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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:
[_] Preliminary proxy statement
[_] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-12
TECHNOLOGY SOLUTIONS COMPANY
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(Name of Registrant as Specified in Its Charter)
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(Name of Person Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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[LOGO] TSC
TECHNOLOGY SOLUTIONS COMPANY
205 North Michigan Avenue
Chicago, Illinois 60601
(312) 228-4500
Dear Stockholder:
You are cordially invited to the 2000 Annual Meeting of Stockholders of
Technology Solutions Company. The meeting will be held at the offices of Bank
One Corporation, 1 Bank One Plaza, Chicago, Illinois 60670 on Thursday, April
27, 2000, starting at 10:00 a.m., local time.
The matters to be considered at the meeting are described in the accompanying
Proxy Statement. Regardless of your plans for attending in person, it is
important that your shares be represented at the meeting. Therefore, please
complete, sign, date and return your proxy card in the enclosed, post-paid
envelope. This will enable you to vote on the business to be transacted whether
or not you attend the meeting.
We hope that you can attend the 2000 Annual Meeting, but in any event, please
vote your shares by signing and returning your proxy card.
Sincerely,
/s/ William H. Waltrip
WILLIAM H. WALTRIP
Chairman
March 31, 2000
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TECHNOLOGY SOLUTIONS COMPANY
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 2000
To Our Stockholders
The 2000 Annual Meeting of Stockholders (the "Annual Meeting") of Technology
Solutions Company (the "Company") will be held at the offices of Bank One
Corporation, 1 Bank One Plaza, Chicago, Illinois 60670 on Thursday, April 27,
2000 at 10:00 a.m., local time, for the following purposes:
1. To elect one director, to serve for a three-year term;
2. To approve an amendment to the Technology Solutions Company 1995
Employee Stock Purchase Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by 2,000,000 shares;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending
December 31, 2000; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 20, 2000, are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. A list of those stockholders will be available for examination by any
stockholder for any purpose germane to the Annual Meeting, during normal
business hours, at the principal executive office of the Company, 205 North
Michigan Avenue, Suite 1500, Chicago, Illinois 60601, for a period of ten days
prior to the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement. Whether or not
you plan to attend the Annual Meeting in person, you are urged to complete,
sign, date and return the enclosed proxy card in the enclosed, post-paid
envelope. If you attend the Annual Meeting and wish to vote in person, you may
withdraw your proxy and vote your shares personally.
By order of the Board of Directors,
/s/ Paul R. Peterson
Paul R. Peterson
Secretary
March 31, 2000
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TECHNOLOGY SOLUTIONS COMPANY
205 North Michigan Avenue, Suite 1500
Chicago, Illinois 60601
PROXY STATEMENT
Annual Meeting of Stockholders
April 27, 2000
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Technology Solutions Company (the "Company") for
use at the 2000 Annual Meeting of Stockholders (the "Annual Meeting") to be held
at the offices of Bank One Corporation, 1 Bank One Plaza, Chicago, Illinois
60670, at 10:00 a.m., local time. The Company's principal executive office is
located at 205 North Michigan Avenue, Suite 1500, Chicago, Illinois 60601.
Each holder of record of shares of Common Stock, $.01 par value, of the Company
(the "Common Stock") at the close of business on March 20, 2000 (the "Record
Date"), is entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof and will have one vote on each matter considered for each
share held on the Record Date. A majority of the shares entitled to vote will
constitute a quorum. On the Record Date there were 43,964,574 shares of Common
Stock outstanding.
If you are unable to attend the Annual Meeting, you may vote by proxy. The proxy
holders will vote your shares according to your instructions. If you return a
properly signed and dated proxy card but do not mark a choice on one or more
items, your shares will be voted in accordance with the recommendations of the
Board of Directors for those items as set forth in this Proxy Statement. The
proxy card gives authority to the proxy holders to vote your shares in their
discretion on any other matter presented at the Annual Meeting or any
adjournment thereof. A proxy may indicate that all or a portion of the shares
represented by that proxy are not being voted by a stockholder with respect to a
particular matter. Any such non-voted shares will be considered present for the
purpose of determining the presence of a quorum.
You may revoke your proxy at any time prior to voting at the Annual Meeting by
delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy or by attending the Annual Meeting and voting in
person.
The Company will bear the cost of preparing, handling, printing and mailing this
Proxy Statement, the related proxy card and any additional material which may be
furnished to stockholders, as well as the actual expense incurred by brokerage
houses, fiduciaries and custodians in forwarding those materials to beneficial
owners of Common Stock held in their names. The solicitation of proxies will be
made by the use of the mail and through direct communication with certain
stockholders or their representatives by certain officers, directors or
employees of the Company who will receive no additional compensation therefor.
The Company has retained Morrow & Co., Inc., of New York, New York, a proxy
soliciting organization, to solicit management proxies for the Annual Meeting.
Their fees for soliciting proxies are estimated to be approximately $9,000, plus
reasonable out-of-pocket expenses. This Proxy Statement and the related proxy
card are first being sent or given to stockholders on or about March 31, 2000.
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ELECTION OF DIRECTORS
The Board of Directors consists of five persons and is divided into three
classes with three-year terms of office ending in different years. The term of
the Class III Director expires this year. The Board of Directors has nominated
one person for election as a director in Class III to serve until the Annual
Meeting of Stockholders held in 2003 and until his successor has been elected
and qualified. The terms of the current Class I and II Directors expire in 2001
and 2002, respectively.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Class III nominee recommended by the Board of Directors. Directors
are elected by a plurality of the votes cast. Stockholders may not cumulate
their votes. The nominee receiving the highest number of votes will be elected.
In the event that the nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who is designated by the present Board of Directors to fill the vacancy.
It is not expected that the nominee will be unable or will decline to serve as a
director. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them for the
nominee recommended by the Board of Directors.
NOMINEE FOR DIRECTOR
Class III -- Nominee to Serve Until the 2003 Annual Meeting:
William H. Waltrip, age 62, has been a Director of the Company since December
1992 and Chairman of the Board since June 1993. Mr. Waltrip also served as Chief
Executive Officer from June 1993 to June 1995. From 1996 to 1998, he served as
the Chairman of the Board of Directors and, during 1996, he served as Chief
Executive Officer of Bausch & Lomb, Inc. From 1991 to 1993, he was Vice Chairman
of Unifax, Inc., a broad-line food service distributor. From 1985 to 1988, he
was President, Chief Operating Officer and a Director of IU International, a
diversified services company with major interests in transportation,
environmental services and distribution. From 1982 to 1985, he was President,
Chief Executive Officer and a Director of Purolator Courier Corporation. From
1972 to 1982, he was President, Chief Operating Officer and Director of Pan
American World Airways, Inc. He is also currently serving as a Director of
Bausch & Lomb, Inc., the Teachers Insurance and Annuity Association and Thomas &
Betts Corporation.
The Board of Directors unanimously recommends that the Company's Stockholders
vote FOR election of the nominee listed above.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class I -- Serving Until the 2001 Annual Meeting:
Michael R. Zucchini, age 53, has been a Director of the Company since October
1997. Until his retirement in December 1999, he had served as Vice Chairman of
Fleet Boston Financial, a financial services company, since 1993 and as its
Chief Technology Officer since April 1997. Mr. Zucchini joined Fleet Boston
Financial in 1987 from General Re Corp., where he had been a senior executive
since 1974. From 1997 until 1999, he served as Chairman of the Financial
Services Roundtable Subcommittee on Legislation and Regulation charged with
interacting with Congress on issues related to technology. He is also currently
serving as a Director of eLoyalty Corporation,
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<PAGE>
and he served from 1993 to 1999 as a Director of VISA, U.S.A., Inc. and from
1995 to 1996 as a Director of American Re Corporation.
Jack N. Hayden, age 53, has been President and CEO of the Company since February
2000. He joined TSC in April 1992 as Senior Vice President, served as interim
CFO during late 1992 and early 1993, and assumed the role of Executive Vice
President in July 1995. He served as CEO of Coleman Consulting Group, Inc., from
September 1998 to March 1999. He rejoined the Company's executive team as Group
President in March 1999. Prior to coming to the Company, he held the position of
Vice President - Operations, Commercial Transport Division of McDonnell Douglas
Corporation from 1990 to 1992. From 1989 to 1990, he served as Vice
President-Finance of McDonnell Douglas Corporation. From 1971 to 1989, he served
in numerous manufacturing and procurement positions at McDonnell Douglas
Corporation.
Class II -- Serving Until the 2002 Annual Meeting:
Stephen B. Oresman, age 67, has been a Director of the Company since July 1988.
Since 1990, he has served as President of Saltash, Ltd., a management consulting
firm. He previously served as Senior Vice President of Booz, Allen & Hamilton,
Inc. and Chairman of Booz, Allen & Hamilton International, parent and subsidiary
consulting firms. He is also currently serving as a Director of Cleveland-Cliffs
Inc. and Stanwood Financial Inc.
Raymond P. Caldiero, age 60, has been a Director of the Company since January
1998. He has served as Chairman, President and Chief Executive Officer of CII
Inc., a business consulting firm, since 1990. He was employed with Marriott
Corporation for over 18 years with his final position being Senior Vice
President and Assistant to the Chairman in December 1989. He is also currently
serving as a Director of EnviroSource Corporation of Horsham, Pennsylvania.
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DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors held four regular meetings and seven special meetings
during the fiscal year ended December 31, 1999 ("Fiscal 1999"). With the
exception of Mr. Caldiero, who attended all but two of the meetings of the Board
of Directors, each incumbent director attended all of the meetings of the Board
and committees thereof on which he served.
The Board of Directors has an Audit Committee presently composed of Messrs.
Caldiero and Oresman. The Audit Committee reviews the results and scope of the
audit and other services provided by the Company's independent accountants and
recommends the appointment of independent accountants to the Board of Directors.
See "Ratification of Appointment of Independent Accountants." The Audit
Committee met once during Fiscal 1999.
The Board of Directors has a Compensation Committee presently composed of
Messrs. Caldiero and Zucchini. The Compensation Committee approves all executive
compensation and stock option grants. The Compensation Committee held three
regular meetings and seven special meetings during Fiscal 1999.
Those directors who are not employees of the Company ("Outside Directors")
receive an annual fee of $25,000 plus reimbursement of expenses incurred in
attending meetings.
In addition, each Outside Director presently holds stock options issued under
the Technology Solutions Company 1993 Outside Directors Plan, as amended (the
"1993 Plan") or the Technology Solutions Company 1996 Stock Incentive Plan (the
"1996 Plan"). Any new Outside Director will receive an option to purchase 40,500
shares of Common Stock with a per share exercise price equal to the closing
price of a share of Common Stock as reported on The Nasdaq Stock Market(R) on
the day the stock option is granted. In addition, an option to purchase 40,500
shares of Common Stock has been and will be granted to each Outside Director at
the time that a previously issued stock option granted under the 1993 Plan or
the 1996 Plan to that director became or becomes exercisable in full (assuming
he is an Outside Director at that time). Each stock option granted to an Outside
Director under the 1996 Plan becomes exercisable in thirty-six monthly
installments of 1,125 shares each, commencing on the last day of the calendar
month immediately following the month the option is granted.
During Fiscal 1999, Mr. Zucchini received an option to purchase 25,000 shares of
eLoyalty (as defined below under "Executive Officer Compensation") common stock
and Mr. John T. Kohler received an option to purchase 125,000 shares of eLoyalty
common stock in connection with their proposed service as directors of eLoyalty
following the Spin-Off (as defined below under "Executive Officer
Compensation"). The exercise price of each such option is $3.50 per share, which
equaled the appraised fair market value of a share of eLoyalty common stock on
the date of grant. Mr. Zucchini's eLoyalty option becomes exercisable in
thirty-six monthly installments of 694 shares each, commencing on the last day
of the calendar month immediately following the month the option is granted.
One-third of Mr. Kohler's eLoyalty option becomes exercisable on the second
anniversary of the grant date, and 1/36 becomes exercisable on the last day of
each calendar month for 24 months thereafter.
The Board of Directors does not have a nominating committee. Selection of
nominees for the Board is made by the entire Board of Directors. The names of
persons to be considered by the Board as potential nominees for the Company's
Board of Directors should be directed to the Company's Secretary, Paul R.
Peterson, at 205 North Michigan Avenue, Suite 1500, Chicago, Illinois 60601.
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<PAGE>
APPROVAL OF AMENDMENT TO THE
TECHNOLOGY SOLUTIONS COMPANY
1995 EMPLOYEE STOCK PURCHASE PLAN
The Technology Solutions Company 1995 Employee Stock Purchase Plan (the "Stock
Purchase Plan") is intended to provide employees of the Company with additional
incentives by permitting them to acquire a proprietary interest in the Company
through the purchase of shares of the Common Stock. The following is a summary
description of the Stock Purchase Plan and is qualified in its entirety by
reference to the text of the Stock Purchase Plan, a copy of which (as it is
proposed to be amended) is attached hereto as Exhibit A. The Board of Directors
has approved an amendment to the Stock Purchase Plan, subject to stockholder
approval, to increase the number of shares of Common Stock available for
purchase thereunder by 2,000,000 shares. Of the 1,687,500 shares originally made
available for purchase under the Stock Purchase Plan when it was adopted,
397,695 shares remain available for purchase as of March 31, 2000.
General
The Board adopted the Stock Purchase Plan on June 29, 1995, and the stockholders
of the Company approved the Stock Purchase Plan at the Company's 1995 Annual
Meeting. The Stock Purchase Plan is intended to provide employees of the Company
with added incentive to remain employed with the Company and to encourage
increased efforts to promote the best interest of the Company by permitting them
to purchase shares of Common Stock at below-market prices. As described in more
detail below, the Purchase Price (as defined below) for a Purchase Period (as
defined below) is generally 85% of the lesser of (i) the fair market value of
the Common Stock on the first day of the Purchase Period and (ii) the fair
market value of the Common Stock on the last day of the Purchase Period. The
Stock Purchase Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code").
As used in this description of the Stock Purchase Plan, references to employment
with the Company are deemed to include employment with the Company and/or
subsidiary corporations of the Company within the meaning of Section 424(f) of
the Code.
Administration
The Stock Purchase Plan is administered by the Compensation Committee of the
Board of Directors, although the Board of Directors may otherwise appoint (i)
the entire Board or (ii) a committee consisting of two or more members of the
Board to administer the Stock Purchase Plan (the committee that administers the
Stock Purchase Plan is referred to herein as the "Plan Committee"). The Plan
Committee has full power and authority to interpret and administer the Stock
Purchase Plan, to establish rules and regulations, to appoint agents in
connection therewith and to take any other action that the Plan Committee deems
necessary or desirable to administer the Stock Purchase Plan. The Plan Committee
is required to administer the Stock Purchase Plan so that all participants have
the same rights and privileges as required by Section 423(b)(5) of the Code.
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Common Stock Purchase Under the Stock Purchase Plan
The maximum number of shares of Common Stock that may be purchased under the
Stock Purchase Plan, without giving effect to the proposed amendment, is
1,687,500. As of March 31, 2000, there were 397,695 shares available for
purchase. If the proposed amendment is approved, an additional 2,000,000 will be
available for purchase. The number of shares available is subject to appropriate
adjustment in the event of a stock dividend, stock split or combination of
shares. Shares of Common Stock purchased under the Stock Purchase Plan may be
treasury shares, authorized and unissued shares, or a combination thereof. On
March 23, the closing sales price of a share of Common Stock as reported by The
Nasdaq Stock Market was $8.9375.
Eligible Employees
Eligibility to participate in the Stock Purchase Plan is extended to each
employee of the Company who has been continuously employed by the Company for at
least three months, whose customary employment by the Company is greater than 20
hours per week and more than five months in any calendar year (each such
employee is referred to herein as an "Eligible Employee"). A person must be an
Eligible Employee on the first day of a Purchase Period (as defined below) in
order to participate in the Stock Purchase Plan during that Purchase Period. As
of the date of this Proxy Statement, approximately 625 employees of the Company
are Eligible Employees.
Material Terms of the Stock Purchase Plan
Eligible Employees may purchase shares of Common Stock at below-market prices
through payroll deductions during successive three month periods (each period is
referred to herein as a "Purchase Period"), except that, in order to provide for
the orderly maintenance of the Stock Purchase Plan during the periods before and
after the Spin-Off (as defined under "Executive Officer Compensation" below),
the last Purchase Period before the Spin-Off ended on January 31, 2000, the last
full standard Company pay period before the record date for the Spin-Off, and
the first purchase period after the Spin-Off began on February 16, 2000, the
first day of the first standard Company pay period following the Spin-Off. The
Purchase Period that began on February 16, 2000 will end on March 31, 2000, and
the next Purchase Period will begin on April 1, 2000 or the first business day
thereafter. Except as otherwise stated in this paragraph, each Purchase Period
begins on the first business day following the end of the last Purchase Period
and ends on the last business day of the third month thereafter.
An Eligible Employee may purchase shares of Common Stock through payroll
deductions. The amount of payroll deduction is a whole percentage amount or a
whole dollar amount as determined by the Plan Committee, in either case not to
exceed 15%, or such lesser percentage as may be determined by the Plan
Committee, of such Eligible Employee's then current regular wage or salary
(before withholding or other deductions) paid to the Eligible Employee by the
Company.
No employee can purchase more than 1,500 shares of Common Stock during any
Purchase Period, subject to adjustment in the event of certain changes in
capitalization. No employee can acquire rights to purchase Common Stock under
the Stock Purchase Plan at a rate which exceeds
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$25,000 of fair market value of such Common Stock during a calendar year, to be
determined in the manner provided by Section 423(b)(8) of the Code. In addition,
no employee can purchase Common Stock under the Stock Purchase Plan if, after
that purchase, the employee would own 5% or more of the total combined voting
power or value of all classes of stock of the Company, to be determined in the
manner provided by Section 424(d) of the Code.
To participate in the Stock Purchase Plan, an Eligible Employee is required to
execute and deliver a payroll deduction authorization to the Company or its
designated agent in the time and manner specified by the Plan Committee. Such
authorization will become effective on the first day of the Purchase Period
commencing after its execution and delivery. A participant may change the amount
of his or her payroll deduction by executing and delivering a new payroll
deduction authorization, which will become effective on the first day of the
next Purchase Period following such execution and delivery.
Payroll deductions are credited to a purchase account established on the books
of the Company on behalf of each participant (a "Purchase Account"). At the end
of each Purchase Period, the amount in each participant's Purchase Account are
applied to purchase from the Company the number of shares of Common Stock
determined by dividing such amount by the Purchase Price (as defined below) for
the Purchase Period.
The Purchase Price for a Purchase Period is 85% of the lesser of (i) the fair
market value of the Common Stock on the first day of the Purchase Period and
(ii) the fair market value of the Common Stock on the last day of the Purchase
Period, unless the Plan Committee determines otherwise in accordance with the
terms of the Stock Purchase Plan. The fair market value of a share of Common
Stock on a given day is the average of the high and low transaction prices for a
share of Common Stock as reported by The Nasdaq Stock Market on such day or, if
there are no reported transactions on that day, on the next preceding date for
which transactions were reported.
The Plan Committee may, in its discretion, establish additional procedures
whereby Eligible Employees may participate in the Stock Purchase Plan by means
other than payroll deduction, including, but not limited to, delivery of funds
by participants in a lump sum or automatic charges to participants' bank
accounts. Such other methods of participating shall be subject to such rules and
conditions as the Plan Committee may establish. Rights to purchase Common Stock
under the Stock Purchase Plan are not transferable.
Common Stock purchased under the Stock Purchase Plan is considered to be issued
and outstanding to the participant's credit as of the close of business on the
last day of each Purchase Period. No interest will accrue at any time for any
amount credited to a Purchase Account. After the close of each Purchase Period,
a report will be sent to each participant stating the entries made to his or her
Purchase Account, the number of shares of Common Stock purchased and the
applicable Purchase Price. A participant will be issued a certificate for his or
her shares upon the request of the participant.
A participant may elect at any time to terminate participation in the Stock
Purchase Plan, provided such termination is received by the Company in writing
prior to the last business day of the Purchase Period for which such termination
is to be effective. In addition, a participant's participation in the Stock
Purchase Plan will automatically terminate upon the participant's death or
termination of employment with the Company or when the participant otherwise
ceases to be
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an Eligible Employee. Upon any such termination, the Company will deliver to
such participant or his or her legal representative, as the case may be, cash in
an amount equal to the balance in his or her Purchase Account on the date of
such termination.
In the event of a Change in Control of the Company (as defined in the Stock
Purchase Plan), the then current Purchase Period will end, all participants'
Purchase Accounts will be applied to purchase shares of Common Stock, and the
Plan will immediately thereafter terminate.
Termination and Amendment
The Board or the Plan Committee may terminate the Stock Purchase Plan at any
time. The Stock Purchase Plan will terminate when the maximum number of shares
of Common Stock available for purchase thereunder has been purchased.
The Board or the Plan Committee may amend the Stock Purchase Plan for any
reason; provided. however, that no such amendment may (i) materially adversely
affect any purchase rights outstanding under the Stock Purchase Plan during the
Purchase Period in which the amendment is to be effected, (ii) unless approved
by the stockholders of the Company, increase the number of shares of Common
Stock which may be purchased under the Stock Purchase Plan, (iii) decrease the
Purchase Price for shares of Common Stock thereunder for any period below 85% of
the lesser of (a) the fair market value of the Common Stock on the first day of
the Purchase Period and (b) the fair market value of the Common Stock on the
last day of the Purchase Period, (iv) unless approved by the stockholders of the
Company, change the class of employees eligible to participate in the Stock
Purchase Plan or (v) adversely affect the qualification of the Stock Purchase
Plan under Section 423 of the Code.
Plan Benefits
Approximately 320 Eligible Employees currently participate in the Stock Purchase
Plan. It is not possible to determine the number of or extent to which Eligible
Employees will in the future participate in the Stock Purchase Plan. In Fiscal
1999, the following individuals (with their position with the Company as of
December 31, 1999 indicated parenthetically) and groups made the indicated
purchases of Common Stock under the Stock Purchase Plan: William H. Waltrip
(Chairman of the Board) - 0 shares; John T. Kohler (President and Chief
Executive Officer) - 0 shares; Jack N. Hayden (Group President) - 0 shares;
Kelly D. Conway (Group President) - 2,296 shares; Timothy P. Dimond (Chief
Financial Officer) - 2,421 shares; current executive officers - 3,056 shares;
non-executive officer employees - 503,764 shares.
Federal Income Tax Consequences
The following is only a general summary of the possible federal income tax
consequences that could result under the Stock Purchase Plan and should not be
relied upon as being a complete statement. It does not address the state or
local tax aspects of participation in the Stock Purchase Plan.
The Stock Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under Section 423 of the
Code, an Eligible Employee who elects to participate in the Stock Purchase Plan
will not realize any taxable income at the time Common Stock is purchased under
the Stock Purchase Plan for such Eligible Employee.
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If an employee disposes of Common Stock purchased under the Stock Purchase Plan
two years or more after the first day of the Purchase Period or one year or more
after the date the Common Stock is transferred to the employee, whichever is
later, the employee will recognize ordinary income in an amount equal to the
lesser of: (a) the excess of the fair market value of the Common Stock at the
time of disposition over the purchase price under the Stock Purchase Plan and
(b) 15% of the fair market value of the Common Stock on the first day of the
Purchase Period. The portion of the gain that is in excess of the amount
recognized as ordinary income, if any, is taxed as long-term capital gain. If
the Common Stock is disposed of at a price below the purchase price under the
Stock Purchase Plan, the loss will be treated as long-term capital loss. The
Company will not be entitled to any deduction with respect to a disposition of
Common Stock occurring under the circumstances described in this paragraph.
If an employee disposes of Common Stock purchased under the Stock Purchase Plan
within two years after the first day of the Purchase Period, or within one year
after the date the Common Stock is transferred to the employee, whichever is
later, the employee will recognize ordinary income, and the Company will be
entitled to a corresponding deduction, in an amount equal to the excess of the
fair market value of the Common Stock on the last day of the Purchase Period
over the purchase price of the Common Stock under the Stock Purchase Plan. The
employee's cost basis of the Common Stock will be increased by the amount of the
ordinary income recognized by the employee. In addition, on the disposition of
the Common Stock, an employee will recognize capital gain or loss equal to the
difference between the price at which the Common Stock is disposed of and the
cost basis in the Common Stock, as so increased. The Company will not be
entitled to any deduction with respect to the amount recognized by the employee
as capital gain.
Approval of Amendment to the Stock Purchase Plan
Approval of the proposal to amend the Stock Purchase Plan requires the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the Annual Meeting, in person or by proxy, and entitled to vote
thereon. Abstentions will have the same effect as votes against the proposal.
Shares not voted by a broker acting as nominee because the broker lacks
discretionary authority to vote will be considered as not being in attendance
for the vote on this proposal.
The Board of Directors unanimously recommends that the Company's Stockholders
vote FOR approval of the proposal to amend the Technology Solutions Company 1995
Employee Stock Purchase Plan.
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RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 2000. Approval
of the proposal to ratify the appointment of PricewaterhouseCoopers LLP requires
the affirmative vote of a majority of the stockholders present, in person or by
proxy, at the Annual Meeting and entitled to vote thereon. If the appointment is
not ratified, the appointment of other independent accountants will be
considered by the Board of Directors. Abstentions will have the same effect as
votes against the proposal. Shares not voted by a broker acting as nominee
because the broker lacks discretionary authority to vote will be considered as
not being in attendance for the vote on the proposal. PricewaterhouseCoopers LLP
has audited the Company's financial statements since the fiscal year ended May
31, 1991. Representatives of PricewaterhouseCoopers LLP are expected to be at
the Annual Meeting and to be available to respond to appropriate questions and
also to have the opportunity to make a statement.
The Board of Directors unanimously recommends that the Company's Stockholders
vote FOR approval of the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending December 31, 2000.
- --------------------------------------------------------------------------------
- 11 -
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The next following table sets forth summary information concerning the
compensation during the periods indicated of the Company's Chief Executive
Officer and its four other most highly compensated executive officers during
Fiscal 1999 (collectively, the "Named Executive Officers"). The table identifies
grants of options to purchase both the Company's Common Stock and common stock
of eLoyalty Corporation ("eLoyalty"). eLoyalty was a subsidiary of the Company
until February 15, 2000, when the Company distributed the common stock of
eLoyalty owned by the Company to the Company's stockholders (the "Spin-Off").
Following the Spin-Off, eLoyalty became an independent, publicly traded company.
At the time of the Spin-Off, outstanding options to purchase the Company's
Common Stock were appropriately adjusted to reflect the Spin-Off. The
adjustments were calculated to preserve the intrinsic value of each option and
to preserve the ratio of the exercise price to the fair market value of the
stock subject to the option.
Each outstanding nonqualified option to purchase Common Stock of the Company
granted before June 22, 1999 to a person who continued as an employee or
director of the Company after the Spin-Off, or who was not an employee or
director of either the Company or eLoyalty after the Spin-Off, was converted, on
a one-for-one basis, into both an adjusted Company option and a substitute
eLoyalty option. The original exercise price of the Company option was split
into an exercise price for (1) the adjusted Company option and (2) the eLoyalty
option based on the relative trading values of the two companies' common stock
immediately after the Spin-Off. Immediately after the Spin-Off, the Company's
Common Stock traded at 16.5278% of the combined value of one share of the
Company's Common Stock and one share of eLoyalty's Common Stock. Accordingly,
the exercise price for the adjusted Company option was set at 16.5278% of the
original Company option exercise price while the eLoyalty option exercise price
was set at 83.4722% of the original Company option exercise price.
Each outstanding nonqualified Company option granted after June 21, 1999 to a
person who continued as an employee or director of the Company after the
Spin-Off, or who was not an employee or director of either the Company or
eLoyalty after the Spin-Off, was not adjusted as described above, but instead
continued solely as an adjusted option to purchase shares of the Company's
Common Stock. The adjusted exercise price was determined by multiplying the
original exercise price by 16.5278%. The adjusted number of shares subject to
the option was determined by dividing the original number of shares by 16.5278%.
Each outstanding option to purchase Company Common Stock held by a person who
became a employee or director of eLoyalty immediately after the Spin-Off (and
who was not also a director of the Company) was converted into a substitute
option to purchase eLoyalty Common Stock. The exercise price of the substitute
option was determined by multiplying the original exercise price by 83.4722%.
The number of shares subject to the substitute option was determined by dividing
the original number of shares by 83.4722%. The substitute options take into
account all employment with both the Company and eLoyalty for purposes of
determining when the option becomes exercisable and when it terminates. All
other terms of the substitute options are the same as the Company options.
- --------------------------------------------------------------------------------
- 12 -
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
==========================================================
Annual Long-Term Compensation Awards(1)
Compensation
====================================================================================================================================
Technology
eLoyalty Solutions
Corporation Company
Securities Securities All Other
Name and Principal Position Fiscal Underlying Underlying Compensation
as of December 31, 1999 Year Salary ($) Bonus($) Options (#) Options (#) ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
William H. Waltrip 1999 300,000 300,000 50,000 50,000 0
Chairman of the Board 1998(2) 108,333 100,000 -- 50,000 0
1998 100,000 22,000 -- 112,500 0
1997 100,000 100,000 -- 168,750 0
- ------------------------------------------------------------------------------------------------------------------------------------
John T. Kohler 1999 550,000 0(3) 200,000(4) 30,000 0
President and Chief Executive Officer 1998(2) 320,833 230,000 -- 75,000 0
1998 550,000 150,000 -- 168,750 0
1997 525,000 460,000 -- 168,750 0
- ------------------------------------------------------------------------------------------------------------------------------------
Jack N. Hayden 1999(5) 360,125 860,000(6) 0 150,000 0
Group President 1998(2)(5) 123,846 105,000 -- 70,000 0
1998 460,000 150,000 -- 168,750 0
1997 400,000 400,000 -- 202,500 0
- ------------------------------------------------------------------------------------------------------------------------------------
Kelly D. Conway 1999 480,000 266,573 625,000 0 382,503(7)
Group President 1998(2) 266,667 120,000 -- 65,000 0
1998 440,000 100,000 -- 135,000 0
1997 400,000 225,000 -- 199,125 0
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy P. Dimond 1999 240,000 165,000 20,000 45,000 0
Chief Financial Officer 1998(2) 126,667 50,000 -- 3,000 0
1998 200,000 25,000 -- 11,250 0
1997 160,000 74,000 -- 22,500 0
====================================================================================================================================
</TABLE>
- ------------------------
(1) Option grant information is provided on a pre-Spin-Off basis.
(2) During 1998 the Company changed its fiscal year end from May 31 to
December 31. The compensation figures reported cover the transition period
from June 1, 1998 through December 31, 1998.
(3) In connection with the Spin-Off, Mr. Kohler resigned as a director and
executive officer of the Company. See "Employment Agreements."
(4) Mr. Kohler has forfeited 75,000 of these options. See "Employment
Agreements."
(5) Mr. Hayden left the Company's executive team in August 1998 and rejoined
it in March 1999. Mr. Hayden has been the Company's President and Chief
Executive Officer since the Spin-Off.
(6) Includes a $460,000 bonus paid to Mr. Hayden upon rejoining the Company's
executive team.
(7) Consists of principal and interest forgiven under a loan made by the
Company to Mr. Conway. See "Other Transactions."
- --------------------------------------------------------------------------------
- 13 -
<PAGE>
Option Grants
The following table sets forth information with respect to individual grants of
Company and eLoyalty options that were made during Fiscal 1999 to each of the
Named Executive Officers and the potential realizable value of these options
assuming five percent and ten percent rates (see footnote (2) to the table) of
compound appreciation in the market value of Company and eLoyalty Common Stock,
as the case may be, over the term of the option grants. The table does not
reflect the adjustments and substitutions made with the respect to the options
in connection with the Spin-Off. No stock appreciation rights were granted in
Fiscal 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
====================================================================================================================================
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants(1) Option Term
====================================================================================================================================
Percent of
Total Options
Number of Granted to
Securities Employees Exercise
Underlying in Fiscal Price Expiration
Name Options Granted(#) Year ($/Sh) Date 5%($)(2) 10%($)(2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
William H. Waltrip
Technology Solutions Company 50,000(3) 2% 9.0000 6/22/09 283,003 717,184
Options
eLoyalty Corporation Options 50,000(4) 1% 3.5000 7/1/09 110,057 278,905
- ------------------------------------------------------------------------------------------------------------------------------------
John T. Kohler
Technology Solutions Company 30,000(3) 1% 9.0000 6/22/09 169,802 430,310
Options
eLoyalty Corporation Options 200,000(4)(5) 2% 3.5000 7/1/09 440,226 1,115,620
- ------------------------------------------------------------------------------------------------------------------------------------
Jack N. Hayden
Technology Solutions Company 150,000(6) 7% 6.9375 3/29/09 654,443 1,658,488
Options
eLoyalty Corporation Options 0 0% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Kelly D. Conway
Technology Solutions Company 0 0% -- -- -- --
Options
eLoyalty Corporation Options 625,000(4) 12% 3.5000 7/1/09 1,375,707 3,486,312
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy P. Dimond
Technology Solutions Company 45,000(3) 2% 9.0000 6/22/09 254,702 645,466
Options
eLoyalty Corporation Options 20,000(4) -- 3.5000 7/1/09 44,023 111,562
====================================================================================================================================
</TABLE>
- ------------------------
(1) The respective Boards of the Company and eLoyalty may, upon a sale of
substantially all of the business and assets of such company, accelerate
the exercisability of options to purchase common stock of the Company or
eLoyalty, respectively.
(2) Amounts reflect assumed rates of appreciation set forth in the Securities
and Exchange Commission's executive compensation disclosure rules. Actual
gains, if any, on stock option exercises depend on future performance of
- --------------------------------------------------------------------------------
- 14 -
<PAGE>
the Company's Common Stock or eLoyalty's common stock, as the case may be,
and overall stock market conditions. No assurance can be given that the
amounts reflected in these columns will be achieved.
(3) Subject to option provisions regarding termination of employment, one
third of these options will become exercisable on June 22, 2000 and 1/36
of these options become exercisable on the last day of each calendar month
for 24 months thereafter.
(4) Subject to option provisions regarding termination of employment, one
third of these options will become exercisable on July 1, 2001 and 1/36 of
these options become exercisable on the last day of each calendar month
for 24 months thereafter.
(5) Mr. Kohler has forfeited 75,000 of these options. See "Employment
Agreements."
(6) Subject to option provisions regarding termination of employment, one
third of these options became exercisable on March 29, 2000 and 1/36 of
these options become exercisable on the last day of each calendar month
for 24 months thereafter.
- --------------------------------------------------------------------------------
- 15 -
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values(1)
<TABLE>
<CAPTION>
====================================================================================================================================
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Dec. 31, 1999 (#) Options at Dec. 31, 1999 ($)
--------------------------------- -----------------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William H. Waltrip
Technology Solutions Company -- -- 423,625 93,750 9,985,224 1,819,661
Options
eLoyalty Corporation Options -- -- -- 50,000 -- 986,563
- ------------------------------------------------------------------------------------------------------------------------------------
John T. Kohler
Technology Solutions Company 68,750 616,316 446,875 95,625 9,929,966 1,641,054
Options
eLoyalty Corporation Options -- -- -- 125,000 -- 2,466,406
- ------------------------------------------------------------------------------------------------------------------------------------
Jack N. Hayden
Technology Solutions Company 96,000 589,315 384,125 213,125 7,996,345 4,824,336
Options
eLoyalty Corporation Options -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Kelly D. Conway
Technology Solutions Company -- -- 481,849 54,980 11,348,742 760,603
Options
eLoyalty Corporation Options -- -- -- 625,000 -- 12,332,031
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy P. Dimond
Technology Solutions Company 5,000 532 13,370 48,375 238,385 1,138,029
Options
eLoyalty Corporation Options -- -- -- 20,000 -- 394,625
====================================================================================================================================
</TABLE>
(1) All information is provided on a pre-Spin-Off basis.
Employment Agreements
The Company has entered into an employment agreement with Mr. William H. Waltrip
to serve as its Chairman of the Board of Directors. The agreement does not have
a fixed expiration date and may be terminated by either party on 90 days'
written notice. If Mr. Waltrip's employment is terminated by the Company, he
will be entitled to receive his salary and health insurance benefits for a
one-year period following the termination. If, following a change in control of
the Company, (i) Mr. Waltrip's title, position, duties or salary are diminished
and he resigns within 90 days thereafter, or (ii) his employment with the
Company is terminated following his refusal to relocate for a period in excess
of six months to any location outside of the metropolitan area where he resides,
he will be entitled to receive his salary and health insurance benefits for a
one-year period following the termination. Each of Mr. Waltrip's options to
purchase Common Stock that is not then fully exercisable will become exercisable
in full upon a change in control of the Company. If Mr. Waltrip's employment
with the Company is terminated because of his death or disability, he or his
designated beneficiary will be entitled to receive his salary and health
- --------------------------------------------------------------------------------
- 16 -
<PAGE>
insurance benefits for a one-year period following the termination. Mr.
Waltrip's current annual salary is $300,000.
Mr. Kohler's employment with the Company terminated effective February 14, 2000.
The Company has entered into a separation agreement with Mr. Kohler pursuant to
which the Company agreed to pay, subject to Mr. Kohler's compliance with certain
terms of his employment agreement, the following: (i) $1,100,000, representing
twice his annual salary, payable on February 14, 2000; and (ii) $647,000, in
lieu of on-going average bonus payments, payable on February 14, 2000. Under the
separation agreement, the Company has agreed to continue Mr. Kohler's health
insurance and short-term disability benefits until the earlier of February 14,
2002 or such time as Mr. Kohler secures other employment. Under the separation
agreement, Mr. Kohler forfeited 75,000 of 200,000 options to purchase eLoyalty
common stock previously granted to him. The separation agreement further
provides that, so long as Mr. Kohler serves as a director of eLoyalty, (i) his
options to purchase Company Common Stock (which options converted, after the
Spin-Off, into options to purchase eLoyalty common stock as described above
under "Executive Officer Compensation") and his non-forfeited options to
purchase eLoyalty common stock will continue to vest in accordance with the
vesting schedules provided in the option grant agreement and (ii) the provisions
in the option grant agreement that require the optionee to exercise vested
options within 90 days of termination of employment with the Company will not be
triggered until the effective date of Mr. Kohler's termination as a director of
eLoyalty. The separation agreement also provides that the Compensation Committee
of the Board of Directors will adopt a resolution providing that, for purposes
of the TSC Executive Deferred Compensation Plan, Mr. Kohler's service as a
director of eLoyalty will be treated as service as an Eligible Employee as
defined in such Plan. The separation agreement also provides that Mr. Kohler
will be entitled to retain possession and use of certain Company equipment
provided to him during his employment with the Company for so long as he remains
a director of eLoyalty.
Mr. Conway's employment with the Company terminated effective February 15, 2000,
when his employment agreement with the Company was assigned to, and assumed by,
eLoyalty in the Spin-Off.
The Company has entered into an employment agreement with Mr. Jack N. Hayden to
serve as its President and Chief Executive Officer. The agreement does not have
a fixed expiration date and may be terminated by either party on 90 days'
written notice. If Mr. Hayden's employment is terminated by the Company, his
unvested options will become exercisable and he will be entitled to receive his
salary, bonus and health insurance benefits for a two-year period following the
termination. Following a change in control of the Company, Mr. Hayden's unvested
options will become exercisable and, if (i) Mr. Hayden's title, position,
salary, benefits, duties or status are diminished and he resigns within 90 days
thereafter, or (ii) his employment with the Company is terminated following his
refusal to relocate for more than six months to any location outside of the
metropolitan area where he resides, he will be entitled to receive his salary,
bonus and health insurance benefits for a two-year period following the
termination. If Mr. Hayden's employment with the Company is terminated because
of his death or disability, he or his designated beneficiary will be entitled to
receive his salary, bonus and health insurance benefits for a one-year period
following the termination. Mr. Hayden's current annual salary is $480,000.
- --------------------------------------------------------------------------------
- 17 -
<PAGE>
The Company has entered into an employment agreement with Mr. Timothy P. Dimond
to serve as its Senior Vice President and Chief Financial Officer. The agreement
does not have a fixed expiration date and may be terminated by either party on
90 days' written notice. If Mr. Dimond's employment is terminated by the
Company, he will be entitled to receive his salary, bonus and health insurance
benefits for a one-year period following the termination. If, following a change
in control of the Company, (i) Mr. Dimond's title, position, duties or salary
are diminished and he resigns within 90 days thereafter, or (ii) his employment
with the Company is terminated following his refusal to permanently relocate to
any location outside of the Chicago metropolitan area, he will be entitled to
receive his salary, bonus and health insurance benefits for a one-year period
following the termination. Also upon a change in control, Mr. Dimond's unvested
options will become exercisable. If Mr. Dimond's employment with the Company is
terminated because of his death or disability, he or his designated beneficiary
will be entitled to receive his salary, bonus and health insurance benefits for
a one-year period following the termination. Mr. Dimond's current annual salary
is $260,000.
- --------------------------------------------------------------------------------
- 18 -
<PAGE>
OTHER TRANSACTIONS
On January 4, 1999, the Company extended by one year the payment date for a loan
in the amount of $600,000 made to Mr. Kohler on January 6, 1998. The loan was
payable on demand but no later than January 5, 2000, which the Company
subsequently extended to February 24, 2000, and bore interest at the rate of 5.7
percent per annum. Mr. Kohler paid the loan in full on February 24, 2000, on
which date the outstanding balance and accrued interest under the loan was
$673,640.
On November 12, 1998, the Company made a loan of $1,200,000 to Mr. Conway. The
loan was transferred to eLoyalty in the Spin-Off and has a five-year term that,
to the extent not forgiven in whole or in part as described below, is payable on
demand upon the cessation of Mr. Conway's employment with eLoyalty (as
transferee of the Company) or its affiliates. The loan bears interest at the
rate of 4.51 percent per annum, and so long as Mr. Conway remains employed by
eLoyalty or its affiliates, the principal amount of the loan (and interest
accrued thereon) has been or will be forgiven over a five-year period, as
follows: 25% of the principal amount (and accrued interest) on November 12,
1999; $25,000 in principal (and accrued interest) per month for the next twelve
months; $20,000 in principal (and accrued interest) per month for the next
twenty-four months; and $10,000 in principal (and accrued interest) per month
for the next twelve months. The outstanding balance and accrued interest under
the loan as of November 11, 1999 was $1,254,120. Mr. Conway's outstanding
balance and accrued interest as of March 12, 2000 was $800,000.
On December 15, 1999, the Company made a loan of $125,000 to Mr. Conway, payable
by him on March 1, 2000. The loan was transferred to eLoyalty in the Spin-Off.
The loan accrued interest at the rate of 5.74 percent per annum. Mr. Conway paid
eLoyalty $126,495 on February 29, 2000, representing payment in full of the
principal and accrued interest under the loan.
- --------------------------------------------------------------------------------
- 19 -
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
TSC's Compensation Philosophy
The Company recognizes that the success of a computer system design and
implementation consulting business is based on the performance of its employees
and that its employees are the Company's primary asset. With that understanding,
the Compensation Committee of the Board of Directors (the "Compensation
Committee") applies the following operating principles in its duties as
administrator of the Company's Executive Compensation program:
1. Be competitive in all aspects of the compensation program and
consistently demonstrate a willingness to pay levels of compensation
that are necessary to attract and retain highly qualified
executives.
2. Award stock options to executives in order to align management's and
stockholders' interests.
3. Provide variable compensation opportunities based on the financial
performance of the Company -- when objectives are met or exceeded,
the incentive awards can be attractive; when objectives are not met,
those rewards generally are not distributed.
4. Adhere to a compensation strategy that effectively balances short-
and long-term goals of the Company.
Compensation Policies for Executive Officers
The Compensation Committee, presently comprised of two outside board members,
makes executive compensation decisions. In making these decisions, the
Compensation Committee considers recommendations made by the Company's senior
management team. Key components of the Company's Executive Compensation program
include:
1. Base salary-- designed to compensate executives competitively within
the industry.
2. Cash bonus/stock option awards -- designed to help provide a direct
link between executive compensation and the individual's role in
helping the Company attain annual performance measures.
The Compensation Committee believes this Executive Compensation program
effectively serves the interests of both the Company and its stockholders. The
Compensation Committee also believes the program allows the Company to attract
and retain outstanding executives and motivates these executives to perform at
the highest levels.
- --------------------------------------------------------------------------------
- 20 -
<PAGE>
CEO Compensation
Mr. Kohler's compensation was substantially based on the Company's performance.
In Fiscal 1999, Mr. Kohler received a salary of $550,000 and options to purchase
30,000 shares of Company Common Stock, which converted into options to purchase
35,940 shares of eLoyalty common stock as of the Spin-Off, and options to
purchase 200,000 shares of eLoyalty common stock, which were subsequently
reduced to 125,000 as part of a separation agreement with Mr. Kohler. In lieu of
a bonus payment for Fiscal 1999, Mr. Kohler received certain payments as part of
his separation agreement. See "Employment Agreements."
The foregoing report has been furnished by the Compensation Committee.
The Compensation Committee of the Board of Directors
Raymond P. Caldiero
Michael R. Zucchini
- --------------------------------------------------------------------------------
- 21 -
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information as of March 13, 2000 concerning the
beneficial ownership of Common Stock for each Director, Named Executive Officer
and all Directors and executive officers as a group. Unless otherwise noted, the
listed persons have sole voting and investment power with respect to the shares
held in their names, subject to community property laws if applicable.
Number
of % of Total
Director Name Shares Outstanding Shares
- ------------- ------ ------------------
William H. Waltrip 441,680 (1) 1.0
Jack N. Hayden 531,317 (2) 1.2
Raymond P. Caldiero 31,500 (3) *
Stephen B. Oresman 83,962 (4) *
Michael R. Zucchini 42,427 (5) *
Named
Executive Officers
- ------------------
William H. Waltrip 441,680 (1) 1.0
John T. Kohler 100,055 *
Jack N. Hayden 531,317 (2) 1.2
Kelly D. Conway 18,509 *
Timothy P. Dimond 63,661 (6) *
All Directors and Executive
Officers as a group (9 persons) 1,520,545 (7) 3.4
- ------------------------------
* less than one percent
(1) Includes 441,680 shares which Mr. Waltrip has the right to acquire under
options which are currently exercisable or which will be exercisable
within 60 days.
(2) Includes 464,821 shares which Mr. Hayden has the right to acquire under
options which are currently exercisable or which will be exercisable
within 60 days.
(3) Includes 31,500 shares which Mr. Caldiero has the right to acquire under
options which are currently exercisable or which will be exercisable
within 60 days.
(4) Includes 57,375 shares which Mr. Oresman has the right to acquire under
options which are currently exercisable or which will be exercisable
within 60 days.
(5) Includes 34,875 shares which Mr. Zucchini has the right to acquire under
options which are currently exercisable or which will be exercisable
within 60 days. Includes 1,687 shares held by Mr. Zucchini's wife.
(6) Includes 14,954 shares which Mr. Dimond has the right to acquire under
options which are currently exercisable or which will be exercisable
within 60 days.
(7) Includes 1,049,759 shares which directors and executive officers have the
right to acquire under options which are currently exercisable or which
will be exercisable within 60 days. Includes shares beneficially owned by
Messrs. Kohler and Conway as Named Executive Officers for Fiscal 1999,
although they are not currently executive officers of the Company. See
"Employment Agreements."
- --------------------------------------------------------------------------------
- 22 -
<PAGE>
ADDITIONAL INFORMATION RELATING TO VOTING SECURITIES
The following table sets forth the holders of Common Stock known to the Company,
as of March 13, 2000, based, in part, on a review of reports on Schedule 13G
filed with the SEC, to own beneficially more than five percent of the Company's
Common Stock.
Name and Number
Address of of Shares Percent
Beneficial Owner Owned of Class(1)
-------------------------------------------- ------------- ------------
FMR Corp.
82 Devonshire Street 3,739,000 8.5%
Boston, MA 02109
GeoCapital LLC
767 Fifth Avenue, 45th Floor 3,500,000 8.0%
New York, NY 10153
Brookside Capital Partners Fund, L.P.
Two Copley Place 3,355,300 (2) 7.6%
Boston, MA 02116
Massachusetts Financial
Services Company
500 Boylston Street 3,337,960 (3) 7.6%
Boston, MA 02116-3741
- -----------------------
(1) Calculated on the basis of the actual number of outstanding shares as of
March 13, 2000 in the amount of 43,930,018.
(2) Based on the most recent report on Schedule 13G, Brookside Capital
Partners Fund, L.P. represented that it has sole voting and dispositive
power with respect to 3,355,300 shares.
(3) Based on the most recent report on Schedule 13G, Massachusetts Financial
Services Company represented that it has sole voting power with respect to
2,600,068 shares and sole dispositive power with respect to 3,337,960
shares.
- --------------------------------------------------------------------------------
- 23 -
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder return
with the S&P Computer Software and Services Index (the "S&P Computer Index") and
with The Nasdaq Stock Market(R) U.S. Index (the "Nasdaq Index") for the period
beginning May 31, 1994 and ending December 31, 1999, representing the Company's
last five full fiscal years and the transition period from June 1, 1998 through
December 31, 1998. The comparison is based on the assumption that $100 was
invested on May 31, 1994 in each of the Company's Common Stock, the S&P Computer
Index and the Nasdaq Index.
Note: The stock price performance shown below is not necessarily indicative of
future price performance.
Comparison of Total Return(1)
[Line Chart Omitted]
<TABLE>
<CAPTION>
31-May-94 31-May-95 31-May-96 31-May-97 31-May-98 31-Dec-98 31-Dec-99
<S> <C> <C> <C> <C> <C> <C> <C>
TSC 100 159.59 601.81 925.05 1,155.48 615.41 1,881.38
S&P Computer Index 100 140.62 196.64 328.87 426.74 620.94 1,163.88
Nasdaq Index 100 118.96 172.91 194.80 247.53 309.41 553.50
</TABLE>
- ---------------
(1) Total return assumes reinvestment of dividends.
- --------------------------------------------------------------------------------
- 24 -
<PAGE>
STOCKHOLDER PROPOSALS
In order for a stockholder proposal or nomination to be properly presented at
the Company's 2001 Annual Meeting of Stockholders (the "2001 Annual Meeting"),
the stockholder proponent must comply with the relevant notice requirements
contained in the Company's By-laws. These requirements relate to both the timing
and content of the notice. To be timely, a stockholder proposal or nomination
intended to be brought before the 2001 Annual Meeting must be received by the
Company on or after December 28, 2000 and on or prior to January 27, 2001. All
proposals and nominations should be directed to the Secretary of the Company.
In addition, any stockholder proposal that is intended to be included in the
Company's Proxy Statement for the 2001 Annual Meeting must comply with certain
rules and regulations promulgated by the Securities and Exchange Commission. The
deadline for submitting any such proposal to the Company for inclusion in its
Proxy Statement for the 2001 Annual Meeting is December 1, 2000.
If a stockholder proposal is properly presented at the 2001 Annual Meeting in
accordance with the requirements described above and is not included as an
agenda item in the Company's Proxy Statement for that meeting, the designated
proxy holders will be permitted to exercise discretionary voting authority with
respect to that proposal if, in the Proxy Statement, the Company advises
stockholders of the nature of the proposal and how the proxy holders intend to
vote. Nevertheless, the proxy holders will not have discretionary voting
authority if the stockholder proponent satisfies certain requirements of the
Securities and Exchange Commission, including the mailing of a separate proxy
statement to stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's officers and directors, and persons who own more
than 10 percent of a registered class of the Company's equity securities
("Reporting Persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Reporting Persons are required by
Securities and Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of such reports
and written representations from certain Reporting Persons, the Company has
determined that all Reporting Persons complied with all filing requirements
applicable to them in Fiscal 1999, except that Mr. John Kohler filed one Form 4,
which disclosed one transaction, within 30 days after the required filing date.
- --------------------------------------------------------------------------------
- 25 -
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's Annual Report on Form 10-K for Fiscal 1999, without
exhibits, accompanies this Proxy Statement. Financial inquiries should be
directed to Timothy P. Dimond, Senior Vice President and Chief Financial
Officer, Technology Solutions Company, 205 North Michigan Avenue, Suite 1500,
Chicago, Illinois 60601. Telephone (312) 228-4500.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the Annual
Meeting, but if any other matters should properly come before the Annual
Meeting, it is intended that the persons named in the accompanying proxy card
will vote on such matters in accordance with their best judgment.
OTHER INFORMATION
STOCK LISTING
The Nasdaq Stock Market(R)
STOCK SYMBOL
TSCC
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services L.L.C.
111 Founders Plaza
11th Floor
East Hartford, CT 06108
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Chicago, IL
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EXHIBIT A
TECHNOLOGY SOLUTIONS COMPANY
1995 EMPLOYEE STOCK PURCHASE PLAN
(as amended and restated as of March 24, 2000, subject to stockholder approval)
1. Purpose. The purpose of the Technology Solutions Company 1995 Employee Stock
Purchase Plan (the "Plan") is to provide employees of Technology Solutions
Company, a Delaware corporation (the "Company"), and its Subsidiary Companies
(as defined in Section 15) added incentive to remain employed by such companies
and to encourage increased efforts to promote the best interests of such
companies by permitting eligible employees to purchase shares of the common
stock, par value $.01, of the Company ("Common Stock") at below-market prices.
The Plan is intended to qualify as an "employee stock purchase plan" under
section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
Company and its Subsidiary Companies are sometimes hereinafter called
individually a "Participating Company" or collectively the "Participating
Companies."
2. Eligibility. Participation in the Plan shall be open to each employee of the
Participating Companies (a) who has been continuously employed by the
Participating Companies for at least three months, (b) whose customary
employment by the Participating Companies is greater than 20 hours per week; and
(c) whose customary employment by the Participating Companies is more than 5
months in any calendar year (each an "Eligible Employee"). No right to purchase
Common Stock hereunder shall accrue under the Plan in favor of any person who is
not an Eligible Employee as of the first day of a Purchase Period (as defined in
Section 3). Notwithstanding anything contained in the Plan to the contrary, no
Eligible Employee shall acquire a right to purchase Common Stock hereunder (i)
if, immediately after receiving such right, such employee would own 5% or more
of the total combined voting power or value of all classes of stock of the
Company or any Subsidiary Company (including any stock attributable to such
employee under section 424(d) of the Code), or (ii) if for a given calendar year
such right would permit such employee's aggregate rights to purchase Common
Stock under all employee stock purchase plans of the Company and its Subsidiary
Companies (which aggregate rights are exercisable during such calendar year) to
accrue at a rate which exceeds $25,000 of fair market value of such Common Stock
for such calendar year, all determined in the manner provided by section
423(b)(8) of the Code and the rules and regulations thereunder. In addition, the
number of shares of Common Stock which may be purchased by any Eligible Employee
during any Purchase Period shall not exceed 1,500, subject to adjustment
pursuant to Section 14.
3. Effective Date of Plan. The Plan shall become effective on October 1, 1995,
or on such later date (the "Effective Date") as may be specified by the Board of
Directors (the "Board") of the Company or the Committee (as defined in Section
12). The Plan shall cease to be effective unless, within 12 months before or
after the date of its adoption by the Board, it has been approved by the
stockholders of the Company in accordance with the General Corporation Law of
the State of Delaware.
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4. Purchase Periods. The first "Purchase Period" shall be for a three month
period beginning on October 1, 1995 and ending on January 31, 1996, and shall be
followed thereafter by successive three-month Purchase Periods, each of which
shall begin on the first business day following the end of the last Purchase
Period and end on the last business day of the third month thereafter. In the
event of a pro rata distribution by the Company to its stockholders of all of
the shares of the common stock of eLoyalty Corporation then owned by the Company
(a "Spin-Off"), the Purchase Period then in effect under the Plan shall end as
of the business day immediately preceding the record date of the Spin-Off. The
amounts credited to the Purchase Accounts of all Participants as of such date
shall be applied to purchase shares of Common Stock in accordance with Section 5
of the Plan, and such shares shall be considered issued and outstanding for
purposes of the Spin-Off. Thereafter, a new Purchase Period shall begin on the
first business day after the record date of the Spin-Off (the "Record Date") and
end on the last business day of the calendar quarter in which the Record Date
occurs (or on the last business day of the first calendar quarter beginning
after the Record Date, if so determined by the Committee prior to the Record
Date in its sole discretion). Such Purchase Period shall be followed by
successive three-month Purchase Periods, each of which shall begin on the first
business day of the following calendar quarter and end on the last business day
of such calendar quarter.
5. Basis of Participation.
(a) Each Eligible Employee shall be entitled to enroll in the Plan as of
the first day of any Purchase Period which begins on or after such employee
becomes an Eligible Employee and shall be considered a Participant in the Plan
thereafter ("Participant").
(i) To enroll in the Plan, an Eligible Employee shall execute and
deliver a payroll deduction authorization (the "Authorization") to the
Participating Company which is the employee's employer, or its designated
agent, in the time and manner specified by the Committee. The
Authorization shall become effective on the first day of the Purchase
Period commencing after the execution and delivery of such Authorization.
Each Authorization shall direct that payroll deductions be made by the
Participating Company which is the employee's employer for each payroll
period during which the employee is a Participant in the Plan. The amount
of each payroll deduction specified in an Authorization for each such
payroll period shall be a whole percentage amount or a whole dollar
amount, as determined by the Committee, in either case not to exceed 15%,
or such lesser percentage as may be determined by the Committee, of the
Participant's current regular wage or salary (before withholding or other
deductions) paid to him or her by any of the Participating Companies.
(ii) Payroll deductions (and any other amount paid under the Plan)
shall be made for each Participant in accordance with his or her or her
Authorization until his or her or her participation in the Plan terminates
or the Plan terminates, all as hereinafter provided. Payroll deductions
(and any other amount paid under the Plan) shall continue in accordance
with such Authorization notwithstanding any transfer of employment between
Participating Companies.
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(iii) A Participant may change the amount of his or her payroll
deduction by filing a new Authorization with the Company or its designed
agent, which shall become effective on the first day of the Purchase
Period commencing after the execution and delivery of such Authorization.
No other changes shall be permitted, except that a Participant may elect
to terminate his or her participation in the Plan as provided in Section
8.
(iv) Payroll deductions shall be credited to a purchase account
established on the books of the Company on behalf of each Participant (a
"Purchase Account"). At the end of each Purchase Period, the amount in
each Participant's Purchase Account will be applied to the purchase from
the Company of the number of shares of Common Stock determined by dividing
such amount by the Purchase Price (as defined in Section 6) for such
Purchase Period.
(b) The Committee may, in its discretion, establish additional procedures
whereby Eligible Employees may participate in the Plan by means other than
payroll deduction, including, but not limited to, delivery of funds by
Participants in a lump sum or automatic charges to Participants' bank accounts.
Such other methods of participating shall be subject to such rules and
conditions as the Committee may establish. The Committee may at any time amend,
suspend to terminate any participation procedures established pursuant to this
paragraph without prior notice to any Participant or Eligible Employee.
6. Purchase Price. The purchase price (the "Purchase Price") per share of Common
Stock hereunder for any Purchase Period shall be 85% of the lesser of (i) the
fair market value of a share of Common Stock on the first day of such Purchase
Period and (ii) the fair market value of a share of Common Stock on the last day
of such Purchase Period, unless, prior to the beginning of such Purchase Period,
the Committee shall determine otherwise (subject to the limitations contained in
clause (iii) of Section 9(c)). If such determination results in a fraction of
one cent, the Purchase Price shall be increased to the next higher full cent.
The fair market value of a share of Common Stock on a given day shall be the
average of the high and low transaction prices of a share of Common Stock as
reported on The Nasdaq Stock Market on the date as to which such value is being
determined or, if there shall be no reported transactions on such date, on the
next preceding date for which transactions were reported. In no event, however,
shall the Purchase Price be less than the par value of the Common Stock.
7. Issuance of Shares.
(a) The Common stock purchased by each Participant shall be considered to
be issued and outstanding to his or her credit as of the close of business on
the last day of each Purchase Period. The total number of shares of Common Stock
purchased by all Participants during each Purchase Period shall be issued, as of
the last day in such Purchase Period, to a nominee or agent for the benefit of
the Participants. A Participant will be issued a certificate for his or her
shares upon the request of the Participant in accordance with the procedures
established by the Company.
(b) No interest shall accrue at any time for any amount credited to a
Purchase Account of a Participant. After the close of each Purchase Period, a
report will be sent to
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each Participant stating the entries made to his or her Purchase Account, the
number of shares of Common Stock purchased and the applicable Purchase Price.
8. Termination of Participation.
(a) A Participant may elect at any time to terminate his or her
participation in the Plan, provided such termination is received by the Company
in writing prior to the last business day of the Purchase Period for which such
termination is to be effective. Upon any such termination, the Company shall
promptly deliver to such Participant cash in an amount equal to the balance to
his or her credit in his or her Purchase Account on the date of such
termination. At any time after such termination, the Participant may request the
delivery to such Participant of one or more certificates for the number of whole
shares of Common Stock held for his or her benefit, and the cash equivalent for
any fractional share so held. Such cash equivalent shall be determined by
multiplying the fractional share by the fair market value of a share of Common
Stock on the last day of the Purchase Period immediately preceding such
termination, determined as provided in Section 6.
(b) If the Participant dies, terminates his or her employment with the
Participating Companies for any reason, or otherwise ceases to be an Eligible
Employee (including, without limitation, as a result of a Participating Company
ceasing to be a Subsidiary Company), his or her participation in the Plan shall
immediately terminate. Upon such terminating event, the Company shall promptly
deliver to such Participant or his or her legal representative, as the case may
be, cash in an amount equal to the balance to his or her credit in his or her
Purchase Account on the date of such termination.
9. Termination or Amendment of the Plan.
(a) The Company, by action of the Board or the Committee, may terminate
the Plan at any time. Notice of termination shall be given to all Participants,
but any failure to give such notice shall not impair the effectiveness of the
termination.
(b) Without any action being required, the Plan will terminate in any
event when the maximum number of shares of Common Stock to be sold under the
Plan (as provided in Section 13) has been purchased. Such termination shall not
impair any rights which under the Plan shall have vested on or prior to the date
of such termination. If at any time the number of shares remaining available for
purchase under the Plan are not sufficient to satisfy all then-outstanding
purchase rights, the Board may determine an equitable basis of apportioning
available shares among all Participants consistent with Section 423 of the Code.
(c) The Board or the Committee may amend the Plan from time to time in any
respect for any reason; provided, however, no such amendment shall (i)
materially adversely affect any purchase rights outstanding under the Plan
during the Purchase Period in which such amendment is to be effected, (ii)
unless approved by the stockholders of the Company, increase the maximum number
of shares of Common Stock which may be purchased under the Plan (iii) decrease
the Purchase Price of the shares of Common Stock for any Purchase Period below
the lesser of 85% of the fair market value thereof on the first day of such
Purchase Period and 85% of the fair market value thereof on the last day of such
Purchase Period, (iv) unless approved by the stockholders of the
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Company, change the class of employees eligible to participate in the Plan or
(v) adversely affect the qualification of the Plan under Section 423 of the
Code.
(d) Upon termination of the Plan, the respective cash balance, if any, to
the credit of each Participant in his or her Purchase Account, one or more
certificates for the number of whole shares of Common Stock held for his or her
benefit, and the cash equivalent of any fractional shares so held, determined as
provided in Section 8(a), shall be promptly distributed to such Participant.
10. Non-Transferability. Rights acquired under the Plan are not transferable and
may be exercised only by a Participant.
11. Stockholder's Rights. No Eligible Employee or Participant shall by reason of
the Plan have any rights of a stockholder of the Company until and to the extent
he or she shall acquire shares of Common Stock as herein provided.
12. Administration of the Plan.
(a) The Plan shall be administered by the Compensation Committee of the
Board (the "Committee"), provided that the Board may otherwise appoint (i) the
entire Board or (ii) a committee consisting of two or more members of the Board,
to act as the Committee. In addition to the power to amend or terminate the Plan
pursuant to Section 9, the Committee shall have full power and authority to: (A)
interpret and administer the Plan and any instrument or agreement entered into
under the Plan; (B) establish such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and (C)
make any other determination and take any other action that the Committee deems
necessary or desirable for administration of the Plan. Decisions of the
Committee shall be final, conclusive and binding upon all persons, including the
Company, any Participant and any other employee of the Company. A majority of
the members of the Committee may determine its actions and fix the time and
place of its meetings.
(b) The Plan shall be administered so as to ensure all Participants have
the same rights and privileges as required by section 423(b)(5) of the Code.
13. Maximum Number of Shares. The maximum number of shares of Common Stock which
may be purchased under the Plan is 3,687,500, subject, however, to adjustment as
hereinafter set forth. If the Company shall, at any time after the Effective
Date, change its issued Common Stock into an increased number of shares through
a stock dividend or a split-up of shares, or into a decreased number of shares
through a combination of shares, then, effective with the record date for such
change, the maximum number of shares of Common Stock which thereafter may be
purchased under the Plan shall be the maximum number of shares of Common Stock
which, immediately prior to such record date, remained available for purchase
under the Plan proportionately increased, in case of such stock dividend or
split-up, or proportionately decreased in cash of such combination of shares.
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14. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the maximum number and class of securities which may purchased under
this Plan, the maximum number and class of securities that may be purchased by
any Eligible Employee during any Purchase Period, and the purchase price per
security shall be appropriately adjusted by the Committee. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being available
under this Plan, such fractional security shall be disregarded.
15. Miscellaneous.
(a) Except as otherwise expressly provided herein, any Authorization,
election, notice or document under the Plan from an Eligible Employee or
Participant shall be delivered to the Company, the Participating Company that is
the employer of such Eligible Employee, or their designated agents and, subject
to any limitations specified in the Plan, shall be effective when so delivered.
(b) The term "business day" shall mean any day other than Saturday, Sunday
or a legal holiday recognized by the Participating Corporation for which the
Participant is employed.
(c) The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(d) The term "Subsidiary Companies" shall mean all corporations which are,
or become, after the Effective Date, subsidiary corporations (within the meaning
of Section 424(f) of the Code) and of which the Company is the common parent.
(e) The Plan, and the Company's obligation to sell and deliver Common
Stock hereunder, shall be subject to all applicable federal, state and foreign
laws, rules and regulations, and to such approval by any regulatory or
governmental agency as may, in the opinion of counsel for the Company, be
required.
16. Change in Control.
(a) In order to maintain the Participants' rights in the event of any
Change in Control of the Company, as hereinafter defined, upon such Change in
Control, the then current Purchase Period shall thereupon end, and all
Participants' Purchase Accounts shall be applied to purchase shares of Common
Stock pursuant to Section 6, and the Plan shall immediately thereafter
terminate.
(b) "Change in Control" for the purposes hereof means the occurrence of
any of the following events:
(i) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act, of beneficial ownership within the meaning of Rule
13d-3
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promulgated under the Exchange Act, of 35% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities");
excluding, however, the following: (1) any acquisition directly from the
Company (excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege, unless the security being so
exercised, converted or exchanged was acquired directly from the Company);
(2) any acquisition by the Company; (3) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company or
any Subsidiary Corporation; or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 16(b); provided further, that for
purposes of clause (2) above, if any Person (other than the Company or any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company) shall become the
beneficial owner of 35% or more of the Outstanding Company Common Stock or
35% or more of the Outstanding Company Voting Securities by reason of an
acquisition by the Company, and such Person shall, after such acquisition
by the Company, become the beneficial owner of any additional shares of
the Outstanding Company Common Stock or any additional Outstanding Company
Voting Securities and such beneficial ownership is publicly announced,
such additional beneficial ownership shall constitute a Change in Control;
(ii) individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided that any individual who becomes a
director of the Company subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by the
vote of at least a majority of the directors then comprising the Incumbent
Board, shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a director of
the Company as a result of an actual or threatened election contest, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board, shall not be
deemed a member of the Incumbent Board;
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which (A) all or substantially all of the individuals or entities who are
the beneficial owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or indirectly,
more than 60% of, respectively, the outstanding shares of common stock and
the combined voting power of the outstanding securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which, as a result of such transaction, owns the
Company
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or all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each other
as their ownership, immediately prior to such Corporate Transaction, of
the Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be (B) no Person (other than the Company, any
employee benefit plan (or related trust) sponsored or maintained by the
Company or a Subsidiary Corporation, the corporation resulting form such
Corporate Transaction, and any Person who beneficially owned, immediately
prior to such Corporate Transaction, directly or indirectly, 35% or more
of the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) will beneficially own, directly or
indirectly, 35% or more of, respectively, the outstanding shares of common
stock or the combined voting power of the outstanding securities entitled
to vote generally in the election of directors of the corporation
resulting from such Corporate Transaction and (C) individuals who were
members of the Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transactions; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
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PROXY
TECHNOLOGY SOLUTIONS COMPANY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 27, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Technology Solutions Company (the "Company")
does hereby acknowledge receipt of Notice of said Annual Meeting and the
accompanying Proxy Statement, and does hereby constitute and appoint William H.
Waltrip and Jack N. Hayden or either of them, with full power of substitution,
to vote all shares of stock of the Company that the undersigned is entitled to
vote, as fully as the undersigned could do if personally present, at the Annual
Meeting of Stockholders of the Company to be held on April 27, 2000 at 10:00
a.m., local time, at the offices of Bank One Corporation, 1 Bank One Plaza,
Chicago, Illinois, and at any adjournment thereof, as indicated on the reverse
side.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN AND, IN THE
ABSENCE OF SUCH INSTRUCTIONS, WILL BE VOTED FOR THE NOMINEE LISTED ON THE
REVERSE SIDE AND IN FAVOR OF PROPOSALS 2 AND 3. IF OTHER BUSINESS IS PRESENTED
AT THE MEETING, THIS PROXY WILL BE VOTED ON THOSE MATTERS IN ACCORDANCE WITH THE
BEST JUDGMENT OF THE NAMED PROXIES.
(Please date and sign on reverse side)
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. FOLD AND DETACH HERE .
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This Proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this Proxy will be voted for
the nominee in Proposal 1, for the proposal to approve the amendment to the
Technology Solutions Company 1995 Employee Stock Purchase Plan, and for the
proposal to ratify the appointment of PricewaterhouseCoopers LLP. Please mark
Box [.] or [x]
1. The election of the Class III Director
FOR the listed nominee WITHHOLD AUTHORITY for the listed nominee
[ ] [ ]
INSTRUCTIONS. To withhold authority to vote for the nominee, strike the
nominee's name.
Nominee: William H. Waltrip
2. Proposal to approve the amendment to the Technology Solutions Company 1995
Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for the fiscal year ending
December 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. As such proxies may in their discretion determine upon such other matters as
may properly come before the meeting.
When signing the proxy, please take care to have the signature conform to the
stockholder's name as it appears on this side of the proxy. If shares are
registered in the names of two or more persons, each person should sign.
Executors, administrators, trustees and guardians should so indicate when
signing. Corporations and partnerships should sign in their full corporate or
partnership names by a duly authorized person.
Signature Signature Date
---------------------- ---------------------- ------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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. FOLD AND DETACH HERE .
YOUR ARE URGED TO MARK, SIGN, DATE AND RETURN YOUR PROXY WITHOUT DELAY IN THE
RETURN ENVELOPE PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
