<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
SIGNAL TECHNOLOGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
<PAGE>
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
SIGNAL TECHNOLOGY CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2000-9:00 A.M.
You are hereby notified that the Annual Meeting of Stockholders of Signal
Technology Corporation will be held on May 16, 2000, at 9:00 a.m., at the
offices of Bingham Dana LLP, 16th Floor, 150 Federal Street, Boston,
Massachusetts, to consider and act upon the following matters:
1. To elect one class of two directors;
2. To ratify the action of the directors in amending the 1992 Equity
Incentive Plan to increase the number of shares of Common Stock reserved
for issuance thereunder from 1,666,666 to 2,266,666;
3. To transact such other business as may properly come before the meeting.
If you are unable to attend the meeting personally, please be sure to date,
sign and return the enclosed proxy in the envelope provided to: Proxy
Department, BankBoston, N.A., c/o EquiServe Limited Partnership, P.O. Box 8040,
Boston, Massachusetts 02266-8040.
Only stockholders of record on the books of the Company at the close of
business on March 17, 2000 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
ROGER D. FELDMAN,
SECRETARY
Dated: April 12, 1999
<PAGE>
SIGNAL TECHNOLOGY CORPORATION
EXECUTIVE OFFICES:
222 ROSEWOOD DRIVE
NORTHWOODS BUSINESS PARK
DANVERS, MA 01923
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being mailed to
stockholders commencing on or about April 12, 2000. The accompanying proxy is
solicited by the Board of Directors of Signal Technology Corporation
(hereinafter called the "Company") for use at the Annual Meeting of Stockholders
to be held on May 16, 2000, and any adjournment or adjournments thereof. The
cost of soliciting proxies will be borne by the Company. Directors, officers and
a few employees may assist in the solicitation of proxies by mail, telephone,
telegraph and personal interview without additional compensation.
When a proxy is returned properly signed, the shares represented thereby
will be voted by the persons named as proxies in accordance with the
stockholder's directions. You are urged to specify your choices on the enclosed
proxy card. If a proxy is signed and returned without specifying choices, the
shares will be voted "FOR" proposals 1 and 2 and at the discretion of the
persons named as proxies in the manner they believe to be in the best interests
of the Company as to other matters that may properly come before the meeting. A
stockholder giving a proxy may revoke it at any time before it is voted at the
meeting by written notice to the Company, by oral notice to the Secretary at the
meeting or by submitting a later dated proxy.
The Board of Directors has fixed the close of business on March 17, 2000 as
the record date for the meeting. Only stockholders of record on the record date
are entitled to notice of and to vote at the meeting. On the record date, there
were 7,770,096 shares of the Company's Common Stock, $.01 par value ("Common
Stock"), issued and outstanding, each of which is entitled to one vote. The
holders of Common Stock do not have cumulative voting rights.
QUORUM AND VOTING
The presence in person or by proxy at the annual meeting of holders of one
third (1/3) of the Common Stock issued and outstanding is required for a quorum.
Therefore, holders of not fewer than 2,590,032 shares of Common Stock must be
present in person or by proxy for there to be a quorum. Shares represented by
all proxies received, including proxies that withhold authority for the election
of directors and/or abstain from voting on the ratification of the amendment to
the 1992 Equity Incentive Plan, as well as "broker non-votes," discussed below,
count toward establishing the presence of a quorum.
Assuming the presence of a quorum, directors of the Company are elected by
plurality vote of the shares of Common Stock present in person or by proxy and
voting in the election of directors. Shares may be voted for or withheld from
each nominee for election as a director. Shares for which the vote is withheld
and "broker non-votes" will be excluded entirely and have no effect on the
election of directors of the Company.
Under applicable rules, brokers who hold shares of the Company's Common
Stock in street name have the authority to vote the shares in the broker's
discretion on "routine" matters if they have not received specific instructions
from the beneficial owner of the shares. The uncontested election of directors
is a "routine" matter for this purpose. With respect to matters which are
determined by the appropriate broker-dealer regulatory organization to be
"non-routine," which includes Item 2 on the agenda for this meeting of the
Company's stockholders, brokers may not vote shares held in street name without
specific instructions from the beneficial owner. If a broker holding shares in
street name submits a proxy card on which the broker physically lines out the
matter, that action is called a "broker non-vote" as to that matter. "Broker
non-votes" are not counted in determining the number of votes cast with respect
to the matter. If a broker submits a proxy but does not indicate a specific
choice on a "routine" matter, the shares will be voted as specified in the proxy
card. At this meeting of the Company's stockholders, shares represented by such
a proxy card would be voted for the election of the director nominees.
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The By-laws of the Company permit a seven member Board of Directors, divided
into three classes, as nearly equal in number as may be. The terms of each class
are staggered so that the term of each class expires on the third anniversary of
the annual meeting of the stockholders at which such class was elected.
Accordingly, the term of one class of directors expires at each annual meeting
of stockholders.
The term of one class of directors, currently consisting of George E.
Lombard and Thomas G. McInerney expires at the 2000 annual meeting. Unless
otherwise instructed in the proxy, all proxies will be voted to elect
Messrs. Lombard and McInerney to a three-year term expiring at the 2003 annual
meeting, with each such director to hold office until his successor has been
duly elected and qualified. Messrs. Lombard and McInerney are currently members
of the Board of Directors and are standing for re-election. The Company does not
contemplate that either of Messrs. Lombard or McInerney will be unable to serve,
but in that event proxies solicited hereby will be voted for the election of
another person or persons to be designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' THE ELECTION OF MESSRS.
LOMBARD AND MCINERNEY.
As described at the beginning of this proxy statement, directors are elected
by a plurality of the votes cast at a meeting at which a quorum is present.
The following table and narrative sets forth information regarding the
principal occupation, other affiliations, committee memberships and age of the
nominees and directors of the Company continuing in office.
<TABLE>
<CAPTION>
TERM AS A
NAME AGE POSITION WITH COMPANY DIRECTOR ENDS
- ---- -------- ------------------------------------ -------------
<S> <C> <C> <C>
Nominees for Election
George E. Lombard(1).............. 59 Chairman of the Board and Chief 2000
Executive Officer
Thomas G. McInerney(3)............ 63 Director 2000
Directors Continuing in Office
Bernard P. O'Sullivan(1)(3)....... 72 Director 2001
Joseph Schneider(2)............... 49 Director 2001
Larry L. Hansen(2)(3)............. 71 Director 2002
Harvey C. Krentzman(1)(2)(3)...... 73 Director 2002
Thomas F. Skelly(2)............... 66 Director 2002
</TABLE>
- ------------------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Larry L. Hansen, Director since 1991. Mr. Hansen was Executive Vice
President of Tylan General (a sales and service center for pressure and flow
products) from December 1989 until his retirement in January 1991. He is a
director of Electro Scientific Industries, Inc. and Micrel, Inc.
Harvey C. Krentzman, Director since 1981. Mr. Krentzman is a founder of the
Company. He has been President of Advanced Management Associates Inc. (financial
and management consultants) for more than 40 years. Mr. Krentzman is the Vice
Chairman of the board of trustees of the Boston Symphony Orchestra and
Northeastern University, a trustee of Beth Israel Deaconess, the Norman Rockwell
2
<PAGE>
Museum and the U.S.S. Constitution Museum, and is an honorary trustee of the
Woods Hole Oceanographic Institution. Mr. Krentzman serves on the boards of
directors of Jones & Vining, Inc., Arley Corporation, Bell Manufacturing
Corporation and Inspectron Corporation.
Thomas F. Skelly, Director since 1999. Prior to joining the Company,
Mr. Skelly worked at The Gillette Company for 30 years, the last 17 of which he
served as Senior Vice President of Finance and Chief Financial Officer.
Mr. Skelly is a certified public accountant.
George E. Lombard, Chairman of the Board of Directors and Chief Executive
Officer since 1998. In addition, Mr. Lombard served as the Company's President
until March 1999. From 1995 to 1998, Mr. Lombard served as President of L-3
Communications Corporation's Display Systems Division. Prior to that he was a
Vice President of Unisys. Including successor corporations, Mr. Lombard's career
includes 26 years with the Lockheed Corporation where he held several key
management positions.
Thomas G. McInerney, Director since 1999. General McInerney is President of
TG McInerney Consulting. From 1996 to 2000, he was President and Chief Executive
Officer of Business Executives for National Security (BENS). From 1994 to 1996,
he was Vice President, Command and Control C(4)1 Programs for Loral Defense
Systems-Eagan (formerly Unisys Electronic Systems division). In July 1994, as
the Assistant Vice Chief of Staff of the Air Force, General McInerney retired
with the rank of Lieutenant General following a 35 year military career. General
McInerney also serves on the boards of directors of Armed Forces Bank, Worldwide
Flight Services, Pan Am International Flight Academy, and Alloy Surfaces
Company.
Bernard P. O'Sullivan, Chairman of the Board from May 1990 until March 31,
1994 and Director since 1981; Mr. O'Sullivan is a founder of the Company. Prior
to his retirement on May 31, 1987, he was President of O'Sullivan and
Murphy, Inc. (a manufacturers' representative selling microwave components), a
company he founded in May 1975.
Joseph Schneider, Director since 1996. Mr. Schneider is President of JSA
Partners, Inc., a strategic management consulting firm that specializes in the
aerospace and defense industry and JSA Holdings, Inc. Prior to founding JSA
Partners, Inc. in 1997, Mr. Schneider was a consultant with A.T. Kearney, Inc,
and before that he was the President of EDS/JSA International after his prior
company, JSA International, Inc., was acquired by Electronic Data Systems
Corporation in August 1994. Prior thereto, Mr. Schneider was the founder and
President of JSA International, Inc. from December 1981 until August 1994.
Mr. Schneider serves on the board of directors of United Industrial Corporation
and is the Chairman of JSA Research, Inc. From 1972 to 1977, Mr. Schneider
served as an infantry officer primarily in the United States Army Airborne and
Special Forces units.
INFORMATION ABOUT BOARD OF DIRECTORS AND COMMITTEES
MEETINGS
The Company's Board of Directors held nine meetings during fiscal year 1999.
The Board has standing executive, audit and compensation committees; there is no
nominating committee. All directors attended more than 75% of all meetings of
the Board and of the committees of which they were members.
EXECUTIVE COMMITTEE
The Executive Committee consists of three members and is reconstituted
annually at the first meeting of the Board of Directors following the Annual
Meeting of Stockholders. The current members of the Committee are
Messrs. Bernard P. O'Sullivan (Chairman), Harvey C. Krentzman and George E.
Lombard. The Executive Committee is authorized to act on behalf of the Board of
Directors when the Board of Directors is not in session. The Executive Committee
held no meetings in fiscal year 1999.
3
<PAGE>
AUDIT COMMITTEE
The Audit Committee consists of four members. The Audit Committee is
reconstituted annually at the first meeting of the Board following the Annual
Meeting of Stockholders. The current members of the Committee are Messrs. Larry
L. Hansen, Harvey C. Krentzman, Joseph Schneider and Thomas F. Skelly
(Chairman). The Audit Committee meets with the Company's auditors and principal
financial personnel to review quarterly financial results and the results of the
annual audit. The Audit Committee also reviews the scope of, and establishes
fees for, audit and non-audit services performed by the independent accountants,
reviews the independence of the independent accountants and the adequacy and
effectiveness of the Company's internal accounting controls. The Audit Committee
held two meetings in fiscal year 1999.
COMPENSATION COMMITTEE
The Compensation Committee establishes the compensation and other incentive
arrangements of each officer of the Company whose base salary is $125,000 or
more. The Compensation Committee consists of four members, currently
Messrs. Harvey C. Krentzman (Chairman), Bernard P. O'Sullivan, Larry L. Hansen
and Thomas G. McInerney, and is reconstituted annually at the first meeting of
the Board following the Annual Meeting of Stockholders. The Compensation
Committee held two meetings in fiscal year 1999.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual fee of
$17,500 for serving on the Board, a fee of $800 for each Board meeting attended
in excess of the sixth meeting within any fiscal year of the Company, and $500
for each committee meeting attended which is not held in conjunction with a
meeting of the Board of Directors, plus reimbursement of out-of-pocket expenses
for attendance at each Board or committee meeting.
During 1999, the Company paid consulting fees of $17,500 and $6,000,
respectively, to Bernard P. O'Sullivan, and Joseph Schneider, both of whom are
directors of the Company. Mr. O'Sullivan provided services to the company in
connection with marketing activities, and Mr. Schneider provided services to the
company in connection with mergers and acquisitions. During 1999, the Company
paid $60,000 to Advanced Management Associates Inc. ("AMA"), for management
consulting services provided by Harvey C. Krentzman, a director of the Company
and the President and principal owner of AMA. The directors are required to
account for their time spent in performing services for the Company. The Company
believes these fees are comparable to fees that would be charged by unrelated
third parties providing similar services.
APPROVAL OF AN AMENDMENT TO
THE COMPANY'S 1992 EQUITY INCENTIVE PLAN
(ITEM 2 ON PROXY CARD)
On December 15, 1999, the Board of Directors increased the number of shares
of Common Stock reserved for issuance under the Company's 1992 Equity Incentive
Plan (the "Equity Incentive Plan") to 2,266,666 from 1,666,666 previously
authorized. The Company, through the granting of stock options (both incentive
and nonstatutory), stock appreciation rights, performance shares, restricted
stock or stock units, provides incentives to the key employees of, and persons
who provide services to, the Company by enabling them to acquire or increase
their proprietary interest in the Company.
SUMMARY DESCRIPTION OF THE 1992 EQUITY INCENTIVE PLAN
The Equity Incentive Plan is administered by the Compensation Committee.
Subject to the terms of the Equity Incentive Plan, the Compensation Committee
has complete authority to designate persons to receive awards, to grant the
awards, to determine the form of the awards and to fix all terms of any awards
4
<PAGE>
granted. Incentive stock options (which are intended to meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")) may
be granted only to employees of the Company and must have an exercise price of
not less than 100% of the fair market value of the Company's Common Stock on the
date of grant (110% for incentive stock options granted to any 10% stockholder
of the Company). The aggregate exercise price of the shares of Common Stock as
to which an incentive stock option becomes exercisable in any year may not
exceed $100,000. The term of an incentive stock option may not exceed ten years
(five years in the case of an incentive stock option granted to any 10%
stockholder of the Company). Nonstatutory stock options and other stock awards
may be granted on such terms (as to date of grant, vesting, number of shares,
exercise price (in the case of nonstatutory options), purchase price,
restrictions on transfer, forfeiture and other provisions) as the Compensation
Committee may determine, subject to the terms of the Equity Incentive Plan. The
Equity Incentive Plan may be suspended or discontinued by the Board and may be
amended by the Board, except that the stockholders of the Company must approve
any amendment if such approval is required to comply with any applicable tax or
regulatory requirement.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND THE PARTICIPANTS
NONSTATUTORY OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK AND STOCK
UNITS. There are no Federal income tax consequences to the Company or the
participants upon grant of nonstatutory options, stock appreciation rights,
restricted stock and stock units. Upon the exercise of such an award (or other
realization event, such as the lapse of a forfeiture restriction), (i) the
participant will recognize ordinary income in an amount equal to the amount by
which the fair market value of the Common Stock acquired upon the exercise of
such award exceeds the exercise price, if any, and (ii) the Company will receive
a corresponding deduction. A sale of Common Stock so acquired will give rise to
a capital gain equal to the difference between the fair market value of the
Common Stock on the exercise and sale dates.
INCENTIVE STOCK OPTIONS. Except as noted at the end of this paragraph,
there are no Federal income tax consequences to the Company or the participant
upon grant or exercise of an incentive stock option. If the participant holds
shares of Common Stock purchased pursuant to the exercise of an incentive stock
option for at least two years after the date the option was granted and at least
one year after the exercise of the option, the subsequent sale of Common Stock
will give rise to a long-term capital gain or loss to the participant and no
deduction will be available to the Company. If the participant sells the shares
of Common Stock within two years after the date an incentive stock option is
granted or within one year after the exercise of an option, the participant will
recognize ordinary income in an amount equal to the difference between the fair
market value at the exercise date and the option exercise price, and the Company
will be entitled to an equivalent deduction. Some participants may have to pay
alternative minimum tax upon exercise of an incentive stock option.
PERFORMANCE SHARES. A participant will recognize ordinary income in an
amount equal to the cash or fair market value of the Common Stock transferred to
the participant under the Performance Share program, and the Company will
receive a corresponding deduction. A sale of any Common Stock so acquired will
give rise to a capital gain equal to the difference between the fair market
value of the Common Stock on the transfer and sale dates.
Although the foregoing summarizes the essential features of the Equity
Incentive Plan, it is qualified in its entirety by reference to the full text of
the Equity Incentive Plan as amended, which is attached as EXHIBIT 1 to this
proxy statement.
The following table sets forth the number of options to purchase Common
Stock under the 1992 Equity Incentive Plan on or prior to March 15, 2000 to each
of (i) the officers listed in the Summary Compensation Table, (ii) each of the
nominees for election as a director, (iii) all directors of the Company who are
not executive officers of the Company as a group, (iv) all present executive
officers of the
5
<PAGE>
Company as a group, and (v) all employees of the Company, including all other
current officers, as a group:
OPTIONS GRANTED UNDER THE 1992 EQUITY INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
OPTIONEE(1) OPTIONS
- ----------- ----------------
<S> <C>
John Cotumaccio............................................. 45,000
James V. DiLorenzo.......................................... 175,000
Gene L. Joles............................................... 26,666
George E. Lombard........................................... 350,000
Thomas G. McInerney......................................... 25,000
Robert N. Nelsen............................................ 175,000
All directors who are not executive officers of the Company
as a group................................................ 101,666
All present executive officers of the Company as a group.... 885,999
All employees of the Company, including all other current
officers, as a group...................................... 341,001
</TABLE>
- ------------------------
(1) Does not include directors or officers who did not receive any options under
the 1992 Equity Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' THIS PROPOSAL.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company who are not also directors. Presidents of the Company's
operating divisions are considered to be executive officers. The executive
officers of the Company are elected annually by the Board of Directors following
the Annual Meeting of Stockholders and serve at the discretion of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- -------- ------------------------------------------
<S> <C> <C>
John Cotumaccio........................... 56 President, Keltec Operation
James V. DiLorenzo........................ 58 President
Patrick D. Gallagher...................... 56 President, Olektron Operation
George Hreczuck........................... 61 President, Systems Operation
Gene L. Joles............................. 50 President, Arizona Operation
Joseph W. Mersereau....................... 50 President, California Operation (acting)
Vice President, Treasurer and Chief
Robert N. Nelsen.......................... 52 Financial Officer
Vice President, Human Resources and
David S. Parker........................... 52 Administration
Robert Schlaefli.......................... 41 President, California Operation (former)
</TABLE>
John Cotumaccio, President, Keltec Operation of the Company since
August 1998. From 1979 to 1998, Mr. Cotumaccio held various positions at
divisions of Loral Corporation and its successors, Lockheed Martin, and L-3
Communications Corporation, including Director of Manufacturing, Director of
Operations, and other management positions. Prior to joining the Company,
Mr. Cotumaccio served as the Vice President of Operations for L-3 Communications
Corporation's Display Systems Division in Atlanta, Georgia.
6
<PAGE>
James V. DiLorenzo, President, Signal Technology Corporation since
March 1999. Prior to joining the Company, he served since January 1996 as a
general manager of Raytheon Microelectronics, a division of Raytheon
Electronics, the commercial electronics group of Raytheon Company.
Dr. DiLorenzo joined Raytheon in 1989 from Microwave Semiconductor Corporation,
where he served as Vice President, Research and Development. Prior to that,
Dr. DiLorenzo spent 17 years at AT&T's Bell Laboratories, concluding his tenure
there as department head of special materials and devices. Dr. DiLorenzo has
over 25 years of senior management experience in the electronics industry.
Patrick D. Gallagher, President of the Olektron Operation of the Company
since April 1999. Prior to joining the Company, he served from January 1998 to
January 1999 as President of Microwave Device Technology Corporation. Prior to
that Mr. Gallagher served for over six years as a Vice President of Alpha
Industries, Inc.
George M. Hreczuck, President, Systems Operation of the Company since
November 1998. Prior to that, from 1995 to 1998, Mr. Hreczuck served as the Vice
President and General Manager of the Company's Systems Operation. Mr. Hreczuck
has over 25 years' experience in the switch matrix business.
Gene L. Joles, President of the Arizona Operation of the Company since
October 1997. From February 1997 to October 1997, Mr. Joles served as the
President of the Space Center of the Arizona Operation. Prior thereto,
Mr. Joles served as the President of the Arizona Microwave Division since
June 1991. He also served concurrently as the President of the California
Microwave Division from June 1992 until February 1996. From August 1988 until
June 1991, Mr. Joles held the positions of Vice President, Operations and
General Manager of the Active Assemblies Division of M/A-COM, Inc.
Joseph W. Mersereau, President (acting) of the California Operation since
February 2000. From November 1998 to February 2000, Mr. Mersereau was Director
of Engineering of the California Operation. From October 1991 to November 1998,
Mr. Mersereau has held various positions in the California Operation including
Director of New Business Development and Regional Sales Manager. Prior to
joining the Company, Mr. Mersereau was a product line manager, at Western
Microwave from 1985-1991 and lead engineer for GaAs FET Amplifier development at
TRW Microwave from 1982-1985. Mr. Mersereau has more than 25 years of experience
in new product development of microwave components and subsystems.
Robert N. Nelsen, Vice President, Treasurer and Chief Financial Officer of
the Company since August 1998. Prior to that, from 1990 to 1998, Mr. Nelsen
served as Vice President at several divisions of Loral Corporation and its
successors, Lockheed Martin, and L-3 Communications Corporation, including, most
recently, the Display Systems Division.
David S. Parker, Vice President, Human Resources and Administration of the
Company since August 1998. Prior to that from September 1995 to August 1998,
Mr. Parker served as Director, Human Resources of Loral Corporation and its
successors, Lockheed Martin and L-3 Communications Corporation's Display Systems
Division. From December 1991 to September 1995, Mr. Parker was the Assistant
Director, Human Resources of Reynolds Electrical & Engineering Co. Mr. Parker
has 25 years of human resources management experience including assignments with
Honeywell Inc., Burroughs Corporation and American Can Co.
Robert J. Schlaefli, President of the California Operation from
February 1996 to February 2000. Prior thereto, Mr. Schlaefli was the General
Manager of the California Operation since September 1995. Between October 1989
and September 1995, Mr. Schlaefli was a Vice President of the California
Operation overseeing Component Products and later Operations. Before that,
Mr. Schlaefli served as the Materials Manager of the Microwave Products Division
of Eaton Corporation. Mr. Schlaefli has over 20 years experience in the
manufacture and development of microwave electronic systems and components.
7
<PAGE>
SECURITIES OWNERSHIP
The following table sets forth information as of March 15, 2000 regarding
beneficial ownership of Common Stock of each director and each executive officer
named in the Summary Compensation Table, all directors and executive officers as
a group, and each person who is known by the Company to own beneficially more
than five percent of the Company's Common Stock.
<TABLE>
<CAPTION>
NAME OF OWNER NUMBER OF SHARES PERCENT
------------- ---------------- --------
<S> <C> <C>
DIRECTORS AND OFFICERS
John Cotumaccio......................................... 18,750(1) *
James V. DiLorenzo...................................... 75,086(2) 1.0%
Larry L. Hansen......................................... 26,666 *
Gene L. Joles........................................... 50,266(3) *
Harvey C. Krentzman..................................... 12,000(4) *
George E. Lombard....................................... 249,126(5) 3.1%
Thomas G. McInerney..................................... 25,000(6) *
Robert N. Nelsen........................................ 73,126(7) *
Bernard P. O'Sullivan................................... 619,952(8) 8.0%
Joseph Schneider........................................ 41,500(9) *
Thomas F. Skelly........................................ 25,000(10) *
All directors and executive officers as a group (15
persons).............................................. 1,216,472(11) 14.7%
PRINCIPAL STOCKHOLDERS
Caleb Loring, III......................................... 1,238,889(12) 15.9%
c/o Essex Associates
400 Essex Street
Beverly Farms, MA 01915
David L. Babson and Company Incorporated.................. 447,800(13) 5.8%
One Memorial Drive
Cambridge, MA 02142
Dimensional Fund Advisors Inc............................. 438,804(14) 5.6%
1299 Ocean Avenue, 11(th) Floor
Santa Monica, CA 90401
</TABLE>
- ------------------------
* less than one percent
Note: Unless otherwise indicated, the persons shown have sole voting and
investment power over the shares listed. Includes options exercisable as
of March 15, 2000, or within 60 days after such date.
(1) Includes 18,750 shares subject to exercisable options.
(2) Includes 70,000 shares subject to exercisable options.
(3) Includes 40,000 shares subject to exercisable options.
(4) Does not include 1,238,889 shares held by several trusts for the benefit of
Mr. Krentzman's family members. Mr. Krentzman does not have voting or
investment power over such shares and disclaims beneficial ownership over
all such shares.
(5) Includes 225,000 shares subject to exercisable options.
(6) Includes 25,000 shares subject to exercisable options.
(7) Includes 55,000 shares subject to exercisable options.
8
<PAGE>
(8) Includes 514,252 shares over which Mr. O'Sullivan has the sole power to vote
or direct the vote, 105,700 shares over which Mr. O'Sullivan has shared
power to vote or direct the vote, 220,967 shares which Mr. O'Sullivan has
the sole power to dispose or direct the disposition of, and 105,700 shares
which Mr. O'Sullivan has shared power to dispose or direct the disposition
of. Includes 105,700 shares held jointly by Mr. O'Sullivan and his wife.
Also includes 117,991 shares over which Mr. O'Sullivan has the right to vote
but of which William L. Murphy has the exclusive right to dispose and
pecuniary interest, 54,000 shares held by a trust for the benefit of
Mr. O'Sullivan's grandchildren, and 121,294 shares held by a trust for the
benefit of Mr. O'Sullivan's children, with respect to each of which
Mr. O'Sullivan disclaims beneficial ownership. Does not include 50,167
shares held by Mr. O'Sullivan's wife, with respect to which Mr. O'Sullivan
disclaims beneficial ownership.
(9) Includes 25,000 shares subject to exercisable options.
(10) Includes 25,000 shares subject to exercisable options.
(11) See footnotes (1) through (10).
(12) Includes 1,238,889 shares held by a trust for the benefit of certain family
members and other relatives of Harvey C. Krentzman.
(13) Information has been obtained from a Schedule 13G, dated February 9, 2000,
filed by David L. Babson and Company Incorporated with the Securities and
Exchange Commission.
(14) Information has been obtained from a Schedule 13G, dated February 3, 2000,
filed by Dimensional Fund Advisors Inc. with the Securities and Exchange
Commission.
9
<PAGE>
EXECUTIVE COMPENSATION
1. REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing the compensation, including bonus and incentive
arrangements, of the Company's Chief Executive Officer and to consider and
approve or modify the recommendations of the Chief Executive Officer as to the
proposed compensation of each executive officer of the Company whose aggregate
compensation exceeds a threshold amount fixed by the Board, which in 1999 was
$125,000.
The compensation policy of the Company for its executive officers is based
on the following principles:
- The compensation program should support the strategic and financial
objectives of the Company by rewarding its executive officers for regular
and significant improvement in earnings and increase in the value of the
Company's Common Stock;
- The compensation program should reflect the highly competitive nature of
the industry in which the Company operates, and the fact that the key
executives throughout the industry are known to each other; and
- An important part of the compensation program is to provide
performance-based incentives to executive officers by way of equity
ownership so that, with successful performance and the consequent increase
in the value of the Company, their interests become more and more aligned
with those of the owners of the Company's Common Stock.
The Company designs, develops, manufactures and markets sophisticated
electronic components and subsystems, principally in the radio and microwave
portion of the spectrum and in power supplies, that are utilized in a broad
range of advanced defense, space and communication applications. Most of the
competitive entities, across a broad spectrum of the Company's product lines,
are known to the members of the Committee, whose experience in the industry is
extensive.
The Chief Executive Officer's salary, bonus and, when granted, options to
purchase stock of the Company, are determined annually by the Committee based on
the Committee's subjective evaluation of a variety of factors, each of which is
weighted, again subjectively, by each member of the Committee according to his
own experience and background. Among the criteria used by each member of the
Committee in making his evaluation of the appropriate compensation of the Chief
Executive Officer are:
- the compensation of the chief executives of competitive entities;
- his influence on the performance of the Company through his management
skills;
- his ability to work with, influence and effectuate the policies of the
Board of Directors;
- his skill in long range planning for the Company's future growth and
activities; and
- the manner in which he positions the Company to succeed in what has been
in recent years a declining market.
These criteria are used by the members of the Committee in determining each
element of compensation. There is no specific relationship between the
performance of the Company and the compensation of the executive officers,
although, with respect to bonuses and stock options, performance of the Company
is given more weight by the Committee than the other criteria.
Regarding bonuses, the Board of Directors, in accordance with the Company's
bonus plan, each year sets the maximum amount available to be awarded as
bonuses. Within that amount, the Committee, early
10
<PAGE>
in the calendar year, prescribes the bonuses for the prior year for all of the
Company's executives based upon the criteria outlined above.
Stock options are similarly determined and granted by the Committee.
Respectfully submitted,
Harvey C. Krentzman, Chairman
Bernard P. O'Sullivan
Larry L. Hansen
Thomas G. McInerney
2. REPORT OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer recommends to the Compensation Committee the
proposed compensation (other than his own) of each executive officer of the
Company whose aggregate compensation exceeds a threshold amount fixed by the
Board, which in 1999 was $125,000. The Committee considers, and approves or
modifies, the recommendations of the Chief Executive Officer.
In making his evaluation of the performance of an executive officer in his
or her area of responsibility, and in formulating his recommendation to the
Committee, while the Chief Executive Officer adheres to the criteria and
principles enunciated in the Committee's report set forth above, he relies most
heavily on the following criteria used by the Committee:
- the executive's influence on the performance of the Company through his or
her management skills;
- the executive's skill in long range planning for the Company's future
growth and activities; and
- the manner in which the executive positions the Company to succeed in the
future.
Respectfully submitted,
George E. Lombard
11
<PAGE>
The following table sets forth information concerning the compensation paid
or accrued by the Company to or on behalf of the Company's current and former
Chief Executive Officers and each of the four other most highly compensated
executive officers of the Company (hereafter referred to as the "named executive
officers") during the fiscal years ended December 31, 1997, 1998 and 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
NAME AND ------------------------------------ OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) SAR'S (#) COMPENSATION ($)
------------------ -------- ---------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
George E. Lombard................... 1999 $ 280,770 $ 175,000 -- $65,333(2)(3)
Chairman of the Board and Chief 1998 $ 183,531 $ 75,000 350,000 $27,233(2)(4)
Executive Officer
(commencing June 1, 1998)
John Cotumaccio..................... 1999 $ 166,734 $ 75,000 15,000 $66,835(5)
President, Keltec Operation 1998 $ 62,791 $ 35,000 30,000 --
(commencing August 31, 1998)
James V. DiLorenzo.................. 1999 $ 209,615 $ 151,200 175,000 --
President
(commencing March 15, 1999)
Gene L. Joles....................... 1999 $ 161,199 $ 39,600 -- $ 1,566(2)
President, Arizona Operation 1998 $ 159,923 -- -- 2,571(2)
1997 $ 155,769 -- -- $ 2,465(2)
Robert N. Nelsen.................... 1999 $ 197,250 $ 110,565 -- $ 3,038(2)
Vice President, Treasurer and 1998 $ 108,736 $ 45,000 175,000 $30,950(6)
Chief Financial Officer
(commencing August 3, 1998)
</TABLE>
- ------------------------
(1) Represents bonus earned with respect to the specified year, whether or not
paid during such year.
(2) Represents the Company's matching contribution for the account of the named
executive officer under the Company's 401(k) plan. The normal matching
contribution is 30% of the first 6% of salary contributed by the employee.
(3) Includes a $63,317 relocation payment in connection with Mr. Lombard's
relocation to the Company's Danvers, Massachusetts executive offices and
$2,016 paid in accordance with footnote number 2.
(4) Represents relocation payment in connection with Mr. Lombard's relocation to
the Company's Danvers, Massachusetts executive offices.
(5) Includes a $65,578 relocation payment in connection with Mr. Cotumaccio's
relocation to the Company's Fort Walton Beach, Florida offices and $1,257
paid in accordance with footnote number 2.
(6) Represents relocation payment in connection with Mr. Nelsen's relocation to
the Company's Danvers, Massachusetts executive offices.
12
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of stock
options to the named executive officers during the year ended on December 31,
1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE OR PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION OPTION TERM
NAME(1) GRANTED FISCAL YEAR ($/SH) DATE 5%($)/10%($)
------- ---------- --------------------- ----------- ---------- ----------------------
<S> <C> <C> <C> <C> <C>
John Cotumaccio............... 15,000 3% $4.69 2009 $44,243/$112,120
James V. DiLorenzo............ 175,000 36% $4.31 2009 $474,344/$1,202,080
</TABLE>
- ------------------------
(1) Does not include named executive officers who were not granted any options
during the year ended on December 31, 1999.
The following table sets forth information concerning unexercised options
held on December 31, 1999 by the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS/SAR'S AT
FISCAL YEAR-END FISCAL YEAR-END
(#) ($)
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
---------------------- -----------------------------------------------------
<S> <C> <C>
John Cotumaccio.................................. 15,000/ 30,000 $ 71,250/$109,688
James V. DiLorenzo............................... 70,000/105,000 $ 205,625/$308,438
George E. Lombard................................ 225,000/125,000 $1,068,750/$593,750
Gene L. Joles.................................... 40,000/ 0 $ 218,000/$ 0
Robert N. Nelsen................................. 55,000/120,000 $ 261,250/$570,000
</TABLE>
13
<PAGE>
The following graph compares the cumulative shareholder return on the
Company's Common Stock over the period commencing December 30, 1994 through
December 31, 1999, to that of the American Stock Exchange Index ("Amex Market
Index") and the index published by Media General Financial Services for Standard
Industrial Classification Code 3679-Electronic Components, N.E.C. ("Industry
Index") assuming the investment of $100 on December 30, 1994. In calculating
cumulative total shareholder return, reinvestment of dividends is assumed. The
stock price performance shown on the graph is not necessarily indicative of
future price performance.
CUMULATIVE SHAREHOLDER RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1999
SIGNAL TECHNOLOGY CORP. 100.00 117.14 174.29 117.14 61.43 165.71
PEER GROUP INDEX 100.00 167.05 182.57 271.28 169.93 263.34
AMEX MARKET INDEX 100.00 128.90 136.01 163.66 161.44 201.27
</TABLE>
<TABLE>
<CAPTION>
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SIGNAL TECHNOLOGY CORPORATION...................... 100.00 117.14 174.29 117.14 61.43 165.71
AMEX MARKET INDEX.................................. 100.00 128.90 136.01 163.66 161.44 201.27
PEER GROUP INDEX................................... 100.00 167.05 182.57 271.28 169.93 263.34
</TABLE>
14
<PAGE>
OTHER MATTERS
As of the date of this proxy statement, the management of the Company knows
of no matter not specifically referred to above as to which any action is
expected to be taken at the Annual Meeting of Stockholders. It is intended,
however, that the persons named as proxies will vote the proxies, insofar as
they are not otherwise instructed, regarding such other matters and the
transaction of such other business as may properly be brought before the
meeting, as seems to them to be in the best interest of the Company and its
stockholders.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for consideration at the
Company's next annual meeting of stockholders must submit the proposal to the
Company so that it is received at the principal executive offices of the
Company, on or before December 13, 2000. Any stockholder desiring to submit a
proposal should consult applicable regulations of the Securities and Exchange
Commission.
ADDITIONAL INFORMATION
Under the securities laws of the United States, the Company's directors,
certain of its officers, and any persons holding more than ten percent of the
Common Stock are required to report their ownership of the Common Stock and any
changes in that ownership to the Commission. Specific due dates for these
reports have been established and the Company is required to report in this
proxy statement any failure to file by such dates during 1999. During the
Company's 1999 fiscal year, to the knowledge of the Company, all of these filing
requirements were satisfied. In making these statements, the Company has relied
upon written representations of its directors, officers, and its ten percent
holders as well as copies of those reports filed with the Commission that have
been furnished to the Company.
RELATIONSHIP WITH INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP has been the independent auditors for the Company
and will serve in that capacity for the 2000 fiscal year. A representative of
PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions from shareowners.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE YEAR 1999 MAY BE OBTAINED WITHOUT CHARGE UPON
WRITTEN REQUEST TO ROBERT N. NELSEN, VICE PRESIDENT, TREASURER AND CHIEF
FINANCIAL OFFICER, SIGNAL TECHNOLOGY CORPORATION, 222 ROSEWOOD DRIVE, NORTHWOODS
BUSINESS PARK, DANVERS, MA 01923. THE COMPANY'S ANNUAL REPORT ON FORM 10-K MAY
ALSO BE VIEWED ON THE INTERNET BY ACCESSING THE COMPANY'S HOME PAGE AT
HTTP:\\WWW.SIGTECH.COM.
15
<PAGE>
EXHIBIT 1
SIGNAL TECHNOLOGY CORPORATION
AMENDED AND RESTATED 1992 EQUITY INCENTIVE PLAN
SECTION 1.--PURPOSE
The purposes of the Amended and Restated SIGNAL TECHNOLOGY CORPORATION 1992
Equity Incentive Plan (the "Plan") are
(a) to attract and retain key employees and consultants, to provide an
incentive for them and other persons having a business relationship with
Signal Technology Corporation (the "Company");
(b) to assist the Company to achieve long-range performance goals, and;
(c) to enable such key employees and consultants to participate in the
long-term growth of the Company.
SECTION 2.--DEFINITIONS
"Affiliate" means any business entity in which the Company owns directly or
indirectly fifty percent (50%) or more of the total combined voting power or has
a significant financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means a committee of not less than three members of the Board
appointed by the Board to administer the Plan, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 or any successor provision.
"Common Stock" or "Stock" means the Common Stock, $.01 par value, of the
Company.
"Designated Beneficiary" means the beneficiary designated by a Participant, in a
manner determined by the Committee, to receive amounts due or exercise rights of
the Participant in the event of the Participant's death. In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
"Fair Market Value" means, with respect to Common Stock or any other property,
the fair market value of such property as determined by the Committee in good
faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 hereof which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 hereof which is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Participant" means a person selected by the Committee to receive an Award under
the Plan.
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<PAGE>
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" means shares of Common Stock which may be earned by the
achievement of performance goals awarded to a Participant under Section 8
hereof.
"Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time selected by the Committee during
which an award of Restricted Stock may be forfeited to the Company.
"Restricted Stock" means shares of Common Stock subject to forfeiture awarded to
a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess in value
of shares of Common Stock over the exercise price awarded to a Participant under
Section 7 hereof.
"Stock Unit" means an award Common Stock or units that are valued in whole or in
part by reference to, or otherwise based on, the value of Common Stock, awarded
to a Participant under Section 10 hereof.
SECTION 3.--ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons and all
determinations under the Plan with respect thereto, provided that the Committee
shall fix the maximum amount of such Awards for the Participants who are not
Reporting Persons and a maximum for any one Participant.
SECTION 4.--ELIGIBILITY
All employees and consultants of, and other persons having a business
relationship with, the Company or any Affiliate capable of contributing
significantly to the successful performance of the Company other than a person
who has irrevocably elected not to be eligible, are eligible to be Participants
in the Plan. Incentive Stock Options may be awarded only to persons eligible to
receive such Options under the Code.
SECTION 5.--STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b) below, Awards may be made under
the Plan for up to Two Million, Two Hundred and Sixty-Six Thousand, Six
Hundred and Sixty-Six (2,266,666) shares of Common Stock. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, including without limitation the
surrender of shares in payment for the Award or any tax obligation thereon,
the shares subject to such Award or so surrendered, as the case may be, to
the extent of such expiration, termination, forfeiture or decrease, shall
again be available for award under the Plan. Common Stock issued through the
assumption or substitution of outstanding grants from an acquired company
shall not reduce the shares available for Awards under the Plan. Shares
issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up,
A-2
<PAGE>
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value, or
other similar transaction affects the Common Stock such that an adjustment
is required in order to preserve the benefits or potential benefits intended
to be made available under the Plan, then the Committee, subject, in the
case of Incentive Stock Options, to any limitation required under the Code,
shall equitably adjust any or all of (i) the number and kind of shares in
respect of which Awards may be made under the Plan, (ii) the number and kind
of shares subject to outstanding Awards, and (iii) the award, exercise or
conversion price with respect to any of the foregoing, and if considered
appropriate, the Committee may make provision for a cash payment with
respect to an outstanding Award, provided that the number of shares subject
to any Award shall be a whole number.
SECTION 6.--STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Committee may award Incentive
Stock Options and Nonstatutory Stock Options and determine the number of
shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
terms and conditions of Incentive Stock Options shall be subject to, and
comply with, Section 422 of the Code or any successor provision and any
regulations thereunder.
(b) The Committee shall establish the option price at the time each Option is
awarded, which price shall not be less than one hundred percent (100%) of
the Fair Market Value of the Common Stock on the date of award with respect
to Incentive Stock Options and not less than fifty percent (50%) of the Fair
Market Value of the Common Stock on the date of the award with respect to
Nonstatutory Stock Options.
(c) Each Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option until
payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent
permitted by the Committee at or after the award of the Option, by delivery
of a note or shares of Common Stock owned by the optionee, including
Restricted Stock, valued at their Fair Market Value on the date of delivery,
or such other lawful consideration as the Committee may determine.
(e) The Committee may provide for the automatic award of an Option upon the
delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.
SECTION 7.--STOCK APPRECIATION RIGHTS
(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs shall have
an exercise price of not less than fifty percent (50%) of the Fair Market
Value of the Common Stock on the date of award, or in the case of SARs in
tandem with Options, the exercise price of the related Option.
(b) An SAR related to an Option which can only be exercised during limited
periods following a change in control of the Company, may entitle the
Participant to receive an amount based upon the highest price paid or
offered for Common Stock in any transaction relating to the change in
control or paid during the thirty (30) day period immediately preceding the
occurrence of the change in control in any transaction reported in the stock
market in which the Common Stock is normally traded.
A-3
<PAGE>
SECTION 8.--PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Committee may award Performance
Shares and determine the number of such shares for each Performance Cycle
and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of
Performance Shares shall be equal to the Fair Market Value of the Common
Stock on the date the Performance Shares are earned or in the discretion of
the Committee on the date the Committee determines that the Performance
Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle, for the
purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle,
the Committee may adjust the performance goals for such Cycle as it deems
equitable in recognition of unusual or non-recurring events affecting the
Company, changes in applicable tax laws or accounting principles, or such
other factors as the Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the Committee
shall determine the number of Performance Shares which have been earned on
the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall
determine, at or after the time of award, whether payment values will be
settled in whole or in part in cash or other property, including Common
Stock or Awards.
SECTION 9.--RESTRICTED STOCK
(a) Subject to the provisions of the Plan, the Committee may award shares of
Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of
Restricted Stock shall be issued for no cash consideration or such minimum
consideration as may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered, except as permitted by the Committee, during the
Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the
Participant and unless otherwise determined by the Committee, deposited by
the Participant, together with a stock power endorsed in blank, with the
Company. At the expiration of the Restricted Period, the Company shall
deliver such certificates to the Participant or if the Participant has died,
to the Participant's Designated Beneficiary.
SECTION 10.--STOCK UNITS
(a) Subject to the provisions of the Plan, the Committee may award Stock Units
subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award shall
be issued for no cash consideration or such minimum consideration as may be
required by applicable law.
A-4
<PAGE>
SECTION 11.--GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) Reporting Person Limitations
Any other provision of the Plan to the contrary notwithstanding, to the
extent required to qualify for the exemption provided by Rule 16b-3 under
the Securities Exchange Act of 1934 and any successor provision, (i) any
Common Stock or other equity security offered under the Plan to a Reporting
Person may not be sold for at least six (6) months after acquisition, except
in case of death or disability, and (ii) any Option, SAR or other similar
right related to an equity security, issued under the Plan to a Reporting
Person shall not be transferable other than by will or the laws of descent
and distribution, shall not be exercisable for at least six (6) months
except in the case of death or disability, and shall be exercisable during
the Participant's lifetime only by the Participant or the Participant's
guardian or legal representative.
(b) Documentation
Each Award under the Plan shall be evidenced by a writing delivered to the
Participant specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the Plan
as the Committee considers necessary or advisable to achieve the purposes of
the Plan or comply with applicable tax and regulatory requirements.
(c) Committee Discretion
Each type of Award may be made alone, in addition to, or in relation to any
other type of Award. The terms of each type of Award need not be identical,
and the Committee need not treat Participants uniformly. Except as otherwise
provided by the Plan or a particular Award, any determination with respect
to an Award may be made by the Committee at the time of award or at any time
thereafter.
(d) Settlement
The Committee shall determine whether Awards are settled in whole or in part
in cash, Common Stock, other securities of the Company, Awards or other
property. The Committee may permit a Participant to defer all or any portion
of a payment under the Plan, including the crediting of interest on deferred
amounts denominated in cash and dividend equivalents on amounts denominated
in Common Stock.
(e) Dividends and Cash Awards
In the discretion of the Committee, any Award under the Plan may provide the
Participant with (i) dividends or dividend equivalents payable currently or
deferred with or without interest, and (ii) cash payments in lieu of or in
addition to an Award.
(f) Termination of Employment
The Committee shall determine the effect on an Award of the disability,
death, retirement or other termination of employment of a Participant and
the extent to which, and the period during which, the Participant's legal
representative, guardian or Designated Beneficiary may receive payment of an
Award or exercise rights thereunder.
(g) Change in Control
In order to preserve a Participant's rights under an Award in the event of a
change in control of the Company, the Committee in its discretion may, at
the time an Award is made or at any time thereafter, take one or more of the
following actions: (i) provide for the acceleration of any time period
relating to the exercise or realization of the Award, (ii) provide for the
purchase of the Award upon the Participant's request for an amount of cash
or other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or
payable, (iii) adjust the terms of the Award in a manner determined by the
Committee to reflect the change in
A-5
<PAGE>
control, (iv) cause the Award to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.
(h) Withholding
The Participant shall pay to the Company, or make provision satisfactory to
the Committee for payment of, any taxes required by law to be withheld in
respect of Awards under the Plan no later than the date of the event
creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued
at their Fair Market Value on the date of delivery. The Company and its
Affiliates may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the Participant.
(i) Foreign Nationals
Awards may be made to Participants who are foreign nationals or employed
outside the United States on such terms and conditions different from those
specified in the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable laws.
(j) Amendment of Award
The Committee may amend, modify or terminate any outstanding Award,
including substituting therefor another Award of the same or a different
type, changing the date of exercise or realization, or converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would
not materially and adversely affect the Participant.
SECTION 12.--MISCELLANEOUS
(a) No Right To Employment
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right
to employment or continued employment. The Company expressly reserves the
right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder
Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a shareholder with respect
to any shares of Common Stock to be distributed under the Plan until he or
she becomes the holder thereof. A Participant to whom Common Stock is
awarded shall be considered the holder of the Stock at the time of the Award
except as otherwise provided in the applicable Award.
(c) Effective Date
Subject to the approval of the shareholders of the Company, the Plan shall
be effective on 14 September 1992. Prior to such approval, Awards may be
made under the Plan expressly subject to such approval.
(d) Termination of Plan
The Plan shall terminate on 14 September 2002 unless sooner terminated by
the Board of Directors (the "Termination Date"). Any option outstanding
under this Plan at the Termination Date or upon any suspension of this Plan
shall remain in effect until such option shall have been exercised or shall
have expired in accordance with its terms.
A-6
<PAGE>
(e) Amendment of Plan
The Board may amend, suspend or terminate the Plan or any portion thereof at
any time, provided that no amendment shall be made without shareholder
approval if such approval is necessary to comply with any applicable tax or
regulatory requirement, including any requirement for exemptive relief under
Section 16(b) of the Securities Exchange Act of 1934 or any successor
provision.
(f) Governing Law
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
A-7
<PAGE>
DETACH HERE
COMMON STOCK PROXY
SIGNAL TECHNOLOGY CORPORATION
Annual Meeting of Stockholders
to be Held May 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Revoking any such prior appointment, the undersigned, a stockholder of
SIGNAL TECHNOLOGY CORPORATION, hereby appoints GEORGE E. LOMBARD, ROBERT N.
NELSEN AND ROGER D. FELDMAN, and each of them, attorneys and agents of the
undersigned, with full power of substitution, to vote all shares of the Common
Stock of the undersigned in said Company at the Annual Meeting of Stockholders
of said Company to be held at the offices of Bingham Dana LLP, 16th Floor, 150
Federal Street, Boston, Massachusetts, on May 16, 2000, at 9:00 a.m., and at any
adjournments or postponements thereof, as fully and effectively as the
undersigned could do if personally present and voting, hereby approving,
ratifying and confirming all that said attorneys and agents or their substitutes
may lawfully do in place of the undersigned as indicated on the reverse side.
- -------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON SIDE
- -------------- THE REVERSE SIDE -------------
<PAGE>
DETACH HERE
Please mark
[X] votes as in
this example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS INDICATED THIS PROXY WILL BE VOTED FOR PROPOSALS (1) AND (2) AND,
AS TO OTHER MATTERS THAT MAY COME BEFORE THE MEETING, IN THE MANNER PERSONS
NAMED AS PROXIES BELIEVE TO BE IN THE BEST INTERESTS OF SIGNAL TECHNOLOGY
CORPORATION.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS 2. RATIFICATION OF AMENDMENT TO 1992 EQUITY
Nominees: LOMBARD AND MCINERNEY. INCENTIVE PLAN.
FOR WITHHELD
[__] [__] FOR [___]
AGAINST [___]
ABSTAIN [___]
[__] _____________________________________
Votes withheld for the nominees noted
above
3. Upon any other matter which may
properly come before the meeting or
any adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT [__]
PLEASE SIGN, DATE AND RETURN PROXY
PROMPTLY USING THE ENCLOSED
ENVELOPE.
When shares are held by joint
tenants both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Please sign exactly as name appears
hereon.
</TABLE>
Signature:______________ Date:__________ Signature:______________ Date:_______
