<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:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BTG, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(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 LOGO)
BTG, INC.
3877 FAIRFAX RIDGE ROAD
FAIRFAX, VIRGINIA 22030
July 29, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 annual meeting of BTG, Inc. on
Thursday, September 9, 1999, at 10:00 a.m. at the Hyatt Regency Reston, 1800
Presidents Street, Reston, Virginia 20190.
At this meeting, you will be asked to vote, in person or by proxy, on the
following matters: (i) the election of two directors; (ii) approval of
amendments to the Directors Stock Option Plan; (iii) ratification of the
appointment of BTG's independent auditors; and (iv) 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 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 9, 1999
NOTICE IS HEREBY GIVEN that the 1999 annual meeting of shareholders of BTG,
Inc. will be held on Thursday, September 9, 1999, at 10:00 a.m. at the Hyatt
Regency Reston, 1800 Presidents Street, Reston, Virginia 20190, for the
following purposes:
1) To elect two directors, each for a three-year term;
2) To approve amendments to the Directors Stock Option Plan, increasing to
2,500 the number of option shares issuable per year to each eligible
director, and increasing the option price from the fair market value of
the stock on the date of the grant to 110% of such fair market value;
3) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending March 31, 2000; and
4) To transact such other business as may properly come before the meeting
or any adjournments thereof.
Pursuant to BTG's bylaws, the Board of Directors has fixed July 8, 1999 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
July 29, 1999
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 9, 1999
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. ("BTG" or the
"Company"), a Virginia corporation, in connection with the solicitation of
proxies by the Board of Directors for use at the 1999 annual meeting of
shareholders of the Company to be held on Thursday, September 9, 1999, at 10:00
a.m. at the Hyatt Regency Reston, 1800 Presidents Street, Reston, Virginia
20190, and any adjournments 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 AMENDMENTS TO THE DIRECTORS STOCK OPTION PLAN TO INCREASE THE NUMBER
OF OPTION SHARES ISSUABLE PER YEAR TO EACH ELIGIBLE DIRECTOR TO 2,500, AND TO
INCREASE THE OPTION PRICE FROM THE FAIR MARKET VALUE OF THE STOCK ON THE DATE OF
THE GRANT TO 110% OF SUCH FAIR MARKET VALUE; AND (iii) FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE 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 29, 1999.
The securities which can be voted at the annual meeting consist of shares
of common stock of BTG. Each share entitles its owner to one vote on each matter
presented to the shareholders. The Board of Directors has fixed July 8, 1999 as
the record date for the determination of shareholders entitled to vote at the
annual meeting. On the record date, there were approximately 307 record holders
of common stock and the number of shares outstanding as of that date was
8,846,487. 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, which has been
appointed by the Board of Directors to act as inspector of election for the
annual meeting. Under Virginia corporate law and BTG'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 BTG'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 THE PROPOSALS SET FORTH IN ITEMS 1, 2 AND 3 OF THIS PROXY STATEMENT
------------------------
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding beneficial
ownership of BTG's common stock as of July 8, 1999 by: (i) each director and
nominee for director; (ii) the Chief Executive Officer, the most highly
compensated executive officers during the year ended March 31, 1999, each of
whose total annual salary and bonus exceeded $100,000 (the "Named Executive
Officers"); (iii) all persons known to be beneficial owners of more than 5% of
the outstanding common stock; and (iv) all incumbent 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 as to 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>
Heartland Advisors, Inc. (1)........................ 1,776,700 20.08%
Edward H. Bersoff, Chairman, President, and Chief
Executive Officer(2).............................. 1,340,246 15.15
Wellington Management Co., LLP(3)................... 842,700 9.53
Donald M. Wallach, Director(4)...................... 306,497 3.46
John Littley, III, Senior Vice President(5)......... 125,897 1.42
Marilynn D. Bersoff, Corporate Secretary(6)......... 103,321 1.17
Randall C. Fuerst, Senior Vice President(7)......... 60,483 *
Alan G. Merten, Director(8)......................... 20,439 *
Raymond T. Tate, Director(9)........................ 18,373 *
Ruth M. Davis, Director(10)......................... 17,460 *
Linda E. Hill, Senior Vice President(11)............ 14,348 *
Earle C. Williams, Director(12)..................... 10,100 *
Ronald L. Turner, Director(13)...................... 4,000 *
Peter F. DiGiammarino, Senior Vice President(14).... 0 *
All directors and executive officers as a group (15
persons)(15)...................................... 2,047,680 23.15
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of common stock.
(1) The address of Heartland Advisors, Inc. is 790 North Milwaukee Street,
Milwaukee, WI 53202.
(2) The address of Dr. Bersoff, and each other officer and director of BTG, is
c/o BTG, Inc., 3877 Fairfax Ridge Road, Fairfax, Virginia 22030. The number
of shares listed for Dr. Bersoff includes options to acquire 13,000 shares
of common stock, which are exercisable within 60 days of July 8, 1999. Does
not include (i) options to acquire 164,667 shares, which are not
exercisable within 60 days of July 8, 1999; (ii) 96,487 shares and options
to acquire 31,500 shares (6,834 of which are exercisable within 60 days of
July 8, 1999) owned by Marilynn D. Bersoff, Dr. Bersoff's wife; (iii) 2,875
shares owned by Dr. Bersoff's mother; and (iv) 2,875 shares owned by Dr.
Bersoff and his brother, as trustees for their mother.
(3) The address of Wellington Management Company, LLP is 75 State Street,
Boston, MA 02109.
2
<PAGE> 6
(4) Includes (i) options to acquire 5,500 shares, which are exercisable within
60 days of July 8, 1999; (ii) 114,130 shares held in joint tenancy with Mr.
Wallach's wife; and (iii) 55,050 shares held by Wallach Associates, Inc.
Employee Profit Sharing Plan Trust, of which Mr. Wallach is the managing
trustee. Does not include 1,000 shares owned by Mr. Wallach's wife.
(5) Includes (i) options to acquire 14,167 shares, which are exercisable within
60 days of July 8, 1999; and (ii) 68,000 shares owned jointly with Mr.
Littley's wife. Does not include (i) options to acquire 46,333 shares,
which are not exercisable within 60 days of July 8, 1999; and (ii) 3,000
shares owned by Mr. Littley's wife.
(6) Includes options to acquire 6,834 shares, which are exercisable within 60
days of July 8, 1999. Does not include (i) options to acquire 24,666
shares, which are not exercisable within 60 days of July 8, 1999; and (ii)
1,327,246 shares and options to acquire 177,667 shares (13,000 of which are
exercisable within 60 days of July 8, 1999) owned by Edward H. Bersoff,
Marilynn Bersoff's husband.
(7) Includes options to acquire 12,001 shares, which are exercisable within 60
days of July 8, 1999. Does not include options to acquire 93,999 shares,
which are not exercisable within 60 days of July 8, 1999.
(8) Includes options to acquire 3,000 shares, which are exercisable within 60
days of July 8, 1999.
(9) Includes options to acquire 5,000 shares, which are exercisable within 60
days of July 8, 1999.
(10) Includes options to acquire 5,000 shares, which are exercisable within 60
days of July 8, 1999.
(11) Includes (i) options to acquire 3,834 shares, which are exercisable within
60 days of July 8, 1999; and (ii) 419 shares owned jointly with Ms. Hill's
husband. Does not include options to acquire 64,166 shares, which are not
exercisable within 60 days of July 8, 1999.
(12) Includes options to acquire 3,500 shares, which are exercisable within 60
days of July 8, 1999.
(13) Includes options to acquire 4,000 shares, which are exercisable within 60
days of July 8, 1999.
(14) As of January 4, 1999, Mr. DiGiammarino was no longer employed by the
Company.
(15) Includes options to acquire 90,821 shares, which are exercisable within 60
days of July 8, 1999. Does not include options to acquire 574,846 shares,
which are not exercisable within 60 days of July 8, 1999.
3
<PAGE> 7
ELECTION OF DIRECTORS
(ITEM ONE)
The Board of Directors consists of seven members. 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, Ruth M. Davis and Raymond T. Tate each will be nominated for three-year
terms. 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 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, the two
directors receiving the largest number of votes will be elected.
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>
Ruth M. Davis............... 70 Director 1986 2002
Raymond T. Tate............. 75 Director 1988 2002
</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. Davis also currently serves on the boards of Consolidated Edison Company of
New York, Inc., Ceridian Corporation, and Varian Semiconductor Equipment
Associates, Inc. She served as Assistant Secretary of Energy for Resource
Applications from 1979 to 1981 and as Deputy Undersecretary of Defense for
Research and Advanced Technology from 1977 to 1979.
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 Officer 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 National Security Agency.
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>
Edward H. Bersoff........... 56 Chairman of the Board, 1982 2000
President, and CEO
Donald M. Wallach........... 64 Director 1982 2000
Alan G. Merten.............. 57 Director 1996 2001
Ronald L. Turner............ 53 Director 1995 2001
Earle C. Williams........... 69 Director 1998 2001
</TABLE>
Edward H. Bersoff has served as President, Chief Executive Officer, and
Chairman of the Board of Directors since founding BTG in 1982. From 1975 until
1982, he was employed by CTEC, Inc., a provider of
4
<PAGE> 8
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 Publishing International, Inc. and Transcrypt International, Inc. He is
the husband of Marilynn D. Bersoff, Corporate Secretary of BTG.
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, intelligence, computer science, and information
technology.
Alan G. Merten has been the President of George Mason University since
1996. From 1989 until accepting that position, he served as Dean of the Johnson
Graduate School of Management at Cornell University. Dr. Merten currently serves
on the boards of Smith Barney Concert Investment Series and Comshare, Inc.
Ronald L. Turner is currently President and Chief Operating Officer of
Ceridian Corporation ("Ceridian"), an information services company. From 1993 to
1997 he served as the President and Chief Executive Officer of Computing Devices
International, a defense electronics business that was sold by Ceridian in 1997.
From 1987 to 1993, he served as President and Chief Executive Officer of
GEC-Marconi Electronic Systems Division. Mr. Turner also currently serves as a
director of Ceridian and FLIR Systems, Inc.
Earle C. Williams served as President and Chief Executive Officer of BDM
International, Inc. from 1972 until his retirement in 1992 and as a director of
that company from 1972 through 1997. Mr. Williams is presently a member of the
Board of Directors of Gamma-A Technologies, Inc., GTS Duratek, Inc., and The
Parsons Corporation. He is also a director of the Wolftrap Foundation for the
Performing Arts and the Auburn University Foundation.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors acts as the nominating committee for selecting
nominees for election as directors. BTG's bylaws 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 BTG. 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 BTG. To be timely, notice must be
delivered to, or mailed to and received at, the principal executive offices of
BTG no later than 90 days prior to the anniversary date of the immediately
preceding annual meeting. A shareholder's notice of nomination also must set
forth certain information specified in Section 2.3.6 of BTG's bylaws concerning
both the nominating shareholder and each person the shareholder proposes to
nominate for election. No such nominations have been received in connection with
the 1999 annual meeting.
The members of the Organization and Compensation Committee of the Board of
Directors (the "Compensation Committee") during fiscal 1999 were Messrs. Wallach
(chair) and Tate, and Dr. Merten, all of whom are non-employee directors. The
Compensation Committee has authority over, and performs all the duties related
to, compensation of management, 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 1995 Employee Stock Option Plan (the "Employee Option Plan"),
the Directors Stock Option Plan (the "Directors Option Plan"), and the 1997
Non-Employee Director Stock Purchase Plan (the "Director Purchase Plan"). The
Compensation Committee met three times in fiscal 1999.
The members of the Audit Committee of the Board of Directors during fiscal
1999 were Dr. Davis (chair) and Messrs. Williams and Turner, 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 BTG's
independent auditors, and reviews the adequacy of BTG's internal accounting
controls. In fiscal 1999, the Audit Committee met five times.
5
<PAGE> 9
During the twelve months ended March 31, 1999, the Board of Directors held
nine 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
For the first half of fiscal 1999, non-employee directors each received
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 was
compensated at one-half the normal meeting rate. Beginning in October 1998,
quarterly payments were increased to $5,000 ($5,375 for committee chairs), with
an annual maximum of $36,000 ($37,500 for committee chairs) on each director's
fees. The directors also received reimbursement for reasonable expenses incurred
in attending meetings.
BTG originally adopted the Directors Option Plan on August 30, 1995 (the
"Effective Date"). Under the plan, options to purchase up to 100,000 shares of
common stock were set aside to be granted to directors who are not officers or
employees of BTG (each an "Eligible Director"). On the Effective Date, each
Eligible Director was granted an initial option to purchase shares, the number
of which varied depending upon each Eligible Director's years of service as a
director, 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 Option Plan also provided that each Eligible Director
whose commencement of service is after the Effective Date is to be granted an
initial option to purchase 1,000 shares as of the date of the Eligible
Director's commencement of service. Each Eligible Director also is granted an
additional option to purchase 1,000 shares each year that the Eligible Director
continues to be an Eligible Director. All options granted under the original
Directors Option Plan had a purchase price equal to the fair market value of the
stock as of the grant date. The Directors Option Plan will terminate in 2005,
unless terminated at an earlier date by the Board of Directors. During fiscal
1999, no directors exercised options to purchase shares under the Directors
Option Plan. Subject to shareholder approval, the Directors Option Plan was
amended on December 17, 1998 to provide that each Eligible Director will receive
options to acquire 2,500 shares per annual grant, at an exercise price equal to
110% of the stock's fair market value on the grant date.
BTG also has adopted the Director Purchase Plan. Under that plan,
non-employee directors may elect to have their fees as directors retained and
used to purchase shares of common stock. Generally, retained fees are
accumulated during the period commencing on October 1 of each year and ending
September 30 of the following year (the "Accumulation Period"). The purchase
price for each share is its fair market value on the first or last trading day
of such Accumulation Period, whichever is lower. Under the Director Purchase
Plan, 100,000 shares are available for purchase by non-employee directors.
During the Accumulation Period ended September 30, 1998, five directors had
elected to purchase an aggregate of 18,961 shares under the Director Purchase
Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Neither the Company nor any of its subsidiaries has, since the beginning of
fiscal year 1999, been a party to any transactions or relationships described in
Item 404 of SEC Regulation S-K.
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............... 1999 $413,542 $ 0 135,000 $19,293
Chairman of the Board, 1998 398,334 0 10,000 52,146
President and Chief Executive 1997 357,007 0 9,000 37,407
Officer
Randall C. Fuerst............... 1999 238,958 0 75,000 9,962
Senior Vice President 1998 214,376 50,000 7,000 38,425
1997 197,113 0 7,000 17,688
Marilynn D. Bersoff............. 1999 177,084 25,000 15,000 33,501
Corporate Secretary 1998 184,292 25,000 5,000 19,318
1997 166,179 0 4,000 13,440
John Littley, III............... 1999 194,375 0 25,000 12,959
Senior Vice President and
Chief Information Officer
Linda E. Hill................... 1999 190,748(2) 0 45,000 18,692
Senior Vice President
Peter F. DiGiammarino(3)........ 1999 199,807 0 10,000 7,948
Senior Vice President
</TABLE>
- ---------------
(1) The figures in this column may include contributions by BTG under its 401(k)
profit sharing plan, Company-paid life insurance premiums, educational
benefits, and reimbursement of a maximum of $10,000 per year of the cost of
uninsured medical expenses, tax preparation, financial planning, and certain
legal expenses.
(2) Of this amount, $11,997.53 was paid in Company stock.
(3) As of January 4, 1999, the Company no longer employed Mr. DiGiammarino.
7
<PAGE> 11
STOCK OPTIONS
Option Grants. The following table contains information with respect to
grants of stock options to each of the Named Executive Officers during the
fiscal year ended March 31, 1999. All such grants were made under the Employee
Option Plan. Under the Employee Option Plan, options to purchase up to an
aggregate of 1,250,000 shares are available for grants to key employees. As of
March 31, 1999, options to purchase 1,243,250 shares had been granted since the
inception of the Employee Option Plan. Of those, options to acquire 14,166
shares had been exercised, and options to acquire 1,034,251 shares were
outstanding under the Employee Option Plan. At March 31, 1999, 201,583 shares
remained available for issuance under the Employee Option Plan. BTG does not
have any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------- POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATE
NUMBER OF OF STOCK
SECURITIES % OF TOTAL SECURITIES PRICE APPRECIATION
UNDERLYING UNDERLYING OPTIONS EXERCISE FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED IN FISCAL YEAR ($/SH)(3) DATE(4) 5% 10%
---- ---------- --------------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff...... 35,000(1) 3.93% $9.83 4/09/03 $ 56,462 $172,235
100,000(2) 11.23 6.60 12/17/03 98,000 320,000
Randall C. Fuerst...... 25,000(1) 2.81 8.94 4/09/08 145,275 382,185
50,000(2) 5.61 6.30 12/17/08 165,000 483,000
John Littley, III...... 10,000(1) 1.12 8.94 4/09/08 58,110 152,874
15,000(2) 1.68 6.30 12/17/08 49,500 144,900
Linda E. Hill.......... 10,000(1) 1.12 8.94 4/09/08 58,110 152,874
35,000(2) 3.93 6.30 12/17/08 115,500 338,100
Marilynn D. Bersoff.... 15,000(1) 1.68 9.83 4/09/03 24,198 73,815
Peter F.
DiGiammarino(5)...... 10,000(1) 1.12 8.94 4/04/99 0 0
</TABLE>
- ---------------
(1) These options vest in equal installments over a three-year period beginning
April 9, 2000, two years after the grant date.
(2) These options vest in equal installments over a three-year period beginning
December 17, 1999, one year after the grant date.
(3) The option exercise prices on all options granted under the Employee Option
Plan may not be less than 100% of the fair market value of the stock on the
grant date, as defined in the Employee Option Plan. For options granted on
or after December 17, 1998, the exercise prices range from 105% to 115% of
fair market value as of the grant date. The table shows the exercise price
applicable to options in the first year they become exercisable. The options
are not subject to any provision that could cause the exercise price to be
lowered (other than for anti-dilution purposes).
(4) Under the Employee Option Plan, 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, but not later than ten years after the
grant.
(5) As of January 4, 1999, the Company no longer employed Mr. DiGiammarino, and
his options terminated on April 4, 1999.
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,
1999, 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, 1999 MARCH 31, 1999(1)
ACQUIRED IN VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ----------- -------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Bersoff........... 8,001 $47,705 171,000 6,667 $ 0 $ 0
Randall C. Fuerst........... 0 0 98,666 7,334 0 0
John Littley, III........... 0 0 50,666 9,834 0 0
Linda E. Hill............... 1,000 3,450 65,666 2,334 0 0
Marilynn D. Bersoff......... 4,000 15,160 27,666 3,834 0 0
Peter F. DiGiammarino(2).... 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Based on a value of $5.625 per share on March 31, 1999.
(2) As of January 4, 1999, the Company no longer employed Mr. DiGiammarino, and
his options terminated on April 4, 1999.
EMPLOYMENT AGREEMENTS
Pursuant to an agreement dated as of October 24, 1997, Edward H. Bersoff
serves as the President and Chief Executive Officer of BTG. Dr. Bersoff is to be
paid minimum annual cash compensation of $400,000 and is employed for a term
ending on March 31, 2002. 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 for willful and gross misconduct, or 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, 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
BTG 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 members of the Board of
Directors, none of whom is an employee of the Company. Mr. Tate is President of
BTG Technology Resources, Inc., a wholly-owned subsidiary of the Company. Mr.
Tate receives no compensation for this position. The Committee has been
authorized to oversee BTG's executive compensation program as well as the
Employee Option Plan. The Committee establishes the salary and option levels for
the executive officers and approves the recommendation of the Chief Executive
Officer with respect to other key executive employees. 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 of Directors.
BTG's executive compensation program has been designed to attract and
retain highly qualified executive personnel in order to enhance BTG's financial
strength and profitability. BTG supports a pay-for-performance policy that
rewards individuals for achieving goals that further the Company's long-term
plans. The Compensation Committee is mindful of the need to maintain competitive
compensation opportunities while
9
<PAGE> 13
encouraging superlative performance. The program is designed to recruit and
retain talented executives who are critical to BTG's long-term success.
Executive compensation consists of three components: base salary; annual
incentive bonus; and stock options. The Compensation Committee reviews base
salaries for executive officers 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 use bonuses and stock options to provide a substantial portion of the
incentive for performance. Incentive bonuses are paid only to the extent that
predetermined corporate, operating 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 BTG's then current five-year strategic
plan. 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 BTG. Although the satisfaction of performance objectives serves as
the basis for granting key employee bonuses, the most significant prerequisite
to the payment of incentive compensation to executive officers is the
satisfaction of overall Company financial performance objectives. For fiscal
year 1999, the Compensation Committee, in consultation with the entire Board of
Directors, determined that a total of $25,000 in incentive bonuses would be paid
to the Company's executive officers.
To encourage growth and shareholder value, stock options are granted
pursuant to the Employee Option Plan to key management personnel who are in a
position to make substantial contributions to the long-term success of BTG. The
Compensation Committee believes that this focuses attention on managing BTG from
the perspective of an owner with an equity interest in the business. Beginning
in fiscal year 1999, the Compensation Committee increased the exercise price for
stock options granted to senior management from the fair market value as of the
date of grant to a sliding scale ranging from 105% to 115% of the fair market
value. This change is intended to assure that option grants compensate officers
for optimizing the future performance of the Company's stock.
Like all BTG employees, the Named Executive Officers are eligible to
participate in BTG's 401(k) Profit Sharing Plan. The Compensation Committee has
authorized the Company to reimburse senior executives up to $10,000 for the cost
of health care not covered by insurance, tax preparation, financial planning,
and legal expenses related to estate planning, adoptions, and divorce.
Dr. Bersoff has served in his current capacity as Chairman of the Board,
President, and Chief Executive Officer since founding BTG in 1982. The
Compensation Committee believes that the success of BTG since its founding 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 BTG as well as within the greater metropolitan
Washington business community. 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 BTG's industry. The
Compensation Committee believes that Dr. Bersoff's efforts to implement BTG's
plan to restructure its organization and refocus on its core competencies of
systems engineering and systems integration justify his salary of $413,542.
However, due to the failure to achieve overall Company performance objectives,
no incentive bonus was paid for fiscal year 1999. Although Dr. Bersoff's salary
for fiscal 1999 represents a 3.8% increase over his salary for fiscal 1998, his
total compensation for fiscal 1999 was 3.9% lower than that for fiscal 1998.
Respectfully submitted,
Organization and Compensation
Committee
Alan G. Merten
Raymond T. Tate
Donald M. Wallach, Chair
10
<PAGE> 14
STOCK PERFORMANCE CHART
The following chart compares the percentage change in the cumulative total
shareholder return on the Company's common stock for the last five fiscal years,
with the cumulative total return on both 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 consists of
six companies, each of whose business focus is similar to that of BTG. While
none of the selected peers offers a range of products and services fully
comparable to that of BTG, each is recognized as a provider of high technology
electronic, computer and communications equipment, and engineering services,
primarily to the Government and other Government resellers. The return of each
peer group company has been weighted according to its respective stock market
capitalization for the purpose of arriving at a peer group average. Dividends
paid by those 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: American Management Systems,
Incorporated, CACI International, Inc., GRC International, Inc., Nichols
Research Corp., Affiliated Computer Services, Inc., and Computer Sciences
Corporation. This list differs from the peer group used for fiscal year 1998,
which included American Management Systems, Incorporated, CACI International,
Inc., GRC International, Inc., Nichols Research Corp., Analysis and Technology,
Inc., and Microdyne Corporation, because two of the companies listed in the
prior year's group -- Analysis and Technology, Inc. and Microdyne
Corporation -- have been acquired by other companies and their stock is no
longer publicly traded. In turn, the peer group used in 1998 differed from the
peer group used in fiscal year 1997 and prior years because three of the
companies listed among the prior peer groups -- Computer Data Systems, Inc.,
Logicon, Inc., and Questech, Inc. -- had been acquired by other companies, and
one, Government Technology Services, Inc., was deleted because BTG is no longer
in the same line of business as that company. Accordingly, BTG has restated the
results for the peer group used last year and has added results for the new peer
group as of fiscal year 1998. The comparison assumes $100 was invested on
December 23, 1994 in BTG's common stock, in the peer group composites, and in
the NASDAQ Composite Index, and assumes the reinvestment of dividends, as
previously described.
<TABLE>
<CAPTION>
NEW PEER GROUP 1998 PEER GROUP NASDAQ COMPOSITE
BTG, INC. RETURN RETURN INDEX
----------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
12/23/94 100.00 100.00 100.00 100.00
3/31/95 97.00 101.00 110.00 110.00
3/31/96 123.00 155.00 210.00 150.00
3/31/97 219.00 134.00 163.00 167.00
3/31/98 115.00 218.00 215.00 253.00
3/31/99 70.00 228.00 229.00 340.00
</TABLE>
11
<PAGE> 15
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
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 the Company's stock. During BTG's fiscal year 1999, Directors
Ruth Davis, Donald Wallach, Alan Merten, and Raymond Tate each failed timely to
report one transaction.
DIRECTORS STOCK OPTION PLAN AMENDMENTS
(ITEM TWO)
The Directors Option Plan gives Eligible Directors the right to receive
options to purchase shares of the Company's common stock. Those Eligible
Directors serving on August 30, 1995, the effective date of the Directors Option
Plan, were granted initial options, the number of which varied depending upon
each Eligible Director's years of service as a director. Each Eligible Director
also is granted an additional option to purchase 1,000 shares for each year that
the Eligible Director continues in that status. Options are exercisable
beginning six months after the date they are granted. The exercise price of such
options is the fair market value of the stock on the grant date. The Directors
Option Plan will terminate on August 30, 2005, unless terminated at an earlier
date by the Board of Directors.
The Board of Directors has approved, and is proposing for shareholder
approval, amendments to the Directors Option Plan. The amendments increase, to
2,500, the number of option shares issuable initially and annually to each
Eligible Director, and increase the exercise price of the options to 110% of the
fair market value of the shares on the date the option is granted. In all other
respects, the Directors Option Plan, which was approved by shareholders at the
annual meeting of shareholders on August 14, 1996, will remain unchanged. These
amendments, as set forth in the Amended and Restated Directors Stock Option
Plan, attached hereto as Appendix A, will be effective as of December 17, 1998.
The Board believes these amendments will foster increased involvement by
directors in the affairs of the Company and will align their interests further
with the Company's performance. In addition, they will provide an additional
incentive to attract future directors.
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 Directors Option Plan.
YOUR PROXY WILL BE VOTED FOR THIS PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM THREE)
On July 28, 1999, the Board of Directors appointed Deloitte & Touche LLP to
replace KPMG LLP as BTG's independent public accountants for the fiscal year
ending March 31, 2000, subject to ratification by shareholders at the annual
meeting. During the two fiscal years ended March 31, 1999 and March 31, 1998,
the reports of KPMG LLP on the Company's annual financial statements have
neither contained any adverse opinions or disclaimers of opinion, nor have they
been qualified or modified as to uncertainty, audit scope, or accounting
principles. During such two-year period, and through July 28, 1999, there were
no disagreements with KPMG LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of KPMG LLP, would have
caused KPMG LLP to make reference to the subject matter of the disagreement in
connection with its reports on the Company's financial statements for such
years. Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Deloitte & Touche LLP to audit the books
and accounts of BTG for the fiscal year ending March 31, 2000. No determination
has been made as to what action the Board of Directors would take if the
shareholders do not ratify the appointment.
12
<PAGE> 16
YOUR PROXY WILL BE VOTED FOR THIS PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED
IN PROXY MATERIALS
Any proposal submitted under SEC Rule 14a-8 for inclusion in next year's
annual meeting proxy statement must be received by BTG by May 1, 2000. Any other
proposal for consideration by shareholders at next year's annual meeting must be
received by BTG by June 12, 2000.
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
July 29, 1999
COPIES OF THE ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED MARCH
31, 1999, 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, BY E-MAIL AT [email protected], OR VIA THE INTERNET AT WWW.BTG.COM.
13
<PAGE> 17
EXHIBIT A
BTG, INC.
DIRECTORS STOCK OPTION PLAN
AMENDED AND RESTATED AS OF DECEMBER 17, 1998
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.
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
A-1
<PAGE> 18
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, 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
A-2
<PAGE> 19
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.
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
prior to December 17, 1998 shall be the Fair Market Value of such Stock. The
Option Price of the Stock covered by each Option granted under the Plan, on or
after December 17, 1998, shall be 110% of the Fair Market Value of such Stock.
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. Prior to
December 17, 1998, 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
A-3
<PAGE> 20
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. On or after December 17, 1998, the amount subject to
grant shall be as follows: each Eligible Director whose Commencement of Service
is on or after December 17, 1998 shall be granted an Initial Option to purchase
2,500 shares of Stock as of the date of the Eligible Director's Commencement of
Service. Each Eligible Director also shall be granted an Additional Option to
purchase 2,500 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.
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.
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<PAGE> 21
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 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.
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<PAGE> 22
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 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.
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<PAGE> 23
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 August 14, 1996.
/s/ MARILYNN D. BERSOFF
--------------------------------------
Marilynn D. Bersoff
Secretary
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<PAGE> 24
\/ FOLD AND DETACH HERE \/
- --------------------------------------------------------------------------------
REVOCABLE PROXY
BTG, INC.
3877 FAIRFAX RIDGE ROAD, FAIRFAX, VIRGINIA 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 9, 1999, AND
AT ANY ADJOURNMENTS 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 Hyatt Regency Reston, 1800 Presidents Street, Reston, VA 20190
on September 9, 1999 at 10:00 a.m., Eastern Time, and at any adjournments 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 2002 Annual Meeting:
Ruth M. Davis Raymond T. Tate
[ ] FOR all the nominees listed above.
[ ] WITHHOLD AUTHORITY to vote for the following nominee(s):____________________
2. Proposal to amend the Directors Stock Option Plan, effective December 17,
1998, increasing to 2,500 the number of option shares issuable per year to each
eligible director, and increasing the option price from the fair market value of
the stock on the date of the grant to 110% of such fair market value:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending March 31, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To vote, in its discretion, upon any other business that may properly come
before the annual meeting or any adjournments 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)
<PAGE> 25
\/ FOLD AND DETACH HERE \/
- --------------------------------------------------------------------------------
(continued from reverse side)
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting
of Shareholders of BTG, Inc. called for September 9, 1999, and a Proxy
Statement, prior to signing this Proxy.
-----------------------
I PLAN TO ATTEND THE Dated:______________________________, 1999
SEPTEMBER 9, 1999
ANNUAL SHAREHOLDERS
MEETING __________________________________________
[ ] 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.
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 AND 3, AT THE DISCRETION OF THE PROXY. THIS PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS VOTED BY DELIVERING 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.
