<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BTG, Inc.
- ---------------------------------
(Name of Registrant as Specified In Its Charter)
BTG, Inc.
- ---------------------------------
(Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
____________________________________________
2) Aggregate number of securities to which transaction
applies:
____________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
_____________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________
* Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / 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> 2
[BTG LOGO]
BTG, INC.
1945 OLD GALLOWS ROAD
VIENNA, VIRGINIA 22182
July 17, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 annual meeting of BTG, Inc.
(the "Company") on Wednesday, August 14, 1996, at 10:00 a.m. at the DoubleTree
Hotel at Tysons Corner, 7801 Leesburg Pike, Falls Church, VA 22043.
At this meeting you will be asked to vote, in person or by proxy, on the
following matters: (i) the election of three directors; (ii) approval of the
Company's Directors Stock Option Plan; (iii) approval of amendments to the
Company's Employee Stock Purchase Plan; (iv) approval of amendments to the
Company's 1995 Employee Stock Option Plan; (v) the ratification of the
appointment of the Company's independent auditors; and (vi) any other business
as may properly come before the meeting. The official Notice of Meeting, proxy
statement and form of proxy are included with this letter. The matters listed in
the Notice of Meeting are described in detail in the proxy statement.
It is important that your shares be represented at the 1996 annual meeting,
whether or not you are personally able to attend. You are urged to complete,
sign and mail the enclosed proxy card as soon as possible.
Sincerely,
/s/ EDWARD H. BERSOFF
------------------------------------
Edward H. Bersoff
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 3
BTG, INC.
1945 OLD GALLOWS ROAD
VIENNA, VIRGINIA 22182
(703) 556-6518
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 14, 1996
NOTICE IS HEREBY GIVEN that the 1996 annual meeting of shareholders (the
"Annual Meeting") of BTG, Inc. (the "Company" or "BTG") will be held on
Wednesday, August 14, 1996, at 10:00 a.m., at the DoubleTree Hotel at Tysons
Corner, 7801 Leesburg Pike, Falls Church, VA 22043, for the following purposes:
1) To elect three directors;
2) To approve the Company's Directors Stock Option Plan;
3) To approve amendments to the Company's Employee Stock Purchase Plan;
4) To approve amendments to the Company's 1995 Employee Stock Option Plan;
5) To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997; and
6) To transact such other business as may properly come before the meeting
or any adjournments thereof.
Pursuant to the Company's bylaws, the Board of Directors has fixed June 15,
1996 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. Only holders of record of BTG common stock
as of that date will be entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof.
In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies by BTG.
By order of the Board of Directors of
BTG, Inc.
/s/ EDWARD H. BERSOFF
----------------------------------
Edward H. Bersoff
Chairman of the Board, President and
Chief Executive Officer
Vienna, Virginia
July 17, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
BTG, INC.
1945 OLD GALLOWS ROAD
VIENNA, VIRGINIA 22182
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 14, 1996
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are being furnished to the shareholders of BTG, Inc., a Virginia
corporation ("BTG" or the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the 1996 Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held at the
DoubleTree Hotel at Tysons Corner, 7801 Leesburg Pike, Falls Church, VA 22043,
on Wednesday, August 14, 1996, at 10:00 a.m., and any adjournment thereof.
If the enclosed form of proxy is properly executed and returned to BTG in
time to be voted at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions thereon. EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED: (I) FOR THE ELECTION OF EACH OF THE THREE NOMINEES OF THE BOARD
OF DIRECTORS TO SERVE AS DIRECTORS; (II) FOR THE APPROVAL OF THE COMPANY'S
DIRECTORS STOCK OPTION PLAN; (III) FOR THE APPROVAL OF AMENDMENTS TO THE
COMPANY'S EMPLOYEE STOCK PURCHASE PLAN; (IV) FOR THE APPROVAL OF AMENDMENTS TO
THE COMPANY'S 1995 EMPLOYEE STOCK OPTION PLAN; AND (V) FOR THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
If any other matters are properly brought before the Annual Meeting, proxies
will be voted in the discretion of the proxy holders. BTG is not aware of any
such matters that are proposed to be presented at its Annual Meeting.
The cost of soliciting proxies in the form enclosed herewith will be borne
by BTG. In addition to the solicitation of proxies by mail, directors, officers
and regular employees of BTG, without extra remuneration, may solicit proxies
personally, by telephone, telegram, or otherwise. BTG may request persons, firms
and corporations holding shares in their name or in the names of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from the beneficial owners and will reimburse the holders for their
reasonable expenses in doing so. It is anticipated that this proxy statement
will be mailed to shareholders on or about July 17, 1996.
The securities which can be voted at the Annual Meeting consist of shares
of common stock (no par value) ("Common Stock") of BTG. Each share entitles its
owner to one vote on each matter presented to the shareholders. June 15, 1996
has been fixed by the Board of Directors as the record date (the "Record Date")
for the determination of shareholders entitled to vote at the Annual Meeting. On
the Record Date, there were approximately 375 record holders of Common Stock and
the number of shares outstanding as of that date was 6,136,438. The presence, in
person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. Shareholders' votes will be tabulated by a representative of First
Union National Bank of North Carolina, who has been appointed by the Board of
Directors to act as inspector of election for the Annual Meeting. Under Virginia
corporate law and the Company's bylaws, directors are elected by a plurality of
votes of shares present (in person or by proxy) and entitled to vote. Unless
otherwise required by law or the Company's Articles of Incorporation or bylaws,
any other matter put to a shareholder vote will be decided by the affirmative
vote of a majority of the votes cast on the matter. For purposes of that
tabulation, abstentions and broker non-votes have no effect on the vote.
The presence of a shareholder at the Annual Meeting will not automatically
revoke the shareholder's proxy. However, a shareholder may revoke a proxy at any
time prior to its exercise by filing with the Secretary of BTG a written notice
of revocation, by delivering to BTG a duly executed proxy bearing a later date,
or by attending the Annual Meeting and voting in person.
<PAGE> 5
------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF ALL PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
------------------------
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of June 15, 1996 by (i) each director
and nominee for director; (ii) the Chief Executive Officer and each of the other
four most highly compensated executive officers whose total annual salary and
bonus exceeded $100,000 during the year ended March 31, 1996 (the "Named
Executive Officers"); (iii) all persons known to the Company to be beneficial
owners of more than 5% of its outstanding Common Stock; and (iv) all directors
and executive officers as a group. Under the rules of the Securities and
Exchange Commission ("SEC"), a person is deemed a "beneficial owner" of a
security if such person has or shares the power to vote or direct the voting of
such security or the power to dispose or direct the disposition of such
security. A person is also deemed to be a beneficial owner of any securities of
which that person has the right to acquire beneficial ownership within 60 days.
More than one person may be deemed to be a beneficial owner of the same
securities.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF COMMON
NAME SHARES STOCK OUTSTANDING
---------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Edward H. Bersoff, Chairman, President and
Chief Executive Officer(1)........................ 1,338,961 21.68%
Donald M. Wallach, Director(2)...................... 266,805 4.32
Ralph R. Maddox, Director(3)........................ 97,110 1.57
Marilynn D. Bersoff, Secretary(4)................... 92,044 1.49
James V. Kimsey, Director(5)........................ 11,000 *
Ruth M. Davis, Director(6).......................... 5,750 *
John M. Hughes, Chief Financial Officer(7).......... 3,979 *
Raymond T. Tate, Director(8)........................ 2,000 *
Ronald L. Turner, Director(9)....................... 1,000 *
C. Thomas Nixon..................................... 174 *
Alan G. Merten...................................... 0 *
All directors and executive officers as a group (9
persons).......................................... 1,818,823 29.45
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) The address of Dr. Bersoff is: c/o BTG, Inc., 1945 Old Gallows Road, Vienna,
Virginia 22182. Includes 22,665 shares of Common Stock underlying options
granted by the Company which are exercisable within 60 days of June 15,
1996. Does not include (i) 32,835 additional shares issuable upon the
exercise of options granted by the Company which are not exercisable within
60 days of June 15, 1996; (ii) 77,799 shares of Common Stock and 15,500
shares of Common Stock underlying options (4,665 of which are exercisable
within 60 days of June 15, 1996) owned by Marilynn D. Bersoff, Dr. Bersoff's
wife; and (iii) 5,750 shares of Common Stock owned by Dr. Bersoff's parents.
(2) Includes (i) 2,500 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1996; (ii) 114,130
shares held in joint tenancy with Shoshana Wallach, Mr. Wallach's wife; and
(iii) 47,050 shares held by the Wallach Associates, Inc. Employee Profit
Sharing Plan Trust, of which Mr. Wallach is the sole beneficiary.
(3) Includes 102,610 shares of Common Stock held in joint tenancy with Mr.
Maddox's wife and 1,500 shares of Common Stock underlying options granted by
the Company which are exercisable within 60 days of June 15, 1996.
(4) Includes 4,665 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1996. Does not
include (i) 10,835 additional shares issuable upon
2
<PAGE> 6
the exercise of options granted by the Company which are not exercisable
within 60 days of June 15, 1996; and (ii) 1,316,296 shares of Common Stock
and 55,500 shares of Common Stock underlying options (22,665 of which are
exercisable within 60 days of June 15, 1996) owned by Edward H. Bersoff, Ms.
Bersoff's husband.
(5) Includes 1,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1996.
(6) Includes 2,000 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of June 15, 1996.
(7) Includes 1,667 shares of Common Stock issuable upon the exercise of options
granted by the Company which are exercisable within 60 days of June 15,
1996. Does not include 14,833 additional shares issuable upon the exercise
of options granted by the Company which are not exercisable within 60 days
of June 15, 1996.
(8) Includes 2,000 shares of Common Stock issuable upon the exercise of options
granted by the Company which are exercisable within 60 days of June 15,
1996.
(9) Includes 1,000 shares of Common Stock issuable upon the exercise of options
granted by the Company which are exercisable within 60 days of June 15,
1996.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers to file reports with the SEC on
Forms 3, 4 and 5 to report their ownership of and transactions in Common Stock.
During the Company's fiscal year 1996, each of Mrs. Bersoff and Mr. Kimsey
failed timely to report one transaction.
3
<PAGE> 7
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The Company's Board of Directors consists of seven members. The directors
serve three-year terms which are staggered to provide for the election of
approximately one-third of the Board of Directors each year. At the Annual
Meeting, each of Ruth M. Davis and Raymond T. Tate will be elected for a
three-year term. In addition, Alan G. Merten, who was appointed by the Board of
Directors to serve in the seat on the Board vacated by Ralph R. Maddox, will be
elected to complete a term expiring in 1998. Unless otherwise instructed on the
proxy, it is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election of the three
nominee directors listed below. The Board of Directors believes that each
nominee will stand for election and will serve if elected. However, if any
person nominated by the Board of Directors fails to stand for election or is
unable to accept election, proxies will be voted by the proxy holders for the
election of such other person or persons as the Board of Directors may
recommend. There is no cumulative voting for election of directors. Assuming the
presence of a quorum at the Annual Meeting, directors will be elected by a
plurality vote.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
Set forth below is certain information with respect to the nominees of the
Board of Directors for election as directors at the Annual Meeting and other
directors whose terms do not expire until subsequent annual meetings.
<TABLE>
<CAPTION>
FOR TERM TO
NAME AGE POSITION DIRECTOR SINCE EXPIRE
---------------------------- --- ---------------------- -------------- -----------
<S> <C> <C> <C> <C>
NOMINEES
Ruth M. Davis............... 67 Director 1986 1999
Raymond T. Tate............. 71 Director 1988 1999
Alan G. Merten.............. 53 Director 1996* 1998
CONTINUING DIRECTORS
Edward H. Bersoff........... 53 Chairman of the Board, 1982 1997
President and Chief
Executive Officer
James V. Kimsey............. 56 Director 1995 1998
Ronald L. Turner............ 49 Director 1995 1998
Donald M. Wallach........... 61 Director 1982 1997
</TABLE>
- ---------------
* Effective July 22, 1996.
Edward H. Bersoff has served as the Company's President, Chief Executive
Officer and Chairman of the Board of Directors since the Company's founding in
1982. From 1975 until 1982, he was employed by CTEC, Inc. ("CTEC"), a provider
of systems integration services, serving first as Vice President, then Executive
Vice President, and later as President. Previously, he was employed by Logicon,
Inc., a provider of advanced technology systems and services to national
security, civil and industrial clients, and the National Aeronautics and Space
Administration, in Cambridge, Massachusetts. Dr. Bersoff serves as chairman of
the Professional Services Council and as a director of Phillips Business
Information, Inc. He is the husband of Marilynn D. Bersoff, Secretary of the
Company.
Ruth M. Davis is Chair of The Aerospace Corporation, a government chartered
not-for-profit corporation, and has served since 1981 as President and Chief
Executive Officer of the Pymatuning Group, Inc., a consulting firm which
specializes in industrial modernization strategies and technology development.
Dr. Davis also currently serves on the boards of Air Products and Chemicals,
Inc., Ashton Technology Group, Consolidated Edison Company of New York, Inc.,
Ceridian Corporation, Giddings & Lewis, Inc., Premark International, Inc.,
Sprint Corporation, Varian Associates, Inc. and Tupperware. She served as
Assistant
4
<PAGE> 8
Secretary of Energy for Resource Applications from 1979 to 1981 and as a Deputy
Undersecretary of Defense for Research and Advanced Technology from 1977 to
1979.
James V. Kimsey has served at various times as Chairman of the Board, Chief
Executive Officer and President of America Online, Incorporated ("AOL") since
founding the company in 1985 and is currently Chairman Emeritus. AOL is a
leading provider of interactive on-line services to consumers. In addition, Mr.
Kimsey is currently a member of the Board of Directors of Capital One Financial
Corporation, CP Enterprises, Inc., Batterson Venture Partners, University
Support Services, Inc., The Jamestown Foundation, Refugees International,
National Stroke Association, and the American Electronics Association.
Alan G. Merten became the President of George Mason University on July 1,
1996. From 1989 until accepting this position, he served as Dean of the Johnson
Graduate School of Management at Cornell University. Dr. Merten also currently
serves on the boards of Comshare, Inc., The INDUS Group, Inc. and as a trustee
of Common Sense Trust, and as a director/trustee of Van Kampen American Capital
Bond Fund, Inc., Van Kampen American Capital Convertible Securities, Inc., and
Van Kampen American Capital Income Trust.
Raymond T. Tate has served since 1994 as Chairman of the Board, President
and Chief Executive Officer of Ashton Technology Group, Inc., a technology
company primarily involved in financial transaction and neural network research
and development activities. In 1979 he founded, and has since served as
President of Raymond Tate Associates, Inc., a technology consulting firm. He is
a former Deputy Assistant Secretary of the Navy and a former Deputy Director of
the NSA.
Ronald L. Turner has served, since 1993, as the President and Chief
Executive Officer of Computing Devices International, the defense electronics
business division of Ceridian Corporation, an information technology company.
From 1987 to 1993 he served as President and Chief Executive Officer of
GEC-Marconi Electronic Systems Corporation. Mr. Turner also currently serves on
the boards of Aerospace Industries Association of America, Inc., Advanced
Technology Services, FLIR Systems, Inc., and Electronic Industries Association
Government Division.
Donald M. Wallach has served since 1965 as the President of Wallach
Associates, Inc., a professional recruiting and employment counseling firm which
recruits primarily executive and technical professionals in the fields of
defense, electronics, space and computer science.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS NOMINEES
FOR DIRECTORS.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors acts as a nominating committee for selecting
nominees for election as directors. The Company's bylaws also permit
shareholders eligible to vote at the Annual Meeting to make nominations for
directors if such nominations are made pursuant to timely notice in writing to
the Secretary of the Company. The bylaws also permit shareholders to propose
other business to be brought before an annual meeting, provided that such
proposals are made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, notice must be delivered to, or mailed to and received
at, the principal executive offices of the Company no later than 90 days prior
to the date of the anniversary of the immediately preceding annual meeting. A
shareholder's notice of nomination must also set forth certain information
specified in Section 2.3.6 of the Company's bylaws concerning each person the
shareholder proposes to nominate for election and the nominating shareholder. No
such nominations or proposals have been received in connection with the Annual
Meeting.
The members of the Organization and Compensation Committee of the Company's
Board of Directors (the "Compensation Committee") are Messrs. Kimsey, Tate, and
Wallach, all of whom are non-employee directors. Messrs. Tate and Wallach have
served as members of the Compensation Committee since the beginning of fiscal
1994. Mr. Kimsey has served on the committee since August, 1995. The
Compensation Committee has the authority and performs all the duties related to
the compensation of management of the Company, including determining policies
and practices, changes in compensation and benefits for manage-
5
<PAGE> 9
ment, determination of employee benefits and all other matters relating to
employee compensation, including administering the Company's 1995 Employee Stock
Option Plan (the "Option Plan"). The Organization and Compensation Committee met
at the end of fiscal 1995 and in April of 1996 but had no meetings during fiscal
1996.
The members of the Audit Committee of the Company's Board of Directors are
Messrs. Turner and Wallach and Dr. Davis, all of whom are non-employee
directors. The Audit Committee, among other things, makes recommendations
concerning the engagement of independent auditors, reviews the results and scope
of the annual audit and other services provided by the Company's independent
auditors, and reviews the adequacy of the Company's internal accounting
controls. In fiscal 1996, the Audit Committee met two times.
During the 12 months ended March 31, 1996, the Board of Directors held five
meetings. No incumbent director attended fewer than 75 percent of the total
number of meetings of the Board of Directors and committees of the Board of
Directors on which he or she served.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive quarterly payments of $3,000
and fees of $2,000 per Board of Directors meeting and $1,000 per committee
meeting attended. Attendance via telephone is compensated at one-half of the
normal rate. The Directors also receive reimbursement for reasonable expenses
incurred in attending meetings.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
FOR THE ANNUAL COMPENSATION SECURITIES
FISCAL YEAR --------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION ENDED MARCH 31, SALARY($) BONUS($) OPTIONS(#) COMPENSATION(1)
- ------------------------------- --------------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Edward H. Bersoff.............. 1996 $ 296,194 $150,000 0 $ 9,557
Chairman of the Board, 1995 266,361 115,000 11,000 24,423
President, and Chief 1994 243,736 110,000 13,000 25,835
Executive Officer
John M. Hughes................. 1996 219,723 40,000 0 10,055
Senior Vice President and 1995 207,980 37,500 7,500 16,828
Chief Financial Officer 1994 197,630 30,000 5,000 9,406
Marilynn D. Bersoff............ 1996 130,104 40,000 0 8,600
Senior Vice President, 1995 126,775 25,000 2,500 14,011
Administration, Corporate 1994 109,894 27,500 4,000 14,328
Secretary
C. Thomas Nixon................ 1996 189,365 20,000 0 8,758
Senior Vice President and
General Manager, Technology
Systems Division
</TABLE>
- ---------------
(1) Amounts in this column include Company contributions under the Company's
401(k) profit sharing plan, Company-paid life insurance premiums, additional
executive allowances and reimbursement of uninsured medical expenses (capped
at $5,000 per year).
6
<PAGE> 10
STOCK OPTIONS
Option Grants. No options for Common Stock were granted to any of the
Named Executive Officers during the year ended March 31, 1996. Under the Option
Plan, options to purchase up to an aggregate of 250,000 shares of Common Stock
are available for grants to key employees. As of March 31, 1996, options to
purchase 71,500 shares of Common Stock had been granted and were outstanding
under the Option Plan. The Company is proposing to amend the Option Plan to
increase the number of shares authorized to be issued under the Option Plan to
750,000. See "Proposed Amendment to the 1995 Employee Stock Option Plan." The
Company does not have any stock appreciation rights.
Option Exercises and Year-End Value. The following table provides
information regarding the exercise of options during the year ended March 31,
1996, as well as the fiscal year-end value of all unexercised options held, by
the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES MARCH 31, 1996 MARCH 31, 1996(1)
ACQUIRED IN VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ---------------------------- ----------- -------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff........... 12,500 $ 76,688 23,835 22,665 $78,890 $ 144,523
Marilynn D. Bersoff......... 4,500 34,920 11,835 4,665 59,577 29,073
John M. Hughes.............. 0 0 10,834 1,666 21,421 10,704
C. Thomas Nixon............. 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Based on a per share value of $9.875 as of March 31, 1996.
EMPLOYMENT AGREEMENTS
Pursuant to an agreement dated as of October 28, 1994, Edward H. Bersoff
serves as the President and Chief Executive Officer of the Company. Dr. Bersoff
is paid minimum annual cash compensation of $260,000 and is employed for a term
ending on March 31, 2000. This term is automatically extended for successive
two-year periods unless written notice to terminate is given at least six months
prior to the expiration of the term or any such two-year extension of the term.
Dr. Bersoff's minimum annual cash compensation for such two-year extensions will
increase by 10% for each such extension. Dr. Bersoff's employment may be
terminated by the Board of Directors of the Company for willful and gross
misconduct and in the case of death or illness or disability which prevents Dr.
Bersoff from substantially fulfilling his duties for a period in excess of six
consecutive months. If Dr. Bersoff's employment is terminated because of death
or illness or disability, he or his estate, as the case may be, will be paid the
cash compensation due Dr. Bersoff for a period of three months following the
date of termination. The agreement includes a covenant by Dr. Bersoff not to be
involved, directly or indirectly, in a business enterprise that competes with
the Company during the term of his employment and for two years thereafter. In
addition, under the terms of his employment agreement, Dr. Bersoff will be
nominated to serve as a director of BTG during the term of his employment.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is comprised of three non-employee members of
the Board of Directors. It has been authorized to oversee the Company's
executive compensation program as well as the Option Plan. The committee
establishes the salary and option levels for the executive officers of the
Company and approves the recommendations of the Chief Executive Officer with
respect to other key executive employees of the Company. All decisions by the
committee relating to compensation of executive officers and other key
employees, including the awarding of stock options, are reviewed by the full
board.
7
<PAGE> 11
The Company's executive compensation program has been designed to attract
and retain highly qualified executive personnel in order to enhance the
financial strength and profitability of the Company. The Company supports a
pay-for-performance policy that rewards individuals for achieving goals that
further the long-term plans of the Company. The Compensation Committee is
mindful of the need to maintain competitive compensation opportunities while
encouraging superlative performance. The program is designed to recruit and
retain talented executives who are critical to the Company's long-term success.
Executive compensation consists of three components: base salary; annual
incentive bonus; and stock options. Base salaries for executive officers are
reviewed by the Compensation Committee annually prior to the start of each
fiscal year. Prior to fiscal year 1997 compensation was reviewed annually before
the start of the calendar year. Although base salaries are generally competitive
with those of comparable companies, the Compensation Committee's philosophy is
to provide a substantial portion of the incentive for performance through
incentive bonuses and stock options. Incentive bonuses are paid only to the
extent that predetermined corporate, business unit and individual goals are
achieved.
In order to qualify for an incentive bonus, each key employee must
negotiate the terms of a BTG Performance Agreement (BPA) with his supervisor.
The BPA of the chief executive officer is a reflection of the steps required to
be satisfied in implementing the then current five-year strategic plan of the
Company. Each executive officer's BPA is geared toward the satisfaction of that
portion of the chief executive's BPA as is appropriate, thereby linking
incentive compensation, in the form of the annual bonus, to the short and long-
term goals of the Company. Satisfaction of performance objectives are measured
quarterly and serve, along with the fulfillment of predetermined corporate and
business unit goals, as the basis for the granting of key employee bonuses.
To encourage growth and shareholder value, stock options are granted
pursuant to the Option Plan to key management personnel who are in a position to
make substantial contributions to the long-term success of the Company. The
Compensation Committee believes that this focuses attention on managing the
Company from the perspective of an owner with an equity interest in the
business.
Like all Company employees, the Named Executive Officers participate in the
Company's 401(k) Profit Sharing Plan. The Compensation Committee also provides
reimbursement for health care costs not covered by insurance to a maximum of
$5,000 per year to all corporate officers.
Dr. Bersoff has served in his current capacity, as Chairman of the Board,
President and Chief Executive Officer, since founding the Company in 1982. The
Compensation Committee believes that the success of BTG since its founding, and
more particularly since going public, in December of 1994, has been directly
related to Dr. Bersoff's local, regional and national activities as well as his
entrepreneurial abilities. Throughout his term Dr. Bersoff has served as a
leader within the Company as well as within the northern Virginia business
community. During fiscal year 1996, Dr. Bersoff served among other things, as
Chairman of the Fairfax County, Virginia Chamber of Commerce. The Compensation
Committee's general approach in setting the Chief Executive Officer's
compensation is to tie a significant portion of his compensation to Company
performance, and to seek to be competitive with other companies of similar size
in the Company's industry. The Compensation Committee believes that the
Company's internal growth and the growth due to the acquisition of CAI during
fiscal year 1996 are a result of Dr. Bersoff's activities and justify his
combined salary and bonus of $446,194, a 17% increase over fiscal year 1995.
Respectfully submitted,
Organization and Compensation
Committee
James V. Kimsey
Raymond T. Tate
Donald M. Wallach, Chairman
8
<PAGE> 12
STOCK PERFORMANCE CHART
The following chart compares the percentage change in the cumulative total
shareholder return on the Common Stock since the Company's initial public
offering completed in December 1994 with the cumulative total return on the
NASDAQ Composite Index and a peer group of companies. The NASDAQ Composite Index
is a broad-based capitalization-weighted index of all NASDAQ stocks. The peer
group comprises six companies of similar business focus as the Company. While
none of the selected peers offer a fully comparable range of products and
services to the Company, they are recognized as providers of high technology
electronic, computer and communications equipment and engineering services
primarily to the Government and other Government resellers. The returns of each
company have been weighted according to their respective stock market
capitalization for the purpose of arriving at a peer group average. Dividends
paid by those peer companies that pay dividends are assumed to be reinvested at
the end of the ex-dividend month without any transaction cost. The members of
the peer group are as follows: Analysis and Technology, Inc., CACI
International, Inc., Computer Data Systems, Inc., Government Technology
Services, Inc., Logicon, Inc. and Questech, Inc. The peer group differs from
that used for the Company's proxy statement in respect of the 1995 annual
meeting. One company previously included in the peer group, GeoDynamics
Corporation, is no longer in the peer group because it was acquired by Logicon,
Inc. during the Company's fiscal year ended March 31, 1996. The comparison
assumes $100 was invested on December 23, 1994 in the Common Stock, in the peer
group composite and in the NASDAQ Composite Index and assumes reinvestment of
dividends, as previously described.
<TABLE>
<CAPTION>
Measurement Period Nasdaq Com- Peer Group
(Fiscal Year Covered) posite Index Return BTG, Inc.
<S> <C> <C> <C>
12/23/94 100 100 100
3/31/95 110.34 98.29 96.87
3/31/96 148.85 153.14 123.43
</TABLE>
CERTAIN TRANSACTIONS
Wallach Associates, Inc., the common stock of which is wholly-owned by
Donald M. Wallach, a director of the Company, provided professional recruiting
services to the Company for which a payment of $11,402.57 was paid during the
1996 fiscal year.
9
<PAGE> 13
PROPOSED DIRECTORS STOCK OPTION PLAN
(PROPOSAL TWO)
GENERAL
On August 30, 1995 the Board of Directors approved and is now proposing for
shareholder approval the BTG, Inc. Directors Stock Option Plan (the "Director
Plan"). The purpose of the Director Plan is to attract and retain the best
possible individuals for the Board and provide them with additional incentives
to promote the success of the Company. The Director Plan permits non-employee
directors of the Company to purchase shares of Common Stock pursuant to options.
Under the Director Plan, 100,000 shares of Common Stock will be reserved for
issuance.
Assuming the presence of a quorum, the affirmative vote of a majority of
the shares present, in person or by proxy, and entitled to vote at the Annual
Meeting is required to approve the Director Plan. Unless otherwise indicated,
properly executed proxies will be voted in favor of Proposal Two to adopt the
Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTOR PLAN.
DESCRIPTION OF THE DIRECTOR PLAN
The following summary of the Director Plan does not purport to be complete,
and is subject to and qualified in its entirety by reference to the complete
text of the Director Plan, which is annexed hereto as Exhibit A.
The Director Plan will be administered by the Chief Financial Officer of
the Company or such other person as is appointed by the Board. The Director Plan
is intended to be a "formula plan", therefore the responsibilities of the
Administrator under the Director Plan shall be limited to taking all legal
actions necessary to document the options granted, to maintain appropriate
records and reports regarding those options and to take such other actions as
may be authorized or required by the Plan. All directors who are neither
employees nor officers of the Company or any of its subsidiaries are eligible to
participate in the Director Plan.
As of the date the Director Plan was adopted by the Board, August 30, 1995,
each eligible director then serving on the Board was granted an initial option
to purchase Common Stock. The number of shares subject to the option varied
depending upon each director's years of service as a director of the Company.
Individuals with more then seven years of service obtained options to acquire
2,500 shares, those with between three and seven years of service obtained
options to acquire 2,000 shares, those with between zero and three years of
service obtained options to acquire 1,500 shares and all new directors obtained
options to acquire 1,000 shares. In the future all new directors will be granted
an option for 1,000 shares as of the date of their initial appointment to the
Board. Each eligible director is also granted an option to acquire 1,000
additional shares on each anniversary of his or her initial grant for so long as
he or she remains a director.
All options granted pursuant to the Director Plan are granted at fair
market value which, for purposes of the Director Plan, is the closing price for
the Common Stock on the last trading date preceding the date of grant. All
options granted under the Director Plan are intended to be non-qualified options
for purposes of the Internal Revenue Code, as amended (the "Code"). Based upon
the closing sale price of the Common Stock on June 14, 1996, the aggregate
market value of the 100,000 shares issuable under the Director Plan was
$1,400,000. All options become exercisable six months after the date granted,
provided, however, that no option is exercisable prior to approval of the
Director Plan by the shareholders. The options expire on the tenth anniversary
of the date of grant. The options are fully vested as of the date granted.
10
<PAGE> 14
The following table sets forth certain information with respect to the
option grants that have previously been made pursuant to the Director Plan.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME UNDERLYING OPTIONS EXERCISE PRICE EXPIRATION DATE VALUE(1)
------------------------------ ------------------ -------------- --------------- --------
<S> <C> <C> <C> <C>
Ruth M. Davis................. 2,000 $11.25 August 29, 2005 $ 5,500
James V. Kimsey............... 1,000 11.25 August 29, 2005 2,750
Ralph R. Maddox............... 1,500 11.25 August 29, 2005 4,125
Alan G. Merten................ -- -- -- --
Raymond T. Tate............... 2,000 11.25 August 29, 2005 5,500
Ronald L. Turner.............. 1,000 11.25 August 29, 2005 2,750
Donald M. Wallach............. 2,500 11.25 August 29, 2005 6,875
All non-employee directors as
a group..................... 10,000 11.25 August 29, 2005 27,500
</TABLE>
- ---------------
(1) Based on the closing price of the Common Stock on the NASDAQ National Market
on June 14, 1996.
Options granted under the Director Plan may be exercised only by the
non-employee director during his or her lifetime. Neither the option nor any
right thereunder may be transferred by the non-employee director by operation of
law or otherwise other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order (as defined in the Code), and
may not be pledged or hypothecated or subject to execution, attachment or
similar process.
Payment for shares of Common Stock purchased under the Director Plan may be
made either in cash or by exchanging shares of Common Stock with a fair market
value equal to or less than the total option price plus cash for any difference.
Options may also be exercised by directing that certificates for the shares
purchased be delivered to a licensed broker acceptable to the Company, as agent
for the optionee, provided that the broker tenders to the Company cash or cash
equivalents equal to the option exercise price.
The Board may, at any time amend the Director Plan in any respect;
provided, however, that without approval of the shareholders of the Company no
amendment shall be made (i) materially increasing the benefits provided under
the Director Plan, (ii) increasing the maximum number of shares which may be
granted, or (iii) changing the designation or class of persons eligible to
receive options under the Director Plan. Notwithstanding anything to the
contrary above, the Director Plan may not be amended more than once in any
six-month period other than to comport with the requirements of the Code or the
Employee Retirement Income Security Act of 1974, or the rules promulgated
thereunder. Unless previously terminated, the Director Plan will terminate
automatically on August 30, 2005, the tenth anniversary of the effective date of
the Director Plan. No termination, suspension or amendment of the Plan may,
without the consent of the optionee to whom an option has been granted,
adversely affect the rights of the holder of the option.
FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTOR PLAN
The grant of an option is not a taxable event for the optionee or the
Company. Upon exercising a non-qualifying option, an optionee will recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise (except
that, if the optionee is subject to certain restrictions imposed by the
securities laws, the measurement date may be delayed, unless the optionee makes
a special tax election within 30 days after exercise to have income determined
without regard to the restrictions). If the Company complies with applicable
reporting requirements, it will be entitled to a business expense deduction in
the same amount. Upon a subsequent sale or exchange of shares acquired pursuant
to the exercise of a non-qualifying option, the optionee will have taxable gain
or loss, measured by the difference between the amount realized on the
disposition and the tax basis of the shares (generally, the amount paid for the
shares plus the amount treated as ordinary income at the time the option was
exercised).
11
<PAGE> 15
If, pursuant to an option agreement, the optionee surrenders shares of
Common Stock in payment of part or all of the exercise price for non-qualifying
options, no gain or loss will be recognized with respect to the shares
surrendered (regardless of whether the shares were acquired pursuant to the
exercise of an incentive option) and the optionee will be treated as receiving
an equivalent number of shares pursuant to the exercise of the option in a
nontaxable exchange. The basis of the shares surrendered will be treated as the
substituted tax basis for an equivalent number of option shares received and the
new shares will be treated as having been held for the same holding period as
had expired with respect to the transferred shares. However, the fair market
value of any shares received in excess of the number of shares surrendered
(i.e., the difference between the aggregate option exercise price and the
aggregate fair market value of the shares received pursuant to the exercise of
the option) will be taxed as ordinary income.
PROPOSED AMENDMENTS TO THE EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL THREE)
The Board of Directors has approved and is proposing for shareholder
approval amendments to the Company's Employee Stock Purchase Plan (the "Purchase
Plan"). The specific amendments proposed are as follows: (i) increase the number
of shares of Common Stock covered by the Purchase Plan from 150,000 to 400,000;
(ii) eliminate the quarterly purchase limitation under the Purchase Plan which
currently limits the total number of shares issuable to all employees as a whole
to 12,500 per quarter; and (iii) provide for annual lump sum contributions under
the Purchase Plan. In no event will employees be permitted to acquire Common
Stock under the Purchase Plan and other similar employee benefit plans having an
aggregate fair market value in excess of $25,000 in any one calendar year. The
amendments are incorporated in the Amended and Restated Employee Stock Purchase
Plan annexed hereto as Exhibit B. The Board believes the amendments will enhance
the utility of the Purchase Plan as a compensatory plan that encourages
increased equity ownership by employees in the Company. In all other respects
the Purchase Plan, which was approved by shareholders at the annual meeting of
shareholders on August 30, 1995, will remain unchanged.
Assuming the presence of a quorum, the affirmative vote of a majority of
the shares present, in person or by proxy, and entitled to vote at the Annual
Meeting is required to approve the amendments to the Purchase Plan. Unless
otherwise indicated, properly executed proxies will be voted in favor of
Proposal Three to adopt the Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENTS TO
THE PURCHASE PLAN.
PROPOSED AMENDMENT TO THE 1995 EMPLOYEE STOCK OPTION PLAN
(PROPOSAL FOUR)
GENERAL
The Board of Directors has approved and is proposing for shareholder
approval an amendment to the BTG, Inc. 1995 Employee Stock Option Plan (the
"Option Plan"). The purpose of the amendment is to increase the number of shares
authorized to be issued pursuant to options granted under the Option Plan from
250,000 to 750,000. In all other respects, the Option Plan, which was approved
by shareholders at the annual meeting of shareholders on August 30, 1995, will
remain unchanged.
Assuming the presence of a quorum, the affirmative vote of a majority of
the shares present, in person or by proxy, and entitled to vote at the Annual
Meeting is required to approve the amendment to the Option Plan. Unless
otherwise indicated, properly executed proxies will be voted in favor of
Proposal Four to amend the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE OPTION PLAN.
12
<PAGE> 16
INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL FIVE)
The Board of Directors has renewed the appointment of KPMG Peat Marwick LLP
to act as the Company's independent public accountants for fiscal 1997, subject
to ratification by shareholders at the Annual Meeting. Representatives of KPMG
Peat Marwick LLP will be present at the annual meeting. They will be given an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions. Unless otherwise indicated, properly executed
proxies will be voted in favor of ratifying the appointment of KPMG Peat Marwick
LLP to audit the books and accounts of the Company for the fiscal year ending
March 31, 1997. No determination has been made as to what action the Board would
take if the shareholders do not ratify the appointment.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED
IN PROXY MATERIALS
Any proposal or proposals intended to be presented by any shareholder at
the 1997 annual meeting must be received by BTG by March 18, 1997 to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this proxy statement, the Board of Directors of BTG knows
of no other business which may come before the Annual Meeting. If any other
business is properly brought before the Annual Meeting, it is the intention of
the proxy holders to vote or act in accordance with their best judgment with
respect to such matters.
By order of the Board of Directors of
BTG, Inc.
/s/ EDWARD H. BERSOFF
-------------------------------------
Edward H. Bersoff
Chairman of the Board, President and
Chief Executive Officer
Vienna, Virginia
July 17, 1996
COPIES OF THE ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED MARCH
31, 1996, ACCOMPANY THIS PROXY STATEMENT. SHAREHOLDERS MAY OBTAIN, FREE OF
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10K BY WRITING TO BTG,
INC., ATTENTION: INVESTOR RELATIONS, 1945 OLD GALLOWS ROAD, VIENNA, VIRGINIA
22182, E-MAIL: [email protected]
13
<PAGE> 17
EXHIBIT A
BTG, INC.
DIRECTORS STOCK OPTION PLAN
BTG, INC., a Virginia corporation (the "Corporation"), sets forth herein
the terms of the Directors Stock Option Plan (the "Plan") as follows:
1. PURPOSE
1.1. The Plan is intended to attract and retain the best possible members
of the Board and to provide additional incentives to those directors to promote
the success of the Corporation. The Plan provides Eligible Directors an
opportunity to purchase shares of the Stock pursuant to Options. Options granted
under the Plan shall not constitute "incentive stock options" within the meaning
of Section 422 of the Code.
1.2. The Plan is intended to constitute a "formula plan" and Eligible
Directors are intended to be "disinterested administrators" of other plans
maintained by the Corporation for purposes of Rule 16b-3 under the Exchange Act.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Stock Option Agreements), the following definitions shall apply:
2.1. "Additional Option" means any Option other than an Initial Option.
2.2. "Administrator" means the Chief Financial Officer of the Corporation
or such other person as is appointed by the Board to serve as Administrator.
2.3. "Board" means the board of directors of the Corporation.
2.4. "Code" means the Internal Revenue Code of 1986, as amended.
2.5. "Commencement of Service" means the date of election of the Eligible
Director to his or her first term as a Director.
2.6. "Corporation" means BTG, Inc., a Virginia corporation.
2.7. "Effective Date" means the date of adoption of the Plan by the Board.
2.8. "Eligible Director" means a member of the Board who is not an officer
or employee of the Corporation or any of its subsidiaries.
2.9. "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or hereafter amended.
2.10. "Exercise Price" means the Option Price multiplied by the number of
shares of Stock purchased pursuant to exercise of an Option.
2.11. "Expiration Date" means the tenth anniversary of the Grant Date or,
if earlier, the termination of the Option pursuant to Section 4.2(c) hereof.
2.12. "Fair Market Value" means the value of each share of Stock subject to
the Plan determined as follows: If on the Grant Date or other determination date
the Stock is listed on an established national or regional stock exchange, is
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or is publicly traded on an established securities
market, the Fair Market Value of the Stock shall be the closing price of the
Stock on such exchange or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading day immediately
preceding the Grant Date or other determination date (or, if there is no such
reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices on
such trading day), or, if no sale of the Stock is reported for such trading day,
on the next preceding day on which any sale shall have been reported. If the
Stock is not listed on such an exchange,
A-1
<PAGE> 18
quoted on such system or traded on such a market, Fair Market Value shall be
determined by the Administrator in good faith.
2.13. "Grant Date" means the date on which an Option grant takes effect
pursuant to Section 7 hereof.
2.14. "Initial Option" means an Option received by each Eligible Director
as of the Effective Date or thereafter as of an Eligible Director's Commencement
of Service.
2.15. "Option" means any option to purchase one or more shares of Stock
pursuant to the Plan, including both Initial Options and Additional Options.
2.16. "Optionee" means an Eligible Director who holds an Option.
2.17. "Option Period" means the period during which Options may be
exercised as defined in Section 9 hereof.
2.18. "Option Price" means the purchase price for each share of Stock
subject to an Option.
2.19. "Securities Act" means the Securities Act of 1933, as now in effect
or as hereafter amended.
2.20. "Stock" means the Common Stock of the Corporation.
2.21. "Stock Option Agreement" means the written agreement evidencing grant
of an Option hereunder.
3. ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator's
responsibilities under the Plan shall be limited to taking all legal actions
necessary to document the Options provided herein, to maintain appropriate
records and reports regarding those Options, and to take all acts authorized or
required by the Plan.
4. STOCK SUBJECT TO THE PLAN
4.1. Options to purchase not more than 100,000 shares of the Stock may be
granted under the Plan. If any Option expires, terminates or is terminated or
cancelled for any reason before it is exercised in full, the shares of Stock
that were subject to the unexercised portion of the Option shall be available
for future Options granted under the Plan.
4.2(a). If the outstanding shares of Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable on capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the Effective Date, the number and kinds of shares
for the purchase of which Options may be granted under the Plan shall be
adjusted proportionately and accordingly by the Corporation. In addition, the
number and kind of shares for which Options are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the holder
of the Option immediately following such event shall, to the extent practicable,
be the same as immediately prior to such event. Any such adjustment in
outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
4.2(b). Subject to Section 4.2(c) hereof, if the Corporation shall be the
surviving corporation in any reorganization, merger or consolidation of the
Corporation with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.
A-2
<PAGE> 19
4.2(c). Upon the dissolution or liquidation of the Corporation, or upon a
merger, consolidation or reorganization of the Corporation with one or more
other corporations in which the Corporation is not the surviving corporation, or
upon a sale of substantially all of the assets of the Corporation to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving corporation) approved
by the Board which results in any person or entity owning 80 percent or more of
the combined voting power of all classes of stock of the Corporation, the Plan
and all Options outstanding hereunder shall terminate, except to the extent
provision is made in writing in connection with such transaction for the
continuation of the Plan, the assumption of the Options theretofore granted, or
for the substitution for such Options of new options covering the stock of a
successor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and exercise prices, in which
event the Plan (if applicable) and Options theretofore granted shall continue in
the manner and under the terms so provided. In the event of any such termination
of the Plan and Options, each individual holding an Option shall have the right
(subject to the limitations on exercise set forth in Section 9 below)
immediately prior to the occurrence of such termination and during such period
occurring prior to such termination as the Board in its sole discretion shall
determine and designate, to exercise such Option to the extent that such Option
was otherwise exercisable at the time such termination occurs. The Administrator
shall send written notice of an event that will result in such a termination to
all individuals who hold Options not later than the time at which the
Corporation gives notice thereof to its stockholders.
4.2(d). Adjustments under this Section 4.2 related to stock or securities
of the Corporation shall be made by the Administrator, whose determination in
that respect shall be final and conclusive. No fractional shares of Stock or
units of other securities shall be issued pursuant to any such adjustment, and
any fractions resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share or unit.
4.2(e). The grant of an Option pursuant to the Plan shall not affect or
limit in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
5. ELIGIBILITY
Eligibility under the Plan is limited to Eligible Directors.
6. OPTION PRICE
The Option Price of the Stock covered by each Option granted under the Plan
shall be the Fair Market Value of such Stock on the Grant Date. The Option Price
shall be subject to adjustment as provided in Section 4.2 hereof.
7. NUMBER OF SHARES AND GRANT DATES
On the Effective Date, each Eligible Director then serving on the Board
shall be granted an Initial Option to purchase shares of Stock, the number of
shares of which will vary depending upon each Eligible Director's years of
service as a director of the Corporation as of the time of the Effective Date,
as follows: (1) more than seven years of service -- 2,500 shares; (2) between
three and seven years of service -- 2,000 shares; (3) between zero and three
years of service -- 1,500 shares; and (4) no service -- 1,000 shares.
Thereafter, each Eligible Director whose Commencement of Service is after the
Effective Date shall be granted an Initial Option to purchase 1,000 shares of
Stock as of the date of the Eligible Director's Commencement of Service. An
Eligible Director also shall be granted an Additional Option to purchase 1,000
shares of Stock on each anniversary of the Grant Date of the Initial Option if
the Eligible Director continues to be an Eligible Director on each of those
anniversary dates.
A-3
<PAGE> 20
8. VESTING OF OPTIONS
Subject to Section 9 hereof, the Options granted to each Eligible Director
shall be vested upon the Grant Date.
9. OPTION PERIOD
An Option shall be exercisable only during the Option Period. The Option
Period shall commence six months after the Grant Date and shall end at the close
of business on the Expiration Date; provided, however, that in no event shall
any Option Period commence prior to approval of the Plan by the Corporation's
stockholders. The Option granted to an Eligible Director will terminate on the
Expiration Date.
10. TIMING AND METHOD OF EXERCISE
Subject to Sections 8 and 9 hereof, an Optionee may, at any time, exercise
an Option with respect to all or any part of the shares of Stock then subject to
such Option by giving the Corporation written notice of exercise, specifying the
number of shares as to which the Option is being exercised. Such notice shall be
addressed to the Administrator at the Corporation's principal office, and shall
be effective when actually received (by personal delivery, fax or other
delivery) by the Administrator. Such notice shall be accompanied by an amount
equal to the Exercise Price of such shares, in the form of any one or
combination of the following: (a) cash or cash equivalents, or (b) shares of
Stock valued at Fair Market Value in accordance with the Plan; provided,
however, that the Board may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions on the use of
shares of Stock to exercise Options as it deems appropriate. Shares of Stock
acquired by the Optionee through exercise of an Option may be surrendered in
payment of the Exercise Price of Options; provided, however, that any Stock
surrendered in payment must have been (a) held by the Optionee for more than six
months at the time of surrender, or (b) acquired under an Option granted not
less than six months prior to the time of surrender. Payment in full of the
Exercise Price need not accompany the written notice of exercise provided the
notice directs that the Stock certificate or certificates for the shares for
which the Option is exercised be delivered to a licensed broker acceptable to
the Corporation as the agent for the individual exercising the Option and, at
the time such Stock certificate or certificates are delivered, the broker
tenders to the Corporation cash (or cash equivalents acceptable to the
Corporation) equal to the Exercise Price.
11. NO STOCKHOLDER RIGHTS UNDER OPTION
Neither an Optionee nor any person entitled to exercise an Optionee's
rights in the event of an Optionee's death shall have any of the rights of a
stockholder with respect to the shares of Stock subject to an Option except to
the extent the certificates for such shares shall have been issued upon the
exercise of the Option.
12. CONTINUATION OF SERVICE
Nothing in the Plan shall confer upon any person any right to continue as a
member of the Board or interfere in any way with the right of the Corporation to
terminate such relationship.
13. STOCK OPTION AGREEMENT
Each Option granted pursuant to the Plan shall be evidenced by a written
Stock Option Agreement notifying the Optionee of the grant and incorporating the
terms of the Plan. The Stock Option Agreement shall be executed by the
Corporation and the Optionee.
14. WITHHOLDING
The Corporation shall have the right to withhold, or require an Optionee to
remit to the Corporation, an amount sufficient to satisfy any applicable
federal, state or local withholding tax requirements imposed with respect to
exercise of Options. To the extent permissible under applicable tax, securities
and other laws, the Optionee may satisfy a tax withholding requirement by
directing the Corporation to apply shares of Stock to
A-4
<PAGE> 21
which the Optionee is entitled as a result of the exercise of an Option to
satisfy withholding requirements under this Section 14.
15. NON-TRANSFERABILITY OF OPTIONS
Each Option granted pursuant to the Plan shall, during Optionee's lifetime,
be exercisable only by Optionee, and neither the Option nor any right thereunder
shall be transferable by the Optionee by operation of law or otherwise other
than by will or the laws of descent and distribution, and shall not be pledged
or hypothecated (by operation of law or otherwise) or subject to execution,
attachment or similar processes.
16. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the
Corporation.
17. ADOPTION, AMENDMENT, SUSPENSION AND TERMINATION
17.1. The Plan shall be effective as of the date of adoption by the Board,
subject to stockholders' approval of the Plan within one year of the Effective
Date by a majority of the votes cast at a duly held meeting of the stockholders
of the Corporation at which a quorum representing a majority of all outstanding
stock is present, either in person or by proxy, and voting on the matter, or by
written consent in accordance with applicable state law and the Amended and
Restated Articles of Incorporation and Amended and Restated Bylaws of the
Corporation and in a manner that satisfies the requirements of Rule 16b-3(b) of
the Exchange Act; provided, however, that upon approval of the Plan by the
stockholders of the Corporation, all Options granted under the Plan on or after
the Effective Date shall be fully effective as if the stockholders of the
Corporation had approved the Plan on the Effective Date. If the stockholders
fail to approve the Plan within one year of the Effective Date, any Options
granted hereunder shall be null, void and of no effect.
17.2. Subject to the limitation of Section 17.4 hereof, the Board may at
any time suspend or terminate the Plan, and may amend it from time to time in
such respects as the Board may deem advisable; provided, however, the Board
shall not amend the Plan in the following respects without the approval of
stockholders then sufficient to approve the Plan in the first instance:
(a) To materially increase the benefits provided under the Plan;
(b) To increase the maximum number of shares which may be granted;
(c) To change the designation or class of persons eligible to receive
Options under the Plan.
17.3. No Option may be granted during any suspension or after the
termination of the Plan, and no amendment, suspension or termination of the Plan
shall, without the Optionee's consent, alter or impair any rights or obligations
under any Stock Option Agreement previously entered into under the Plan. The
Plan shall terminate ten years after the Effective Date unless previously
terminated pursuant to Section 4.2 hereof or by the Board pursuant to this
Section 17.
17.4. Notwithstanding the provisions of Section 17.2 hereof, the Plan shall
not be amended more than once in any six-month period other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, or the
rules promulgated thereunder.
18. SECURITIES LAWS
18.1. The Corporation shall not be required to sell or issue any shares of
Stock under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or the Corporation of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.
Specifically in connection with the Securities Act, upon exercise of any Option,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Stock covered by such Option, the Corporation shall not
be required to sell or issue such shares unless the Administrator has received
evidence satisfactory to the Administrator that the holder of such
A-5
<PAGE> 22
Option may acquire such shares pursuant to an exemption from registration under
the Securities Act. Any determination in this connection by the Administrator
shall be final and conclusive. The Corporation may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act. The Corporation shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority. As
to any jurisdiction that expressly imposes the requirement that an Option shall
not be exercisable unless and until the shares of Stock covered by such Option
are registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
18.2. The intent of the Plan is to qualify for the exemption provided by
Rule 16b-3 under the Exchange Act. To the extent any provision of the Plan does
not comply with the requirements of Rule 16b-3, it shall be deemed inoperative
and shall not affect the validity of the Plan. In the event Rule 16b-3 is
revised or replaced, the Administrator may exercise discretion to modify the
Plan in any respect necessary to satisfy the requirements of the revised
exemption or its replacement.
19. INDEMNIFICATION
19.1. To the extent permitted by applicable law, the Administrator shall be
indemnified and held harmless by the Corporation against and from any and all
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by the Administrator in connection with or resulting from any claim, action,
suit or proceeding to which the Administrator may be a party or in which the
Administrator may be involved by reason of any action taken or failure to act
under the Plan, and against and from any and all amounts paid by the
Administrator (with the Corporation's written approval) in the settlement
thereof, or paid by the Administrator in satisfaction of a judgment in any such
action, suit or proceeding except a judgment in favor of the Corporation;
subject, however, to the conditions that upon the institution of any claim,
action, suit or proceeding against the Administrator, the Administrator shall
give the Corporation an opportunity in writing, at its own expense, to handle
and defend the same before the Administrator undertakes to handle and defend it
on the Administrator's own behalf. The foregoing right of indemnification shall
not be exclusive of any other right to which such person may be entitled as a
matter of law or otherwise, or any power the Corporation may have to indemnify
the Administrator or hold the Administrator harmless.
19.2. The Administrator and each officer and employee of the Corporation
shall be fully justified in reasonably relying or acting upon any information
furnished in connection with the administration of the Plan by the Corporation
or any employee of the Corporation. In no event shall any person who is or shall
have been the Administrator, or an officer or employee of the Corporation, be
liable for any determination made or other action taken or any omission to act
in reliance upon any such information, or for any action (including furnishing
of information) taken or any failure to act, if in good faith.
20. GOVERNING LAW
The validity, interpretation and effect of the Plan, and the rights of all
persons hereunder, shall be governed by and determined in accordance with the
laws of Virginia, other than the choice of law rules thereof.
The Plan was duly adopted and approved by the Board on August 30, 1995, and
was duly approved by the stockholders of the Corporation on [ ], 1996.
-------------------------------------
Marilynn D. Bersoff
Secretary
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<PAGE> 23
EXHIBIT B
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
OF
BTG, INC.
WHEREAS, the BTG, Inc. Employee Stock Purchase Plan (the "Plan") has been
duly adopted by the Board of Directors of BTG, Inc. (the "Company") on May 26,
1995 and by the shareholders of the Company on August 30, 1995 to enable
eligible employees of the Company and its participating affiliates (as defined
below), through Payroll deductions, to purchase shares of the Company's common
stock (the "Common Stock") and thus to benefit the Company by increasing the
employees' interest in the Company's growth and success and encouraging eligible
employees to remain in the employ of the Company or its participating
affiliates; and
WHEREAS, the Board of Directors has approved certain amendments to the Plan
subject to shareholder approval, to be effective as of the commencement of the
first Payroll Deduction Period (as defined below) following such shareholder
approval, and has authorized restatement of the Plan to reflect such amendments,
as set forth below;
NOW, THEREFORE, the provisions of the Plan, as amended and restated, are
set forth below:
1. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in
Section 21 below, the aggregate number of shares of Common Stock that will be
made available for purchase by participants under the Plan is 400,000. The
shares issuable under the Plan may, in the discretion of the Board of Directors
of the Company (the "Board"), be either authorized but unissued shares or
treasury shares. To the extent there shall be any adjustment pursuant to the
provisions of Section 21 hereof, the aforesaid number of shares shall be
appropriately adjusted.
2. ADMINISTRATION. The Plan shall be administered under the direction of
the Employee Stock Purchase Plan Committee (the "Committee"), consisting of at
least two members of the Board, none of whom shall be an employee of the Company
or its affiliates or otherwise eligible to participate in the Plan. Members of
the Committee shall be appointed, and may be removed, by the affirmative vote of
the majority of the entire Board. No member of the Board or the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan.
3. INTERPRETATION. It is intended that the Plan meet the requirements for
an "employee stock purchase plan" under Section 423 of the Internal Revenue Code
of 1986 (the "Code") and is to be so applied and interpreted. Subject to the
express provisions of the Plan, the Committee shall have authority to interpret
the Plan, to prescribe, amend and rescind rules relating to it, and to make all
other determinations necessary or advisable in administering the Plan, all of
which determinations will be final and binding upon all persons.
4. ELIGIBLE EMPLOYEES. Any employee of the Company or any of its
participating affiliates may participate in the Plan, except the following, who
are ineligible to participate: (a) an employee whose customary employment is for
less than five months in any calendar year; (b) an employee whose customary
employment is 20 hours or less per week; and (c) an employee who, after
exercising his or her rights to purchase shares under the Plan, would own shares
of Common Stock (including shares that may be acquired under any outstanding
options) representing five percent or more of the total combined voting power of
all classes of stock of the Company. The term "participating affiliate" means
any direct or indirect affiliate of the Company that is designated as such by a
resolution of the Board. The Board may at any time in its sole discretion, if it
deems it advisable to do so, terminate the participation of the employees of a
particular affiliate or affiliates.
5. PARTICIPATION IN THE PLAN. An eligible employee may become a
participant in the Plan by completing an election to participate in the Plan on
a form provided by the Company and submitting that form to the Human Resources
Department of the Company. The form will (a) authorize payroll deductions and
state the
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<PAGE> 24
amount of eligible compensation (as defined in Section 6 below) to be deducted
from the employee's pay, (b) indicate any additional amount to be contributed as
provided in Section 8 below, and (c) authorize the purchase of shares of Common
Stock for the employee's account in accordance with the terms of the Plan.
Enrollment will become effective upon the first day of the first Payroll
Deduction Period (as defined in Section 7 below) that commences after the
Company's receipt of the form, but not before July 1, 1995.
6. PAYROLL DEDUCTIONS. At the time an eligible employee submits his or her
election to participate in the Plan (as provided in Section 5 above), the
employee shall elect to have deductions made from his or her pay, on each pay
day following his or her enrollment in the Plan, and for as long as he or she
shall participate in the Plan, of a whole dollar amount of eligible compensation
which the employee is entitled to receive on such pay day. For purposes of this
Plan, "eligible compensation" includes salary and overtime pay. Deductions made
in accordance herewith will be credited to the employee's account under the
Plan. A participating employee may at any time increase or decrease his or her
payroll deduction amount by completing and submitting to the Human Resources
Department of the Company a new payroll deduction authorization form to take
effect at the beginning of the next Payroll Deduction Period (as defined in
Section 7 below). An employee may not during any Payroll Deduction Period change
his or her payroll deduction for that Payroll Deduction Period, nor may an
employee withdraw any contributed funds other than by terminating participation
in accordance with Section 15 below.
7. PAYROLL DEDUCTION PERIODS. The first Payroll Deduction Period under the
Plan shall commence on October 1, 1995 and shall end on December 31, 1995 (the
"Initial Payroll Deduction Period"). Subsequent Payroll Deduction Periods will
be three-month periods beginning on January 1, April 1, July 1 and October 1 of
each year.
8. LUMP SUM CONTRIBUTIONS. For the Payroll Deduction Period commencing on
July 1 of each year, an eligible employee may contribute a lump sum amount for
purchase of Common Stock under the Plan in addition to payroll deductions
provided for in Section 6 above.
9. RIGHTS TO PURCHASE COMMON STOCK; PURCHASE PRICE. Rights to purchase
shares of Common Stock will be deemed granted to participating employees as of
the first trading day of each Payroll Deduction Period. The purchase price of
each share of Common Stock (the "Purchase Price") will be the lesser of 85
percent of the fair market value of the Common Stock (i) on the first trading
day of the Payroll Deduction Period or (ii) on the last trading day of such
Payroll Deduction Period. For purposes of the Plan, "fair market value" means,
if the Common Stock is listed on an established national or regional stock
exchange, is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or is publicly traded in an established
securities market, the closing price of the Common Stock on such exchange or
system or in such market (the highest such closing price if there is more than
one such exchange or market) on such date (or, if there is no such closing
price, the mean between the highest bid and lowest asked prices or between the
high and low prices on such date), or, if no sale of the Common Stock has been
made on such day, or the next preceding day on which any such sale shall have
been made.
10. TIMING OF PURCHASE; PURCHASE LIMITATION. Unless a participating
employee has given prior written notice terminating such employee's
participation in the Plan, or his or her participation in the Plan has otherwise
been terminated as provided in Section 15 below, such employee will be deemed to
have exercised automatically his or her right to purchase Common Stock on the
last trading day of the Payroll Deduction Period (except as provided in Section
15 below) for the number of whole shares of Common Stock which the accumulated
funds in the employee's account at that time will purchase at the Purchase
Price, subject to the purchase limitation set forth below in this Section 10 and
subject to adjustment under Section 21 below. Shares may not be purchased at any
other time under the Plan. Fractional shares will not be issued under the Plan.
Notwithstanding any other provision of the Plan, no employee may purchase in any
one calendar year under the Plan and all other "employee stock purchase plans"
of the Company and its subsidiaries (as such term is defined in Section 423 of
the Code) shares of Common Stock having an aggregate fair market value in excess
of $25,000, determined, as to shares purchased during each Payroll Deduction
Period during such calendar year, as of the first trading date of such Payroll
Deduction Period. Any funds remaining in a participating employee's account
after a purchase of shares will be returned to the participating employee,
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<PAGE> 25
except that any such amount that is attributable to a fractional share shall be
retained in the account and will be available for the purchase of additional
shares during the next Payroll Deduction Period. Effective upon the last trading
day of the Payroll Deduction Period, a participating employee will become a
stockholder with respect to the shares purchased during such Period, and will
thereupon have all dividend, voting and other ownership rights incident thereto,
subject to the transfer restriction provided in Section 11 below.
11. ISSUANCE OF STOCK CERTIFICATES; TRANSFER RESTRICTIONS. On the last
trading day of the Payroll Deduction Period, a participating employee will be
credited with the number of whole shares of Common Stock purchased for his or
her account under the Plan during such Period. Shares purchased under the Plan
will be held in the custody of the Committee, or such other entity as the
Committee shall designate, as agent (the "Agent"). The Agent may hold the shares
purchased under the Plan in stock certificates in nominee names, and may
commingle shares held in its custody in a single account or stock certificate,
without identification as to individual employees. An employee may, at any time
after the expiration of six months following his or her purchase of shares under
the Plan, by written notice instruct the Agent to have all or part of such
shares reissued in the employee's own name and have the stock certificate
delivered to the employee. During such six months period, the employee will not
be entitled to sell or otherwise transfer the shares.
12. WITHHOLDING OF TAXES. To the extent that a participant realizes
ordinary income in connection with a sale or other transfer of any shares of
Common Stock purchased under the Plan, the Company, or its affiliate, may
withhold amounts needed to cover such taxes from any payments otherwise due and
owing to the participant or from shares that would otherwise be issued to the
participant hereunder. Any participant who sells or otherwise transfers shares
purchased under the Plan within two years after the beginning of the Payroll
Deduction Period in which the shares were purchased must within 30 days of such
transfer notify the Human Resources Department of the Company in writing of such
transfer.
13. ACCOUNT STATEMENTS. The Company will cause the Agent to deliver to
each participating employee a statement for each Payroll Deduction Period during
which the employee purchases Common Stock under the Plan, reflecting the amount
of Payroll deductions accumulated during the Payroll Deduction Period, the
number of shares purchased for the employee's account, the price per share of
the shares purchased for the employee's account, the number of shares held for
the employee's account at the end of the Payroll Deduction Period, and any
amount attributable to a fractional share that is being carried over to the next
Payroll Deduction Period.
14. PARTICIPATION ADJUSTMENT. If in any Payroll Deduction Period the
number of unsold shares that may be made available for purchase under the Plan
pursuant to Section 1 above is insufficient to permit exercise of all rights
deemed exercised by all participating employees pursuant to Section 10 above, a
participation adjustment will be made, and the number of shares purchasable by
all participating employees will be reduced proportionately. Any funds then
remaining in a participating employee's account after such exercise will be
refunded to the employee.
15. TERMINATION OF PARTICIPATION. A participating employee will be
refunded all monies in his or her account, and his or her participation in the
Plan will be terminated, if: (a) the employee elects to terminate participation
in a writing delivered to the Payroll Department of the Company provided, that,
with respect to a participating employee who is an executive officer of the
Company who is subject to Section 16(b) under the Securities Exchange Act of
1934, as amended, such employee's termination of participation in the Plan shall
be deemed to be effective as of the first day of the next Payroll Deduction
Period following the Payroll Deduction Period during which such employee
delivers a writing terminating such employee's participation in the Plan; (b)
the employee ceases to be employed by the Company or a participating affiliate;
(c) the Board elects to terminate the Plan as provided in Section 20 below; or
(d) the employee ceases to be eligible to participate in the Plan under Section
4 above. Temporary disability or an approved leave of absence will not result in
termination of employment within the meaning of the Plan. As soon as practicable
following termination of an employee's participation in the Plan, the Company
will deliver to the employee a check representing any uninvested contributions
to which the employee is entitled and a stock certificate representing the
number of whole shares held in the employee's account; provided, that the
employee shall not be entitled to have a stock certificate delivered as to any
shares held for less than six months from the date of
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<PAGE> 26
purchase until such six month holding period has been satisfied. Once
terminated, participation may not be reinstated for the then current Payroll
Deduction Period, but, if otherwise eligible, the employee may elect to
participate in any subsequent Payroll Deduction Period.
16. ASSIGNMENT. No participating employee may assign his or her rights to
purchase shares of Common Stock under the Plan, whether voluntarily, by
operation of law or otherwise. Any payment of cash or issuance of shares of
Common Stock under the Plan may be made only to the participating employee (or,
in the event of the employee's death, to the employee's estate). Once a stock
certificate has been issued to the employee or for his or her account, such
certificate may be assigned the same as any other stock certificate.
17. APPLICATION OF FUNDS. All funds received or held by the Company under
the Plan may be used for any corporate purpose until applied to the purchase of
Common Stock and/or refunded to participating employees. Participating
employees' accounts will not be segregated. Interest will not be paid on funds
held by the Company pursuant to the Plan.
18. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor any right to
purchase Common Stock under the Plan confers upon any employee any right to
continued employment with the Company or any of its affiliates, nor will an
employee's participation in the Plan restrict or interfere in any way with the
right of the Company or any of its affiliates to terminate the employee's
employment at any time.
19. AMENDMENT OF PLAN. The Board may amend the Plan in any respect;
provided, however, that without approval of the stockholders of the Company no
amendment shall be made: (a) increasing the number of shares specified in
Section 1 above that may be made available for purchase under the Plan (except
as provided in Section 21 below), (b) changing the eligibility requirements for
participating in the Plan or (c) which adversely affects any right or obligation
with respect to any right to purchase shares of Common Stock pursuant to the
Plan then outstanding, except to the extent that any such action shall be
required or desirable (in the opinion of the Company or its counsel) in order to
comply with the provisions of the Code or any rule or regulation promulgated or
proposed thereunder.
20. EFFECTIVE DATE; TERM AND TERMINATION OF THE PLAN. The Plan was
effective on May 26, 1995 and was approved by a majority of the votes present
and entitled to vote at a duly held meeting of the shareholders of the Company
on August 30, 1995 at which a quorum, representing a majority of all outstanding
voting stock, was present. Amendments to the Plan incorporated in this
restatement are to be effective as of the commencement of the first Payroll
Deduction Period following approval of such amendments by the shareholders of
the Company as set forth above. The Board may terminate the Plan at any time and
for any reason or for no reason, provided that such termination shall not impair
any rights of participants that have vested at the time of termination. In any
event, the Plan shall, without further action of the Board, terminate at the
earlier of (i) the fifth anniversary of the effective date of the Plan and (ii)
such time as all shares of Common Stock that may be made available for purchase
under the Plan pursuant to Section 1 above have been issued; provided, that
Section 11 above shall remain in full force and effect for a period of at least
six months following the date of termination of the Plan, after which all shares
of Common Stock held by the Agent pursuant to the terms of Section 11 above
shall be reissued in the names of the employees entitled to such shares, and
stock certificates evidencing such shares shall be delivered to such employees.
21. EFFECT OF CHANGES IN CAPITALIZATION.
(a) Changes in Stock.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the effective
date of the Plan, the number and kinds of shares of Common Stock that may be
purchased under the Plan shall be adjusted proportionately and accordingly by
the Company. In addition, the number and kind of shares for which rights are
outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of a participating employee immediately following such
event shall, to the extent practicable, be the
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<PAGE> 27
same as immediately before such event. Any such adjustment in outstanding rights
shall not change the aggregate Purchase Price payable by a participating
employee with respect to shares subject to such rights, but shall include a
corresponding proportionate adjustment in the Purchase Price per share.
(b) Reorganization in Which the Company Is the Surviving Corporation.
Subject to Subsection (c) of this Section 21, if the Company shall be the
surviving corporation in any reorganization, merger or consolidation of the
Company with one or more other corporations, all outstanding rights under the
Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to such rights would have been entitled
immediately following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Purchase Price per share so that
the aggregate Purchase Price thereafter shall be the same as the aggregate
Purchase Price of the shares subject to such rights immediately prior to such
reorganization, merger or consolidation.
(c) Reorganization in Which the Company Is Not the Surviving Corporation or
Sale of Assets or Stock.
Upon any dissolution or liquidation of the Company, or upon a merger,
consolidation or reorganization of the Company with one or more other
corporations in which the Company is not the surviving corporation, or upon a
sale of all or substantially all of the assets of the Company to another
corporation, or upon any transaction that results in any person or entity (or
persons or entities acting as a group or otherwise in concert) owning more than
50 percent of the combined voting power of all classes of stock of the Company,
the Plan and all rights outstanding hereunder shall terminate, except to the
extent provision is made in writing in connection with such transaction for the
continuation of the Plan or the assumption of the rights theretofore granted, or
for the substitution for such rights of new rights covering the stock of a
successor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and exercise prices, in which
event the Plan and rights theretofore granted shall continue in the manner and
under the terms so provided. In the event of any such termination of the Plan,
the Payroll Deduction Period shall be deemed to have ended on the last trading
day prior to such termination, and in accordance with Section 10 above the
rights of each participating employee then outstanding shall be deemed to be
automatically exercised on such last trading day; provided, that in the event of
such termination of the Plan, the Company or such successor corporation shall
take such action as may be necessary to ensure that the Agent appointed pursuant
to the terms of Section 11 above shall continue to hold shares of Common Stock
in custody as required by Section 11 above for a period of at least six months
following the date of termination of the Plan, after which all shares of Common
Stock held by the Agent pursuant to the terms of Section 11 above shall be
reissued in the names of the employees entitled to such shares, and stock
certificates evidencing such shares shall be delivered to such employees. The
Board shall send written notice of an event that will result in such a
termination to all participating employees not later than the time at which the
Company gives notice thereof to its stockholders.
(d) Adjustments.
Adjustments under this Section 21 related to stock or securities of the
Company shall be made by the Committee, whose determination in that respect
shall be final, binding, and conclusive. No fractional shares of Common Stock or
units of other securities shall be issued pursuant to any such adjustment, and
any fractions resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Company.
The grant of a right pursuant to the Plan shall not affect or limit in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
22. GOVERNMENTAL REGULATION. The Company's obligation to issue, sell and
deliver shares of Common Stock pursuant to the Plan is subject to such approval
of any governmental authority and any national securities exchange or other
market quotation system as may be required in connection with the authorization,
issuance or sale of such shares.
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<PAGE> 28
23. STOCKHOLDER RIGHTS. Any dividends paid on shares held by the Company
for a participating employee's account will be transmitted to the employee. The
Company will deliver to each participant who purchases shares of Common Stock
under the Plan, as promptly as practicable by mail or otherwise, all notices of
meetings, proxy statements, proxies and other materials distributed by the
Company to its stockholders. Any shares of Common Stock held by the Agent for an
employee's account will be voted in accordance with the employee's duly
delivered and signed proxy instructions. There will be no charge to
participating employees in connection with such notices, proxies and other
materials.
24. PAYMENT OF PLAN EXPENSES. The Company will bear all costs of
administering and carrying out the Plan; provided, that, except as otherwise
specifically provided in the Plan, the Company shall not be obligated to pay any
costs or expenses (including legal fees) incurred by any participant in the Plan
in connection with any right to purchase shares of Common Stock hereunder or the
purchase of such shares of Common Stock.
* * *
The Amended and Restated Employee Stock Purchase Plan of BTG, Inc. was duly
adopted and approved by the Board of Directors of BTG, Inc. on the 26th of June,
1996.
/s/ Marilynn D. Bersoff
-------------------------------------
Marilynn D. Bersoff
Secretary of BTG, Inc.
The Amended and Restated Employee Stock Purchase Plan of BTG, Inc. was duly
approved by the shareholders of BTG, Inc. on the of August, 1996.
-------------------------------------
Marilynn D. Bersoff
Secretary of BTG, Inc.
B-6
<PAGE> 29
REVOCABLE PROXY
BTG, INC.
1945 OLD GALLOWS ROAD VIENNA, VA 22182
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE ONLY AT THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 14, 1996, AND AT ANY
ADJOURNMENT THEREOF.
The undersigned, being a shareholder of BTG, Inc. (the "Company"), hereby
appoints Edward H. Bersoff as proxy and hereby authorizes such proxy to
represent the undersigned at the Annual Meeting of Shareholders of the Company
to be held at the DoubleTree Hotel at Tysons Corner, 7801 Leesburg Pike, Falls
Church, Virginia 22043 on August 14, 1996 at 10:00 a.m., Eastern Time, and at
any adjournment of said meeting, and thereat to act with respect to all votes
that the undersigned would be entitled to cast, if then personally present, in
accordance with the following instructions. The undersigned shareholder hereby
revokes any proxy or proxies heretofore given.
<TABLE>
<S> <C>
1. Proposal to elect three nominees for Director, / / FOR nominees listed below (except as marked to the contrary below)
each of two for a three-year term and one to / / WITHHOLD AUTHORITY to vote for all nominees listed below
complete a term expiring in two years:
</TABLE>
Nominees with terms expiring at the 1999 Annual Meeting: Ruth M. Davis and
Raymond T. Tate.
Nominee with a term expiring at the 1998 Annual Meeting: Alan G. Merten.
INSTRUCTIONS: The undersigned shareholder may withdraw authority to vote for any
nominee(s) by lining through or otherwise striking out the name of such
nominee(s) above.
2. Proposal to approve the Company's Directors Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve amendments to the Company's Employee Stock Purchase Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to approve amendments to the Company's 1995 Employee Stock Option
Plan.
/ / FOR / / AGAINST / / ABSTAIN
5. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
6. To vote in its discretion, upon any other business that may properly come
before that Annual Meeting or any adjournment thereof. Except with respect to
procedural matters incident to the conduct of the Meeting, management is not
aware of any other matters which should come before the Annual Meeting.
(Continued and to be signed and dated on reverse side)
(Continued from reverse side)
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Shareholders of BTG, Inc. called for August 14, 1996, and a Proxy Statement
prior to signing this Proxy.
<TABLE>
<C> <S>
------------------ Dated: , 1996
I plan to attend ----------------------------
the meeting ---------------------------------------------
/ / Signature
------------------ ---------------------------------------------
Signature
Note: Please sign exactly as your name appears
on this proxy. Only one signature is required
where the stock is held jointly. When signing
in a representative capacity, please give
title.
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER. IF NO DIRECTION IS OTHERWISE MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3, 4 AND 5 AT THE DISCRETION OF THE PROXY. THIS PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS VOTED BY DELIVERY TO THE SECRETARY OF THE
COMPANY EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY EXECUTED PROXY
BEARING A LATER DATE, OR BY APPEARING AT THE ANNUAL MEETING AND VOTING IN
PERSON.
