TECH/OPS SEVCON, INC.
One Beacon Street
Boston, Massachusetts 02108
December 11, 1995
BY DIRECT TRANSMISSION
- - -----------------------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Tech/Ops Sevcon, Inc.
Preliminary Proxy Material
Pursuant to Rule 14a-6(a) under the Securities Exchange Act of
1934 and Rule 101(a)(1)(iii) of Regulation S-T, Tech/Ops Sevcon, Inc.
hereby files by direct transmission a preliminary proxy statement and
form of proxy for its 1996 Annual Meeting of Stockholders. In
accordance with Instruction 3 to Item 10 of Schedule 14A, a copy of
the Company's 1996 Equity Incentive Plan that will be acted upon at
the meeting is attached as Appendix A to the proxy statement. In
accordance with the Note to Rule 14a-4(a)(3), the form of proxy is
attached as Appendix B to the proxy statement.
The Company intends to mail the proxy material to stockholders on
December 28, 1995. A check in the amount of $375 as payment both for
the filing fee of $125 for this document, and $250 as the fee for
filing the Company's Form 10-K for the year ended September 30, 1995,
was mailed to the Commission's lockbox in Pittsburgh on November 14,
1995.
Please call our counsel, David R. Pokross, Jr., at Palmer &
Dodge, One Beacon Street, Boston, Massachusetts 02108, telephone (617)
573-0287 if there are any comments.
Yours very truly,
/s/ Paul B. Rosenberg
Treasurer
cc: David R. Pokross, Jr., Esq.
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Check the Appropriate Box
[X] Preliminary Proxy Statement
Tech/Ops Sevcon, Inc.
- - ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter
Payment of Filing Fee (Check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14(a)-6(i)(1),
14(a)-6(i)(2) or Item 22(a)(2) of Schedule 14A.
<PAGE>
TECH/OPS SEVCON, INC.
ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108
TELEPHONE (617) 523-2030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of the
stockholders of Tech/Ops Sevcon, Inc., a Delaware corporation, will be
held at the offices of Palmer & Dodge, 24th Floor, One Beacon Street,
Boston, Massachusetts, at 5:00 p.m. on Wednesday, January 31, 1996 for
the following purposes:
1. To elect two directors to hold office for a term of
three years.
2. To amend the Company's Certificate of Incorporation
to increase the number of authorized shares of
Common Stock from 4,000,000 to 8,000,000.
3. To approve the Company's 1996 Equity Incentive Plan.
4. To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on
December 12, 1995 are entitled to notice of the meeting or to vote
thereat.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE YOUR PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY WILL NOT BE USED.
By order of the Board of Directors
David R. Pokross, Jr.
Secretary
Dated December 28, 1995
<PAGE>
PROXY STATEMENT
Approximate Date of Mailing December 28, 1995
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Tech/Ops Sevcon, Inc. (the "Company") for use at the
annual meeting of stockholders of the Company to be held on January
31, 1996 at 5:00 p.m. at the offices of Palmer & Dodge, 24th Floor,
One Beacon Street, Boston, Massachusetts, or any adjournments or
postponements thereof. It is subject to revocation at any time prior
to the exercise thereof by giving written notice to the Company, by
submission of a later dated proxy or by voting in person at the
meeting. The costs of solicitation, including the preparation,
assembly and mailing of proxy statements, notices and proxies, will be
paid by the Company. Such solicitation will be made by mail and in
addition may be made by the officers and employees of the Company
personally or by telephone or telegram. Forms of proxies and proxy
material may also be distributed, at the expense of the Company,
through brokers, custodians and other similar parties to the
beneficial owners of the Common Stock. The Company has retained
Morrow & Co., 909 Third Avenue, New York, NY 10022, to assist in the
solicitation of proxies for an estimated fee of $3,500.
On December 12, 1995, the Company had outstanding 3,048,330
shares of Common Stock, $.10 par value, which is its only class of
voting stock, held of record by approximately 600 holders.
Stockholders of record at the close of business on December 12, 1995
will be entitled to vote at the meeting. With respect to all matters
which will come before the meeting, each stockholder may cast one vote
for each share registered in his name on the record date. The shares
represented by every proxy received will be voted, and where a choice
has been specified, the shares will be voted in accordance with the
specification so made. If no choice has been specified on the proxy,
the shares will be voted FOR the election of the two nominees as
directors and the other matters described in the accompanying Notice
of Annual Meeting.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table provides information as to the ownership
of the Company's Common Stock as of December 12, 1995 by (i) persons
known to the Company to be the beneficial owners of more than 5% of
the Company's outstanding Common Stock, (ii) the Chief Executive
Officer of the Company, and (iii) all current executive officers and
directors of the Company as a group. Beneficial ownership by
individual directors is shown in the table on pages 2, 3, and 4 below.
1
<PAGE>
<TABLE>
<CAPTION>
Amount
Name and Address Beneficially Percent
of Beneficial Owner Owned (1) of Class
- - ------------------- ------------ --------
<S> <C> <C>
Dr. Marvin G. Schorr. . . . . . . . . . 354,338 11.6%
Tech/Ops Corporation
One Beacon Street
Boston, MA 02108
Bernard F. Start . . .. . . . . . . . . 236,360(2) 7.7%
Tech/Ops Sevcon, Inc.
One Beacon Street
Boston, MA 02108
Dimensional Fund Advisors, Inc. . . .. 195,000(3) 6.4%
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
All current executive officers and
directors as a group (8 persons). . . 804,038(4) 26.0%
___________
</TABLE>
(1) Unless otherwise indicated, each owner has sole voting
and investment power with respect to the shares
listed.
(2) Includes 10,000 shares subject to stock options exer-
cisable within sixty days.
(3) As reported in on Schedule 13F filed with the Secur-
ities and Exchange Commission on July 10, 1995.
(4) Includes 45,000 shares subject to stock options exer-
cisable within sixty days
ELECTION OF DIRECTORS
The Company's Board of Directors has fixed the number of
directors at seven. Members of the Board of Directors are divided
into three classes serving staggered three-year terms. The term of
two of the Company's seven directors, Milton C. Lauenstein and C.
Vincent Vappi, expires at the annual meeting. They are the Board's
nominees for re-election to a three-year term by the stockholders at
the annual meeting. The Company is not presently aware of any reason
that would prevent any nominee from serving as a director if he is
elected. If a nominee should become unavailable for election, the
2
<PAGE>
proxies will be voted for another nominee selected by the Board.
Pursuant to the Company's by-laws, directors will be elected by a
plurality of the votes properly cast at the annual meeting.
Abstentions, votes withheld and broker non-votes will not be treated
as votes cast and will not affect the outcome of the election. A
"broker non-vote" occurs when a broker holding a customer's shares
indicates on the proxy that the broker has not received voting
instructions on a matter from the customer and is barred by applicable
rules from exercising discretionary authority to vote on the matter.
The following table contains information on the two nominees for
election at the annual meeting and each other person whose term of
office as a director will continue after the meeting. The nominees
for election at the meeting are indicated by an asterisk.
<TABLE>
<CAPTION>
Number
Has Been a of Common
Director Shares of
of the the Company
Company Benefici-
Business or its Pre- -ally on
Experience decessor Dec. 12
During Past Tech/Ops, 1995 and
Term Five Years and Inc. Percent of
Name Expires Other Directorships Since Class (1)
- - ---- ------- ------------------- ----- --------
<S> <C> <C> <C> <C>
*Milton. C. 1996 Chairman of the 1974 50,000
Lauenstein (2) Board of Telequip (1.6%)
Age -- 69 Corporation, Hollis
N.H., a closely-held
electronics manufact-
urer. Mr. Lauenstein
is also a director of
Helix Technology Corp-
oration, Waltham, Mass.,
a manufacturer of
cryogenic equipment.
Harold C. 1998 Oscar Gruss & Son, New 1959 10,200
Mayer Jr. (3) York, N.Y., investments, ( - %)
Age -- 71 since December 1990.
Previously a partner
of Silberberg, Rosenthal
& Company, New York, N.Y.,
investments.
3
<PAGE>
Paul B. 1997 Treasurer of the Comp- 1988 84,200
Rosenberg (2) any since 1988. Mr. (2.8%)
Rosenberg is President
of Tech/Ops Corporation,
Boston, Mass., a cons-
ulting firm, and is a
director of Panatech
Research & Development
Corporation, Albuquerque,
N.M., a diversified manu-
facturing and service
company, and Landauer,
Inc., Glenwood, Ill., a
provider of personnel
dosimetry services.
Herbert Roth, 1997 Until June 1985, chief 1971 31,000
Jr. (2) (3) executive officer of (1.0%)
Age -- 67 LFE Corp., Waltham,
Mass., a manufacturer
of equipment and systems
for traffic and indust-
rial process control.
Mr. Roth is a director
of Boston Edison Company,
Boston, Mass., a public
utility; Phoenix Life
Insurance Company;
Phoenix Total Return
Fund, Inc., a mutual
fund; Mark IV Industries,
Inc., a diversified man-
ufacturing concern;, and
Landauer, Inc., Glenwood,
Ill., a provider of pers-
onnel dosimetry services.
Dr. Marvin G. 1998 Chairman of the Comp- 1951 354,338
Schorr (3) any's Board of Direct- (11.6%)
Age -- 70 ors since January 1988.
Previously Chairman of
the Board of Directors
of Tech/Ops, Inc., the
Company's predecessor.
Dr. Schorr is Chairman
of Tech/Ops Corporation,
Boston, Mass., a consult-
ing firm, is Chairman of
Landauer, Inc., Glenwood,
Illinois, a provider of
personnel dosimetry serv-
ices, and is a director
of Helix Technology
Corporation, Mansfield,
Mass., a manufacturer
of cryogenic equipment.
4
<PAGE>
Bernard F. 1997 President and Chief 1988 236,360
Start Executive Officer of (7.7%)
Age -- 57 the Company since Jan- (4)
uary 1988; previously
Manager of the electr-
onic controller busi-
ness of Tech/Ops, Inc.,
the Company's predecessor.
*C. Vincent 1996 Until May 1991, Chair- 1971 8,000
Vappi (2) (3) man and Chief Executive (0.3%)
Age -- 69 Officer of Vappi & Comp-
any, Inc., Cambridge,
Mass., a general building
contractor. Mr. Vappi
is a director of John
Hancock Mutual Life Ins-
urance Company, Boston,
Mass.; Boston Safe Deposit
and Trust Company, a Mass-
achusetts trust company, and
its parent, Boston Company,
Landauer, Inc., Glenwood,
Illinois, a provider of
personnel dosimetry serv-
ices.
</TABLE>
- - ------------------------------------
(1) Unless otherwise indicated, each director has sole
voting and investment power with respect to the shares
listed.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Includes 10,000 shares subject to stock options exer-
cisable within sixty days.
During the fiscal year ended September 30, 1995, the Board of
Directors held a total of six meetings. During such year, no director
attended fewer than 75 percent of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings
held by all committees of the Board on which the director served.
5
<PAGE>
The Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee, which met twice during the fiscal
year ended September 30, 1995, reviews the scope and results of the
external audit, including the audited financial statements, the
auditors' compensation and the adequacy of the Company's internal
financial controls, and recommends the engagement of the Company's
external auditors. The Compensation Committee, which met once last
year, reviews and recommends to the Board the annual salary, bonus,
stock options, and other benefits of the senior executives. The Board
of Directors does not have a nominating committee.
On May 6, 1991, Vappi & Company, Inc., (the "Vappi Company"), a
general building contractor of which Mr. Vappi was the principal
stockholder and chief executive officer, filed a voluntary petition
under Chapter 7 of the United States Bankruptcy Code.
The Vappi Company was a wholly-owned subsidiary of the Comp-
any's predecessor Tech/Ops, Inc., ("Tech/Ops") from 1971, when it was
acquired by Tech/Ops from Mr. Vappi and members of his family, until
1980, when it was resold to the Vappi family. Pursuant to a
commitment made before the resale, Tech/Ops in 1980 guaranteed a
portion of certain rentals under a lease to the Vappi Company as
tenant. The Company, as a successor to Tech/Ops under a Plan of
Reorganization effective 1988, assumed part of that guarantee
amounting to a maximum of $15,000 per year through April 1995, payable
in equal monthly installments. The Vappi Company ceased to make
rental payments in January 1991, and through April 1995 the Company
has paid $65,000 on the guarantee. No further payments will be due.
Mr. Vappi is not personally a party to either the lease or the guaran-
tee.
Director Compensation
Mr. Lauenstein, the Chairman of the Audit Committee, and Mr.
Vappi, the Chairman of the Compensation Committee, are each paid
$12,000 a year for their services as directors. The other directors
(except Mr. Start) are paid $11,000 each. The Company maintains a
Directors' Retirement Plan under which a director the sum of whose age
and full years of service as a director of the Company and its
predecessor Tech/Ops, Inc. on the date of his retirement as a director
is not less than 70 is entitled to receive annually a cash retirement
benefit. This benefit is equal to a percentage of the annual base
directors' fee in effect at the date of his retirement determined by
multiplying the number of his full years of service as a director by
2, but not exceeding 50%. The director's spouse is entitled after his
death, if she survives him, to receive for her life an annual benefit
equal to one-half of that amount.
6
<PAGE>
For a period ending December 31, 1996, the Company has agreed to
pay the consulting business owned by Mr. Rosenberg and Dr. Schorr
$100,000 per year. Of this amount, $30,000 is intended to be paid to
Mr. Rosenberg as compensation and $70,000 will be applied toward the
expenses of maintaining an office and support facilities for the
Company's corporate office and for Mr. Rosenberg and Dr. Schorr. Dr.
Schorr will receive no compensation from this payment.
EXECUTIVE COMPENSATION
The following tables provide information concerning the
compensation of the President and Chief Executive Officer of the
Company for services during each of the last three completed fiscal
years and the value of unexercised options at the end of such year.
Mr. Start is the only executive officer of the Company whose total
salary and bonus in the most recent fiscal year exceeds $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Fiscal Annual Compensation
Year Salary Bonus
---- ------ -----
<S> <C> <C> <C>
Bernard F. Start.................... 1995 $229,800 $85,000
President & 1994 210,150 50,000
Chief Executive Officer 1993 201,125 35,000
</TABLE>
Fiscal Year-End Option Information
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised In-
Options the-Money Options
at 9/30/95 at 9/30/95
Name (All exercisable) (All exercisable)
---- --------------- ---------------
<S> <C> <C>
Bernard F. Start............. 10,000 $87,050
</TABLE>
Mr. Start did not exercise any stock options and the Company did
not grant him any options during the last fiscal year.
Change in Control Agreement.
Mr. Start is party to an agreement providing that in the event of
termination of employment within two years following a Change in Control
of the Company (as defined), not approved by the Company's Board of
Directors, by the Company other than for cause, disability or retirement,
7
<PAGE>
or by Mr. Start for Good Reason (which includes a good faith determination
by him that due to the Change in Control he is not or believes he will
not be able effectively to discharge his duties), Mr. Start will become
entitled to two years' base salary and average bonuses determined in accord-
ance with the agreement, and certain other benefits, subject to a
limitation on total benefits which conforms to the limitation on their
deductibility imposed by the federal tax laws. This agreement extends
through September 30, 1996 and thereafter from year to year unless ter-
minated by the Company.
AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
The Board of Directors has unanimously voted to recommend that
the stockholders adopt an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common
Stock from 4,000,000 shares to 8,000,000 shares. If the amendment is
approved, the shares may be issued from time to time by the Board of
Directors. It is not expected that further authorization from
stockholders will be solicited for the issuance of any shares of
Common Stock, except to the extent such authorization is required by
law or by the rules of the American Stock Exchange. Stockholders do
not have, and the proposed amendment would not create, any preemptive
rights.
Increase of Authorized Common Stock
The Board of Directors recommends that the number of authorized
shares of Common Stock be increased to 8,000,000 shares. The Company
currently has 4,000,000 shares of Common Stock authorized. The
Company's two-for-one stock split in the form of a stock dividend
effective August 28, 1995 doubled the number of shares outstanding and
reserved, thereby reducing the number of shares otherwise available.
As of December 1, 1995, the Company had 3,048,330 shares outstanding
and 120,578 shares reserved for issuance under the Company's employee
stock option plan. Accordingly, as of that date 831,092 shares of
Common Stock were authorized and not outstanding or reserved for issu-
ance.
The Company has no plans, understandings or negotiations underway
at this time for the issuance of any unissued and unreserved shares.
Nevertheless, the Board believes that it is desirable to have a
sufficient number of shares of Common Stock available, as the occasion
may arise, for possible future financings and acquisition
transactions, stock dividends or splits, stock issuances pursuant to
employee benefit plans and other proper corporate purposes and
accordingly recommends the proposed increase. Having such additional
shares available for issuance in the future would give the Company
8
<PAGE>
greater flexibility by allowing shares to be issued without incurring
the delay and expense of a special stockholder's meeting.
Vote Required
Approval of the proposal to increase the authorized Common Stock
will require the affirmative vote of a majority of the shares of
Common Stock outstanding and entitled to vote at the annual meeting.
Abstentions and broker non-votes will have the effect of negative
votes.
The Directors recommend a vote FOR this proposal.
1996 EQUITY INCENTIVE PLAN
General
On November 7, 1995, the Board of Directors adopted, subject to
stockholder approval, the 1996 Equity Incentive Plan (the "Plan") as
an amendment and restatement of the Company's 1987 Key Employee Stock
Bonus and Option Plan (the "1987 Plan"). If the Plan is approved by
stockholders, the Plan will supersede the 1987 Plan and no additional
grants will be made thereunder. The rights of the holders of
outstanding options under the 1987 Plan will not be affected. The
purpose of the Plan is to attract and retain key employees and
consultants of the Company, to provide an incentive for them to
achieve long-range performance goals, and to enable them to
participate in the long-term growth of the Company. The Plan will
continue to be administered by a committee (the "Committee") of not
less than three members of the Board of Directors, currently the
Compensation Committee. Approximately 14 key employees are currently
eligible to participate in the Plan.
The following summary of the amended Plan is qualified by
reference to the full text of the Plan attached as Appendix A to this
proxy statement.
Proposed Amendments to the 1987 Plan
Approval of the Plan would amend the 1987 Plan to (a) increase
the number of shares of Common Stock subject to grants by 100,000
shares, (b) expand the types of awards and the flexibility of the
Committee to fix the terms and conditions of awards available to be
granted and (c) specify a limit on the maximum number of shares with
respect to which stock options and stock appreciation rights ("SARs")
may be made to any participant under the Plan. The Board of Directors
believes that the increase in shares is needed to ensure that a
sufficient number of shares are available to be issued under the Plan
in the future and that the additional types of awards will provide
9
<PAGE>
needed flexibility in structuring appropriate equity incentives for
key employees of the Company.
Shares Subject to Awards
As of December 12, 1995, 29,000 shares were available for awards
under the 1987 Plan. The proposed Plan would make an additional
100,000 shares available for award. The number and kind of shares are
subject to adjustment to reflect stock dividends, recapitalizations or
other changes affecting the Common Stock. If any outstanding or
future award expires or is terminated unexercised or settled in a
manner that results in fewer shares outstanding than were initially
awarded, the shares which would have been issuable will again be
available for award under the Plan. The closing price of the Common
Stock on the American Stock Exchange on December 8, 1995 was
$10.875.
Description of Awards
The 1987 Plan currently provides for the granting of awards in
the form of stock options and bonus stock subject to forfeiture. In
addition to these awards, the amended Plan would permit the grant of
stock appreciation rights ("SARs"). As amended, the Plan would
provide the following three basic types of awards:
Stock Options. The Committee may grant incentive stock
options eligible for special tax treatment under Section 422 of
the Internal Revenue Code of 1986, as amended or nonstatutory
stock options. The Committee will determine the option price,
term and exercise period of each option granted, provided that
the option price may not be less than the fair market value of
the Common Stock on the date of grant. An option may be exercised
by the payment of the option price in whole or in part in cash
or, to the extent permitted by the Committee, by delivery of a
note or shares of Common Stock owned by the participant valued at
their fair market value on the date of delivery, or such other
lawful consideration as the Committee may determine.
Stock Appreciation Rights. The Committee may grant SARs
where the participant receives cash, shares of Common Stock or
other property, or a combination thereof, as determined by the
Committee, equal in value to the difference between the exercise
price of the SAR and the fair market value of the Common Stock on
the date of exercise. SARs may be granted in tandem with options
(at or after award of the option) or alone and unrelated to an
option. SARs in tandem with an option terminate to the extent
that the related option is exercised, and the related option
terminates to the extent that the tandem SAR is exercised. The
10
<PAGE>
exercise price of an SAR may not be less than the fair market
value of the Common Stock on the date of grant or in the case of
a tandem SAR, the exercise price of the related option. In the
case of a tandem SAR which can only be exercised during limited
periods following a change in control of the Company, the
participant would be entitled to receive an amount based upon the
highest price paid or offered for the Common Stock during a
specified period preceding the change in control.
Restricted Stock. The Committee may grant shares of Common
Stock subject to forfeiture for no consideration, for such
minimum consideration as may be required by applicable law or for
such other consideration as the Committee may determine. With
respect to any restricted stock grant, the Committee has full
discretion to determine the number of shares subject to the
grant, the consideration to be paid by the participant, the
conditions under which the shares may be forfeited to the Company
and the other terms and conditions of the grant.
Awards under the Plan contain such terms and conditions not
inconsistent with the Plan as the Committee in its discretion
approves. The Committee has discretion to administer the Plan in the
manner which it determines, from time to time, is in the best interest
of the Company. For example, the Committee will fix the terms of
stock options, SARs and restricted stock grants and determine whether,
in the case of options and SARs, they may be exercised immediately or
at a later date or dates. Awards may be granted subject to conditions
relating to continued employment and restrictions on transfer. The
Committee may provide, at the time an award is made or at any time
thereafter, for the acceleration of a participant's rights or cash
settlement upon a change in control of the Company. The terms and
conditions of awards need not be the same for each participant. The
foregoing examples illustrate, but do not limit, the manner in which
the Committee may exercise its authority in administering the Plan.
The maximum aggregate number of shares subject to stock options
or SARs that may be granted to a participant in any calendar year is
60,000 shares. Incorporation of this limit is intended to qualify
stock options and SARs as performance-based compensation that is not
subject to the $1 million limit on deductibility for Federal income
tax purposes of compensation paid to certain senior officers.
11
<PAGE>
Amendment
The Board has authority to amend the Plan without stockholder
approval unless such approval is necessary to comply with any
applicable tax or regulatory requirement. The Committee has authority
to amend outstanding awards, including changing the date of exercise
and converting an incentive stock option to a nonstatutory option, if
the Committee determines that such action would not adversely affect
the participant. The Plan has no expiration date.
Federal Income Tax Consequences Relating to Stock Options
Incentive Stock Options. An optionee does not realize taxable
income upon the grant or exercise of an ISO under the Plan. If no
disposition of shares issued to an optionee pursuant to the exercise
of an ISO is made by the optionee within two years from the date of
grant or within one year from the date of exercise, then (a) upon sale
of such shares, any amount realized in excess of the option price (the
amount paid for the shares) is taxed to the optionee as long-term
capital gain and any loss sustained will be a long-term capital loss
and (b) no deduction is allowed to the Company for Federal income tax
purposes. The exercise of ISOs gives rise to an adjustment in
computing alternative minimum taxable income that may result in
alternative minimum tax liability for the optionee. If shares of
Common Stock acquired upon the exercise of an ISO are disposed of
prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition") then (a) the optionee
realizes ordinary income in the year of disposition in an amount equal
to the excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized on a sale of such shares)
over the option price thereof and (b) the Company is entitled to
deduct such amount. Any further gain realized is taxed as a short or
long-term capital gain and does not result in any deduction to the
Company. A disqualifying disposition in the year of exercise will
generally avoid the alternative minimum tax consequences of the
exercise of an ISO.
Nonstatutory Stock Options. No income is realized by the
optionee at the time a nonstatutory option is granted. Upon exercise,
(a) ordinary income is realized by the optionee in an amount equal to
the difference between the option price and the fair market value of
the shares on the date of exercise and (b) the Company receives a tax
deduction for the same amount. Upon disposition of the shares,
appreciation or depreciation after the date of exercise is treated as
a short or long-term capital gain or loss and will not result in any
deduction by the Company.
12
<PAGE>
Vote Required
Approval of the Plan will require the affirmative vote of a
majority of the shares of Common Stock present or represented and
entitled to vote at the annual meeting. Broker non-votes will not be
counted as present or represented for this purpose. Abstentions will
be counted as present and entitled to vote and accordingly will have
the effect of negative votes.
The Directors recommend a vote FOR this proposal.
AUDITORS
Arthur Andersen LLP, One International Place, Boston, Mas-
sachusetts, has served as auditors for the Company and its predecessor
Tech/Ops, Inc. since the latter was formed, and upon recommendation of
the Audit Committee, has been appointed as auditors for the current
year. Representatives of Arthur Andersen LLP are expected to be
present at the meeting with an opportunity to make a statement if they
desire to do so and are expected to be available to respond to
appropriate questions.
DEADLINE FOR STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be considered for
inclusion in the Company's proxy materials for the 1997 annual
meeting, it must be received by the Company at One Beacon Street,
Boston, Massachusetts 02108, Attention: Treasurer, no later than
August 30, 1996.
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The by-laws of the Company provide that in order for a
stockholder to bring business before or propose director nominations
at an annual meeting, the stockholder must give written notice to the
Secretary or other specified officer of the Company not less than 50
days nor more than 75 days prior to the meeting. The notice must
contain specified information about the proposed business or each
nominee and the stockholder making the proposal or nomination. If the
annual meeting is scheduled for a date other than the fourth Wednesday
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in January and notice thereof is mailed to stockholders or publicly
disclosed less than 65 days in advance, the notice given by the
stockholder must be received not later than the 15th day following the
day on which the notice of such annual meeting date was mailed or
public disclosure made, whichever occurs first.
OTHER BUSINESS
The Board of Directors does not know of any business which will
come before the meeting except the matters described in the notice.
If other business is properly presented for consideration at the
meeting. The enclosed proxy authorizes the persons named therein to
vote the shares in their discretion.
Dated December 28, 1995
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APPENDIX A
TECH/OPS SEVCON, INC.
1996 EQUITY INCENTIVE PLAN
1. Purpose
The purpose of the Tech/Ops Sevcon, Inc. 1996 Equity Incentive Plan
(the "Plan") is to attract and retain key employees and consultants of
the Company and its Affiliates, to provide an incentive for them to
achieve long-range performance goals, and to enable them to participate
in the long-term growth of the Company.
The Plan is an amendment and restatement of the Company's 1987 Key
Employee Stock Bonus and Option Plan (the "1987 Plan") and supersedes
the 1987 Plan, the separate existence of which shall terminate on the
effective date of the Plan. Nothing herein shall adversely affect the
rights and privileges of holders of outstanding options under the 1987
Plan.
2. Definitions
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right or Restricted
Stock granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor law.
"Committee" means one or more committees each comprised of not less
than three members of the Board appointed by the Board to administer the
Plan or a specified portion thereof. If a Committee is authorized to
grant Awards to a Reporting Person or a "covered employee" within the
meaning of Section 162(m) of the Code, each member shall be a
"disinterested person" or the equivalent within the meaning of
applicable Rule 16b-3 under the Exchange Act or an "outside director" or
the equivalent within the meaning of Section 162(m) of the Code,
respectively.
"Common Stock" or "Stock" means the Common Stock, $.10 par value,
of the Company.
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"Company" means Tech/Ops Sevcon, Inc.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts
due or exercise rights of the Participant in the event of the
Participant's death. In the absence of an effective designation by a
Participant, "Designated Beneficiary" means the Participant's estate.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor law.
"Fair Market Value" means, with respect to Common Stock or any
other property, the fair market value of such property as determined by
the Committee in good faith or in the manner established by the
Committee from time to time.
"Incentive Stock Option" - See Section 6(a).
"Nonstatutory Stock Option" - See Section 6(a).
"Option" - See Section 6(a).
"Participant" means a person selected by the Committee to receive
an Award under the Plan.
"Reporting Person" means a person subject to Section 16 of the
Exchange Act.
"Restricted Period" - See Section 8(a).
"Restricted Stock" - See Section 8(a).
"Stock Appreciation Right" or "SAR" - See Section 7(a).
3. Administration
The Plan shall be administered by the Committee. The Committee
shall have authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as
it shall from time to time consider advisable, and to interpret the
provisions of the Plan. The Committee's decisions shall be final and
binding. To the extent permitted by applicable law, the Committee may
delegate to one or more executive officers of the Company the power to
make Awards to Participants who are not subject to Section 16 of the
Exchange Act and all determinations under the Plan with respect thereto,
provided that the Committee shall fix the maximum amount of such Awards
for all such Participants and a maximum for any one Participant.
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4. Eligibility
All employees and, in the case of Awards other than Incentive Stock
Options under Section 6, consultants of the Company or any Affiliate,
capable of contributing significantly to the successful performance of
the Company, other than a person who has irrevocably elected not to be
eligible, are eligible to be Participants in the Plan. Incentive Stock
Options may be granted only to persons eligible to receive such Options
under the Code.
5. Stock Available for Awards
(a) Amount. Subject to adjustment under subsection (b),
Awards may be made under the Plan for up to 100,000 shares of Common
Stock, together with all shares of Common Stock available for issue
under the 1987 Plan on the effective date of the Plan. If any Award
(including any grant under the 1987 Plan) expires or is terminated
unexercised or is forfeited or settled in a manner that results in fewer
shares outstanding than were awarded, the shares subject to such Award,
to the extent of such expiration, termination, forfeiture or decrease,
shall again be available for award under the Plan. Common Stock issued
through the assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for Awards under
the Plan. Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares or treasury shares.
(b) Adjustment. In the event that the Committee determines
that any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares, or other transaction affects the Common Stock such
that an adjustment is required in order to preserve the benefits
intended to be provided by the Plan, then the Committee (subject in the
case of Incentive Stock Options to any limitation required under the
Code) shall equitably adjust any or all of (i) the number and kind of
shares in respect of which Awards may be made under the Plan, (ii) the
number and kind of shares subject to outstanding Awards, and (iii) the
exercise price with respect to any of the foregoing, and if considered
appropriate, the Committee may make provision for a cash payment with
respect to an outstanding Award, provided that the number of shares
subject to any Award shall always be a whole number.
(c) Limit on Individual Grants. The maximum number of shares
of Common Stock subject to Options and Stock Appreciation Rights that
may be granted to any Participant in the aggregate in any calendar year
shall not exceed 60,000 shares, subject to adjustment under subsection
(b).
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6. Stock Options
(a) Grant of Options. Subject to the provisions of the Plan,
the Committee may grant options ("Options") to purchase shares of Common
Stock (i) complying with the requirements of Section 422 of the Code or
any successor provision and any regulations thereunder ("Incentive Stock
Options") and (ii) not intended to comply with such requirements
("Nonstatutory Stock Options"). The Committee shall determine the
number of shares subject to each Option and the exercise price therefor,
which shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of grant. No Incentive Stock Option may be granted
hereunder more than ten years after the effective date of the Plan.
(b) Terms and Conditions. Each Option shall be exercisable at
such times and subject to such terms and conditions as the Committee may
specify in the applicable grant or thereafter. The Committee may impose
such conditions with respect to the exercise of Options, including
conditions relating to applicable federal or state securities laws, as
it considers necessary or advisable.
(c) Payment. No shares shall be delivered pursuant to any
exercise of an Option until payment in full of the exercise price
therefor is received by the Company. Such payment may be made in whole
or in part in cash or, to the extent permitted by the Committee at or
after the grant of the Option, by delivery of a note or shares of Common
Stock owned by the optionee, including Restricted Stock, or by retaining
shares otherwise issuable pursuant to the Option, in each case valued at
their Fair Market Value on the date of delivery or retention, or such
other lawful consideration as the Committee may determine.
7. Stock Appreciation Rights
(a) Grant of SARs. Subject to the provisions of the Plan, the
Committee may grant rights to receive any excess in value of shares of
Common Stock over the exercise price ("Stock Appreciation Rights" or
"SARs") in tandem with an Option (at or after the award of the Option),
or alone and unrelated to an Option. SARs in tandem with an Option
shall terminate to the extent that the related Option is exercised, and
the related Option shall terminate to the extent that the tandem SARs
are exercised. The Committee shall determine at the time of grant or
thereafter whether SARs are settled in cash, Common Stock or other
securities of the Company, Awards or other property.
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(b) Exercise Price. The Committee shall fix the exercise
price of each SAR or specify the manner in which the price shall be
determined. An SAR granted in tandem with an Option shall have an
exercise price not less than the exercise price of the related Option.
An SAR granted alone and unrelated to an Option may not have an exercise
price less than 100% of the Fair Market Value of the Common Stock on the
date of the grant.
(c) Limited SARs. An SAR related to an Option, which SAR can
only be exercised upon or during limited periods following a change in
control of the Company, may entitle the Participant to receive an amount
based upon the highest price paid or offered for Common Stock in any
transaction relating to the change in control or paid during a specified
period immediately preceding the occurrence of the change in control in
any transaction reported in the stock market in which the Common Stock
is normally traded.
8. Restricted Stock
(a) Grant of Restricted Stock. Subject to the provisions of
the Plan, the Committee may grant shares of Common Stock subject to
forfeiture ("Restricted Stock") and determine the duration of the period
(the "Restricted Period") during which, and the conditions under which,
the shares may be forfeited to the Company and the other terms and
conditions of such Awards. Shares of Restricted Stock may be issued for
no cash consideration or such minimum consideration as may be required
by applicable law.
(b) Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as
permitted by the Committee, during the Restricted Period. Shares of
Restricted Stock shall be evidenced in such manner as the Committee may
determine. Any certificates issued in respect of shares of Restricted
Stock shall be registered in the name of the Participant and unless
otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such
certificates to the Participant or if the Participant has died, to the
Participant's Designated Beneficiary.
9. General Provisions Applicable to Awards
(a) Reporting Person Limitations. Notwithstanding any other
provision of the Plan, to the extent required to qualify for the
exemption provided by Rule 16b-3 under the Exchange Act, Awards made to
a Reporting Person shall not be transferable by such person other than
by will or the laws of descent and distribution and are exercisable
during such person's lifetime only by such person or by such person's
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guardian or legal representative. If then permitted by Rule 16b-3, such
Awards shall also be transferable pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee
Retirement Income Security Act or the rules thereunder.
(b) Documentation. Each Award under the Plan shall be
evidenced by a writing delivered to the Participant specifying the terms
and conditions thereof and containing such other terms and conditions
not inconsistent with the provisions of the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or
to comply with applicable tax and regulatory laws and accounting
principles.
(c) Committee Discretion. Each type of Award may be made
alone, in addition to or in relation to any other Award. The terms of
each type of Award need not be identical, and the Committee need not
treat Participants uniformly. Except as otherwise provided by the Plan
or a particular Award, any determination with respect to an Award may be
made by the Committee at the time of grant or at any time thereafter.
(d) Dividends and Cash Awards. In the discretion of the
Committee, any Award under the Plan may provide the Participant with (i)
dividends or dividend equivalents payable currently or deferred with or
without interest, and (ii) cash payments in lieu of or in addition to an
Award.
(e) Termination of Employment. The Committee shall determine
the effect on an Award of the disability, death, retirement or other
termination of employment of a Participant and the extent to which, and
the period during which, the Participant's legal representative,
guardian or Designated Beneficiary may receive payment of an Award or
exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's
rights under an Award in the event of a change in control of the
Company, the Committee in its discretion may, at the time an Award is
made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to
the exercise or payment of the Award, (ii) provide for payment to the
Participant of cash or other property with a Fair Market Value equal to
the amount that would have been received upon the exercise or payment of
the Award had the Award been exercised or paid upon the change in
control, (iii) adjust the terms of the Award in a manner determined by
the Committee to reflect the change in control, (iv) cause the Award to
be assumed, or new rights substituted therefor, by another entity, or
(v) make such other provision as the Committee may consider equitable to
Participants and in the best interests of the Company.
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(g) Loans. The Committee may authorize the making of loans or
cash payments to Participants in connection with the grant or exercise
any Award under the Plan, which loans may be secured by any security,
including Common Stock, underlying or related to such Award (provided
that the loan shall not exceed the Fair Market Value of the security
subject to such Award), and which may be forgiven upon such terms and
conditions as the Committee may establish at the time of such loan or at
any time thereafter.
(h) Withholding Taxes. The Participant shall pay to the
Company, or make provision satisfactory to the Committee for payment of,
any taxes required by law to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability. In
the Committee's discretion, such tax obligations may be paid in whole or
in part in shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their Fair Market Value on
the date of delivery. The Company and its Affiliates may, to the extent
permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant.
(i) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms
and conditions different from those specified in the Plan as the
Committee considers necessary or advisable to achieve the purposes of
the Plan or to comply with applicable laws.
(j) Amendment of Award. The Committee may amend, modify or
terminate any outstanding Award, including substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization and converting an Incentive Stock Option to a Nonstatutory
Stock Option, provided that the Participant's consent to such action
shall be required unless the Committee determines that the action,
taking into account any related action, would not materially and
adversely affect the Participant.
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10. Miscellaneous
(a) No Right To Employment. No person shall have any claim or
right to be granted an Award. Neither the Plan nor any Award hereunder
shall be deemed to give any employee the right to continued employment
or to limit the right of the Company to discharge any employee at any
time.
(b) No Rights As Stockholder. Subject to the provisions of
the applicable Award, no Participant or Designated Beneficiary shall
have any rights as a stockholder with respect to any shares of Common
Stock to be distributed under the Plan until he or she becomes the
holder thereof. A Participant to whom Common Stock is awarded shall be
considered the holder of the Stock at the time of the Award except as
otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the
stockholders of the Company, the Plan shall be effective on January 31,
1996.
(d) Amendment of Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, subject to such
stockholder approval as the Board determines to be necessary or
advisable to comply with any tax or regulatory requirement.
(e) Governing Law. The provisions of the Plan shall be
governed by and interpreted in accordance with the laws of Delaware.
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(FORM OF PROXY CARD) Appendix B
TECH/OPS SEVCON, INC.
Proxy Solicited by the Board of Directors for Annual Meeting of
Stockholders to be held January 31, 1996
The undersigned appoints Marvin G. Schorr, Paul B. Rosenberg and
David R. Pokross, Jr. and each of them, the attorneys and proxies of
the undersigned, with power of substitution to vote all the shares of
Tech/Ops Sevcon, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held January 31, 1996 at the
offices of Palmer & Dodge, 24th Floor, One Beacon Street, Boston,
Massachusetts at 5:00 o'clock p. m. and at any adjournments thereof.
Receipt of the Notice of Annual Meeting and the accompanying
Proxy Statement is acknowledged.
Please complete, sign and date on reverse side
and mail in enclosed envelope
- - ----------------------------------------------------------------
_____
\ \ Please mark
\ X \ votes as in
\____\ this example
This proxy will be voted FOR both nominees for Director below and FOR
items 2 and 3 if no contrary instructions therefore are given.
1. ELECTION OF DIRECTORS 2. PROPOSAL TO AMEND CERTIF-
ICATE OF INCORPORATION TO
Nominees: Lauenstein, Vappi INCREASE AUTHORIZED COMMON
STOCK.
For Both Withheld from For Against Abstain
Nominees both nominees \__\ \__\ \__\
\__\ \__\
3. PROPOSAL TO APPROVE 1996
EQUITY INCENTIVE PLAN
For Against Abstain
\__\ \__\ \__\
\__\_______________________
For both nominees except as MARK HERE FOR ADDRESS
noted above CHANGE AND NOTE AT LEFT
\___\
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This proxy should be signed by the
registered holder. Where stock is
registered in the names of more than
one person, all such persons should
sign. When signing as executors,
administrators, trustees, guardians,
etc. please indicate your title
as such.
Signature___________ Date________
Signature___________ Date________
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