SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
Tech-Sym Corporation
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
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>
[LOGO]
TECH-SYM CORPORATION
10500 WESTOFFICE DRIVE, SUITE 200
HOUSTON, TEXAS 77042-5391
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
To the Stockholders
of Tech-Sym Corporation:
The Annual Meeting of Stockholders of Tech-Sym Corporation will be held in
the Omni Ballroom of the Westchase Hilton and Towers at 9999 Westheimer,
Houston, Texas, on Tuesday, April 29, 1997, at 10:00 A.M., Houston Time, for the
following purposes:
Proposal 1: To elect eight directors to serve until the next annual
meeting of stockholders and or until their successors are elected and
qualified.
Proposal 2: To consider and act upon a proposal to ratify the
appointment of Price Waterhouse LLP as independent accountants for the year
1997.
Proposal 3: To consider and act upon a proposal to approve the Third
Amendment to the 1990 Stock Option Plan.
And to vote on all other matters incident to the conduct of the meeting or
any adjournment(s) thereof.
Stockholders of record at the close of business on March 14, 1997, are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited and urged to attend the meeting.
EVEN IF YOU EXPECT TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ADDRESSED ENVELOPE. If you should
attend, you may vote in person, if you wish, whether or not you have sent in
your proxy.
By Order of the Board of Directors.
J. RANKIN TIPPINS
GENERAL COUNSEL AND SECRETARY
MARCH 27, 1997
<PAGE>
TECH-SYM CORPORATION
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Tech-Sym Corporation (the
"Company") for use at the annual meeting of stockholders of the Company to be
held in the Omni Ballroom of the Westchase Hilton and Towers at 9999 Westheimer,
Houston, Texas, on Tuesday, April 29, 1997, at 10:00 A.M., Houston Time, and at
any adjournment(s) thereof pursuant to and for the purposes set forth in the
accompanying Notice of Meeting.
The cost of solicitation of these proxies will be borne by the Company,
including the reasonable costs incurred by custodians, nominees, fiduciaries,
and other agents in forwarding the proxy material to their principals. The
Company has engaged Georgeson & Company, Inc., a firm of professional proxy
solicitors, to solicit proxies and will pay such firm a fee of approximately
$6,500, plus expenses for so acting. In addition to such solicitation and the
solicitation made hereby, certain directors, officers, and regular employees of
the Company may solicit proxies by telegraph, telephone, and personal interview.
A proxy will be voted in accordance with the stockholder's instruction or,
if no instruction is indicated, it will be voted in favor of the proposals set
forth in the notice attached hereto. Any stockholder may revoke his or her proxy
at any time prior to its use by a later dated proxy. The proxy also may be
revoked if the stockholder is present at the meeting and elects to vote in
person. It is anticipated that the proxy materials will be first mailed or given
to stockholders on or about March 31, 1997.
SUBMISSION OF STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement
relating to the 1998 annual meeting of stockholders, stockholder proposals must
be received at the Company's principal executive office no later than November
28, 1997, and must otherwise comply with the requirements of Rule 14a-8 under
the Securities Act of 1934, as amended.
VOTING SECURITIES
At the close of business on March 14, 1997, the record date for
determination of stockholders entitled to notice of and to vote at the meeting,
there were outstanding 6,043,381 shares of Common Stock (exclusive of 1,905,400
treasury shares), each share being entitled to one vote upon each of the matters
to be voted on at the meeting. There are no other voting securities outstanding.
The holders of a majority of the shares entitled to vote, present in person
or by proxy, shall constitute a quorum at all meetings of stockholders. For
purposes of determining the presence of a quorum, shares entitled to vote
include shares as to which there is an abstention from voting on some or all
matters submitted for voting and include shares as to which a broker will vote
on at least one matter pursuant to discretionary authority of such broker to
vote on such matter pursuant to applicable stock exchange rules. In the absence
of a quorum (3,021,691 shares) at the meeting, either in person or by proxy, the
meeting may be adjourned from time to time without notice other than
announcement at the meeting until a quorum shall be formed.
In conformity with the corporate law of Nevada (the state of the Company's
organization) and the Company's articles of incorporation and bylaws, at any
meeting of stockholders at which a quorum is present, a majority of the shares
entitled to vote, present in person or represented by proxy, shall decide any
matter submitted to such meeting for vote, unless the matter is one upon which
by law or by express
<PAGE>
provision of the articles of incorporation or bylaws the vote of a greater
number is required, in which case the vote of such greater number shall govern
and control the decision of such matter. None of the proposals set forth in this
proxy statement require a greater vote than a majority of shares. For purposes
of determining whether a majority has been obtained with respect to a particular
matter, shares as to which there is an abstention from voting and shares as to
which a broker does not have authority to vote on such matter will not be
treated as present and entitled to vote with respect to such matter.
The following table sets forth as of January 31, 1997, the beneficial
ownership of the Company's Common Stock with respect to each person known by the
Company to be the beneficial owner of more than five percent of the Company's
currently outstanding shares of Common Stock.
NAME AND BUSINESS ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------- -------------------- --------
Neuberger & Berman, LLC.............. 725,675(a) 12.0%
605 Third Avenue
New York NY 10158-3698
Dimensional Fund Advisors, Inc....... 362,900(b) 6.0%
1299 Ocean Avenue, 11th Floor
Santa Monica CA 90401
Merrill Lynch Trust Company of Texas
as Trustee of the Tech-Sym
Retirement Plan
and GeoScience Retirement Plan
(the "Trustee").................. 380,313(c) 6.3%
Suite 1150
2121 San Jacinto Street
Dallas, Texas 752015
- ------------
(a) According to an amended Schedule 13G dated February 10, 1997, and filed
with the Securities and Exchange Commission by Neuberger & Berman,
Neuberger & Berman had sole voting power with respect to 115,500 of such
shares and shared dispositive power with respect to all such shares.
(b) According to a Schedule 13G dated February 5, 1997, and filed with the
Securities and Exchange Commission, Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor, Dimensional is deemed
to have beneficial ownership of 362,900 shares of Tech-Sym Corporation
stock as of December 31, 1996, all of which shares are held in portfolios
of DFA Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors Inc. serves as investment manager. Dimensional
had sole voting power with respect to 251,500 of such shares and sole
dispositive power with respect to all such shares. Dimensional disclaims
beneficial ownership of all such shares.
(c) According to financial statements as of January 31, 1997, provided by the
Trustee. The shares are held for the benefit of employees and former
employees of the Company who participate in the Company's Retirement Plan
and the GeoScience Retirement Plan. Each participant may direct the
Trustee regarding the voting of such shares allocated to the participant's
account. The total number of shares does not include those shares
allocated to the accounts of the executive officers which are included in
the table of beneficial ownership by officers and directors below.
2
<PAGE>
The following table sets forth as of January 31, 1997, the beneficial
ownership of the Common Stock of the Company ("Tech-Sym") and its GeoScience
Corporation ("GeoScience") subsidiary with respect to each director and
nominee for director, each of the executive officers named in the Summary
Compensation Table below, and all executive officers and directors of the
Company as a group, and Tech-Sym as regards GeoScience.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWENERSHIP
------------------------------------------------------------------------------
GEOSCIENCE CORPORATION TECH-SYM CORPORATION
------------------------------------ ---------------------------------------
SOLE VOTING OPTIONS SOLE VOTING OPTIONS
AND EXERCISABLE AND EXERCISABLE
NAME OF INDIVIDUAL INVESTMENT WITHIN PERCENT INVESTMENT WITHIN PERCENT
OR GROUP POWER 60 DAYS OF CLASS POWER 60 DAYS OF CLASS
- ------------------------------------- ----------- ----------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C>
W. L. Creech......................... 40,000 10,000 * 1,000 5,000 *
Michael C. Forrest................... 2,500 10,000 * 500 10,000 *
A. A. Gallotta, Jr................... 100 5,000 * 2,000 15,000 *
Wendell W. Gamel..................... 5,000 0 * 84,666(a)(b) 36,000 1.99%
Christopher C. Kraft, Jr............. 2,000 10,000 * 1,500 20,000 *
Richard F. Miles..................... 1,823(a) 0 * 826(a) 11,000 *
Robert E. Moore...................... 1,000 5,000 * 15,200 14,000 *
Coy J. Scribner...................... 500 0 * 10,977(a) 31,000 *
Ray F. Thompson...................... 2,000 0 * 20,944(a) 25,000 *
J. Rankin Tippins.................... 4,000 0 * 7,906(a) 18,000 *
Charles K. Watt...................... 1,000 5,000 * 0 15,000 *
All directors and executive
officers as a group
(14 persons)....................... 62,123 45,000 1.04% 163,429 229,000 6.27%
Tech-Sym Corporation................. 7,900,000 0 77.02%
</TABLE>
- ------------
* Less than one percent (1%)
(a) Includes shares allocated to the employee through his participation in the
Tech-Sym Retirement Plan or the GeoScience Retirement Plan.
(b) Includes 5,000 shares held in trust for Mr. Gamel's children in which he
disclaims beneficial ownership.
ELECTION OF DIRECTORS
PROPOSAL 1: THE BOARD OF DIRECTORS BY A UNANIMOUS VOTE NOMINATED AND URGES
YOU TO VOTE FOR THE EIGHT NOMINEES LISTED BELOW. PROXIES SOLICITED HEREBY WILL
BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK PRESENT IN
PERSON OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED FOR APPROVAL
OF THIS PROPOSAL.
The Board recommends the election of the nominees listed below as directors
to hold office until the next annual meeting of stockholders and until their
successors are elected and qualified. Each of such nominees is presently a
member of the Board. If at the time of the 1997 annual meeting of stockholders,
any of such nominees should be unable to serve or is unwilling to serve, the
discretionary authority provided in the Proxy will be used to vote for a
substitute or substitutes designated by the Board of Directors. The Board of
Directors has no reason to believe that any substitute nominee or nominees will
be required.
3
<PAGE>
The Articles of Incorporation provide that the affairs of the Company shall
be conducted by a Board of Directors of not less than three nor more than twenty
members and empower the Board to increase or decrease its size within such
limits. The Board in its discretion and in accordance with such authority has
fixed its size at eight members. No proxy will be voted for a greater number of
persons than the number of nominees named herein. If deemed desirable in the
best interests of the Company, the Board of Directors (pursuant to authority
contained in the Articles of Incorporation) may, subsequent to the annual
meeting of stockholders, increase its size and elect one or more additional
qualified persons to fill the vacancies which then exist pending the next annual
meeting of stockholders.
The nominees, and certain information with respect to each of them, are as
follows:
W. L. CREECH
Director since 1989 Compensation Committee Member Age 69
Since his retirement from the United States Air Force as a Four Star General in
1984, General Creech has been an independent business consultant. During his
military career spanning more than 37 years, General Creech held a succession of
important posts, including as his last assignment Commander of the Tactical Air
Command USAF. General Creech also serves as a director of Comarco, Inc., ESEA
Corporation, and GeoScience Corporation.
MICHAEL C. FORREST
Director since 1995 Audit Committee Member Age 63
Since 1994, Mr. Forrest has served as the Senior Vice President of Technology
and Business Development at Maxus Energy Corporation. Mr. Forrest joined Maxus
in 1992 as Vice Chairman and Chief Operating Officer and served on its Board
from 1992 to 1995, at which time Maxus was acquired by YPF. Prior to that, Mr.
Forrest was president of Pecten International Co., a subsidiary of Shell U.S.A.,
and had worked within the exploration and production divisions of Shell for
thirty-seven years. He also serves as a director of GeoScience Corporation.
A. A. GALLOTTA, JR.
Director since 1986 Audit Committee Chairman Age 64
Admiral Gallotta has been President of AAG Associates, Inc., a consulting firm
for electronic companies, since 1985, the year that he retired from the United
States Navy as a Rear Admiral. From 1988 to 1990, he served as President and
Director of SWL, Inc., a technical support contractor to the United States
Department of Defense and a subsidiary of Flow General Corporation. Admiral
Gallotta dedicated 23 years of his naval career to electronic warfare related
activities and was Vice Commander, Naval Electronics System Command, at the time
of his retirement.
WENDELL W. GAMEL
Director since 1966 Age 67
Mr. Gamel was first elected President of the Company in 1975. In 1980, he was
elected Chairman of the Board and has continuously served in both capacities
ever since. He also serves as a director of GeoScience Corporation.
CHRISTOPHER C. KRAFT, JR.
Director since 1983 Compensation Committee Chairman Age 73
Dr. Kraft has been a consultant to the aerospace industry since his retirement
as Director of the NASA Johnson Space Center in 1982. He was Flight Director for
all of the Mercury missions and many of the Gemini missions. He also serves as a
director of GeoScience Corporation.
4
<PAGE>
ROBERT E. MOORE
Director since 1966 Age 71
Mr. Moore retired as Vice President, Secretary and General Counsel of the
Company on December 31, 1990, after serving in such positions for more than
nineteen years. Effective January 1, 1991, he became a consultant to the
Company.
COY J. SCRIBNER
Director since 1983 Age 65
From 1972, continuing to the present, Mr. Scribner has been President of Metric
Systems Corporation, a subsidiary of the Company engaged in the business of
designing and manufacturing electronic systems primarily used in defense. He was
elected as a Vice President of the Company in 1985 and also serves as Chairman
of Enterprise Electronics Corporation, a subsidiary of the Company engaged in
the business of designing and manufacturing weather information systems.
CHARLES K. WATT
Director since 1987 Compensation Committee Member Age 59
Since 1988, Dr. Watt has served as Chairman of Scientific Research Corporation,
a company involved in advanced technology products and services in which both
the Company and Dr. Watt have equity interests. Since April 1990, Professor Watt
has been a faculty member and Executive Assistant to the President at Clemson
University. Prior to this appointment, he served as a laboratory director and
faculty member at the Georgia Institute of Technology and as Director of Defense
Test and Evaluation in the Office of the Secretary of Defense.
The Board has standing audit and compensation committees (the "Audit Committee"
and the "Compensation Committee," respectively) that are composed of directors
of the Company. The Board does not have a standing nominating committee, but
considers and selects as a whole directors to fill Board vacancies that arise
between annual meetings of stockholders as well as nominates candidates for
election at such meetings. The Audit Committee's functions include making
recommendations concerning the engagement of independent accountants, reviewing
with the independent accountants the plan and results of the auditing
engagement, approving professional services provided by the independent
accountants, reviewing the independence of the independent accountants and
reviewing the adequacy of the Company's internal accounting controls. The
Compensation Committee makes recommendations to the Board as to compensation to
be paid to (i) the officers of the Company, (ii) the chief executive officers
and general managers of subsidiaries and divisions, and (iii) all employees of
the Company and its subsidiaries, regardless of position, whose compensation
exceeds a certain amount. The Compensation Committee also reviews, and makes
recommendations to the Board with respect to, all incentive compensation plans
proposed for the Company and its subsidiaries. The Compensation Committee
administers the 1980 Stock Option Plan and the 1990 Stock Option Plan of the
Company and has sole authority to grant options and stock appreciation rights
under the 1990 Stock Option Plan. Options and stock appreciation rights may no
longer be granted under the 1980 Stock Option Plan. During 1996, the Audit
Committee had three meetings, the Compensation Committee had six meetings, and
the Board of Directors had seven meetings. All members of the Board of Directors
attended 75% or more of the total number of meetings of the Board and Board
committees on which they served.
DIRECTORS' REMUNERATION
Members of the Board of Directors who are not employees of the Company are
paid a fee of $1,300 for attendance at each Board meeting and a fee of $250 for
attendance at each Board committee meeting except for committee chairmen who are
paid $500 for attendance at each Board committee meeting which they
5
<PAGE>
chair. Board members who are employees of the Company receive a fee of $100 for
attendance at each Board meeting. Members of the Board who are not current or
former employees of the Company are also paid an Annual Director Fee of $20,000.
NONEMPLOYEE DIRECTORS RETIREMENT PLAN
Each director who is not a present or former officer or employee of the
Company covered by a Company retirement plan or agreement is automatically
covered by the Company's Nonemployee Directors Retirement Plan. Upon retirement
on or after reaching age 65 or termination of service due to disability, each
such director will be entitled to receive from the Company an annual retirement
benefit equal to 65% of the Annual Director Fee in effect prior to retirement or
disability. If a director leaves the Board prior to reaching age 65 for reasons
other than disability, his retirement benefit will not begin until the director
reaches age 65 and, if the director has served less than ten years as a
director, retirement benefit will be reduced by 10% for each such year.
The surviving spouse of a deceased director who was entitled to receive a
retirement benefit under this plan will receive an annual benefit from the
Company, beginning with the director's death, equal to 37 1/2% of the Annual
Director Fee, subject to a reduction of 10% for each year less than 10 served as
a director unless such director was a member of the Board on the date of death
or had been previously terminated due to a disability. The spouse's benefit will
continue for ten years or until the spouse's death, whichever occurs first.
In the event of a change in control of the Company, as defined in the plan,
the retirement benefits become 100% vested regardless of a director's length of
service and are payable in a lump sum. The Company has contributed certain
assets to a trust with a commercial bank to provide for the payment of the
benefits under the plan. The amounts held in trust remain available to the
claims of creditors of the Company in the event of its bankruptcy or insolvency.
STOCK OPTION PLAN
The Company's 1990 Stock Option Plan provides for the automatic grant of
non-qualified stock options and stock appreciation rights ("SARs") to
nonemployee directors of the Company. An individual who becomes a nonemployee
director shall be automatically granted options and SARs with respect to 10,000
shares of Common Stock as of the date such person first becomes a member of the
Board of Directors. Each nonemployee director shall be automatically granted
options and SARs with respect to an additional 1,000 shares of Common Stock
effective as of the date of each regular annual meeting at which such person is
reelected or continues to serve as a director. The exercise price of such
options and SARs may not be less than 100% of the fair market value per share of
the Common Stock on the date of grant. The stock options and SARs are
exercisable on and after the first anniversary of the date of grant and have a
term of ten years unless earlier terminated in the event a nonemployee director
ceases to be a member of the Board for any reason except death, permanent
disability, or retirement. The 1990 Stock Option Plan provides that, upon a
change in control of the Company, all outstanding stock options and SARs would
be immediately exercisable (with certain exceptions).
The Compensation Committee has recommended, and the Board of Directors has
approved subject to stockholder approval, an amendment to the 1990 Stock Option
Plan to, among other things, increase from 1,000 to 2,000 the number of options
and SARs automatically granted to nonemployee directors of the Company as of the
date of each regular annual meeting at which such person is reelected or
continues to serve as a director. The proposed amendment is scheduled to be
acted on at the 1997 Annual Meeting of
6
<PAGE>
Stockholders. See Proposal 3: Approval of Amendment to the Tech-Sym Corporation
1990 Stock Option Plan.
CONSULTING AND EMPLOYMENT AGREEMENTS
The Company has a consulting agreement with Mr. Robert E. Moore, formerly
an officer and currently a director of the Company, under which Mr. Moore
provides advisory and consulting services to the Company for annual compensation
of $9,263. Such agreement was effective on January 1, 1991, and is scheduled to
terminate on December 31, 2000. For the year ended December 31, 1996, Mr. Moore
was paid $9,263 under this agreement. For such year, Mr. Moore was also paid
$69,225 pursuant to a deferred compensation agreement with the Company. Such
agreement provides for the payment of such amount annually during the life of
Mr. Moore and also provides for the payment of a surviving spouse's benefit,
following his death, in an annual amount of $39,937.50 for the lesser of ten
years or the remainder of her life.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since September 12, 1988, Dr. Watt has served as Chairman of Scientific
Research Corporation ('SRC') in which both the Company and Dr. Watt have equity
interests. Mr. Gamel serves on the SRC Board of Directors which determines the
compensation for Dr. Watt.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and, if any, persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission and the New York Stock Exchange reports relating to ownership and
changes in ownership of such Common Stock. Copies of these reports must also be
furnished to the Company. Based on a review of these reports and on written
representations from the reporting persons that no other reports were required,
the Company believes that all applicable Section 16(a) reporting requirements
were fulfilled, except that Admiral Gallotta, a director, was late in reporting
the sale of shares of the Company's Common Stock.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has a Compensation Committee comprised of three
non-employee directors which reviews and recommends to the Board the payment of
(i) compensation to any employee of the Company or its subsidiaries with an
annual salary of $100,000 or more, and (ii) compensation, regardless of amount,
to any division or subsidiary general manager or chief executive officer. In
addition, the Compensation Committee reviews and recommends to the Board all
incentive compensation plans including, without limitation, bonus plans, stock
option plans, stock purchase plans, and key employee compensation agreements.
The Board has final approval concerning the Compensation Committee's
recommendations.
The Compensation Committee also administers the Company's 1980 and 1990
Stock Option Plans and grants stock options and attendant stock appreciation
rights to officers and key employees under the 1990 Stock Option Plan. The Board
does not have any approval or disapproval authority concerning the grants
awarded by the Compensation Committee.
7
<PAGE>
The executive compensation policies and practices are designed to provide
competitive levels of compensation that integrate pay with the Company's annual
and long-term performance goals. Compensation of the executive officers of the
Company is primarily comprised of salary, incentive bonus, and stock options. In
addition, all of the executive officers are eligible to participate in either
the Company's or its subsidiary's Section 401(k) Retirement Plan and have
entered into Termination Agreements with the Company. Certain executive officers
are also parties to Executive Retirement Agreements with the Company.
SALARY
The base salaries of the executive officers are established at a level
deemed appropriate to attract and retain qualified executives. In establishing
its recommendations, the Compensation Committee considers the recommendations of
management, the amount of responsibilities of the executive officers, the
salaries of others similarly situated both within and outside of the Company,
the recent performance in the executive's area of responsibility, the relative
performance of other companies in similar businesses, and any changes in the
cost-of-living. The salaries of the executive officers are usually reviewed
annually with the performance of the prior year taken into account. As a result,
the salaries received in 1996 were determined in part by each individual's
performance in 1995.
INCENTIVE BONUS PLANS
The Company and its subsidiaries have incentive bonus plans which provide
for incentive compensation for their officers and key employees. Under the
Company's and GeoScience's plans, the aggregate bonus pool from which such
awards can be made in any year cannot exceed 2% of the Company's or
GeoScience's, respective, consolidated earnings before federal and state income
taxes. The apportionment of that part of the Company's bonus pools paid to the
executive officers is determined by the respective Board of Directors, pursuant
to recommendations of the respective Compensation Committees, according to
levels of responsibilities and individual performance. No bonus is payable if
the Company or GeoScience, respectively, fails to earn a profit.
Under the incentive bonus plan for the Company's and GeoScience's
subsidiaries, directors, officers, and key employees of each of the subsidiaries
are eligible to share in a bonus pool, calculated separately for each
subsidiary, amounting to not less than 8% and not more than 15% of such
subsidiary's annual earnings before state and federal income taxes. Bonus
amounts earned in excess of 8% pre-tax earnings depend upon the degree by which
each subsidiary exceeds certain performance criteria, such as sales, net profit
and return on investment. The apportionment of the total amount of the bonus and
the recipients thereof are determined by the senior management of the Company or
GeoScience, respectively, and the respective subsidiary according to levels of
responsibility and individual performance except that approval of the Board of
Directors of the Company or GeoScience, respectively, pursuant to
recommendations of the respective Compensation Committee, is required for an
award to (i) any recipient whose annual salary is equal to or greater than
$100,000 and (ii) any division or subsidiary general manager or chief executive
officer, regardless of the amount of compensation. No bonus is payable if the
subsidiary fails to earn a profit.
The amount of the bonus pool of the Company and of each subsidiary is
subject to reduction by the amount of (i) any bonuses such as year-end bonuses
paid to employees for such year, (ii) the matching contributions which each such
company would be required to make to the retirement plan, if any, on the total
bonus pool amount for the accounts of its bonus recipients and (iii) certain
marketing incentives paid to employees for such year.
8
<PAGE>
STOCK OPTION PLAN
The Company's and GeoScience's Stock Option Plans are designed to align the
long-term interests of key employees with shareholder interests. The exercise
price of such options may not be less than 100% of the fair market value per
share of the Common Stock on the date of the grant. The employees awarded stock
options benefit only when the market price of the Company's or GeoScience's
stock increases to the benefit of all shareholders. It has been the practice to
grant stock options to executive officers every three to five years. The number
of options granted to any individual is dependent on the individual's level of
responsibility and ability to influence the performance of the Company and its
subsidiaries.
CEO COMPENSATION
As with the other executive officers, the compensation of Mr. Gamel
consists primarily of salary, incentive bonus, and stock options. Mr. Gamel's
salary is reviewed on an annual basis by the Compensation Committee and the
Board of Directors at the time of the annual election of officers at the
Director's meeting held in conjunction with the annual stockholders' meeting
held in April of each year. The incentive bonus is determined after the end of
each year when financial results are available. Stock option grants are not
automatic nor awarded on a regular basis.
The Committee determined that a 11.5% salary increase for Mr. Gamel,
effective May of 1996, was appropriate in light of a 4% cost-of-living increase,
the Company's 15% increase in sales and 7.6% increase in net income from the
prior year. The Board of Directors approved the recommendation of the Committee.
A major portion of Mr. Gamel's compensation consists of an annual incentive
bonus under the Incentive Bonus Plan described above and, as such, fluctuates
with the financial performance of the Company. The Company's earnings in 1996
were approximately 76% greater than 1995 when the results of several
non-recurring items were included and 4% greater when the non-recurring items
were excluded. The Committee recommended, and the Board approved, a 1996 bonus
for Mr. Gamel that was 3% greater than that received for 1995.
The Compensation Committee also awarded Mr. Gamel stock options for 25,000
shares of Tech-Sym Corporation Common Stock with an exercise price of $34.625
per share, which was 100% of the closing sale price on the date of grant. The
stock options awarded to Mr. Gamel comprised approximately 10% of all the stock
options awarded to key employees and Directors of the Company in 1996. The
Compensation Committee of the Company's GeoScience Corporation subsidiary also
granted Mr. Gamel stock options for 25,000 shares of GeoScience Corporation
Common Stock with an exercise price of $12.75 per share, which was 100% of the
closing sale price on the date of grant.
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, (the "Securities Act"), or under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporated this information by reference, and shall not otherwise
be deemed filed under such acts.
The foregoing report is given by the following members of the Compensation
Committee.
Christopher C. Kraft, Jr. W. L. Creech Charles K. Watt
9
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
the Chief Executive Officer and the four other most highly compensated executive
officers in 1996 (as the term "executive officer" is defined for proxy
purposes by the Securities and Exchange Commission) for services rendered in all
capacities during the years ended December 31, 1996, 1995, and 1994. The dollar
value of other annual compensation not properly categorized as salary or bonus,
such as perquisites and other personal benefits, did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus for any of the named
executive officers in any of the years listed.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------
SECURITIES SECURITIES
UNDERLYING UNDERLYING
ANNUAL COMPENSATION TECH-SYM GEOSCIENCE ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(A) (#)(B) (#) ($)(C)
- ------------------------------------- ----- --------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
W. W. Gamel.......................... 1996 343,667 190,000 25,000 25,000 8,505
Chairman of the 1995 325,333 184,000 -0- -- 8,093
Board, President, and 1994 308,333 186,000 -0- -- 8,070
Chief Executive
Officer
C. J. Scribner....................... 1996 278,371 89,811 15,000 5,000 8,227
President of Metric 1995 262,673 65,500 -0- -- 7,646
Systems Corporation 1994 250,773 102,107 -0- -- 9,496
R. F. Miles.......................... 1996 195,000 140,350 5,000 25,000 6,854
President of 1995 183,000 67,920 -0- -- 5,695
GeoScience 1994 166,000 98,500 -0- -- 5,678
Corporation
R. F. Thompson....................... 1996 172,000 150,000 15,000 15,000 7,714
Vice President, 1995 163,167 124,000 -0- -- 7,425
Treasurer, and Chief 1994 154,667 126,000 -0- -- 7,402
Financial Officer
J. R. Tippins........................ 1996 142,733 119,772 15,000 15,000 7,413
General Counsel and 1995 126,000 103,204 -0- -- 7,087
Secretary 1994 119,400 104,265 -0- -- 7,087
</TABLE>
- ------------
(a) Incentive bonus amounts were earned during the years indicated, but paid
in the first quarter of the following year.
(b) Includes stock appreciation rights (SARs) awarded in tandem with each
stock option.
(c) Each of the amounts in this column are matching contributions by the
Company to the executive officer's account in the Company's or
GeoScience's Retirement (401(k)) Plan. The amounts for Messrs. Gamel and
Scribner each include $600 in 1994 and 1995 and $700 and $600,
respectively, in 1996 for attending Board meetings.
10
<PAGE>
OPTION/SAR GRANTS TABLE
The following table sets forth information concerning grants during 1996 of
(i) Tech-Sym stock options and stock appreciation rights (SARs) awarded in
tandem with each Tech-Sym stock option and (ii) GeoScience stock options to each
of the named executive officers and the potential realizable value of such
options if the market price of the stock appreciates at the stated rates over
the 10 year term of the option.
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF
SECURITIES GRANTED STOCK PRICE
UNDERLYING TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(B)
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME COMPANY (#)(A) YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------------- ----------- ---------- --------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
W. W. Gamel.......................... Tech-Sym 25,000 10.9 34.625 4/29/06 544,375 1,379,625
GeoScience 25,000 6.8 12.75 6/19/.06 200,500 508,000
C. J. Scribner....................... Tech-Sym 15,000 6.5 34.625 4/29/06 326,625 827,775
GeoScience 5,000 1.4 12.75 6/19/06 40,100 101,600
R. F. Miles.......................... Tech-Sym 5,000 2.2 34.625 4/29/06 108,875 275,925
GeoScience 25,000 6.8 12.75 6/19/06 200,500 508,000
R. F. Thompson....................... Tech-Sym 15,000 6.5 34.625 4/29/06 326,625 827,775
GeoScience 15,000 4.1 12.75 6/19/06 120,300 304,800
J. R. Tippins........................ Tech-Sym 15,000 6.5 34.625 4/29/06 326,625 827,775
GeoScience 15,000 4.1 12.75 6/19/06 120,300 304,800
</TABLE>
- ------------
(a) According to both the shareholder approved Tech-Sym 1990 Stock Option Plan
and GeoScience 1996 Equity Incentive Plan, the exercise price of stock
options and stock appreciation rights may not be less than the market
value per share on the date of grant. Tech-Sym options are exercisable
starting twelve months from grant date, with 20% of the shares covered
thereby becoming exercisable at that time and with 20% of the option
shares becoming exercisable every six months thereafter with full vesting
occurring on the third anniversary date. GeoScience options are
exercisable starting twelve months from grant date, with 25% of the shares
covered thereby becoming exercisable at that time and 25% of the option
shares becoming exercisable every year thereafter with full vesting
occurring on the fourth anniversary date.
(b) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by Securities and Exchange Commission rules and
are not intended to reflect historical performance or to forecast possible
future appreciation, if any, in the Company's or GeoScience's stock price.
The assumed annual rates of 5% and 10%, compounded over ten years, would
result in the Company's and GeoScience's common stock price increasing
from $34.625 and $12.75 per share, respectively, on the grant date to
$56.40 and $20.77, respectively, at 5% and $89.81 and $33.07,
respectively, at 10% in the year 2006.
11
<PAGE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table summarizes for each of the named executive officers the
number of Tech-Sym and GeoScience stock options and stock appreciation rights
(SARs), if any, exercised during the year ended December 31, 1996, the aggregate
dollar value realized upon exercise, the total number of unexercised options and
SARs, if any, held at December 31, 1996, and the aggregate dollar value of
in-the-money, unexercised options and SARs, if any, held at December 31, 1996.
Value realized upon exercise is the difference between the fair market value of
the underlying stock on the exercise date and the exercise or base price of the
option or SAR. Value of the unexercised, in-the-money options or SARs at fiscal
year-end is the difference between its exercise or base price and the fair
market value of the underlying stock on December 31, 1996, which was $29.75 per
share for Tech-Sym and $13 per share for GeoScience. THESE VALUES, UNLIKE THE
AMOUNTS SET FORTH IN THE COLUMN HEADED "VALUE REALIZED," HAVE NOT BEEN, AND
MAY NEVER BE REALIZED. THE UNDERLYING OPTIONS OR SARS HAVE NOT BEEN, AND MAY NOT
BE, EXERCISED; AND ACTUAL GAINS, IF ANY, ON EXERCISE WILL DEPEND ON THE VALUE OF
TECH-SYM AND GEOSCIENCE COMMON STOCK ON THE DATE OF EXERCISE. THERE CAN BE NO
ASSURANCE THAT THESE VALUES WILL BE REALIZED. Unexercisable options are those
which have not yet vested under the vesting schedule in the Company's 1990 Stock
Option Plan or GeoScience's 1996 Equity Incentive Plan.
AGGREGATED OPTION/SAR EXERCISES
IN 1996 AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED,
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT
SHARES AT FY-END(#)(A) FY-END($)(B)
ACQUIRED ON VALUE --------------------------- -----------
NAME COMPANY EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------------- ----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
W. W. Gamel.......................... Tech-Sym 3,000 40,050 36,000 25,000 550,500
GeoScience -0- -0- -0- 25,000 -0-
Coy J. Scribner...................... Tech-Sym 6,000 86,250 31,000 15,000 480,500
GeoScience -0- -0- -0- 5,000 -0-
R. F. Miles.......................... Tech-Sym 4,000 76,500 11,000 5,000 154,000
GeoScience -0- -0- -0- 25,000 -0-
Ray F. Thompson...................... Tech-Sym 5,000 70,000 25,000 15,000 388,750
GeoScience -0- -0- -0- 15,000 -0-
J. R. Tippins........................ Tech-Sym 1,500 22,312 18,000 15,000 275,250
GeoScience -0- -0- -0- 15,000 -0-
</TABLE>
NAME UNEXERCISABLE
- ------------------------------------- -------------
W. W. Gamel.......................... -0-
6,250
Coy J. Scribner...................... -0-
1,250
R. F. Miles.......................... -0-
6,250
Ray F. Thompson...................... -0-
3,750
J. R. Tippins........................ -0-
3,750
- ------------
(a) Includes stock appreciation rights (SARs) awarded in tandem with each
Tech-Sym stock option.
(b) In-the-Money Options/SARs are those where the fair market value of the
underlying security exceeds the exercise or base price of the option or SAR.
EXECUTIVE RETIREMENT AGREEMENTS
The executive officers named in the Summary Compensation Table are each
parties to retirement agreements with the Company which provide for the payment
to each such officer an annual retirement benefit for the remainder of his life
commencing at his retirement on or after age 65 in an amount equal to 65% of
such executive's highest rate of base salary in effect at any time prior to his
reaching age 61 ("Base Salary"). If such executive voluntarily terminates his
employment prior to age 65, but on or after age 62, he shall commence receiving
his retirement benefit reduced by 1.39% for each full calendar month which his
date of termination precedes his 65th birthday, unless such reduction is waived
by the Board. The applicable Base Salaries to date of Messrs. Gamel, Scribner,
Miles, Thompson and Tippins are $240,000, $231,000,
12
<PAGE>
$195,000, $175,000, and $150,000, respectively. The agreements further provide
for the payment of a surviving spouse's benefit equal to 37 1/2% of the
officer's Base Salary, which is payable annually upon his death to his surviving
spouse, if any, for the lesser of ten years or the remainder of her life. The
Company's obligation under each of the agreements to pay the retirement benefits
terminates if the officer voluntarily leaves the employ of the Company prior to
reaching age 62 (other than due to death or total and permanent disability) or
is terminated for cause. The benefits remain payable in the event of either the
executive's termination of employment prior to age 62 because of his total and
permanent disability or his termination after reaching age 62, but in both
instances are subject to reduction for their early commencement unless such
reduction is waived by the Board. Under each of the agreements, the surviving
spouse's benefit is not payable if the officer voluntarily leaves the employ of
the Company prior to age 62 or is terminated for cause, but is payable if the
executive dies while still in the employ of the Company, or after his
termination of employment after reaching age 62 or after his termination due to
a disability. The agreements also provide the executive with continued
Company-provided health benefits after his retirement. The benefits under the
agreements are completely vested except for those contained in the agreement
with Mr. Miles which provides for 50% vesting after ten years of continuous
employment with an additional 10% each year thereafter until fully vested.
The Company has contributed certain assets to a trust with a commercial
bank to provide for the payment of the benefits under the retirement agreements.
The amounts held in trust remain available to the claims of creditors of the
Company in the event of its bankruptcy or insolvency.
TERMINATION AGREEMENTS
The Company has entered into Termination Agreements with certain key
employees, including Messrs. Miles, Thompson, and Tippins named in the Summary
Compensation Table, which provide that if the employee's employment is
terminated during the three-year period following a Change in Control of the
Company, as defined in the agreements, other than for cause or by the employee
for other than "good reason," the employee will continue to be paid his base
salary, participate in the Bonus Plan and receive certain other benefits for the
remainder of such three-year period, reduced by any amounts payable to the
employee (i) pursuant to a Retirement Agreement and (ii) from other employment.
STOCK OPTION PLANS
The Company's 1990 Stock Option Plan, as amended (the "1990 Option
Plan"), provides for the grant of stock options to purchase shares of the
Company's Common Stock and for the grant of Stock Appreciation Rights ("SARs")
in tandem therewith to (i) key employees of the Company and its subsidiaries as
determined by the Company's compensation committee and (ii) the members of the
Board of Directors of the Company who are not employees of the Company. The
maximum number of shares of Common Stock as to which options or SARs may be
granted under the 1990 Option Plan is 858,000 shares, subject to certain
adjustments to prevent dilution. The exercise price of such options and SARs may
not be less than 100% of the fair market value per share of the Common Stock on
the date of grant. The 1990 Option Plan provides that, upon a change in control
of the Company, all outstanding stock options and SARs would become immediately
vested and exercisable (with certain exceptions).
Pursuant to the recommendation of the Compensation Committee, the Board of
Directors has approved, subject to stockholder approval, an amendment to the
1990 Stock Option Plan to, among other things, (i) increase the maximum number
of shares of Common Stock of the Company issuable under the plan from 858,000
shares to 1,158,000 shares and (ii) limit the number of shares of Common Stock
to 250,000 as to which options and stock appreciation rights may be granted to
any person during any calendar
13
<PAGE>
year. The proposed amendment is scheduled to be acted on at the 1997 Annual
Meeting of Stockholders. See Proposal 3: Approval of Amendments to the Tech-Sym
Corporation 1990 Stock Option Plan.
The GeoScience Corporation 1996 Equity Incentive Plan provides for the
grant of stock options, SARs, restricted stock, dividend equivalents,
performance nits, phantom shares, limited stock appreciation rights ("LSARs"),
bonus stock and cash tax rights to (i) all officers and employees of, and any
consultants to, GeoScience or any affiliate of GeoScience as determined by the
GeoScience Compensation Committee and (ii) the directors of GeoScience who are
not employees or consultants of GeoScience or an affiliate who will receive only
automatic grants of Director options with tandem LSARs. The maximum number of
shares of GeoScience Common Stock as to which options or SARs may be granted
under the 1996 Equity Incentive Plan is 1,500,000 shares, subject to certain
adjustments to prevent dilution. The exercise price of such options and SARs may
not be less than 100% of the fair market value per share of the GeoScience
Common Stock on the date of grant. The 1996 Equity Incentive Plan provides that,
upon a change in control of the Company or, if GeoScience ceases to be a
subsidiary of the Company, a change of control of GeoScience, all outstanding
stock options, SARs, and other awards under the plan would become immediately
vested and exercisable (with certain exceptions).
SHARE INVESTMENT PERFORMANCE
The following graph reflects a comparison of the cumulative total return
(change in stock price plus reinvested dividends) of the Company's Common Stock
from December 31, 1991, through December 31, 1996, with the cumulative total
returns reflected in the Media General Financial Services Composite Market Value
Index (a broad market index which includes over 7,000 publicly held companies)
and the Media General Financial Services Industry Group 171 Index -- Electronic
Equipment Manufacturers (a market index reflecting performance of the Company's
peers and which includes the Company). The data presented assumes a hypothetical
investment of $100 in the Company's stock and in the underlying stocks of each
of the two indices as of January 1, 1992, and that all dividends were
reinvested.
14
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
TECH-SYM CORPORATION................. 100 101.87 158.88 175.70 236.45 222.43
ELECTRONIC EQUIPMENT MANUFACTURERS... 100 132.49 190.89 211.88 292.02 400.13
COMPOSITE MARKET VALUE............... 100 104.00 119.39 118.39 153.50 185.38
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1992
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DEC. 31, 1996
The foregoing price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that the Company specifically incorporates
this graph by reference, and shall not otherwise be deemed filed under such
Acts.
There can be no assurance that the Company's share performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future share
performance.
15
<PAGE>
RATIFICATION OF INDEPENDENT ACCOUNTANTS
PROPOSAL 2: THE BOARD OF DIRECTORS HAS UNANIMOUSLY SELECTED PRICE
WATERHOUSE LLP, AND URGES YOU TO VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
SUCH FIRM, AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE YEAR 1997. PROXIES
SOLICITED HEREBY WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR
PROXIES. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK
PRESENT IN PERSON OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED
FOR APPROVAL OF THIS PROPOSAL.
By action of the Board of Directors, Price Waterhouse LLP has been selected
as independent accountants of the Company for the year ending December 31, 1997,
and the Board of Directors proposes the ratification of such selection. Price
Waterhouse LLP has audited the accounts of the Company since 1967. A
representative of such firm is expected to be present at the annual meeting of
stockholders with the opportunity to make a statement if he desires to do so and
will be available to answer appropriate questions.
APPROVAL OF AMENDMENTS TO THE TECH-SYM CORPORATION
1990 STOCK OPTION PLAN
PROPOSAL 3: THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND URGES YOU
TO VOTE FOR PROPOSAL 3. PROXIES SOLICITED HEREBY WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK IS REQUIRED FOR APPROVAL OF
THIS PROPOSAL.
The Board of Directors is proposing for stockholder approval certain
amendments to the Company's 1990 Stock Option Plan (the "Plan"), consisting of
(i) an increase in the maximum number of shares of Common Stock of the Company
issuable under the Plan from 858,000 shares to 1,158,000 shares, (ii) an
increase in the number of shares of Common Stock subject to options that are
automatically granted to each nonemployee director of the Company on an annual
basis, without the need for any additional action by the Board of Directors or
stockholders of the Company, from 1,000 shares to 2,000 shares, and (iii) for
purposes of enabling the exercise of grants to qualify as "performance based"
compensation for tax deduction purposes under Section 162(m) of the Internal
Revenue Code (the "Code"), the imposition of a limit of 250,000 shares of
Common Stock as to which options and stock appreciation rights ("SARs") may be
granted to any person during any calendar year, disregarding any SAR granted in
tandem with an option. A copy of the amended and restated Plan is set forth as
Appendix A to this Proxy Statement. The following summary of the Plan is
qualified in its entirety to the more detailed provisions of the Plan.
GENERAL. The Plan was adopted by the Board of Directors of the Company on
February 15, 1990, and approved by the Company's stockholders on April 24, 1990.
The Board of Directors of the Company approved an amendment to the Plan on
February 21, 1991, which was approved by the stockholders on April 30, 1991,
increasing the maximum number of shares issuable under the Plan from 300,000 to
570,000 shares. The Board of Directors approved a second amendment to the Plan
on February 17, 1994, which was approved by the stockholders on April 26, 1994,
increasing the maximum number of shares issuable under the Plan from 570,000 to
858,000 shares. The Board of Directors of the Company approved a third amendment
to the Plan on February 20, 1997, subject to stockholder approval, which
provides for the amendments discussed above. The purpose of the Plan is to
advance the interests of the Company by providing incentive awards and stock
ownership opportunities to those key employees (including directors who are
employees) who contribute significantly to the performance of the Company and
its subsidiaries and to the members of the Board of Directors of the Company who
are not employees of the Company. In addition, the Plan is intended to enhance
the ability of the Company to attract and retain individuals of
16
<PAGE>
superior managerial ability and to motivate such individuals to exert their best
efforts towards future progress and profitability of the Company. The terms of
the Plan are described below and the Plan, including the proposed amendment, is
set forth in its entirety as Appendix A.
The Plan provides for the grant of stock options to purchase shares of the
Company's Common Stock and for the grant of stock appreciation rights ("SARs")
in tandem therewith to (i) key employees of the Company and its subsidiaries as
determined by the Company's compensation committee and (ii) the members of the
Board of Directors of the Company who are not employees of the Company. The
maximum number of shares of Common Stock as to which options of SARs may granted
under the Plan, as amended, is 858,000 shares, subject to certain adjustments to
prevent dilution. Upon approval of the third amendment to the Plan by the
Company's stockholders, the maximum number of shares of Common Stock as to which
options or SARs may be granted under the plan will be 1,158,000 shares, subject
to certain adjustments to prevent dilution. Stock options granted under the Plan
to key employees may be either incentive stock options ("ISOs") under the
provisions of Section 422 of the Code, or nonqualified stock options ("NSOs").
Options granted to nonemployee Directors will be NSOs, as options granted to
nonemployees do not qualify as ISOs. No amounts are required to be paid by any
key employee or nonemployee director at the time of receipt of any stock option
or SARs by any such person.
The Plan is administered by the Company's compensation committee, which,
under the terms of the Plan, must consist solely of nonemployee directors. The
compensation committee has complete discretion in determining the key executives
and employees of the Company or its subsidiaries who shall receive stock options
and the number of such options to be granted. The Plan provides that, in
granting options to key employees, the compensation committee shall take into
consideration the contribution an employee has made or may make to the success
of the Company or its subsidiaries and such other factors as the compensation
committee shall determine. As described below, the Plan provides for the
automatic grant of stock options and SARs to nonemployee directors of the
Company in specified amounts and at specified times. As of March 14, 1997, 200
key employees and six nonemployee directors are eligible to participate in the
Plan.
The compensation committee has the discretion to grant a SAR separately or
in tandem with any option granted to a key employee under the Plan, and the
grant of a SAR may be made on or after the date of the grant of an option. A SAR
granted to a key employee entitles such employee to receive shares of Common
Stock, cash or any combination thereof, as determined by the compensation
committee, having an aggregate value equal to the excess of (i) the fair market
value of one share of Common Stock on the date of exercise over the purchase
price per share specified in such SAR, multiplied by (ii) the number of shares
for which the SAR is exercised. A SAR granted to a nonemployee director entitles
such Director to receive shares of Common Stock and cash having an aggregate
value as determined in the preceding sentence with respect to the number of
shares for which the SAR is exercised, with such aggregate value to be
automatically paid one-half in cash and one-half in shares of Common Stock. No
fractional shares of Common Stock shall be issued upon the exercise of a SAR (or
upon the exercise of an option granted pursuant to the Plan). SARs are subject
to such terms and conditions, not inconsistent with the Plan, as the
compensation committee may impose. Any SAR granted under the Plan that relates
to a specific option is only exercisable to the extent that the related option
is exercisable.
The term of each stock option or SAR granted to a key employee shall be
determined by the compensation committee on the date of grant, subject to the
limitations that (i) all such options and SARs will expire no later than ten
years from the date of grant and (ii) the exercise price of such options and
SARs may not be less than 100% of the fair market value per share of the Common
Stock on the date of grant. In
17
<PAGE>
the event that the employment of a key employee shall terminate for reasons
other than retirement with the consent of the Company, permanent disability or
death, such employee's options and related SARs shall be exercisable only within
three months after such termination and only to the extent that such options and
SARs were exercisable immediately prior to such termination of employment. If
such termination is due to retirement or permanent disability, the key employee
may exercise options and SARs in full at any time during the remaining term
provided therefor at the time of grant. Upon the termination of employment of a
key employee by reason of death, such employee's options, to the extent then
exercisable, may be exercised for a period of one year after the date of the
employee's death, but no more than ten years after the date an option was
granted.
The Plan provides that an individual who becomes a nonemployee director
shall be automatically granted an option and SAR with respect to 10,000 shares
of Common Stock as of the date such person becomes a member of the Board of
Directors. The Plan also currently provides that, commencing with the regular
annual meeting of stockholders of the Company in 1991, each nonemployee director
is automatically granted an option and SAR with respect to an additional 1,000
shares of Common Stock effective as of the date of each regular annual meeting
at which such person is reelected or continues to serve as a Director. Subject
to the approval of the third amendment to the Plan, this number of shares will
be increased to 2,000.
Options and SARs granted to a nonemployee director under the Plan have an
exercise price equal to the market value of the Common Stock on the date of
grant, are exercisable commencing one year after the date of grant and have a 10
year term. In the event of termination of service of a nonemployee director,
options and SARs held by such nonemployee director will be exercisable only
within 12 months after termination of service and only to the same extent they
were exercisable on the date of termination, except that, if the termination is
due to death, permanent disability or retirement pursuant to a Company policy,
all options and SARs held by such nonemployee director shall be exercisable in
full during the remaining term provided therefor at the time of grant.
The Plan permits the Company to allow an optionee, upon exercise of an
option, to satisfy any applicable federal income tax requirements in the form of
either cash or, at the discretion of the compensation committee, shares of
Common Stock, including shares issuable upon exercise of such option.
The Plan provides that upon a change in control of the Company (i)
outstanding stock options and SARs would become immediately vested and
exercisable (with certain exceptions) and (ii) upon exercise of an option or
SAR, the optionee would receive cash based on the spread between the exercise
price, of such option or SAR and the premium price, if any, paid for the Common
Stock in connection with such change in control. A change in control shall be
deemed to occur if a person or group acquires 25% or more of the Company's
voting securities, the Directors of the Company at the beginning of any two year
period cease to constitute a majority of the Board of Directors during such
period for any reason, the stockholders of the Company approve a merger or
consolidation of the Company with any other company (with certain exceptions),
the stockholders of the Company approve an agreement for the sale, exchange or
disposition by the Company of all or a substantial portion of the Company's
assets or the stockholders of the Company adopt a plan of complete liquidation
of the Company.
The Board of Directors of the Company may amend, suspend or terminate the
Plan at any time, except that any amendment that would (i) increase the maximum
number of shares that may be issued under options granted pursuant to the Plan,
(ii) change the class of employees eligible to receive grants under the Plan,
(iii) extend beyond 10 years the term of any option or SAR, (iv) extend the term
of the Plan or (v) change the operation of grants to nonemployee directors
requires stockholder approval unless, in each case, such approval is not
required to meet the requirements of stockholder approval unless, in each case,
such
18
<PAGE>
approval is not required to meet the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Unless the
term of the Plan is extended or earlier terminated, the Plan will terminate on
December 31, 1999.
FEDERAL INCOME TAXES. As a general rule, no income will be recognized by
an employee upon the grant of either ISOs and NSOs or by a nonemployee director
upon the grant of a NSO. Upon the exercise of a NSO, the optionee will be
treated as receiving compensation income in an amount equal to the excess of the
fair market value of the shares at the time of exercise over the option price
paid for the shares, and the Company may claim a deduction for compensation paid
in the same amount and at the same time as compensation is taxable to the
optionee, provided the Company makes the proper tax withholding with respect to
the exercise by an employee. Upon a subsequent disposition of the shares, any
difference between the fair market value of the shares at the time of exercise
and the amount realized on the disposition would be eligible for treatment as
long-term capital gain or loss if the shares were held for more than twelve
months. The exercise of an ISO (which may not be granted to a nonemployee
director), on the other hand, does not subject the optionee to federal income
tax; however, the "spread" upon the exercise of an ISO is an item of
adjustment for purposes of the alternative minimum tax. If the optionee holds
the shares of Common Stock received upon the exercise of an ISO for the
requisite holding period, gain on the disposition of such shares is treated as
long-term capital gain. If a disposition of such shares is made in a taxable
transaction before expiration of the holding period, a portion of the gain on
disposition will be treated as ordinary income and the balance as long-term or
short-term capital gain, depending on the length of time the shares were held.
The Company is allowed a deduction in the year of disposition of shares received
upon exercise of an ISO only to the extent the amount of any gain is taxable to
the optionee as ordinary income.
An optionee who receives a SAR will not recognize any taxable income upon
receipt of the SAR, but upon exercise of the SAR, the fair market value of the
shares of Common Stock (or the cash in lieu of shares of Common Stock) received
must be treated as ordinary income by the optionee for that year. Under such
circumstances, the Company will, in general, be entitled to a deduction equal to
the amount taxable to the optionee as ordinary income. If the optionee receives
shares of Common Stock upon the exercise of a SAR and thereafter disposes of
such shares in a taxable transaction, the difference between any amount realized
on such disposition and the amount treated as ordinary income upon the exercise
of the SAR will be treated as a capital gain or loss (provided the shares of
Common Stock were held as a capital asset on the date of disposition), which
will be a long or short-term capital gain or loss depending on the holding
period of the shares of Common Stock, and taxed at the same rate as ordinary
income.
LIMITATION OF AMENDMENT. The Plan includes a provision which limits the
number of amendments to the provisions regarding options and SARs granted to
nonemployee directors to no more than one every six months.
NEW BENEFITS UNDER PLAN. If the amendments to the Plan are approved by the
stockholders of the Company, each of the nonemployee directors will receive
options to purchase 2,000 shares of Common Stock (rather than 1,000 shares of
Common Stock as currently provided in the Plan) on the date of the 1997 annual
meeting of stockholders of the Company and on the date of each future annual
meeting of the stockholders, in each case at option exercise prices equal to the
trading price of the Common Stock on the date of grant. There are currently six
(6) nonemployee directors of the Company. The closing price of the Company's
Common Stock on March 14, 1997 was $30.875 per share, as reported in THE WALL
STREET JOURNAL (SOUTHWEST EDITION).
19
<PAGE>
OTHER MATTERS
The Board of Directors of the Company knows of no business to be presented
at the annual meeting other than that stated in the notice of such meeting. In
the event, however, that other matters properly come before the meeting or any
adjournment thereof, it is intended that the persons named in the accompanying
Proxy and acting thereunder will vote in accordance with their best judgment.
Regardless of the number of shares owned by you, it is important that they
be represented at the meeting, and you are respectfully requested to sign, date
and return the accompanying Proxy at your earliest convenience.
ANNUAL REPORT
The annual report to stockholders, including consolidated financial
statements for the years ended December 31, 1996 and 1995, has been mailed to
all stockholders.
FORM 10-K REPORT
UPON THE WRITTEN REQUEST OF EACH STOCKHOLDER SOLICITED HEREBY, ADDRESSED TO
THE COMPANY, ATTENTION: J. RANKIN TIPPINS, SECRETARY, 10500 WESTOFFICE DRIVE,
SUITE 200, HOUSTON, TEXAS 77042-5391, THE COMPANY WILL PROVIDE WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE YEAR ENDED DECEMBER 31, 1996.
By Order of the Board of Directors.
J. RANKIN TIPPINS
GENERAL COUNSEL AND SECRETARY
March 27, 1997
20
<PAGE>
EXHIBIT A
TECH-SYM CORPORATION
1990 STOCK OPTION PLAN
(THIRD AMENDMENT)
This Third Amendment shall be effective upon its approval by the
stockholders of Tech-Sym Corporation (the "Company") at the 1997 annual
meeting of the stockholders. However, if the stockholders of the Company do not
approve this Third Amendment at the 1997 annual meeting of stockholders of the
Company, this amendment shall be null and void for all purposes. Further, no
grants shall be made pursuant to this amendment prior to the date this amendment
is approved by the stockholders. The terms of the Plan, as amended and restated
by this Third Amendment, are as set forth below.
1. PURPOSE
The purpose of the Tech-Sym corporation 1990 Stock Option Plan (the
"Plan") is to advance the interests of Tech-Sym Corporation (the "Company")
and its Subsidiaries (as defined below) by providing incentive awards and stock
ownership opportunities to those key employees including officers and directors
who are employees) who contribute significantly to the performance of the
Company and its Subsidiaries ("Key Employees") and stock ownership
opportunities to the members of the Board of Directors of the company (the
"Board") who are not employees of the Company or a Subsidiary ("Nonemployee
Directors"). In addition, the Plan is intended to enhance the ability of the
Company and its Subsidiaries to attract and retain individuals of superior
managerial ability and to motivate such individuals to exert their best efforts
towards future progress and profitability of the Company and its Subsidiaries.
For purposes of the Plan, a Subsidiary shall be any corporation in which
the Company has a direct or indirect ownership interest of 50% or more the total
combined voting power of all classes of stock in such corporation.
2. ADMINISTRATION AND INTERPRETATION
a. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") consisting of not less than three members of the Board appointed
by and serving at the pleasure of the Board; provided that each member shall be
a "nonemployee director" within the meaning of Rule 16b-3 which has been
adopted by the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as such Rule or its equivalent is in effect from time to time. The
Board may from time to time appoint members of the Committee in substitution for
or in addition to members previously appointed and may fill vacancies, however
caused, in the Committee. The Committee may prescribe, amend and rescind rules
and regulations for the administration of the Plan and shall have the full power
and authority to construe and interpret the Plan. A majority of the members of
the Committee shall constitute a quorum and the acts of a majority of the
members present at a meeting or the acts of a majority of the members evidenced
in writing shall be the acts of the Committee. The Committee may correct any
defect or any omission or reconcile any inconsistency in the Plan or in any
award or grant made hereunder in the manner and to the extent it shall deem
desirable.
The Committee shall have the full and exclusive right to grant all Options
and SARs (both as defined below), other than the automatic grant of Options and
SARs to Nonemployee Directors as provided in
A-1
<PAGE>
Section 5 below. In granting Options or SARs, the Committee shall take into
consideration the contribution the employee has made or may make to the success
of the Company or its Subsidiaries and such other considerations as the
Committee shall determine. The Committee shall also have the authority to
consult with and receive recommendations from officers and other employees of
the Company and its Subsidiaries with regard to these matters. In no event shall
any employee, his legal representatives, heirs, legatees, distributees, or
successors have any right to participate in the Plan, except to such extent, if
any, as the Committee shall determine.
The Committee may from time to time in granting Options or SARs under the
Plan prescribe such other terms and conditions concerning such Options or SARs
as it deems appropriate, provided that such terms and conditions are not more
favorable to the Key Employee than those expressly set forth in the Plan.
The day-to-day administration of the Plan may be carried out by such
officers and employees of the Company and its Subsidiaries as shall be
designated from time to time by the Committee.
b. INTERPRETATION. The interpretation and construction by the Committee
of any provisions of the Plan or of any award or grant under the Plan and any
determination by the Committee under any provision of the Plan or any such award
or grant shall be final and conclusive for all purposes.
c. LIMITATION ON LIABILITY. Neither the Committee nor any member thereof
shall be liable for any act, omission, interpretation, construction or
determination made in connection with the Plan in good faith, and the members of
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including counsel
fees) arising therefrom to the full extent permitted by law and under any
directors and officers liability insurance coverage that may be in effect from
time to time.
3. SHARES SUBJECT TO AWARDS UNDER THE PLAN
a. LIMITATION ON NUMBER OF SHARES. The shares subject to grants of
Options and SARs shall be shares of the Company's authorized but unissued common
stock, par value $.10 per share, and shares, if any, of such common stock that
are issued but not outstanding and held as treasury stock by the Company
("Common Stock"). Subject to adjustment as hereinafter provided, the aggregate
number of shares of Common Stock as to which Options and/or SARs may be granted
under the Plan shall not exceed 1,158,000 shares.
Shares of Common Stock ceasing to be subject to an Option or SAR because of
the exercise of such Option or SAR shall no longer be subject to any further
grant under the Plan. If any outstanding Option or SAR, in whole or in part,
expires or terminates unexercised or is cancelled for any reason prior to
January 1, 2000, the shares of Common Stock allocable to the unexercised,
terminated, cancelled or forfeited portion of such Option or SAR may again be
made the subject of grants under the Plan.
b. ADJUSTMENTS OF AGGREGATE NUMBER OF SHARES. The aggregate number of
shares of Common Stock stated in Section 3(a) shall be subject to appropriate
adjustment, from time to time, in accordance with the provisions of Section 6
hereof. In the event of a change in the Common Stock of the Company that is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be Common Stock
within the meaning of the Plan.
A-2
<PAGE>
4. ELIGIBILITY
The individuals eligible to receive Options and/or SARs under the Plan
shall be those Key Employees as the Committee from time to time shall determine.
In addition, each Nonemployee Director shall automatically receive Options and
SARs under the Plan as provided in Section 5 below.
5. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
a. GRANTS OF OPTIONS.
(1) IN GENERAL. Options granted under the Plan may be either
"Incentive Stock Options" or "Non-qualified Stock Options" (both as
defined below and collectively referred to as "Options"), or both.
Options granted under the Plan shall be such type and for such number of
shares of Common Stock, subject to such terms and conditions as the
Committee shall designate.
The Committee may grant Incentive Stock Options and/or Non-qualified
Stock Options to Key Employees at any time and from time to time before
January 1, 2000.
(2) INCENTIVE STOCK OPTIONS. The term "Incentive Stock Option"
shall mean an Option, or portion thereof, that is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
(3) NON-QUALIFIED STOCK OPTIONS. The term "Non-qualified Stock
Option" shall mean any Option, or portion thereof, that is not an
Incentive Stock Option. Except as specifically provided herein, the
provisions of this Plan shall apply in the same manner to Incentive Stock
Options and to Non-qualified Stock Options.
b. GRANTS OF STOCK APPRECIATION RIGHTS.
(1) IN GENERAL. The term stock appreciation right or "SAR" shall
mean the right to receive from the Company an amount equal to the Market
Value Per Share (as defined in Section 5c.(4) below) on the exercise date,
over the Market Value Per Share on the date of grant, multiplied by the
total number of shares of Common Stock for which the SAR is exercised. The
amount payable by the Company upon the exercise of a SAR may be paid in
cash or in shares of Common Stock or in any combination thereof as the
Committee in its sole discretion shall determine, but no fractional shares
shall be issuable pursuant to any SAR.
SARs may be granted by the Committee to any Key Employee at any time
and from time to time before January 1, 2000. A SAR may, but need not,
relate to a specific Option granted under this Plan. If a SAR relates to a
specific Option, it may be granted either concurrently with the Option or
at any time prior to the exercise, termination, cancellation or expiration
of such Option.
(2) LIMITATIONS ON SARS. The Committee may fix such waiting periods,
exercise dates or other limitations as it shall deem appropriate with
respect to SARs granted under the Plan; provided, however, that each SAR
granted hereunder shall be exercisable only upon consent of the Committee;
and provided further, that a SAR that relates to a specific Option shall be
exercisable only when and to the extent that the Option to which it relates
is exercisable.
c. TERMS OF OPTIONS AND SARS. Options and SARs granted pursuant to this
Plan shall be evidenced by stock option agreements and/or SAR agreements
respectively (collectively referred to herein as "agreements") that shall
comply with and be subject to the following terms and conditions and may contain
such other provisions, consistent with this Plan, as the Committee shall deem
advisable. SARs that relate to a specific Option, however, may be evidenced by
stock option agreements or agreements amending
A-3
<PAGE>
and/or forming a part of the stock option agreements to which such SARs relate.
Reference herein to agreements shall include, to the extent applicable, any
amendments to such agreements.
(1) PAYMENT OF OPTION EXERCISE PRICE. Upon exercise of an Option,
the full option exercise price for the shares with respect to which the
Option is being exercised shall be payable to the Company (i) in cash or by
check payable and acceptable to the Company or (ii) subject to the approval
of the Committee, (a) by tendering to the Company shares of Common Stock
owned by the optionee having an aggregate Market Value Per Share as of the
date of exercise and tender that is not greater than the full option
exercise price for the shares with respect to which the Option is being
exercised and by paying any remaining amount of the option exercise price
as provided in (i) above (provided that the Committee may, upon confirming
that the optionee owns the number of shares being tendered, authorize the
issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the Option less the number of shares being
tendered upon the exercise and return to the optionee (or not require
surrender of) the certificate for the shares being tendered upon the
exercise) or (b) by the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company cash or a check payable and acceptable
to the company to pay the option exercise price; provided that in the event
the optionee chooses to pay the option exercise price as provided in
(ii)(b) above, the optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements
as the Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection.
(2) NUMBER OF SHARES. Each agreement shall state the total number of
shares of Common Stock that are subject to the Option and/or SAR.
(3) EXERCISE PRICE. The exercise price for each Option and SAR shall
be fixed by the Committee at the date of grant, but in no event may such
exercise price per share be less than the Market Value Per Share (as
defined below) on the date of the grant of the Option or SAR.
(4) MARKET VALUE PER SHARE. The Market Value Per Share as of any
particular date shall be determined by any fair and reasonable means
determined by the Committee, which may include, if the Common Stock is
listed for trading on the New York Stock Exchange, the closing price
published in THE WALL STREET JOURNAL reports of New York Stock Exchange --
Composite Transactions for the day of the grant, or if no trade of the
Common Stock shall have been reported for such date, the closing price
which is published in THE WALL STREET JOURNAL reports of the New York Stock
Exchange -- Composite Transactions for the next day prior thereto on which
a trade of the Common Stock was so reported.
(5) TERM. The term of each Option and/or SAR shall be determined by
the Committee at the date of grant; provided, however, that each Option
and/or SAR shall, notwithstanding anything in the Plan or an agreement to
the contrary, expire ten years from the date the Option or SAR is granted
or, if earlier, the date specified in the agreement at the date of grant of
such Option or SAR.
(6) DATE OF EXERCISE. In the discretion of the Committee, each
agreement may contain a provision not inconsistent with Section 8 hereof
stating that the Option and/or SAR granted therein may not be exercised in
whole or in part for a period or periods of time specified in such
agreement, subject to Section 8, and except as so specified therein, any
Option or SAR may be exercised in whole at any time or in part from time to
time during its term. The Committee may, however, at any time, in its sole
discretion amend any outstanding Option or SAR to accelerate the time that
such Option or
A-4
<PAGE>
SAR shall be exercisable or to provide that the time for exercising such
Option or SAR shall be accelerated upon the occurrence of a specified
event.
(7) TERMINATION OF EMPLOYMENT. In the event that an individual's
employment with the Company and its Subsidiaries shall terminate, for
reasons other than (i) retirement with the consent of the Company or the
individual's employing Subsidiary, as the case may be, ("retirement"),
(ii) permanent disability or (iii) death, the individual's Options and/or
SARs shall be exercisable by him, subject to subsections (5) and (6) above,
only within three months after such termination, but only to the extent the
Option and/or SAR was exercisable immediately prior to such termination of
employment.
If, however, any termination of employment is due to retirement or
permanent disability, the individual shall have the right after such
termination of employment, subject to the provisions of subsections (5) and
(6) above, to exercise any outstanding Option and/or SAR in full at any
time during the remaining term provided therefor in the related agreements.
Whether any termination of employment is due to retirement or permanent
disability shall be determined by the Committee.
If an individual shall die while entitled to exercise an Option and/or
SAR, the individual's estate, personal representative or beneficiary, as
the case may be, shall have the right, subject to the provisions of
subsections (5) and (6) above, to exercise such Option and/or SAR at any
time within 12 months from the date of the optionee's death, to the extent
that the optionee was entitled to exercise the same on the day immediately
prior to the optionee's death.
d. EFFECTS OF EXERCISE OF OPTIONS AND SARS. The right of an individual to
exercise an Option or SAR shall terminate to the extent that such Option or SAR
is exercised and, to the extent that a SAR relates to a specific Option, the
exercise of the SAR shall terminate a corresponding portion of the related
Option and, conversely, to the extent that such optionee exercises the related
Option, a corresponding portion of such SAR shall terminate.
e. OPTIONS AND SARS GRANTED BY OTHER CORPORATIONS. Options and SARs may
be granted under the Plan from time to time in substitution for stock options
and stock appreciation rights held by employees of corporations who become Key
Employees as a result of a merger or consolidation of the employer corporation
with the Company or a Subsidiary, or the acquisition by the Company or a
Subsidiary of assets of the employer corporation, or the acquisition by the
Company or a Subsidiary of stock of the employer corporation, with the result
that such employer corporation becomes a Subsidiary.
f. OPTIONS AND SARS GRANTED TO NONEMPLOYEE DIRECTORS. Options and SARs
granted to Nonemployee Directors shall be subject to all provisions and terms of
this Plan otherwise applicable thereto, except that notwithstanding such other
provisions and terms of this Plan to the contrary, all Options and SARs granted
to Nonemployee Directors shall be subject to the following provisions:
(1) TYPE AND TERMS OF AWARDS. Each Option granted to a Nonemployee
Director shall be a Non-qualified Stock Option and shall be automatically
accompanied by an SAR for the entire number of shares subject to the
Option. The agreement with respect to each such grant shall provide that
the accompanying SAR, if and to the extent exercised, shall be
automatically paid one-half in cash and one-half in shares of Common Stock
except that no fractional shares of Common Stock shall be issued. All
Options and SARs granted to Directors shall have an exercise price equal to
the Market Value Per Share on the date of grant, shall become exercisable
on and after the first anniversary of the date of grant (except as provided
in Section 8) and shall have a term of ten years unless earlier terminated
as provided in (3) below.
A-5
<PAGE>
(2) GRANTING OF AWARDS. Each person who is elected or appointed to
the Board as a Nonemployee Director for the first time shall automatically
receive, on the date of his or her election or appointment, an Option for
10,000 shares of Common Stock. On the date of the regular annual meeting of
the stockholders of the Company in each year that this Plan is in effect
(commencing with the 1997 annual meeting of stockholders), each Nonemployee
Director who is in office on that day and who was not elected for the first
time at such annual meeting shall automatically receive an Option for 2,000
shares of Common Stock.
(3) TERMINATION OF SERVICE. In the event that a Nonemployee Director
ceases to be a member of the Board, Options and SARs then held by such
individual shall be exercisable, subject to subsections c.(5) and (6)
above, only within 12 months after such termination of service and only to
the same extent that such Options and SARs were exercisable on the date of
such termination; provided, however, that if the termination is due to the
death, permanent disability or retirement of the individual pursuant to a
Company policy, all Options and SARs held by such Nonemployee Director
shall be exercisable after the date of such termination of service in full
at any time during the remaining term provided therefor in the related
agreements, subject to subsections c.(5) and (6) above.
g. INDIVIDUAL LIMITS. Notwithstanding anything in the Plan to the
contrary, no person may receive Options and SARs with respect to more than
250,000 shares of Common Stock during any calendar year, but disregarding any
SAR granted in tandem with an Option.
6. RECAPITALIZATION
The aggregate number of shares stated in Section 3a, the number of shares
of Common Stock to which each outstanding Option and SAR relates, and the
exercise price in respect of each such Option and SAR shall be adjusted in an
equitable manner determined by the Committee, in its sole discretion and without
liability to any person, in the event of (i) a subdivision or consolidation of
shares of Common Stock or other capital adjustments, (ii) the payment of a stock
dividend or a recapitalization or (iii) a "corporate transaction", as such
term is deemed in Treasury Regulation ^1.425-1(a)(1)(ii), or any other
transaction which, in the opinion of the Committee, is similar to a "corporate
transaction", as deemed by the said Treasury Regulations as in effect on
January 1, 1990, including without limitation any spin-off or other distribution
to the security holders of the Company of securities or property of the Company
or a Subsidiary. The Committee may exercise its discretion to make any such
adjustments on an optionee-by-optionee basis and with respect to all or only
some of the Options or SARs held by an optionee.
7. MERGER OR CONSOLIDATION
Except as otherwise provided in Section 8 below, after a merger of one or
more corporations into the Company in which the Company shall survive, or after
a consolidation of the Company and one or more corporations, in which the
resulting corporation remains, as an independent, publicly-owned corporation, an
optionee shall, at the same cost, be entitled upon the exercise of an Option or
SAR to receive (subject to any required action by stockholders and the
discretion of the Committee as to the payment of cash with respect to a SAR)
such stock, cash and/or securities of the surviving or resulting corporation as
the board of directors of such corporation, in its sole discretion and without
liability to any person, shall determine to be equivalent, as nearly as
practicable, to the nearest whole number and class of shares of Common Stock or
other securities that were then subject to such Option or SAR and such shares of
stock or other securities shall, after such merger or consolidation, be deemed
to be shares of Common Stock for all purposes of the Plan and any agreement.
A-6
<PAGE>
8. CHANGE IN CONTROL
In the event of a Change in Control (as defined below), then,
notwithstanding any other term of this Plan or any agreement to the contrary,
any and all outstanding Options and SARs not fully vested shall automatically
vest in full and, except as provided below with respect to a person subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), be immediately exercisable. The date on which such accelerated vesting
and immediate exercisability shall occur (the "Acceleration Date") shall be
the date of the occurrence of the Change in Control.
A "Change in Control" shall be deemed to have occurred if:
(a) any "person," as such term is used in Section 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company) together with its "Affiliates" and "Associates", as such term
is defined in Rule 12b-2 of the Exchange Act, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then outstanding
securities;
(b) during any period of two consecutive years (not including any
period prior to the effective date of this Plan), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or
(d) of this definitions) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other company other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company (or such surviving entity) outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as herein above defined)
acquires more than 25% of the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company adopt a plan of complete
liquidation of the Company or approve an agreement for the sale, exchange
or disposition by the Company of all or a significant portion of the
Company's assets. For purposes of this clause (d), the term "the sale,
exchange or disposition by the Company of all or a significant portion of
the Company's assets" shall mean a sale or other disposition transaction
or series of related transactions involving assets of the Company or any
Subsidiary (including the stock of any Subsidiary) in which the value of
the assets or stock being sold or otherwise disposed of (as measured by the
purchase price being paid therefor or by such other method as the Board
determines is appropriate in a case where there is no readily ascertainable
purchase price) constitutes more than 25% of the fair market value of the
Company (as hereinafter defined). For purposes of the preceding sentence,
the "fair market value of the Company" shall be the aggregate market
value of the outstanding shares of common stock of the Company (on a fully
diluted
A-7
<PAGE>
basis) plus the aggregate market value of the Company's other outstanding
equity securities. The aggregate market value of the shares of common stock
of the Company shall be determined by multiplying the number of shares of
the Company's common stock (on a fully diluted basis) outstanding on the
date of the execution and delivery of a definitive agreement with respect
to the transaction or series of related transactions (the "Transaction
Date") by the average closing price of the shares of common stock of the
Company for the ten trading days immediately preceding the Transaction
Date. The aggregate market value of any other equity securities of the
Company shall be determined in a manner similar to that prescribed in the
immediately preceding sentence for determining the aggregate market value
of the shares of common stock of the Company or by such other method as the
Board shall determine is appropriate.
Notwithstanding the foregoing however, a Change in Control shall not be
deemed to have occurred if, prior to the time a Change in Control would
otherwise be deemed to have occurred pursuant to the above provisions, the Board
determines otherwise.
If during the 60-day period following any such Acceleration Date or, with
respect to an Option or SAR granted to an officer or director subject to Section
16(b) of the Exchange Act, the 60-day period following the earlier of the date
that Section 16(b) of the Exchange Act ceases to apply to such person or six
months following the date of grant of such Option or SAR (but not to exceed the
remaining term of such Option or SAR), a participant (or beneficiary thereof)
elects to exercise an Option or SAR, the holder shall receive in cash whichever
of the following amounts is applicable:
(i) with respect to an acquisition of Common Stock described in clause
(a) of the definition of Change in Control, an amount equal to the
Acquisition Spread (as defined below);
(ii) with respect to a change in composition of the Board described in
clause (b) of the definition of Change in Control, an amount equal to the
Spread (as defined below); or
(iii) with respect to stockholder approval of an agreement or adoption
of a plan described in clause (c) or (d) of the definition of Change in
Control, an amount equal to the Merger Spread (as defined below).
Notwithstanding the foregoing provisions of this Section 8, in the case of an
exercise in respect of an Incentive Stock Option, the holder may not receive an
amount in excess of the maximum amount that will enable such option to continue
to qualify as an Incentive Stock Option.
As used in this Section 8, the following terms shall have the meaning
indicated:
(1) The term "Acquisition Price Per Share" shall mean the greater
of (i) the highest price paid by a person (or an Affiliate or Associate
thereof) for any share of Common Stock acquired prior to, but in connection
with, a Change in Control described in clause (a) of the definition of a
Change in Control or (ii) the highest Market Value Per Share for any day
during the 60-day period ending on the date the Option or SAR is exercised.
(2) The term "Acquisition Spread" shall mean an amount equal to the
product obtained by multiplying (i) the excess of (A) the Acquisition Price
Per Share over (B) the price per share of Common Stock at which the Option
or SAR is exercisable, by (ii) the number of shares of Common Stock with
respect to which such Option or SAR is being exercised.
(3) The term "Merger Price Per Share" shall mean the greater of (i)
the fixed or formula price for the acquisition of shares of Common Stock
specified in such agreement or adoption, if such fixed or formula price is
determinable on the date on which such Option or SAR is exercised, and (ii)
the
A-8
<PAGE>
highest Market Value Per Share for any day during the 60-day period ending
on the date on which such Option or SAR is exercised.
(4) The term "Merger Spread" shall mean an amount equal to the
product obtained by multiplying (i) the excess of (A) the Merger Price Per
Share over (B) the price per share of Common Stock at which the Option or
SAR is exercisable, by (ii) the number of shares of Common Stock with
respect to which such Option or SAR is being exercised.
(5) The term "Spread" shall mean an amount equal to the product
obtained by multiplying (i) the excess of (A) the highest Market Value Per
Share for any day during the 60-day period ending on the date the Option or
SAR is exercised over (B) the price per share of Common Stock at which the
Option or SAR is exercisable, by (ii) the number of shares of Common Stock
with respect to which the Option or SAR is being exercised.
The Company intends that this Section 8 shall comply with the requirements
of Rule 16b-3 and any future rules promulgated in substitution therefor ("the
Rule") under the Exchange Act during the term of the Plan. Should any provision
of this Section 8 not be necessary to comply with the requirements of the Rule
or should any additional provisions be necessary for this Section 8 to comply
with the requirements of the Rule, the Board may amend the Plan to add to or
modify the provisions of the Plan accordingly.
9. EMPLOYEE'S AGREEMENT
If, at the time of the exercise of any Option or SAR, in the opinion of
counsel for the Company, it is necessary or desirable, in order to comply with
any then applicable laws or regulations relating to the sale of securities, for
the individual exercising the Option or SAR to agree to hold any shares issued
to the individual for investment and without intention to resell or distribute
the same and for the individual to agree to dispose of such shares only in
compliance with such laws and regulations, the individual will, upon the request
of the Company, execute and deliver to the Company a further agreement to such
effect.
10. WITHHOLDING FOR TAXES
Any cash payment under the Plan shall be reduced by any amounts required to
be withheld or paid with respect thereto under all present or future federal,
state and local tax and other laws and regulations that may be in effect as of
the date of each such payment ("Tax Amounts"). Any issuance of Common Stock
pursuant to the exercise of an Option or other distribution of Common Stock
under the Plan shall not be made until appropriate arrangements have been made
for the payment of any amounts that may be required to be withheld or paid with
respect thereto. Such arrangements may, at the discretion of the Committee,
include allowing the optionee to tender to the Company shares of Common Stock
owned by optionee, or to request the Company to withhold a portion of the shares
of Common Stock being acquired pursuant to the exercise or otherwise distributed
to optionee, which have a Market Value Per Share as of the date of such
exercise, tender or withholding that is not greater than the sum of all Tax
Amounts, together with payment of any remaining portion of all Tax Amounts in
cash or by check payable and acceptable to the Company.
11. TERMINATION OF AUTHORITY TO GRANT AWARDS
No Options or SARs may be granted pursuant to this Plan after December 31,
1999.
12. AMENDMENT AND TERMINATION
The Board may from time to time and at any time alter, amend, suspend,
discontinue or terminate this Plan and any grants hereunder; provided, however,
that no such action of the Board may, without the
A-9
<PAGE>
approval of the stockholders of the Company, alter the provisions of the Plan so
as to (i) increase the maximum number of shares of Common Stock that may be
subject to grants and distributed in the payment of exercises under the Plan
(except as provided in Section 3b); (ii) change the class of employees eligible
to receive grants under the Plan; (iii) extend beyond ten years the maximum
terms of Options or SARs granted under the Plan or extend the term of the Plan;
or (iv) change the operation of Section 5f., concerning automatic grants to
Nonemployee Directors, unless, in each case, such approval is not required to
meet the requirements of the Rule.
13. PREEMPTION BY APPLICABLE LAWS AND REGULATIONS
Anything in the Plan or any agreement entered into pursuant to the Plan to
the contrary notwithstanding, if, at any time specified herein or therein for
the making of any determination, the issuance or other distribution of shares of
Common Stock, or the payment of consideration to an employee as a result of the
exercise of any SAR, as the case may be, any law, regulation or requirement of
any governmental authority having jurisdiction in the premises shall require
either the Company or the employee (or the employee's beneficiary), as the case
may be, to take any action in connection with any such determination, the shares
then to be issued or distributed, or such payment, the issue or distribution of
such shares or the making of such determination or payment, as the case may be,
shall be deferred until such action shall have been taken.
14. CHANGE IN CONTROL LIMITATION
Notwithstanding any other provision in the Plan, to the extent that the
acceleration of exercisability of an Option or SAR under this Plan following a
Change in Control, when aggregated with other payments or benefits to the
participant, whether or not payable pursuant to this Plan, would, as determined
by tax counsel selected by the Company, result in "excess parachute payments"
(as defined in Section 280G of the Code) such parachute payments or benefits
provided to a participant under this Plan shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code, but only if, by reason of such reduction, the
participant's net after tax benefit shall exceed the net after tax benefit if
such reduction were not made. "Net after tax benefit" shall mean the sum of
(i) all payments and benefits which a participant receives or is then entitled
to receive that would constitute a "parachute payment" within the meaning of
Section 280G of the Code, less (ii) the amount of federal income taxes payable
with respect to the payments and benefits described in (i) above calculated at
the maximum marginal income tax rate for the year in which such payments and
benefits shall be paid to the participant (based upon the rate for such year as
set forth in the Code at the time of the first payment of the foregoing), less
(iii) the amount of excise taxes imposed with respect to the payments and
benefits described in (i) above by Section 4999 of the Code.
15. MISCELLANEOUS
a. NO EMPLOYMENT CONTRACT. Nothing contained in the Plan shall be
construed as conferring upon any employee the right to continue in the employ of
the Company or any Subsidiary.
b. EMPLOYMENT WITH SUBSIDIARIES. Employment by the Company for the
purpose of this Plan shall be deemed to include employment by, and to continue
during any period in which an employee is in the employment of, any Subsidiary.
c. NO RIGHTS AS A STOCKHOLDER. A participant shall have no rights as a
stockholder with respect to shares covered by such participant's Option or SAR
until the date of the issuance of shares to the participant
A-10
<PAGE>
pursuant thereto. No adjustment will be made for dividends or other
distributions or rights for which the record date is prior to the date of such
issuance.
d. NO RIGHT TO CORPORATE ASSETS. Nothing contained in the Plan shall be
construed as giving any participant, such participant's beneficiaries or any
other person any equity or other interest of any kind in any assets of the
Company or any Subsidiary or creating a trust of any kind or a fiduciary
relationship of any kind between the Company or a Subsidiary and any such
person.
e. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any Subsidiary from taking any
corporate action that is deemed by the Company or such Subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any grant made under the Plan. No participant,
beneficiary or other person shall have any claim against the Company or any
Subsidiary as a result of any such action.
f. NON-ASSIGNABILITY. A participant shall not have the power or right to
sell, exchange, pledge, transfer, assign or otherwise encumber or dispose of
such participant's interest in any grant under the Plan nor shall such interest
be subject to seizure for the payment of a participant's debts, judgments,
alimony, or separate maintenance or be transferable by operation of law in the
event of a participant's bankruptcy or insolvency and to the extent any such
interest arising under the Plan is awarded to a spouse pursuant to any divorce
proceeding, such interest shall be deemed to be terminated and forfeited
notwithstanding an vesting provisions or other terms herein or in the agreement
evidencing such aware.
g. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to the Plan will be used for general corporate purposes.
h. SALE OF SUBSIDIARY OR ASSETS. In the event a Key Employee ceases to be
employed by the Company or a Subsidiary as a result of a sale or other
disposition by the Company of a Subsidiary or all or part of the business
operations of the Company or a Subsidiary, the Committee, in its sole
discretion, may accelerate the exercisability of any grant under the Plan, in
whole or in part, as it deems appropriate.
i. GOVERNING LAW; CONSTRUCTION. All rights and obligations under the Plan
shall be governed by, and the Plan shall be construed in accordance with, the
laws of the State of Texas without regard to the principles of conflicts of
laws. Titles and headings to Sections herein are for purposes of reference only,
and shall in no way limit, define or otherwise affect the meaning or
interpretation of any provisions of the Plan.
Effective Date of Plan: February 15, 1990.
Effective Date of Third Amendment: April 29, 1997.
A-11
<PAGE>
FRONT SIDE OF PROXY
PROXY TECH-SYM CORPORATION PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) WENDELL W. GAMEL, ROBERT E. MOORE and J.
RANKIN TIPPINS, or any of them, lawful attorneys and proxies of the undersigned
to vote as Proxy at the Annual Stockholders' Meeting of Tech-Sym Corporation
(herein the "Company") to be held on April 29, 1997, and any adjournment(s)
thereof, according to the number of votes owned by the undersigned as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBERED 1, 2 AND 3.
<PAGE>
PROPOSAL 1. The Election of Directors:
[ ] FOR nominees [ ] WITHHOLD AUTHORITY
listed below to vote for all nominees
(except as marked listed below
to the contrary below)
W. Creech, M. Forrest, A. Gallotta, W. Gamel, C. Kraft, R. Moore, C.
Scribner, C. Watt
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME HERE:
- -------------------------------------------------------------------------------
PROPOSAL 2: Ratification of the appointment of Price Waterhouse LLP as the
independent accountants of the Company for the year 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3: To approve the Third Amendment to the Tech-Sym Corporation 1990
Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued and to be signed on other side)
BACK SIDE OF PROXY
In accordance with their discretion, said Attorneys and Proxies are authorized
to vote upon such other matters or proposals not known at the time of
solicitation of this proxy which may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. ANY PRIOR PROXY IS HEREBY REVOKED.
Dated: ___________________, 1997
--------------------------------
Signature
--------------------------------
(Signature if held jointly)
Please sign exactly as your name
appears at the left. When shares
are held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by president or other
authorized person. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE. THANK YOU.
