J. Cashman, Jr.
Rudolph P. Lamone
5
<PAGE>
Compensation Committee Interlocks and Insider Participation
There are no affiliations between the Company and its directors other than
the directorship itself and no inter-locking relationships exist between
directors and executive officers.
Executive Officers of the Company
The executive officers of the Company as of November 1, 1995 and related
information are as follows:
Loren D. Jensen, Ph.D., 58, Chairman of the Board and Chief Executive
Officer. Dr. Jensen is the founder of the Company and served as its
Chairman, President, and Chief Executive Officer since operations began
in 1973 until 1991. In June 1991, Dr. Jensen became Chairman and Chief
Executive Officer. In October 1995, Dr. Jensen assumed the titles of
Chairman, President, and Chief Executive Officer. Dr. Jensen has over
35 years of experience in the analysis and management of environmental
problems for industry and government.
Stephen J. Hammalian, Ph.D. 54, Executive Vice President and Secretary.
Dr. Hammalian joined the Company in 1975 and has served as Vice
President since 1978. In 1986, Dr. Hammalian was elected Executive Vice
President, Chief Operating Officer, and Secretary. In 1991, Dr.
Hammalian became Executive Vice President and Secretary. Dr. Hammalian
has over 20 years experience in the environmental services industry and
for the past 18 years has served the Company in various executive
capacities.
Joseph A. Spadaro, CPA, 45, Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary. Mr. Spadaro joined the
Company in 1982 as the Corporate Controller. In 1983, Mr. Spadaro was
elected Vice President of Finance and Administration and in September
1986, he was elected Executive Vice President, Chief Financial Officer,
and Treasurer. Mr. Spadaro became Assistant Secretary in October 1994.
6
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended August 31, 1995, 1994,
and 1993, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to the Chief
Executive Officer and each of the four most highly compensated officers of the
Company whose cash compensation exceeded $100,000 in all capacities in which
they served.
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
Other Restricted All Other
Name and Principal Annual Stock Option Compen-
Position in 1995 Year Salary ($) Bonus ($) Compensation Awards Shares(3) sation (1)
<S> <C> <C> <C> <C> <C> <C> <C>
Loren D. Jensen, Ph.D......... 1995 278,900 4,300 -- -- -- 4,740
Chairman of the Board and 1994 268,500 72,675 -- -- -- 11,261
Chief Executive Officer 1993 262,000 108,387 -- -- -- 10,118
Stephen J. Hammalian, Ph.D.... 1995 137,300 2,100 -- -- 5,000 40,822
Executive Vice President and 1994 133,000 18,859 -- -- 2,250 3,706
Secretary 1993 142,100 20,385 -- -- 28,125(2) 3,376
Joseph A. Spadaro, CPA........ 1995 164,300 2,500 -- -- 5,000 48,101
Executive Vice President, Chief 1994 158,300 24,528 -- -- 2,250 4,372
Financial Officer, Treasurer, 1993 153,100 27,817 -- -- 36,000(2) 3,425
and Assistant Secretary
J. H. Zarzycki, P.E........... 1995 144,900 2,300 -- -- 3,500 8,403
Senior Vice President 1994 130,300 25,374 -- -- 11,250 3,325
1993 118,400 27,724 -- -- 6,750(2) 2,637
Edward V. Lower, Ph.D.(4)..... 1995 271,900 4,200 -- -- 60,000 243,164
Former President, Chief 1994 261,500 72,479 -- -- 33,750 6,869
Operating Officer 1993 253,200 107,960 -- -- 168,750(2) 5,832
- ------------------------------ --------- ------------ ----------- ---------------- ------------- ------------- -------------
</TABLE>
(1) Includes cash payments made upon exercise of non-qualified stock options
during fiscal 1995 for all except Loren D. Jensen. Also for fiscal 1993,
includes payments under a cash profit sharing plan in which all employees
participate and for all fiscal years includes the Company's matching
contributions under its 401(k) Employee Savings Plan. Additionally, life
insurance premiums of $5,033 were paid on behalf of Loren D. Jensen during
each of fiscal years 1994 and 1993.
(2) For each of the named executives, the 1993 grants include options granted
in prior fiscal years that were canceled and reissued. Credit was given for
vesting on the original grant.
(3) All options have been adjusted to reflect two 3 for 2 stock splits, each
effected in the form of a 50% stock dividend issued on February 23, 1994
and July 5, 1994.
(4) Edward V. Lower separated from the Company on October 3, 1995.
7
<PAGE>
The Company has no employment contracts between itself and the executive
officers, nor does it have any compensatory plan or arrangement that results
from the resignation or other termination of the employment of such executive
officers or from a change-in-control of the Company.
Stock-Based Incentive Compensation Plan
The following table sets forth certain information about grants of options
to purchase shares of Common Stock in the last fiscal year to the Chief
Executive Officer and the four most highly compensated officers of the Company.
The Company does not grant Stock Appreciation Rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants in 1995 Grant Date Value
% of Total
Options Grant Date
Granted Exercise or Present
Options (#) to Employees Base Price Expiration Value(1)
Name Granted(2) in Fiscal Year ($/share) Date ($)
<S> <C> <C> <C> <C> <C>
Loren D. Jensen -- -- -- -- --
Stephen J. Hammalian 5,000 3.7 6.125 1/10/05 17,850
Joseph A. Spadaro 5,000 3.7 6.125 1/10/05 17,850
J. H. Zarzycki 3,500 2.6 6.125 1/10/05 12,495
Edward V. Lower (3) 60,000 44.9 6.125 1/10/05 214,200
- --------------------------- --------------- ----------------- -------------- --------------- ----------------------
</TABLE>
(1) Based upon the Black-Scholes option valuation model. In applying this
valuation model, the Company has assumed an expected volatility index of
0.3; a risk-free rate of return of 7.09%; no dividend yield; and exercise
of the option on the fifth anniversary of its grant date. The actual value,
if any, that an executive officer may receive is dependent on the excess of
the stock price over the exercise price. Use of this model should not be
viewed as a forecast of the future performance of the Company's stock
price.
(2) Options typically vest 33% per year and terminate 10 years from date of
grant. However, in accordance with the Plan, if there is a
change-in-control the vesting of the options is accelerated.
(3) Edward V. Lower separated from the Company on October 3, 1995 resulting in
the termination of these options.
8
<PAGE>
The following table sets forth certain information regarding the number and
value, as of August 31, 1995, of unexercised options to purchase shares of
Common Stock held by the Chief Executive Officer and the four most highly
compensated officers. The Company does not grant any Stock Appreciation Rights.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND AUGUST 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-Money
Options at 8/31/95 Options at 8/31/95(1)
(#) ($)
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable(2) Unexercisable(2) Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Loren D. Jensen -- -- -- -- -- --
Stephen J. Hammalian 28,875 $155,800 -- 6,500 -- $300
Joseph A. Spadaro 36,750 $199,000 -- 6,500 -- $300
J. H. Zarzycki 4,500 $17,800 2,250 11,000 -- $500
Edward V. Lower(3) 161,250 $1,092,300 -- 101,250 -- $63,700
- ----------------------- --------------- ----------------- -------------- ----------------- ------------- ---------------
</TABLE>
(1) Based on a closing NASDAQ price of $5.00 per share of Common Stock on
August 31, 1995. Values are calculated by subtracting the exercise price
from the fair market value of the stock as of the fiscal year-end.
(2) All options issued prior to one or both fiscal 1994 stock splits have been
adjusted to reflect two 3 for 2 stock splits, each effected in the form of
a 50% stock dividend issued on February 23, 1994 and July 5, 1994.
(3) Edward V. Lower separated
from the Company on October 3, 1995 resulting in the termination of
the unexercised options.
9
<PAGE>
Performance Graph
The following performance graph compares the performance of the Company's
Common Stock (NASDAQ symbol: EACO) to NASDAQ, U.S. and a self-defined peer group
index for the Company's last five fiscal years. The graph assumes that the value
of an investment in the Company's Common Stock and each index was $100 at August
31, 1990 and that all dividends were reinvested.
(The Performance Graph appears here. The plot points are listed below.)
<TABLE>
<CAPTION>
Cumulative Total Return
8/90 8/91 8/92 8/93 8/94 8/95
<S> <C> <C> <C> <C> <C> <C>
NASDAQ-U.S. 100 142 154 203 211 284
The Company 100 92 48 142 375 188
Peer Group 100 114 87 78 78 86
- ------------------- ---------- ----------- ----------- ----------- ------------ ------------
</TABLE>
(1) Companies included in the peer group index are Earth Technology
Corp USA (ETCO), Ecology & Environment, Inc. (EEI), EMCON
Associates (MCON), GZA Geoenvironmental Tech, Inc. (GZEA),
Groundwater Technology, Inc. (GWTI), TRC Companies, Inc. (TRR),
Tetra Tech, Inc. (WATR), Versar, Inc. (VSR), Weston Roy F, Inc.
(WSTNA), Harding Associates, Inc. (HRDG), and ICF Kaiser
International, Inc. (ICF). The peer group utilized in
constructing the above graph consists of the same companies as
used by the Company in preparing past performance graphs.
(2) Assumes that $100 was invested on August 31, 1990 at the closing sales
price of the Company's Common Stock and in each index, and that all
dividends, if any, were reinvested. Returns are measured through the
last trading day of each of the Company's fiscal years. No cash
dividends have been declared on the Company's Common Stock.
10
<PAGE>
APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK RESERVED
FOR ISSUANCE UNDER THE COMPANY'S AMENDED AND RESTATED STOCK OPTION PLAN
On January 10, 1995, the shareholders approved amendments to the current
Company Stock Option Plan (the "Option Plan"). The Amended and Restated Plan
replaced the prior Stock Option Plan. The number of shares of Common Stock
available for issuance under the Option Plan was not, however, greater than the
number of shares of Common Stock available for issuance under the prior Stock
Option Plan; the primary change accomplished by the Option Plan was to permit
the Plan's administrator to grant incentive stock options in addition to
non-qualified stock options. Following is a general summary of the Stock Option
Plan.
The Company now seeks the approval of the shareholders to increase the
number of shares of Common Stock available for issuance under the Option Plan
from 648,200 to 898,200.
The purpose of the Option Plan is to serve as an employment incentive and to
encourage stock ownership by certain key officers and employees of the Company
and of its subsidiary corporations so that they may increase their proprietary
interest in the Company's success.
Administration
The Option Plan is administered by the Compensation Committee of the Board
of Directors (the "Committee") who will be authorized to designate those
individuals eligible to participate in the Plan and to determine the types,
numbers, and terms of awards granted under the Option Plan. The Committee is
composed of not less than three (3) nor more than five (5) non-officer employees
who are not eligible to receive any awards under the Option Plan.
Amendment and Termination
Subject to certain terms and conditions set forth in the Option Plan, the
Board of Directors may amend, discontinue, or terminate the Plan at any time.
Such termination shall not affect the validity of any stock option agreement
then outstanding.
Eligibility
Officers and key employees of the Company and its subsidiaries as designated
by the Committee are eligible to participate in the Option Plan.
Types of Awards
The Option Plan provides for the potential grant by the Compensation
Committee of both incentive stock options, qualified as such under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), and non-qualified
stock options. The exercise price of each share of all options awarded will be
one hundred percent (100%) of the fair market value of the shares of Common
Stock on the date of the grant of the option or, in the case of incentive stock
options granted to certain individuals who possess more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company ("Ten
Percent Shareholders"), shall not be less than one hundred ten percent (110%) of
such fair market value. The fair market value per share of the Common Stock
shall be the average of the highest bid price and the lowest asking price on the
over-the-counter market as reported in The Wall Street Journal for trading on
the date the option is granted, as reported by NASDAQ. The term of each option
shall be fixed by the Committee but no stock option other than stock options
granted to Ten-Percent Shareholders shall be exercisable more than ten (10)
years from the date of grant of the option.
11
<PAGE>
Grants of Awards
The Committee shall have the discretion to impose such terms and conditions
as it deems appropriate to any award granted under the Amended and Restated
Plan. Awards granted under the Option Plan may be granted either alone or in
addition to any other award granted under the Plan or any other benefit plan
maintained by the Company.
Shares Subject to the Plan
The maximum number of shares of Common Stock that may be issued under the
Option Plan is 648,200 shares of the Company's Common Stock. On January 10,
1995, the Board of Directors approved an increase in the number of shares
reserved under the Option Plan from 648,200 to 898,200 shares of Common Stock.
This number is subject to adjustment in certain circumstances, including stock
splits, dividends, recapitalizations and major corporate changes. The market
value of a share of Common Stock based on the mean of the high and low prices on
the over-the-counter market as reported in The Wall Street Journal on November
14, 1995 as reported by NASDAQ was $4.15.
Transferability
As in the past, no option shall be assignable or transferable except by will
or by the laws of descent and distribution. During the lifetime of an optionee,
an option shall be exercisable only by the optionee.
Change of Control
In the event an optionee ceases to be an employee due to death or
disability, due to normal retirement or for any reason within six (6) months of
a Change of Control (as defined in the Amended and Restated Plan) all
outstanding options shall, to the extent not previously vested shall immediately
become fully vested, and shall remain so for a period of one (1) year from the
date of termination of service as a director, but in no event after their
respective expiration dates.
Federal Income Tax Consequences
A discussion of select federal income tax consequences arising from
participation in the Amended and Restated Plan follows.
Non-Qualified Options
An employee will not realize any taxable income upon the grant of a
nonstatutory stock option. An employee to whom shares of Common Stock are issued
upon exercise of a nonstatutory stock option will recognize taxable income at
the time of exercise in an amount equal to the difference between the fair
market value of the Common Stock at the time the stock is exercised and the
exercise price paid for the Common Stock. At that time the Company will receive
a corresponding Federal income tax deduction.
Incentive Stock Options
In general, an employee will not recognize taxable income at the time an
incentive stock option is granted or exercised except that the excess of the
fair market value of the Common Stock acquired upon exercise of an incentive
stock option over the exercise price is potentially subject to the alternative
minimum tax. If the employee holds the shares acquired pursuant to an incentive
stock option for at least two (2) years from the date of grant and for at least
one (1) year from the date of exercise, the employee's gain will be taxed as a
long-term capital gain in an amount equal to the difference between the exercise
price and the sale price. In that case, the Company is not entitled to a tax
deduction. If the employee disposes of the stock before the end of these holding
periods, he will recognize ordinary income upon sale of the stock and the
Company will be entitled to a corresponding tax deduction.
The Board of Directors recommends a vote "FOR" the increase in the number of
shares of Common Stock reserved for issuance from 648,200 to 898,200 under the
Company's Amended and Restated Stock Option Plan.
12
<PAGE>
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed the firm of Arthur Andersen LLP to act as
independent auditors for the Company for the fiscal year ended August 31, 1995.
The Board of Directors, upon recommendation of the Audit Committee, has selected
the firm of Arthur Andersen LLP to audit the consolidated financial statements
of the Company for the fiscal year ending August 31, 1996. A representative of
Arthur Andersen LLP is expected to be present at the Meeting, have an
opportunity to make a statement, and be available to respond to appropriate
questions.
The Board of Directors recommends a vote "FOR" the proposal to ratify the
appointment of Arthur Andersen LLP as independent auditors for the fiscal year
ending August 31, 1996.
Voting Procedures
Each proposal submitted to the Company's shareholders for a vote is deemed
approved if a majority of the shares of Common Stock of the Company present in
person or by proxy at a meeting at which a quorum is present votes in favor of
the proposal. The presence in person or by proxy of shareholders entitled to
cast a majority of all the votes entitled to be cast at the meeting constitutes
a quorum. A shareholder is entitled to one vote for each share owned.
Shareholder votes are tabulated by the Company's Registrar and Transfer
Agent. Proxies received by the Registrar, if such proxy is properly executed and
delivered, will be voted in accordance with the voting specifications made on
such Proxy. Proxies received by the Registrar on which no voting specification
has been made by the shareholder will be voted for all items discussed in the
Proxy Statement, in the manner stated on the proxy card. Shareholders who
execute and deliver proxies retain the right to revoke them by notice in writing
delivered to the Company's Secretary at any time before such proxies are voted.
Under applicable Delaware corporate law and the Charter and By-Laws of the
Company, proxies received by the Registrar specifying an abstention as to any
proposal will cause the shares so represented to be counted toward a quorum, but
are not counted as favorable votes and, therefore, have the same effect as a
vote against the proposal. To the extent holders or brokers having the right to
vote shares do not attend the meeting or return a proxy, such shares will not
count toward a quorum and, if a quorum is otherwise achieved, will have no
effect on the vote of the proposals considered at the meeting which shall be
based solely upon the vote of the shares represented at the meeting.
1997 Annual Meeting of Stockholders
If any Stockholder intends to present a proposal for consideration at the
1997 Annual Meeting of Stockholders, such proposal must be received by the
Company on or before August 1, 1996, in order to be included in the Company's
Proxy Statement and form of proxy for such meeting. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement and
form of proxy relating to the 1997 Annual Meeting of Stockholders any
stockholder proposal which does not meet all of the requirements for such
inclusion established by the Securities and Exchange Commission at that time in
effect.
As of the date of this Proxy Statement, the Board of Directors knows of no
matters, other than those stated above, that may be brought before the Meeting.
However, if other matters do properly come before the Meeting, the persons named
in the enclosed proxy will vote upon them in their discretion and in accordance
with their best judgment.
A copy of the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission, Washington, D.C., is available to stockholders free of
charge upon written request. Address requests to Chief Financial Officer, EA
Engineering, Science, and Technology, Inc., 11019 McCormick Road, Hunt Valley,
Maryland 21031.
The cost of preparing and mailing the Notice of Meeting, Proxy Statement and
form of proxy will be paid by the Company. The Company will request banks,
brokers, fiduciaries, and similar persons to forward copies of such material
13
<PAGE>
to beneficial owners of the Company's Common Stock in a timely manner and to
request authority for execution of proxies, and the Company will reimburse such
persons and institutions for their reasonable out-of-pocket expenses incurred in
connection therewith. To the extent necessary to assure sufficient
representation, officers and regular employees of the Company may solicit the
return of the proxies by telephone, telegram, or personal interview. The extent
of this solicitation by personal contact will depend upon the response to the
initial solicitation by mail. It is anticipated that the costs of such
solicitation, if undertaken, will not exceed $1,000.
By the Order of the Board of Directors
/s/ Stephen J. Hammalian
Stephen J. Hammalian
Executive Vice President and Secretary
Dated at Hunt Valley, Maryland
November 14, 1995
