<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BTG, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
BTG, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[BTG INCORPORATED LOGO]
BTG, INC.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
August , 1997
Dear Shareholder:
You are cordially invited to attend the 1997 annual meeting of BTG, Inc.
(the "Company") on Wednesday, September 17, 1997, at 10:00 a.m. at the Fairview
Park Marriott at 3111 Fairview Park Drive, Falls Church, VA 22042.
At this meeting you will be asked to vote, in person or by proxy, on the
following matters: (i) election of two directors, each for a three-year term;
(ii) approval of the Company's Non-Employee Director Stock Purchase Plan; (iii)
approval of an amendment to the Company's Articles of Incorporation, to increase
the total number of authorized shares of common stock from 10,000,000 shares to
20,000,000 shares; (iv) approval of an amendment to the Company's 1995 Employee
Stock Option Plan to increase the number of shares authorized to be issued
pursuant to options granted under the plan from 750,000 to 1,250,000; (v)
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 1997 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.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
(703) 383-8000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 17, 1997
NOTICE IS HEREBY GIVEN that the 1997 annual meeting of shareholders (the
"Annual Meeting") of BTG, Inc. (the "Company" or "BTG") will be held on
Wednesday, September 17, 1997, at 10:00 a.m. at the Fairview Park Marriott at
3111 Fairview Park Drive, Falls Church, VA 22042, for the following purposes:
1) To elect two directors, each for a three-year term;
2) To approve the Company's Non-Employee Director Stock Purchase Plan;
3) To approve an amendment to the Company's Articles of Incorporation to
increase the total number of authorized shares of common stock from
10,000,000 to 20,000,000;
4) To approve an amendment to the Company's 1995 Employee Stock Option Plan
to increase the number of shares authorized to be issued pursuant to
options granted under the plan from 750,000 to 1,250,000;
5) To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending March 31, 1998; 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 July 17,
1997 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
Fairfax, Virginia
August , 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.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 17, 1997
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 1997 Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held on
Wednesday, September 17, 1997, at 10:00 a.m. at the Fairview Park Marriott at
3111 Fairview Park Drive, Falls Church, VA 22042, 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 TWO NOMINEES OF THE BOARD OF
DIRECTORS TO SERVE AS DIRECTORS, EACH FOR A THREE-YEAR TERM; (ii) FOR THE
APPROVAL OF THE COMPANY'S NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN; (iii) FOR
THE APPROVAL OF AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 10,000,000
TO 20,000,000; (iv) FOR THE APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1995
EMPLOYEE STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED TO BE
ISSUED PURSUANT TO OPTIONS GRANTED UNDER THE PLAN FROM 750,000 TO 1,250,000; 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 August , 1997.
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. July 17, 1997
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 337 record holders of Common Stock and
the number of shares outstanding as of that date was 8,523,939. 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 July 17, 1997 by (i) each director
and nominee for director; (ii) the Chief Executive Officer and each of the other
four most highly compensated executive officers each of whose total annual
salary and bonus exceeded $100,000 during the year ended March 31, 1997 (the
"Named Executive Officers"); (iii) all persons known to the Company to be
beneficial owners of more than 5% of the 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).............................. 1,208,796 14.2%
Donald M. Wallach, Director(2)...................... 267,805 3.1
Randall C. Fuerst, Senior Vice President(3)......... 49,860 1.0
James V. Kimsey, Director(4)........................ 12,000 *
John M. Hughes, Chief Financial Officer(5).......... 8,742 *
Ruth M. Davis, Director(6).......................... 6,750 *
Raymond T. Tate, Director(7)........................ 3,000 *
Ronald L. Turner, Director(8)....................... 2,000 *
Alan G. Merten, Director(9)......................... 1,000 *
C. Thomas Nixon(10)................................. 818 *
Leland Phipps, Senior Vice President(11)............ 184 *
All directors and executive officers as a group (14
persons).......................................... 1,947,484 22.8%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) The address of Dr. Bersoff is: c/o BTG, Inc., 3877 Fairfax Ridge Road,
Fairfax, Virginia 22030. Does not include (i) 30,668 additional shares
issuable upon the exercise of options granted by the Company which are not
exercisable within 60 days of July 17, 1997; (ii) 92,487 shares of Common
Stock and 15,500 shares of Common Stock underlying options (3,499 of which
are exercisable within 60 days of July 17, 1997) owned by Marilynn D.
Bersoff, Dr. Bersoff's wife; and (iii) 5,750 shares of Common Stock owned
by Dr. Bersoff's mother.
(2) Includes (i) 3,500 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of July 17, 1997; (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, in which Mr. Wallach has a majority interest.
(3) Includes 2,666 shares of Common Stock underlying options granted by the
Company which are exercisable within 60 days of July 17, 1997. Does not
include 17,834 additional shares issuable upon the exercise of options
granted by the Company which are not exercisable within 60 days of July 17,
1997.
(4) Includes 2,000 shares of Common Stock issuable upon the exercise of options
granted by the Company which are exercisable within 60 days of July 17,
1997.
2
<PAGE> 6
(5) Does not include 16,667 additional shares issuable upon the exercise of
options granted by the Company which are not exercisable within 60 days of
July 17, 1997.
(6) Includes 3,000 shares of Common Stock issuable upon the exercise of options
granted by the Company which are exercisable within 60 days of July 17,
1997.
(7) Includes 3,000 shares of Common Stock issuable upon the exercise of options
granted by the Company which are exercisable within 60 days of July 17,
1997.
(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 July 17,
1997.
(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 July 17,
1997.
(10) As of May 21, 1997, Mr. Nixon was no longer employed by the Company.
(11) Does not include 6,500 additional shares issuable upon the exercise of
options granted by the Company which are not exercisable within 60 days of
July 17, 1997.
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 Edward H. Bersoff and Donald M. Wallach will be elected for a
three-year term. 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 two 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
Edward H. Bersoff........... 54 Chairman of the Board, 1982 2000
President and Chief
Executive Officer
Donald M. Wallach........... 62 Director 1982 2000
</TABLE>
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., 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 a director of
Phillips Business Information, Inc. He is the husband of Marilynn D. Bersoff,
Senior Vice President, Administration and Secretary of the Company.
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.
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
FOR TERM TO
NAME AGE POSITION DIRECTOR SINCE EXPIRE
---------------------------- --- ---------------------- -------------- -----------
<S> <C> <C> <C> <C>
Ruth M. Davis............... 68 Director 1986 1999
James V. Kimsey............. 57 Director 1995 1998
Alan G. Merten.............. 54 Director 1996 1998
Raymond T. Tate............. 72 Director 1988 1999
Ronald L. Turner............ 50 Director 1995 1998
</TABLE>
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., which specializes in industrial
modernization strategies and technology management. Dr.
4
<PAGE> 8
Davis also currently serves on the boards of Air Products and Chemicals, Inc.,
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 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, Inc. ("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 and the
National Stroke 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 1979 as President of Raymond Tate
Associates, Inc., a technology consulting firm. From 1994 to October 1996, he
served as Chairman of the Board, President and Chief Executive of Ashton
Technology Group, Inc., a technology company primarily involved in financial
transactions and neural network research and development activities. He is a
former Deputy Assistant Secretary of the Navy and a former Deputy Director of
the NSA.
Ronald L. Turner is currently an Executive Vice President of Ceridian
Corporation ("Ceridian"), an information technology company. From 1993 to 1997
he served as the President and Chief Executive Officer of Computing Devices
International, the defense electronics business division of Ceridian. 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 board of
FLIR Systems, Inc.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors acts as 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 Compensation 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 management,
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 two
times in fiscal 1997.
5
<PAGE> 9
The members of the Audit Committee of the Company's Board of Directors are
Messrs. Turner and Merten 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
1997, the Audit Committee met twice.
During the 12 months ended March 31, 1997, the Board of Directors held five
meetings. Other than James Kimsey, who did not attend two of the 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.
The Company has adopted a Directors Stock Option Plan (the "Directors
Plan"). Under the Directors Plan, options to purchase up to an aggregate of
100,000 shares of Common Stock are available for grants to directors of the
Company who are not officers or employees of the Company or any subsidiary of
the Company (each an "Eligible Director"). On August 30, 1995, the effective
date of the Directors Plan (the "Effective Date"), each Eligible Director then
serving on the Board of Directors was granted an initial option to purchase
shares of Common Stock, the number of which varied depending upon each Eligible
Director's years of service as a director of the Company, 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 years of service -- 1,000 shares. The Directors Plan provides
that each Eligible Director whose commencement of service is after the Effective
Date is granted an initial option to purchase 1,000 shares of Common Stock as of
the date of the Eligible Director's commencement of service. An Eligible
Director is also granted an additional option to purchase 1,000 shares of Common
Stock for each year that the Eligible Director continues to be an Eligible
Director. The Directors Plan will terminate in 2006, unless terminated at an
earlier date by the Board of Directors.
6
<PAGE> 10
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(2)........... 1997 $ 357,007 $ 0 9,000(2) $37,407
Chairman of the Board, 1996 296,194 150,000 0 9,557
President, and Chief 1995 266,361 115,000 11,000 24,423
Executive Officer
John M. Hughes................. 1997 229,548 0 4,000 16,575
Senior Vice President and 1996 219,723 40,000 0 10,055
Chief Financial Officer 1995 207,980 37,500 7,500 16,828
Leland Phipps.................. 1997 275,012 0 7,000 25,329
Senior Vice President, and
General Manager, Integration
and Network Systems
C. Thomas Nixon................ 1997 199,179 0 4,000 20,595
Senior Vice President and 1996 189,365 20,000 0 8,758
General Manager, Technology
Systems(3)
Randall C. Fuerst.............. 1997 197,113 0 7,000 17,688
Senior Vice President and
General Manager, Systems
Engineering
</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, the value of annual leave converted into Common Stock
pursuant to the BTG, Inc. Annual Leave Stock Plan and reimbursement of the
cost of uninsured medical expenses, tax preparation, financial planning and
certain legal expenses (capped at $10,000 per year).
(2) Does not include an option to acquire 4,000 additional shares granted to
Marilynn D. Bersoff, Dr. Bersoff's wife.
(3) As of May 21, 1997, Mr. Nixon was no longer employed by the Company.
7
<PAGE> 11
STOCK OPTIONS
Option Grants. The following table contains information with respect to
grants of stock options for Common Stock to each of the Named Executive Officers
during the year ended March 31, 1997. All such grants were made under the Option
Plan. Under the Option Plan, options to purchase up to an aggregate of 750,000
shares of Common Stock are available for grants to key employees. As of March
31, 1997, options to purchase 41,500 shares of Common Stock had been granted. Of
those options to acquire 3,666 shares had been exercised and options to acquire
37,834 shares were outstanding under the Option Plan. The Company does not have
any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------- ANNUAL RATE
NUMBER OF % OF TOTAL OF STOCK
SECURITIES SECURITIES PRICE APPRECIATION
UNDERLYING UNDERLYING OPTIONS EXERCISE FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(1) IN FISCAL YEAR ($/SH)(2) DATE(3) 5% 10%
- ----------------------- ---------- -------------------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff(4)... 9,000 10.3% $ 10.31 4/10/01 $14,940 $ 43,200
John M. Hughes......... 4,000 4.6 9.38 4/10/06 23,560 59,800
Leland Phipps.......... 3,000 3.4 9.38 4/10/06 17,670 44,850
C. Thomas Nixon(5)..... 4,000 4.6 9.38 4/10/06 23,560 59,800
Randall C. Fuerst...... 7,000 8.0 9.38 4/10/06 41,230 104,650
</TABLE>
- ---------------
(1) All options included in this table vest in equal installments over a
three-year period beginning April 11, 1998, two years after the date of
grant.
(2) The option exercise prices on all options granted under the Option Plan may
not be less than 100% of the fair market value of Common Stock on the grant
date, as defined in the Option Plan. The options are not subject to any
provision that could cause the exercise price to be lowered (other than for
anti-dilution purposes).
(3) Options can only be exercised so long as the optionee is employed by BTG or
a subsidiary of BTG and for three months after termination of employment.
(4) Does not include an option to acquire 4,000 additional shares granted to
Marilynn D. Bersoff, Dr. Bersoff's wife.
(5) As of May 21, 1997, Mr. Nixon was no longer employed by the Company.
8
<PAGE> 12
Option Exercises and Year-End Value. The following table provides
information regarding the exercise of options during the year ended March 31,
1997, 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
MARCH 31, 1997 MARCH 31, 1997(1)
ACQUIRED IN VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- --------------------------- ----------- -------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff(2)....... 12,500 $277,125 21,668 12,332 $ 125,205 $ 151,695
John M. Hughes............. 0 0 10,667 5,833 104,651 71,204
Leland Phipps.............. 0 0 6,500 0 52,780 0
C. Thomas Nixon(3)......... 0 0 4,000 0 32,480 0
Randy Fuerst............... 0 0 10,834 4,266 96,372 53,094
</TABLE>
- ---------------
(1) Based on a per share value of $17.50 as of March 31, 1997.
(2) Does not include the following which relate to options exercised or held by
Marilynn D. Bersoff, Dr. Bersoff's wife: (i) $18,454 realized on the
exercise of options to acquire 1,000 shares of Common Stock; (ii)
unexercisable in-the-money options valued at $99,676 or (iii) exercisable
in-the-money options valued at $33,229.
(3) As of May 21, 1997, Mr. Nixon was no longer employed by the Company.
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.
Pursuant to an agreement dated as of October 20, 1995, Leland Phipps serves
as President of Concept Automation, Inc. of America ("CAI"), a wholly-owned
subsidiary of the Company. This agreement was part of the transaction pursuant
to which the Company acquired CAI. Mr. Phipps is paid minimum annual cash
compensation of $275,000 and is employed for a term ending on October 20, 1998.
Mr. Phipps' employment may be terminated for cause by the Company, at no cost.
Termination without cause requires a continuation of cash compensation and other
benefits for the term of the agreement. The agreement terminates if Mr. Phipps
is unable to perform the duties and services specified in the agreement. The
agreement includes a covenant not to compete which expires on the earlier of one
year after Mr. Phipps is no longer employed by the Company or October 20, 1999.
9
<PAGE> 13
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 recommendation 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.
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 or her
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
is measured quarterly and serves, 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. For fiscal year 1997, the Compensation Committee, in consultation with
the entire Board of Directors, determined that no incentive bonuses would be
paid to the executive officers of the Company.
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 the cost of health care not covered by insurance, tax
preparation, financial planning and legal expenses related to estate planning,
adoptions and divorce, to a maximum of $10,000 per year to all senior corporate
officers.
10
<PAGE> 14
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 1997, 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 growth through acquisitions are a result of Dr.
Bersoff's activities and justify his salary of $357,007, a 21% increase over
fiscal year 1996. However, due to the failure to achieve certain of the goals
established in his BPA, no incentive bonus was paid, for the fiscal year,
resulting in a decrease of 20% in salary and bonus as compared to fiscal year
1996.
Respectfully submitted,
Organization and Compensation
Committee
James V. Kimsey
Raymond T. Tate
Donald M. Wallach, Chairman
11
<PAGE> 15
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 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 Composite
(Fiscal Year Covered) Index Peer Group 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
3/31/97 94.68 93.10 86.04
</TABLE>
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and certain beneficial holders of
Common Stock 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
1997, Clifton Y. Bumgardner failed timely to report two transactions.
12
<PAGE> 16
ADOPTION OF NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN
(PROPOSAL TWO)
GENERAL
On October 15, 1996, the Board of Directors approved and is now proposing
for shareholder approval the Non-Employee Director Stock Purchase Plan (the
"Director Purchase Plan"). The purpose of the Director Purchase Plan is to
enable non-employee directors to purchase shares of Common Stock, with accrued
fees, and thus to encourage stock ownership by directors of the Company and to
encourage the continued employment of directors of the Company.
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 Purchase Plan. Unless otherwise
indicated, properly executed proxies will be voted in favor of Proposal Two to
adopt the Director Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTOR
PURCHASE PLAN.
DESCRIPTION OF THE DIRECTOR PURCHASE PLAN
The following summary of the Director Purchase 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 Purchase Plan, which is attached hereto as
Appendix A and is incorporated herein by reference.
Under the Director Purchase Plan, 100,000 shares of Common Stock are
available for purchase by non-employee directors of the Company. In the event
there is any increase or decrease in Common Stock without receipt of
consideration by the Company (for instance, by a recapitalization or stock
split), there may be a proportionate adjustment to the number and kinds of
shares that may be purchased under the Director Purchase Plan. The Director
Purchase Plan permits non-employee directors to elect to have their fees as
directors retained by the Company and used to purchase shares of Common Stock of
the Company. Generally, retained fees will be accumulated during the period
commencing on April 1 of each year and ending March 31 of the following year
(the "Accumulation Period").
An eligible non-employee director may become a participant in the Director
Purchase Plan by completing an election to participate in the Director Purchase
Plan authorizing the Company to retain directors fees payable following
enrollment in the Director Purchase Plan. The fees retained will be credited to
the non-employee director's account under the Director Purchase Plan. A
non-employee director may not, during any Accumulation Period, change the
percentage of directors fees retained for that Accumulation Period, nor may a
non-employee director withdraw any contributed funds other than when (i) the
Board of Directors elects to terminate the Director Purchase Plan or (ii) the
non-employee director is terminated for cause. The amount credited to a
non-employee director's account at the time a director dies, is disabled,
resigns or is not reelected will be credited with interest and the non-employee
director will continue to participate in the Director Purchase Plan for the
remainder of the Accumulation Period. The Director Purchase Plan shall be
administered by the Board of Directors.
The purchase price for each share (the "Purchase Price") will be the fair
market value of the Common Stock on the first or last trading day of such
Accumulation Period, whichever is lower. On the last trading day of the
Accumulation Period, a participating non-employee director will be credited with
the number of whole shares of Common Stock purchased for his or her account
under the Director Purchase Plan during such period. Common Stock purchased
under the Director Purchase Plan will be held in the custody of First Union
National Bank, as agent (the "Agent"). The Agent may hold the Common Stock
purchased under the Director Purchase 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 directors. A non-employee
director may, however, by written notice instruct the Agent to have all or part
of such shares reissued in the non-employee director's own name and have the
stock certificate delivered to the non-employee director.
13
<PAGE> 17
No participating non-employee director may assign his or her rights to
purchase shares of Common Stock under the Director Purchase Plan, whether
voluntarily, by operation of law or otherwise.
The Board of Directors may, at any time, amend the Director Purchase Plan
in any respect; provided, however, that without approval of the stockholders of
the Company no amendment shall be made impairing the vested rights of
non-employee directors.
The Board of Directors may terminate the Director Purchase 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 Director Purchase Plan shall without further action of the
Board of Directors, terminate at the earlier of (i) five years after adoption of
the Director Purchase Plan by the Board of Directors or (ii) such time as all
shares of Common Stock that may be made available for purchase under the
Director Purchase Plan have been issued.
FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTOR PURCHASE PLAN
Amounts retained under the Director Purchase Plan will be taxable income to
the non-employee directors in the year in which the amounts otherwise would have
been received. The non-employee directors will not be required to recognize
additional income for federal income tax purposes at the time they are deemed to
have been granted a right to purchase Common Stock (on the first day of an
Accumulation Period). They will recognize ordinary income when the right to
purchase Common Stock is exercised on the last day of the Accumulation Period,
measured by the difference between the purchase price of the shares of Common
Stock and their fair market value on the last day of the Accumulation Period.
The non-employee director's tax-basis for determining gain or loss on a
future sale will be the fair market value of the shares of Common Stock on the
last day of the Accumulation Period. Upon disposition of the Common Stock
acquired under the Director Purchase Plan, any gain realized will be reportable
by them as a capital gain, and any loss will be reportable as a capital loss.
Capital gain or loss will be long-term if the non-employee directors have held
the Common Stock for at least one year. Otherwise, the capital gain or loss will
be short-term.
The Company will be entitled to a deduction in any amount equal to the
amount that is considered ordinary income. Otherwise, the Director Purchase Plan
has no tax effect on the Company.
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL THREE)
The Company's Articles of Incorporation, as amended through the date of
this Proxy Statement, authorize the issuance by the Company of up to 11,000,000
shares of capital stock, consisting of 10,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock, the rights, powers and preferences of which
may be fixed by the Board of Directors. As of July 17, 1997, the Company has
issued and outstanding 8,523,939 shares of Common Stock and no shares of
Preferred Stock. In addition, as of July 17, 1997, the Company has 982,080
shares of Common Stock reserved for issuance under outstanding options, warrants
and stock purchase rights exercisable as of December 31, 1997. On July 15, 1997,
the Board of Directors approved an amendment to the Company's Articles of
Incorporation, pursuant to which the number of shares of Common Stock authorized
for issuance by the Company thereunder will be increased, subject to approval by
the Company's shareholders, from 10,000,000 to 20,000,000. A copy of that
amendment is attached hereto as Appendix B. Pursuant to such amendment, there
will be no change in the number of shares of Preferred Stock authorized for
issuance by the Company under its Articles of Incorporation.
The Board of Directors believes that an increase in the Company's
authorized shares of Common Stock is appropriate in order to ensure the
availability, and to provide flexibility for the issuance, of a sufficient
number of shares of Common Stock for a variety of corporate purposes. Such
purposes would include acquisitions of assets or businesses, stock splits and
stock dividends, the exercise of options, warrants and stock purchase
14
<PAGE> 18
rights, and capital raising issuances through the future sale of Common Stock
and/or securities exercisable for or convertible into Common Stock. The Board of
Directors believes that the failure of the Company to maintain the ability to
issue additional Common Stock under the above circumstances could materially
adversely affect the Company in the future by limiting the Company's ability to
raise capital if needed and/or requiring the Company to make cash payments, in
lieu of payments in Common Stock, under circumstances where it would otherwise
be advantageous to make such payments in Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" PROPOSAL THREE.
PROPOSED AMENDMENT TO THE 1995 EMPLOYEE STOCK OPTION PLAN
(PROPOSAL FOUR)
The Board of Directors has approved and is proposing for shareholder
approval an amendment to the Company's 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
750,000 to 1,250,000. In all other respects, the Option Plan, which was approved
by shareholders at the annual meeting of shareholders on August 30, 1995, as
amended at the annual meeting of shareholders held on August 14, 1996, 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.
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 1998, 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, 1998. No determination has been made as to what action the Board of
Directors 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 1998 annual meeting must be received by BTG by March , 1998 to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
15
<PAGE> 19
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
Fairfax, Virginia
August , 1997
COPIES OF THE ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED MARCH
31, 1997, ACCOMPANY THIS PROXY STATEMENT. SHAREHOLDERS MAY OBTAIN, FREE OF
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K BY WRITING TO BTG,
INC. ATTENTION: INVESTOR RELATIONS, 3877 FAIRFAX RIDGE ROAD, FAIRFAX, VIRGINIA
22030, E-MAIL: [email protected]
16
<PAGE> 20
APPENDIX A
OCTOBER 15, 1996
BTG, INC.
NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN
The Board of Directors of BTG, Inc. (the "Company") has adopted this
Non-Employee Director Stock Purchase Plan (the "Plan") to enable individuals who
serve as directors of the Company and who are not employees of the Company
("Non-Employee Directors"), through the retention by the Company of fees to be
paid to such Non-Employee Directors for services as directors, to purchase
shares of the Company's Common Stock, no par value per share (the "Common
Stock"). The purpose of the Plan is to benefit the Company by increasing the
Non-Employee Directors' proprietary interest in the Company's growth and success
and enabling the Company to continue to attract highly qualified persons to
serve as Non-Employee Directors. The provisions of the Plan are set forth below:
1. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 21 below, an aggregate of
100,000 shares of Common Stock will be made available for purchase by
participants under the Plan. 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.
2. ADMINISTRATION.
The Plan shall be administered by the Board. The Board's actions under the
Plan shall be limited to taking all actions authorized by this Plan or otherwise
reasonably necessary to effect the purposes hereof.
3. INTERPRETATION.
Subject to the express provisions of the Plan, the Board 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. ELIGIBILITY TO PARTICIPATE.
The only persons eligible to participate in the Plan shall be directors of
the Company who are not employees of the Company.
5. PARTICIPATION IN THE PLAN.
A Non-Employee Director may become a participant in the Plan by completing
an election to participate in the Plan on an authorization form provided by the
Company and submitting that form to the Secretary of the Company. The form will
authorize the Company to retain a whole percentage amount of not less than one
percent (the "Stated Percentage") of the Non-Employee Director's eligible fees
(as defined in Section 6 below) and authorize the purchase of shares of Common
Stock for the Non-Employee Director's account in accordance with the terms of
the Plan. Enrollment will become effective upon the first day of the first
Accumulation Period (as defined in Section 7 below) that commences after the
Company's receipt of the form.
6. FEE RETENTION.
From and after the effective date of a Non-Employee Director's enrollment
in the Plan (as provided in Section 5 above), the Non-Employee Director shall
elect to have an amount equal to the Stated Percentage of eligible fees payable
to such Non-Employee Director on each Fee Payment Date (as defined below)
retained by the Company. For purposes of this Plan, "eligible fees" include all
fees which the Non-Employee Director
A-1
<PAGE> 21
is entitled to receive from the Company for his or her service as a director,
including annual director fees, per meeting director fees and per meeting
committee fees. The fee retentions will be credited to the Non-Employee
Director's account under the Plan. A Non-Employee Director may not contribute
amounts to purchase Common Stock under the Plan other than through fee
retentions. As used herein, the term "Fee Payment Date" means, for each
Non-Employee Director, each date on which an eligible fee is payable to such
Non-Employee Director. A Non-Employee Director may not during any Accumulation
Period change his or her Stated Percentage of eligible fees to be retained for
that Accumulation Period, nor may a Non-Employee Director withdraw any
contributed funds other than by terminating participation in accordance with
Section 15 below.
7. ACCUMULATION PERIODS.
The first Accumulation Period under the Plan shall commence on October 16,
1996 and end on September 30, 1997 (the "Initial Accumulation Period").
Subsequent Accumulation Periods will be 12-month periods beginning on October 1
of each year and ending on September 30 of the following year.
8. PURCHASE PRICE.
The purchase price of each share of Common Stock (the "Purchase Price")
will be the lesser of the fair market value of the Common Stock (i) on the first
trading day of the Accumulation Period or (ii) on the last trading day of such
Accumulation 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.
9. TIMING OF PURCHASE.
Unless a participating Non-Employee Director's participation in the Plan
has been terminated as provided in Section 15 below, shares of Common Stock will
be purchased for such Non-Employee Director's account automatically on the last
trading day of each Accumulation Period (except as provided in Section 15
below). Shares may not be purchased at any other time under the Plan. Effective
upon the last trading day of each Accumulation Period, each participating
Non-Employee Director's account will be credited with the number of shares of
Common Stock which the accumulated funds in such Non-Employee Director's account
at that time will purchase at the Purchase Price.
10. ISSUANCE OF STOCK CERTIFICATES.
On the last trading day of the Accumulation Period, a participating
Non-Employee Director will be credited with the number of 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 First Union National
Bank 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 participating Non-Employee Director. A participating Non-Employee
Director may, at any time 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 participating Non-Employee Director's own name and have the
stock certificate delivered to the Non-Employee Director.
11. WITHHOLDING OF TAXES.
To the extent that a participating Non-Employee Director realizes ordinary
income in connection with the Plan (including, without limitation, as a result
of the accrual of fees or the purchase, issuance, sale or other
A-2
<PAGE> 22
transfer of shares of Common Stock under the Plan) and the Company is required
to withhold taxes with respect thereto, the Company may withhold amounts needed
to cover such taxes from any payments otherwise due and owing to the
Non-Employee Director or from shares that would otherwise be credited or issued
to the Non-Employee Director hereunder.
12. ACCOUNT STATEMENTS.
The Company will cause the Agent to deliver to each participating
Non-Employee Director a statement for each Accumulation Period during which the
Non-Employee Director purchases Common Stock under the Plan reflecting the
amount of fee retentions accumulated during the Accumulation Period, the number
of shares, including any fractional share interest, purchased for the
Non-Employee Director's account, the price per share of the shares purchased for
the Non-Employee Director's account, and the number of shares, including any
fractional share interest, held for the Non-Employee Director's account at the
end of the Accumulation Period.
13. PARTICIPATION ADJUSTMENT.
If in any Accumulation 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 Non-Employee Directors pursuant to Section 9 above, a
participation adjustment will be made, and the number of shares purchasable by
all participating Non-Employee Directors will be reduced proportionately. Any
funds then remaining in a participating Non-Employee Director's account after
such exercise will be promptly refunded to the Non-Employee Director.
14. TERMINATION OF SERVICE AS A DIRECTOR OTHER THAN FOR CAUSE.
If the Non-Employee Director ceases to be a director other than due to a
termination for cause, the amount then credited to such director's account will
continue to be credited with interest and the director's option to purchase
shall be reduced to the number of shares which may be purchased, as of the last
day of the Accumulation Period, with the amount then credited to the
Non-Employee Director's account.
15. TERMINATION OF SERVICE AS A DIRECTOR FOR CAUSE; TERMINATION OF PLAN.
If (i) the Board elects to terminate the Plan as provided in Section 20
below, or (ii) the Non-Employee Director is terminated for cause, the
participating Non-Employee Director will be refunded all monies in his or her
account. As soon as practicable following the effective date of termination of a
Non-Employee Director's participation in the Plan pursuant to this Section 15,
the Company will deliver to the Non-Employee Director a check representing the
amount in the Non-Employee Director's account and a stock certificate
representing the number of whole shares held in the Non-Employee Director's
account.
16. ASSIGNMENT.
No participating Non-Employee Director 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 Non-Employee
Director (or, in the event of the Non-Employee Director's death, to the
Non-Employee Director's estate). Once a stock certificate has been issued to the
Non-Employee Director or for his or her account, such certificate may be
assigned the same as any other stock certificate.
17. APPLICATION OF FUNDS.
All funds retained 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 Non-Employee Directors. Participating Non-Employee Directors'
accounts will not be segregated. Interest will not be paid on funds held by the
Company pursuant to the Plan.
A-3
<PAGE> 23
18. NO RIGHT TO CONTINUED MEMBERSHIP ON THE BOARD.
Neither the Plan nor any right to purchase Common Stock under the Plan
confers upon any Non-Employee Director any right to continued membership on the
Board, nor will a Non-Employee Director's participation in the Plan create any
obligation on the part of the Board to nominate any director for re-election by
the Company's stockholders.
19. AMENDMENT OF PLAN.
Unless otherwise required by law, the Board may, at any time, amend the
Plan in any respect; provided, however, that without approval of the
stockholders of the Company no amendment shall be made impairing the vested
rights of participating Non-Employee Directors.
20. EFFECTIVE DATE; TERM AND TERMINATION OF THE PLAN.
The Plan shall be effective as of the date of adoption by the Board, which
date is set forth below, subject to approval of the Plan by a majority of the
votes present and entitled to vote at a duly held meeting of the shareholders of
the Company at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy; provided, however, that upon
approval of the Plan by the shareholders of the Company as set forth above, all
rights to purchase shares granted under the Plan on or after the effective date
shall be fully effective as if the shareholders of the Company had approved the
Plan on the effective date. If the shareholders fail to approve the Plan on or
before one year after the effective date, the Plan shall terminate, any rights
to purchase shares granted hereunder shall be null and void and of no effect,
and all contributed funds shall be refunded to participating Non-Employee
Directors. 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
participating Non-Employee Directors that have vested at the time of
termination. In any event, the Plan shall, without further action of the Board,
terminate five (5) years after the date of adoption of the Plan by the Board or,
if earlier, at 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.
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 by reason
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 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 similarly adjusted so that the proportionate interest of a participating
Non-Employee Director immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding rights shall not change the aggregate Purchase Price payable by a
participating Non-Employee Director 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.
A-4
<PAGE> 24
(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 (including, without limitation, a merger or
reorganization in which the Company is the surviving corporation) approved by
the Board that results in any person or entity 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 and/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 Accumulation
Period shall be deemed to have ended on the last trading day prior to such
termination, and in accordance with Section 9 above the rights of each
participating Non-Employee Director then outstanding shall be deemed to be
automatically exercised on such last trading day. The Board shall send written
notice of an event that will result in such a termination to all participating
Non-Employee Directors 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.
23. STOCKHOLDER RIGHTS.
Any dividends paid on shares held for a participating Non-Employee
Director's account will be transmitted to the Non-Employee Director. The Company
will deliver to each participating Non-Employee Director 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
for a Non-Employee Director's account will be voted in accordance with the
Non-Employee Director's duly delivered and signed proxy instructions. There will
be no charge to participating Non-Employee Directors 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.
A-5
<PAGE> 25
25. RULE 16B-3.
Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or any successor provision under the Securities
Exchange Act of 1934. If any provision of the Plan or action by the Board fails
to so comply, it shall be deemed null and void to the extent permitted by law
and deemed advisable by the Board. Moreover, in the event the Plan does not
include a provision required by Rule 16b-3 to be stated herein, such provision
(other than one relating to eligibility requirements, or the price and amount of
awards) shall be deemed automatically to be incorporated by reference into the
Plan.
This Plan was duly adopted and approved by the Board of Directors of the
Company by resolution at a meeting held on the 15th of October, 1996.
/s/ MARILYNN D. BERSOFF
--------------------------------------
Marilynn D. Bersoff
Secretary of BTG, Inc.
This Plan was duly approved by the shareholders of the Company at a meeting
of the shareholders held on the of , 199 .
--------------------------------------
Marilynn D. Bersoff
Secretary of BTG, Inc.
A-6
<PAGE> 26
APPENDIX B
ARTICLES OF AMENDMENT
OF
BTG, INC.
1. ARTICLE 3 of the Company's Amended and Restated Articles of
Incorporation is hereby amended and restated as follows:
"ARTICLE 3. CAPITAL STOCK
The total number of shares that the Company shall have the
authority to issue is twenty-one million (21,000,000) shares, of which
twenty million (20,000,000) shares shall be Common Stock ("Common
Stock") and one million (1,000,000) shares shall be Preferred Stock
("Preferred Stock"). To the extent permitted by the Virginia Stock
Corporation Act, the Board of Directors, by an adoption of an amendment
to the articles of incorporation, may fix in whole or part, the
preferences, limitations and relative rights of (i) any class of shares
before the issuance of any shares of that class or (ii) one or more
series within a class before the issuance of any shares of that series."
2. The foregoing amendment (the "Amendment") was proposed by the Company's
Board of Directors, which found adoption of the Amendment to be in the Company's
best interest and directed that it be submitted to a vote at the annual meeting
of the Company's shareholders on September 17, 1997 (the "Annual Meeting").
3. On August , 1997, notice of the Annual Meeting, accompanied by a copy
of the Amendment, was given in the manner provided in the Virginia Stock
Corporation Act to each of the Company's shareholders of record. On September
17, 1997, the Amendment was approved by the Company's shareholders.
4. Holders of shares of common stock were eligible to vote on the adoption
of the Amendment. At the close of business on July 17, 1997, the date fixed by
the Company's Board of Directors as the record date for the meeting of the
shareholders, shares of common stock were outstanding. Of those
shares, were voted for the Amendment, were voted against the
Amendment, and abstained from voting on the Amendment at the meeting
of the shareholders. The number of shares of common stock voted for the
Amendment was sufficient to approve the Amendment.
5. The Certificate of Amendment shall become effective at o'clock
.m. on September , 1997.
BTG, INC.
Date: September 17, 1997
By:
-----------------------------------
Edward H. Bersoff
Chairman of the Board, Chief
Executive Officer and President
B-1
<PAGE> 27
REVOCABLE PROXY
BTG, INC.
3877 FAIRFAX RIDGE ROAD FAIRFAX, VA 22030
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE ONLY
AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 17, 1997, 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 Fairview Park Marriott at 3111 Fairview Park Drive, Falls
Church, VA 22042 on September 17, 1997 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.
1. Proposal to elect the following two nominees for Director, each for a
three-year term expiring at the 2000 Annual Meeting:
Edward H. Bersoff Donald M. Wallach
[ ] FOR all the nominees listed above.
[ ] WITHHOLD AUTHORITY to vote for the following nominee(s):
----------------
- ----------------------------------------------------
2. Proposal to approve the Company's Non-Employee Director Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve an amendment to the Company's Articles of Incorporation
to increase the total number of authorized shares of Common Stock from
10,000,000 to 20,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to approve an amendment to the Company's 1995 Employee Stock Option
Plan to increase the number of shares authorized to be issued pursuant to
options granted under the plan from 750,000 to 1,250,000.
[ ] 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, 1998;
[ ] 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 September 17, 1997, and a Proxy Statement
prior to signing this Proxy.
<TABLE>
<C> <S>
------------------------------------------------ Dated: , 1997
I plan to attend the ---------------------------------
September 17, 1997 Annual Shareholders 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.
