FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _______.
COMMISSION FILE NUMBER 1-4371
TECH-SYM CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 74-1509818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10500 WESTOFFICE DRIVE, SUITE 200, HOUSTON, TEXAS 77042
(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 785-7790
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ].
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON OUTSTANDING AT JULY 31, 1998
Common Stock, $.10 par value 6,087,581
<PAGE>
Form 10-Q
TECH-SYM CORPORATION
INDEX
PAGE NO.
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheet June 30, 1998 (unaudited)
and December 31, 1997 1
Consolidated Statement of Income and Accumulated Earnings for
the Quarter Ended June 30, 1998 and 1997 (unaudited) 2
Consolidated Statement of Income and Accumulated Earnings for
the Six Months Ended June 30, 1998 and 1997 (unaudited) 3
Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1998 and 1997 (unaudited) 4
Consolidated Statement of Changes in Shareholders' Investment
for the Six Months Ended June 30, 1998 and 1997 (unaudited) 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-11
Part II. Other information:
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports to Form 8-K 12
Signatures 13
<PAGE>
Page 1 Form 10-Q
ITEM 1. FINANCIAL STATEMENTS
TECH-SYM CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PAR VALUE AND NUMBER OF SHARES)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 7,833 $ 13,384
Short-term investments .......................... 100 5,588
Receivables, net ................................ 68,907 76,980
Unbilled revenue ................................ 37,196 48,140
Inventories ..................................... 73,796 96,962
Other ........................................... 8,297 8,046
------------- -----------------
Total current
assets .................................. 196,129 $ 249,100
Property, plant and equipment, net ................ 49,335 49,049
Long-term receivables, net ........................ 4,632 18,759
Other assets ...................................... 25,417 29,842
Net assets of discontinued operations ............. 19,093
------------- -----------------
Total
assets .................................. $ 294,606 $ 346,750
============= =================
LIABILITIES
Current liabilities:
Notes payable ................................... $ 29,986 $ 54,137
Current maturities of long-term debt ............ 5,945 8,622
Accounts payable ................................ 13,928 23,479
Billings in excess of cost and estimated earnings
on uncompleted contracts ..................... 5,802 9,941
Taxes on income ................................. 5,497 5,888
Other accrued liabilities ....................... 18,588 21,399
------------- -----------------
Total current liabilities ............... 79,746 123,466
Long-term debt .................................... 10,488 16,139
Other liabilities ................................. 16,562 29,005
------------- -----------------
Total liabilities ....................... 106,796 168,610
Minority interest ...................................... 17,002 14,957
SHAREHOLDERS' INVESTMENT
Preferred stock-authorized 2,000,000 shares,
without par value; none issued
Common stock-authorized 20,000,000 shares,
$.10 par value; issued 8,015,881
and 7,994,881, respectively .................... 802 799
Additional capital ................................ 41,005 40,677
Accumulated earnings .............................. 160,121 152,644
Accumulated other comprehensive loss .............. (3,068) (3,277)
Common stock held in treasury at cost
(1,951,900 and 1,936,900 shares, respectively) . (28,052) (27,660)
------------- -----------------
Total shareholders' investment .......... 170,808 163,183
------------- -----------------
Total liabilities, minority interest and
shareholders' investment ............. $ 294,606 $ 346,750
============= =================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 2 Form 10-Q
TECH-SYM CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND ACCUMULATED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the Quarter
Ended June 30,
----------------------
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Revenue ...................................................................... $ 65,808 $ 56,825
Cost of revenue .............................................................. 42,026 38,617
--------- ---------
Gross profit .......................................................... 23,782 18,208
Selling, general and administrative expenses ................................. 14,373 12,811
Research and development expense ............................................. 2,472 2,647
Interest expense ............................................................. 905 858
Interest and other income, net ............................................... (236) (718)
--------- ---------
Income from continuing operations before income taxes
and minority interest ................................................. 6,268 2,610
Provision for income taxes ................................................... 2,068 723
Minority interest ............................................................ 627 242
--------- ---------
Income from continuing operations ............................................ 3,573 1,645
Discontinued operations (see Note 3)
Gain (loss) from sale and operations of CogniSeis net of applicable
income tax expense (benefit) of $1,913 and ($425) and minority interest
of $886 and ($206),
respectively .......................................................... 3,364 (740)
Income (loss) from discontinued
operations, net of applicable income tax
(benefit) expense of ($1,040) and $209,
respectively .......................................................... (2,112) 538
Loss on disposal of discontinued operations, including a provision of
$350 for operating losses through estimated disposal date net of
applicable income tax
benefit of $300 ....................................................... (600)
--------- ---------
Total from discontinued operations .................................... 652 (202)
--------- ---------
Net income ......................................................... $ 4,225 $ 1,443
--------- ---------
Accumulated earnings:
Beginning of period ................................................... 155,896 146,741
--------- ---------
End of period ......................................................... $ 160,121 $ 148,184
========= =========
Earnings (loss) per common share - basic
Continuing operations ................................................. $ 0.59 $ 0.27
Discontinued operations ............................................... .11 (0.03)
--------- ---------
Net income ......................................................... $ 0.70 $ 0.24
========= =========
Average shares outstanding - basic ........................................... 6,058 6,032
Earnings (loss) per common share - diluted
Continuing operations ................................................. $ 0.58 $ 0.26
Discontinued operations ............................................... .10 (0.03)
--------- ---------
Net income ......................................................... $ 0.68 $ 0.23
========= =========
Average shares outstanding - diluted ......................................... 6,168 6,170
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 3 Form 10-Q
TECH-SYM CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND ACCUMULATED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
---------------------
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Revenue ...................................................................... $ 132,412 $ 114,241
Cost of revenue .............................................................. 86,043 79,143
--------- ---------
Gross profit .......................................................... 46,369 35,098
Selling, general and administrative expenses ................................. 28,482 24,968
Research and development expense ............................................. 5,050 4,781
Interest expense ............................................................. 1,941 1,538
Interest and other income, net ............................................... (872) (1,057)
--------- ---------
Income from continuing operations before income taxes
and minority interest ................................................. 11,768 4,868
Provision for income taxes ................................................... 3,883 1,439
Minority interest ............................................................ 1,110 338
--------- ---------
Income from continuing operations ............................................ 6,775 3,091
Discontinued operations (see Note 3)
Gain (loss) from sale and operations of CogniSeis net of applicable
income tax expense (benefit) of $1,913 and ($713) and minority interest
of $886 and ($352),
respectively .......................................................... 3,364 (1,236)
Income (loss) from discontinued
operations, net of applicable income tax
(benefit) expense of ($1,015) and $477,
respectively .......................................................... (2,062) 1,134
Loss on disposal of discontinued
operations, including a provision of $350
for operating losses through estimated
disposal date net of applicable income tax
benefit of $300 ....................................................... (600)
--------- ---------
Total from discontinued operations .................................... 702 (102)
--------- ---------
Net income ......................................................... $ 7,477 $ 2,989
--------- ---------
Accumulated earnings:
Beginning of period ................................................... 152,644 145,195
--------- ---------
End of period ......................................................... $ 160,121 $ 148,184
========= =========
Earnings (loss) per common share - basic
Continuing operations ................................................. $ 1.12 $ 0.51
Discontinued operations ............................................... .11 (0.02)
--------- ---------
Net income ......................................................... $ 1.23 $ 0.49
========= =========
Average shares outstanding - basic ........................................... 6,058 6,037
Earnings (loss) per common share - diluted
Continuing operations ................................................. $ 1.10 $ 0.50
Discontinued operations ............................................... .11 (0.02)
--------- ---------
Net income ......................................................... $ 1.21 $ 0.48
========= =========
Average shares outstanding - diluted ......................................... 6,162 6,171
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 4 Form 10-Q
TECH-SYM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
--------------------
1998 1997
-------- --------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income .............................................................. $ 7,477 $ 2,989
Adjustments to reconcile net income to net
cash provided by (used for) operating activities:
Depreciation and amortization ........................................... 6,903 6,836
Gain on sale of CogniSeis ............................................... (3,364)
Gain foreign currency denominated debt .................................. (641)
Minority interest ....................................................... 1,110 (14)
Change in operating assets and liabilities:
Receivables .......................................................... 10,774 (883)
Unbilled revenue ..................................................... 2,303 (662)
Inventories .......................................................... 274 (8,185)
Accounts payable and taxes on income ................................. (7,848) (2,922)
Billing in excess and other accrued liabilities ...................... 4,612 (9,785)
Long-term receivables and other assets ............................... 1,613 (5,675)
Other liabilities and deferred credits ............................... (3,219) 1,120
-------- --------
Net cash provided by (used for) operating activities .................... 20,635 (17,822)
-------- --------
Cash flows from investing activities:
Capital expenditures .................................................... (11,783) (5,234)
Sale of investment securities ........................................... 5,462 6,280
Purchase of investment securities ....................................... (2,730) (5,710)
Other investing activities .............................................. (546) 270
-------- --------
Net cash used for investing activities .................................. (9,597) (4,394)
-------- --------
Cash flows from financing activities:
Net (payments) borrowings under bank line of credit
agreements ................................................................ (11,170) 9,392
Proceeds from long-term debt ............................................ 1,359 2,432
Payments on long-term debt .............................................. (2,314) (2,759)
Proceeds from exercise of stock options ................................. 331 332
Acquisition of Tech-Sym and GeoScience treasury shares .................. (392) (3,140)
Proceeds from sale of notes receivable .................................. 7,848
-------- --------
Net cash (used for) provided by financing activities .................... (12,186) 14,105
-------- --------
Net decrease in cash and cash equivalents ................................. (1,148) (8,111)
Cash and cash equivalents at beginning of period ........................ 13,384 20,450
-------- --------
Cash and cash equivalents at end of period .............................. $ 12,236 $ 12,339
======== ========
Non cash transactions:
Reduction in balance of notes receivable sold with recourse ............ $ 1,712
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 5 Form 10-Q
TECH-SYM CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' INVESTMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER TREASURY STOCK TOTAL
--------------- ADDITIONAL ACCUMULATED COMPREHENSIVE ----------------- SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) SHARES AMOUNT INVESTMENT
------ ------ ---------- ----------- ------------ ------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 ....... 7,995 $ 799 $ 40,677 $ 152,644 $ (3,277) 1,937 $(27,660) $ 163,183
Comprehensive income for 1998:
Net income ...................... 7,477
Other comprehensive
income, net of tax
Foreign currency
translation adjustments 209
Total comprehensive income 7,686
Acquisition of treasury shares ..... 15 (392) (392)
Issuance of common stock
for stock options ............... 21 3 328 331
------ ------ ---------- ----------- ------------ ------ -------- -------------
Balance at June 30, 1998 ........... 8,016 $ 802 $ 41,005 $ 160,121 $ (3,068) 1,952 $(28,052) $ 170,808
====== ====== ========== =========== ============ ====== ======== =============
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER TREASURY STOCK TOTAL
--------------- ADDITIONAL ACCUMULATED COMPREHENSIVE ----------------- SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) SHARES AMOUNT INVESTMENT
------ ------ ---------- ----------- ------------ ------ -------- -------------
Balance at December 31, 1996 ....... 7,941 $ 794 $ 39,753 $ 145,195 $ (911) 1,905 $(26,759) $ 158,072
Comprehensive income for 1997:
Net income ...................... 2,989
Other comprehensive
income (loss), net of tax
Foreign currency
translation adjustments (1,392)
Total comprehensive income 1,597
Acquisition of treasury shares ..... 31 (888) (888)
Issuance of common stock
for stock options ............... 23 2 330 332
------ ------ ---------- ----------- ------------ ------ -------- -------------
Balance at June 30, 1997 ........... 7,964 $ 796 $ 40,083 $ 148,184 $ (2,303) 1,936 $(27,647) $ 159,113
====== ====== ========== =========== ============ ====== ======== =============
</TABLE>
<PAGE>
Page 6 Form 10-Q
TECH-SYM CORPORATION
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Tech-Sym
Corporation and its subsidiaries (the "Company") have been prepared in
accordance with the instructions to Form 10-Q. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements and should be read in conjunction
with the financial statements and notes thereto appearing in the Company's
Annual Report for the year ended December 31, 1997.
In the opinion of the Company's management ("Management") all adjustments
necessary for a fair presentation of the results of operations for all periods
reported have been included. Such adjustments consist only of normal recurring
items.
The consolidated statements of income for the six months ended June 30, 1998 are
not necessarily indicative of the results expected for the full year ending
December 31, 1998.
The consolidated statements have been restated to reflect the Company's
broadcast, air monitoring products and real estate investment subsidiaries as
discontinued operations in accordance with Accounting Principles Board Opinion
No. 30 (see Note 3).
Certain prior year amounts have been reclassified to conform to the current year
presentation.
NOTE 2 - INVENTORIES
Inventories, which consist principally of electronic components are summarized
as follows (in thousands):
JUNE 30, 1998 DECEMBER 31, 1997
------------ -----------------
Raw materials ............................. $ 30,972 $ 39,935
Work in progress .......................... 17,271 35,964
Finished goods ............................ 25,553 21,063
------------ -----------------
$ 73,796 $ 96,962
============ =================
NOTE 3 - DISCONTINUED OPERATIONS
Effective June 30, 1998 (the "measurement date"), the Company adopted a plan to
sell it broadcast, air monitoring products and real estate investment
subsidiaries (the "discontinued businesses"). Accordingly, the discontinued
businesses are reported as discontinued operations for the periods presented.
Management anticipates the broadcast business will incur operating losses
approximating $3,200,000 from the measurement date through the expected disposal
date. Such losses have been deferred due to the fact that Management expects an
overall gain on the sale of the broadcast business. Management believes the air
monitoring products and real estate investment businesses will incur operating
losses of approximately $250,000 and $100,000, respectively, during the disposal
period. As such, the Company has recorded a provision of $300,000, net, for each
business to reflect the anticipated overall loss on each sale, which includes
anticipated operating losses.
<PAGE>
Page 7 Form 10-Q
TECH-SYM CORPORATION
NOTE 3 - DISCONTINUED OPERATIONS, CON'T.
The operating results (unaudited) of the discontinued operations are summarized
as follows (in thousands):
QUARTER ENDED JUNE 30, 1998
AIR
MONITORING REAL ESTATE
BROADCAST PRODUCTS INVESTMENT TOTAL
-------- ------- ------- --------
Revenue .......................... $ 7,939 $ 750 $ 368 $ 9,057
Loss before income taxes ......... (2,816) (250) (86) (3,152)
Income tax benefit ............... (929) (82) (29) (1,040)
-------- ------- ------- --------
Net loss ......................... $ (1,887) $ (168) $ (57) $ (2,112)
======== ======= ======= ========
QUARTER ENDED JUNE 30, 1997
AIR
MONITORING REAL ESTATE
BROADCAST PRODUCTS INVESTMENT TOTAL
-------- ------- ------- --------
Revenue .......................... $ 14,238 $ 704 $ 458 $ 15,400
Income (loss) before income taxes 1,008 (168) (93) 747
Income tax expense (benefit) ..... 282 (47) (26) 209
-------- ------- ------- --------
Net income (loss) ................ $ 726 $ (121) $ (67) $ 538
======== ======= ======= ========
SIX MONTHS ENDED JUNE 30, 1998
AIR
MONITORING REAL ESTATE
BROADCAST PRODUCTS INVESTMENT TOTAL
-------- ------- ------- --------
Revenue .......................... $ 17,640 $ 1,761 $ 776 $ 20,177
Loss before income taxes ......... (2,640) (277) (160) (3,077)
Income tax benefit ............... (871) (91) (53) (1,015)
-------- ------- ------- --------
Net loss ......................... $ (1,769) $ (186) $ (107) $ (2,062)
======== ======= ======= ========
SIX MONTHS ENDED JUNE 30, 1997
AIR
MONITORING REAL ESTATE
BROADCAST PRODUCTS INVESTMENT TOTAL
-------- ------- ------- --------
Revenue .......................... $ 28,465 $ 1,506 $ 911 $ 30,882
Income (loss) before income taxes 2,147 (440) (96) 1,611
Income tax expense (benefit) ..... 635 (130) (28) 477
-------- ------- ------- --------
Net income (loss) ................ $ 1,512 $ (310) $ (68) $ 1,134
======== ======= ======= ========
The net assets (unaudited) of the discontinued operation are summarized as
follows (in thousands):
JUNE 30, 1998 AIR
MONITORING REAL ESTATE
BROADCAST PRODUCTS INVESTMENT TOTAL
-------- ------- ------- --------
Current assets ................... $ 43,043 $ 1,433 $ 862 $ 45,338
Property, plant and equipment, net 5,380 1,690 7,070
Other assets ..................... 2,296 49 5,029 7,374
Current liabilities .............. (24,904) (610) (319) (25,833)
Long-term liabilities ............ (12,102) (2,754) (14,856)
-------- ------- ------- --------
Net assets ..................... $ 13,713 $ 872 $ 4,508 $ 19,093
======== ======= ======= ========
<PAGE>
Page 8 Form 10-Q
TECH-SYM CORPORATION
NOTE 3 - DISCONTINUED OPERATIONS, CON'T.
In the fourth quarter of 1997, the Company's majority owned subsidiary,
GeoScience Corporation, sold CogniSeis Development, Inc. As a result, the
operations for the quarter and six month period ended June 30, 1997 have been
reclassified to report separately the results of the discontinued operation.
Revenue from CogniSeis for the quarter and six months ended June 30, 1997 was
$5,575,000 and $11,398,000, respectively.
During the second quarter of 1998 the purchaser confirmed its intent to elect
the early pay-out provision of the sales agreement and on July 8, 1998, the
Company received payment on the note receivable related to the sale of
CogniSeis. The purchaser's election of the early pay-out provision of the sale
agreement eliminated uncertainty regarding the gain on the sale. As a result,
the Company recognized its portion, $3,364,000, of the net gain on the sale.
NOTE 4 - PER SHARE DATA
Basic per share amounts have been computed based on the average number of common
shares outstanding. Diluted per share amounts reflect the increase in average
common shares outstanding that would result from the exercise of outstanding
stock options computed using the treasury stock method. Stock options are the
only dilutive potential shares the Company has outstanding for all periods
presented. Outstanding options to purchase 341,460 and 225,100 shares of common
stock were excluded from the computation of diluted earnings per share for the
quarter and six month period ended June 30, 1998 and 1997, respectively, because
to do so would have been anti-dilutive using the treasury stock method.
NOTE 5 - COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, REPORTING COMPREHENSIVE INCOME. This Statement establishes
standards for reporting and display of comprehensive income and its components.
Accumulated other comprehensive income (loss) by component is summarized in the
Consolidated Statement of Changes in Shareholders' Investment.
NOTE 6 - NEW PRONOUNCEMENTS
In June 1998, Statement of Financial Accounting Standards No. 133 (FAS 133),
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, was issued. FAS
133 is effective for fiscal years beginning after June 15, 1999, and establishes
accounting and reporting standards for derivative instruments. Adoption of FAS
133 is not expected to have a material effect on the Company's financial
position or operational results.
<PAGE>
Page 9 Form 10-Q
TECH-SYM CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
In June 1998, the Company adopted a plan to sell its broadcast, air monitoring
products and real estate investment subsidiaries (the "discontinued
businesses"). The discontinued businesses are accounted for as discontinued
operations. Accordingly, the consolidated financial statements have been
restated to report separately the operating results of the continuing
operations. All prior year amounts have been restated.
RESULTS OF OPERATIONS - QUARTER ENDED JUNE 30, 1998 COMPARED TO THE QUARTER
ENDED JUNE 30, 1997
Revenue for the quarter ended June 30, 1998 increased $8,983,000 or 16% to
$65,808,000 compared to $56,825,000 for the quarter ended June 30, 1997. The
overall increase in revenue is primarily attributable to increased shipments of
seismic data acquisition products which resulted in a $9,879,000 or 42% increase
in revenue in the geoscientific business area. The increased shipments of
seismic data acquisition products are a result of customer orders placed during
the latter part of 1997 and early 1998. Increased revenue in the geoscientific
business area was partially offset by the decrease in revenue in the
communications business area of $637,000 or 4% reflecting the slow-down in
telecommunications equipment partially as a result of the Asian crisis, and the
decrease in the defense systems business revenue of $112,000 or 1%.
The gross profit margin was 36% for the quarter ended June 30, 1998 compared to
32% for the same quarter in the prior year. The increase in the gross margin
percentage was primarily a result of the increased revenue in the geoscientific
business area, where the gross profit margins are greater than those of the
communications and defense products.
Selling, general and administrative expense increased $1,562,000 or 12% to
$14,373,000 for the quarter ended June 30, 1998 compared to the same quarter in
the prior year. Most of the increase was a result of the increase in expense
items directly associated with the increase in revenue in the geoscientific
business area for the period. As a percentage of revenue, selling, general and
administrative expense was consistent at 22% for the quarter ended June 30, 1998
and for the quarter ended June 30, 1997. Research and development expense was
$2,472,000 for the second quarter of 1998 compared to $2,647,000 for the second
quarter of 1997.
Interest expense was $905,000 for the quarter ended June 30, 1998 compared to
$858,000 for the quarter ended June 30, 1997. The $47,000 or 5% increase in
interest expense was caused by the increase in borrowings to support the
expenditures for capital equipment and facilities and to finance the higher
levels of accounts receivable and inventories. Other income was $236,000 for the
quarter ended June 30, 1998 compared to $718,000 for the quarter ended June 30,
1997.
The Company has increased its effective tax rate to 33% for 1998 as compared to
the 28% rate used for the second quarter in 1997 due to its anticipated profit
level for the year.
Minority interest expense was $627,000 for the second quarter of 1998 compared
to $242,000 for the second quarter of 1997. The increase in minority interest
expense is a direct result of the increase in net income at the Company's
majority-owned subsidiary, GeoScience Corporation ("GeoScience").
Income from continuing operations for the quarter ended June 30, 1998 was
$3,573,000 or $.58 per diluted share as compared to $1,645,000 or $.26 per
diluted share for the quarter ended June 30, 1997. The improvement in earnings
is primarily attributable to the Company's geoscientific business.
During the fourth quarter of 1997, GeoScience sold its software subsidiary,
CogniSeis Development, Inc. As a result, there were no results from CogniSeis
for the second quarter of 1998 compared to a loss from CogniSeis of $740,000 for
the second quarter of 1997. During the second quarter of 1998, the Company
recognized its portion, $3,364,000, of the net gain on the sale of CogniSeis
which had been deferred since the fourth quarter of 1997.
<PAGE>
Page 10 Form 10-Q
TECH-SYM CORPORATION
The discontinued businesses posted a loss of $2,112,000 for the quarter ended
June 30, 1998 compared to income of $538,000 for the quarter ended June 30,
1997. The decrease in the results of the discontinued operations is primarily
due to the broadcast subsidiary as a result of lower levels of new orders in the
latter part of 1997 and first half of 1998. The Company believes that it will
incur a loss on the sale of its air monitoring products and real estate
investment subsidiaries of $600,000, net, which includes anticipated losses
through the estimated disposal dates.
Net income for the quarter ended June 30, 1998 was $4,225,000 or $.68 per
diluted share as compared to $1,443,000 or $.23 per diluted share for the
quarter ended June 30, 1997, reflecting the net effect of the items discussed
above.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1997
Revenue for the six months ended June 30, 1998 increased $18,171,000 or 16% to
$132,412,000 compared to $114,241,000 for the six months ended June 30, 1997.
The increase in revenue is primarily attributable to increased shipments of
seismic data acquisition products which resulted in a $19,860,000 or 43%
increase in the geoscientific business area. The increase in the geoscientific
business area was partially offset by a decrease in revenue in the defense
systems business area of $3,030,000 or 10%.
The gross profit margin was 35% for the six months ended June 30, 1998 compared
to 31% for the same period in the prior year. The increase in the gross profit
percentage was primarily a result of the increased revenue in the geoscientific
business area and a change in the sales mix within the geoscientific business
area with an increase in sales of the higher margin 24-bit data acquisition
module.
Selling, general and administrative expense increased $3,514,000 or 14% to
$28,482,000 for the six months ended June 30, 1998 compared to the same period
in the prior year. The majority of the increase was a result of the increase in
expense items directly associated with the increase in revenue in the
geoscientific business area for the period. As a percentage of revenue, selling,
general and administrative expense was consistent at 22% for the six months
ended June 30, 1998 and 1997. Research and development expense was $5,050,000
for the first half of 1998 compared to $4,781,000 for the first half of 1997.
Interest expense was $1,941,000 for the six months ended June 30, 1998 compared
to $1,538,000 for the six months ended June 30, 1997. The $403,000 or 26%
increase in interest expense was caused by the increase in borrowings to support
the expenditures for capital equipment and facilities and to finance the growth
in accounts receivable and inventories. Other income was $872,000 for the six
months ended June 30, 1998 compared to $1,057,000 for the six months ended June
30, 1997.
The Company has increased its effective tax rate to 33% as compared to the 29.5%
used for the first half of 1997 due to its anticipated profit level for the
year.
Minority interest expense was $1,110,000 for the six months ended June 30, 1998
compared to $338,000 for the six months ended June 30, 1997. The increase in
minority interest is a direct result of the increase in net income at the
Company's majority-owned subsidiary, GeoScience Corporation.
Income from continuing operations for the six months ended June 30, 1998 was
$6,775,000 or $1.10 per diluted share as compared to $3,091,000 or $.50 per
diluted share for the six months ended June 30, 1997. The improvement in
earnings is primarily attributable to the Company's geoscientific business.
During the fourth quarter of 1997, GeoScience sold its software subsidiary,
CogniSeis Development, Inc. As a result, there were no results from the
discontinued operation for the six months ended June 30, 1998 compared to a loss
from CogniSeis of $1,236,000 for the six months ended June 30, 1997. During the
second quarter of 1998, the Company recognized its portion, $3,364,000, of the
net gain on the sale of CogniSeis which had been deferred since the fourth
quarter of 1997.
<PAGE>
Page 11 Form 10-Q
TECH-SYM CORPORATION
The discontinued businesses posted a loss of $2,062,000 for the six months ended
June 30, 1998 compared to income of $1,134,000 for the six months ended June 30,
1997. The decrease in the results of the discontinued operations is primarily
due to the broadcast subsidiary as a result of lower levels of new orders in the
latter part of 1997 and first half of 1998. The Company believes that it will
incur a loss on the sale of its air monitoring products and real estate
investment subsidiaries of $600,000, net, which includes anticipated losses
through the estimated disposal dates.
Net income for the six months ended June 30, 1998 was $7,477,000 or $1.21 per
diluted share as compared to $2,989,000 or $.48 per diluted share for the six
months ended June 30, 1997, reflecting the net effect of the items discussed
above.
LIQUIDITY AND CAPITAL RESOURCES
As a result of continued improved earnings and the improved collection of
accounts receivable and inventory controls, the Company is currently satisfying
its working capital and capital expenditure requirements through internally
generated cash from operations. At June 30, 1998, the Company's working capital
balance was $116,383,000 compared to $125,634,000 at December 31, 1997. The
decrease in working capital is attributable to the reclassification of the net
assets of the discontinued operations discussed in Note 3. Cash provided by
operations was $20,635,000 for the six months ended June 30, 1998 as compared to
cash used for operations of $17,822,000 for the six months ended June 30, 1997.
At June 30, 1998, the Company had short-term line of credit facilities
aggregating $99,964,000 of which $48,972,000 was available for additional
short-term borrowings. The Company had a working capital ratio of 2.46 to 1.0
and debt to total capitalization of 28%. The Company believes that its current
financial position and available line of credit facilities will provide adequate
sources of funds to meet foreseeable requirements.
Purchases of property, plant and equipment totaled $11,783,000 for the six
months ended June 30, 1998 compared to $5,234,000 for the same period in the
prior year. The Company estimates that capital expenditures for property, plant
and equipment during the remainder of 1998 will be approximately $9,000,000.
Most of the anticipated capital expenditures are not subject to firm commitments
and the Company may modify its plans depending on future results of operations
or other factors.
Forward-looking statements in this document are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that all forward-looking statements involve risks and
uncertainties, including, without limitation, risks associated with the
uncertainty of market acceptance of the Company's products, limited number of
customers, as well as risks of downturns in economic conditions generally, risks
associated with competition and competitive pricing pressures, and other risks
detailed in the Company's filings with the Securities and Exchange Commission.
<PAGE>
Page 12 Form 10-Q
TECH-SYM CORPORATION
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
1. Elected all seven (7) management nominees for directors pursuant
to proxies solicited without opposition under regulation 14A, as
stated below:
VOTES VOTES
NOMINEE IN FAVOR WITHHELD
W. L. Creech 4,823,613 1,077,987
Michael C. Forrest 4,830,361 1,071,238
A.A. Gallotta, Jr. 4,824,576 1,077,023
Wendell W. Gamel 4,822,854 1,078,745
Christopher C. Kraft, Jr. 4,823,610 1,077,989
Coy J. Scribner 4,823,379 1,078,220
Charles K. Watt 4,830,423 1,071,176
2. Ratified the appointment of Price Waterhouse LLP as independent
accountants of the Registrant for the year ending December 31,
1998 (5,877,815 shares voted for, 12,867 voted against and 10,917
shares abstained.)
3. Approved the adoption of the Tech-Sym Corporation 1998 Equity
Incentive Plan (2,376,435 shares voted for, 1,694,266 shares
voted against and 689,139 shares abstained.)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3(a) By-Laws of Registrant, as amended.
10(a) 1998 Equity Incentive Plan, as amended.
10(b) Termination Agreement dated as of May 1, 1998, between
the Registrant and J. Michael Camp.
10(c) Executive Retirement Agreement, as amended and restated,
dated as of April 30, 1998 between the Registrant and
Wendell W. Gamel.
10(d) Executive Retirement Agreement, as amended and restated,
dated as of April 30, 1998 between the Registrant and
Coy J. Scribner.
(b) Reports on Form 8-K.
Current report on Form 8-K dated April 22, 1998 (Item 5. Other
Events - reported the information set forth in the press release
dated April 22, 1998 concerning the election of Mr.
Camp as President and CEO).
No financial statements were filed as a part of this report.
<PAGE>
Page 13 Form 10-Q
TECH-SYM CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECH-SYM CORPORATION
Registrant
Date: August 13, 1998 /s/ J. MICHAEL CAMP
J. Michael Camp, President
and Chief Executive Officer
Date: August 13, 1998 /s/ RAY F. THOMPSON
Ray F. Thompson, Vice President,
Treasurer, and Chief Financial
Officer
EXHIBIT 3.a
B Y L A W S
OF
TECH-SYM CORPORATION
DATED: APRIL 13, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I Offices.................................................... 1
Section 1.1 Business Office ........................................... 1
Section 1.2 Principal Office .......................................... 1
Section 1.3 Other Offices ............................................. 1
ARTICLE II Meetings of Stockholders................................... 1
Section 2.1 Place of Meetings ......................................... 1
Section 2.2 Annual Meeting ............................................ 2
Section 2.3 Special Meetings .......................................... 3
Section 2.4 Business to be Conducted .................................. 3
Section 2.5 Notice of the Meetings .................................... 5
Section 2.6 Voting Lists .............................................. 5
Section 2.7 Quorum .................................................... 6
Section 2.8 Organization .............................................. 6
Section 2.9 Proxies.................................................... 7
Section 2.10 Voting of Shares .......................................... 8
Section 2.11 Voting of Shares by Certain Holders ....................... 8
Section 2.12 Election of Directors ..................................... 10
Section 2.13 Action Without Meeting .................................... 10
Section 2.14 Determination of Record Date for Action by Written Consent. 10
Section 2.15 Determination of Consent Date ............................. 11
ARTICLE III Directors ................................................. 11
Section 3.1 Number and Qualification .................................. 11
Section 3.2 Election and Term of Office ............................... 11
Section 3.3 Resignation ............................................... 13
Section 3.4 Removal.................................................... 13
Section 3.5 Vacancies ................................................. 14
Section 3.6 General Powers ............................................ 14
Section 3.7 Compensation .............................................. 14
ARTICLE IV Meetings of the Board ..................................... 14
Section 4.1 Place of Meetings ......................................... 14
Section 4.2 Annual Meeting ............................................ 16
Section 4.3 Regular Meetings .......................................... 15
Section 4.4 Special Meetings .......................................... 15
Section 4.5 Quorum and Action ......................................... 15
Section 4.6 Presumption of Assent to Action............................ 16
Section 4.7 Telephone Meetings ........................................ 17
Section 4.8 Action Without Meeting .................................... 17
ARTICLE V Committees of the Board.................................... 17
Section 5.1 Membership and Authorities ................................ 17
Section 5.2 Meetings and Notices ...................................... 18
Section 5.3 Quorum and Action ......................................... 18
Section 5.4 Minutes and Rules of Procedure ............................ 18
Section 5.5 Vacancies ................................................. 19
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Section 5.6 Telephone Meetings ........................................ 19
Section 5.7 Action Without Meeting .................................... 19
ARTICLE VI Officers................................................... 19
Section 6.1 Number .................................................... 19
Section 6.2 Election, Term of Office and Qualification ................ 20
Section 6.3 Subordinate Officers ...................................... 20
Section 6.4 Resignation ............................................... 20
Section 6.5 Removal.................................................... 20
Section 6.6 Vacancies ................................................. 21
Section 6.7 The Chairman of the Board ................................. 21
Section 6.8 The President ............................................. 21
Section 6.9 The Vice Presidents ....................................... 22
Section 6.10 The Secretary ............................................. 22
Section 6.11 Assistant Secretaries ..................................... 22
Section 6.12 The Treasurer ............................................. 23
Section 6.13 Assistant Treasurers ...................................... 23
Section 6.14 Controller ................................................ 23
Section 6.15 Treasurer's Bond .......................................... 24
Section 6.16 Salaries .................................................. 24
ARTICLE VII Corporate Shares........................................... 24
Section 7.1 Share Certificates ........................................ 24
Section 7.2 Lost Certificates, etc .................................... 25
Section 7.3 Transfer of Shares ........................................ 26
Section 7.4 Ownership of Shares ....................................... 26
Section 7.5 Closing of Transfer Books ................................. 27
ARTICLE VIII Indemnification............................................ 27
Section 8.1 Indemnification............................................ 27
Section 8.2 Continuing Offer, Reliance, etc............................ 30
Section 8.3 Effect of Amendment ....................................... 31
ARTICLE IX General Provisions ........................................ 31
Section 9.1 Waiver of Notice .......................................... 31
Section 9.2 Seal ...................................................... 32
Section 9.3 Fiscal Year ............................................... 32
Section 9.4 Checks, Notes, etc ........................................ 32
Section 9.5 Examination of Books and Records .......................... 32
Section 9.6 Voting Upon Shares Held by the Company .................... 32
ARTICLE X Amendments ................................................ 33
Section 10.1 Amendments ................................................ 33
ARTICLE XI Subject to All Laws ....................................... 33
Section 11.1 Subject to All Laws ....................................... 33
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TECH-SYM CORPORATION
B Y L A W S
ARTICLE I
OFFICES
SECTION 1.1 PRINCIPAL BUSINESS OFFICE. The principal business
office of the Company shall be in Houston, Texas.
SECTION 1.1 PRINCIPAL OFFICE. The PRINCIPAL office of the Company
required by the General Corporation Law of the State of Nevada to be maintained
in the State of Nevada shall be at such address within the State of Nevada as
shall be determined by the Board of Directors of the Company (the "BOARD") and
the address of the principal office may be changed from time to time by the
Board.
SECTION 1.3 OTHER OFFICES. The Company may also have offices at such
other places, both within and without the State of Nevada, as the Board may from
time to time determine or the business of the Company may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 PLACE OF MEETINGS. The Board may designate any place,
either within or without the State of Nevada, as the place of meeting for any
annual meeting of the stockholders of the Company or for any special meeting of
stockholders called by a majority of the members of the Whole Board (as
hereinafter defined). As used in these Bylaws, "STOCKHOLDER" means a person in
whose name shares of the Company's capital stock are registered in the records
of the Company. A waiver of notice signed by all stockholders entitled to vote
at a meeting may designate any place, either within or without the State of
Nevada, as the place for the holding of
<PAGE>
such meeting. If no designation is made,
or if a special meeting be otherwise called, the place of meeting shall be in
the same city as the principal business office of the Company.
SECTION 2.2 ANNUAL MEETING. (a) An annual meeting of stockholders
shall be held in each year on the last Tuesday in April (unless that day be a
legal holiday, in which event the annual meeting will be held on the next
succeeding business day) for the election of directors and for the transaction
of such other business as may properly be brought before the meeting.
(b) Upon Whole Board Approval (as hereinafter defined) the date and
time specified in paragraph (a) above for the holding of any annual meeting of
the stockholders may be changed to such date and time as the Board shall deem
advisable; PROVIDED, HOWEVER, that no change of the date and time of any such
meeting shall be made within 20 days next before the date specified for such
meeting in paragraph (a) above.
(c) As used in these Bylaws, the terms
(i)"BOARD APPROVAL" shall mean the adoption by the Board of a
resolution or resolutions authorizing or approving the action (A) by the
unanimous written consent of the Whole Board or (B) by the affirmative vote of
not less than a majority of the members of the Whole Board (including not less
than a majority of the Continuing Directors) at a meeting called and held at
which a quorum was present and acting throughout, PROVIDED that at the time of
adoption by the Board of any such resolution or resolutions (x) there are not
less than three Continuing Directors and (y) a majority of the members of the
Whole Board are Continuing Directors;
(ii)"CONTINUING DIRECTOR" shall mean, as of the time a
determination is made, a member of the Board which member was elected by the
stockholders at a regularly scheduled annual stockholders meeting or which
member was appointed by the Board at a time when at least a majority of the
members of the Board were elected by the stockholders at a regularly scheduled
annual stockholders meeting;
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<PAGE>
(iii)"WHOLE BOARD" shall mean the total authorized number of
directors of the Company as fixed from time to time pursuant to Section 3.1; and
(iv)"WHOLE BOARD APPROVAL" shall mean the adoption by the
Board of a resolution or resolutions authorizing or approving the action (A) by
the unanimous written consent of the Whole Board or (B) by the affirmative vote
of not less than a majority of the members of the Whole Board at a meeting
called and held at which a quorum was present and acting throughout.
SECTION 2.3 SPECIAL MEETINGS. Special meetings of the stockholders
for any purpose or purposes, unless otherwise prescribed by law or by the
Articles of Incorporation, may be called by (a) the Chairman of the Board, if
one shall be elected, (b) the President, if a Chairman of the Board is not
elected, (c) a majority of the members of the Whole Board or (d) the holders of
record of at least a majority of all of the shares entitled to vote at the
special meeting. Business transacted at all special meetings shall be confined
to the purpose or purposes stated in the notice of such meeting.
SECTION 2.4 BUSINESS TO BE CONDUCTED. (a) At any annual meeting of
the stockholders duly called and held as provided in these Bylaws, only such
business shall be conducted as shall have been brought before the meeting (i) by
Whole Board Approval or (ii) by any stockholder of record who complies with the
procedures set forth in this Section 2.4(a), PROVIDED, HOWEVER, that only such
business shall be conducted as the Board determines is a proper matter for a
stockholder vote. For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
proper written form to the Secretary of the Company. To be timely, the
stockholder's notice must be delivered to or mailed and received at the
principal business office of the Company not less than 30 days prior to the
meeting; PROVIDED, HOWEVER, that in the event that less than 40 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder
3
<PAGE>
to be timely must be received not later than the close of business on the 10th
day following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. To be in proper written form, the
stockholder's notice shall set forth in writing as to each matter the
stockholder proposes to bring before the annual meeting a brief description of
the business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, together with (i) the name and
address, as they appear on the Company's books, of the stockholder, (ii) the
class and number of shares of stock which are beneficially owned by the
stockholder and (iii) any material interest of the stockholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at an annual meeting except business that is properly brought before
the meeting in accordance with the procedures set forth in this Section 2.4(a)
and only such business shall be conducted as the Board determines is a proper
matter for a stockholder vote. The Board shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 2.4(a), and, if the
Board should so determine, the Board shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
(b) At any special meeting of the stockholders duly called and held
as provided in these Bylaws, only such business shall be conducted (i) as shall
have been brought before the meeting by Whole Board Approval or (ii) as shall be
specified in the written notice of demand in proper written form calling for
such special meeting. To be in proper written form, written notice of demand
calling for a special meeting shall set forth in writing as to each matter that
is proposed to be brought before the special meeting a brief description of the
business desired to be brought before the special meeting and the reasons for
conducting such business at the special meeting, together with (i) the name and
address, as they appear on the Company's books, of each
4
<PAGE>
stockholder participating in the call of such special meeting, (ii) the class
and number of shares of stock which are beneficially owned by each such
stockholder and (iii) any material interest of each such stockholder in such
business. Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at a special meeting except business that is properly brought
before the meeting in accordance with the procedures set forth in this Section
2.4(b) and only such business shall be conducted as the Board determines is a
proper matter for a stockholder vote. The Board shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 2.4(b) and,
if the Board should so determine, the Board shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
SECTION 2.5 NOTICE OF MEETINGS. Written or printed notice of all
meetings of stockholders, signed by the President, a Vice President, the
Secretary or an Assistant Secretary, stating the place, day and hour thereof,
and the purpose or purposes for which the meeting is called, shall be personally
delivered or mailed, not less than 10 days nor more than 60 days prior to the
date of the meeting, to the stockholders of record entitled to vote at such
meeting. If mailed, the notice shall be addressed to the stockholders as their
addresses appear on the stock transfer books of the Company and the postage
shall be prepaid. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership, shall constitute
delivery of such notice to such corporation, association or partnership.
SECTION 2.6 VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the Company shall make, at least 10 days
before each meeting of the stockholders, a complete list of stockholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of 10 days prior to such meeting, shall be kept
on file at the
5
<PAGE>
principal business office of the Company and shall be subject to inspection by
any stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder for the duration of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at any
meeting of stockholders. Failure to comply with this Section 2.6 with respect to
any meeting of stockholders shall not affect the validity of any action taken at
such meeting.
SECTION 2.7 QUORUM. The holders of a majority of the shares entitled
to vote, present in person or represented by proxy, shall constitute a quorum at
all meetings of the stockholders for the transaction of business, except as
otherwise provided by law, by the Articles of Incorporation or by these Bylaws.
A holder of a share shall be treated as being present at a meeting if the holder
of such share is (i) present in person at the meeting or (ii) represented at the
meeting by a valid proxy, whether the instrument granting such proxy is marked
as casting a vote or abstaining, is left blank or does not empower such proxy to
vote with respect to some or all matters to be voted upon at the meeting. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote at such meeting, present in
person or represented by proxy, shall have the power to adjourn the meeting from
time to time without notice other than announcement at the meeting until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally convened.
SECTION 2.8 ORGANIZATIONAL. (a) The Chairman of the Board, if one
shall be elected, shall preside at all meetings of the stockholders. In the
absence of the Chairman of the Board or should one not be elected, the President
or, in his absence, a Vice President shall
6
<PAGE>
preside. In the absence of all of these officers, any stockholder or the duly
appointed proxy of any stockholder may call the meeting to order and a chairman
shall be elected from among the stockholders present.
(b) The Secretary of the Company shall act as secretary at all
meetings of the stockholders. In his absence an Assistant Secretary shall so act
and in the absence of all of these officers the presiding officer may appoint
any person to act as secretary of the meeting.
SECTION 2.9 PROXIES. (a) At any meeting of the stockholders every
stockholder entitled to vote at such meeting shall be entitled to vote in person
or by proxy executed in writing by such stockholder or by his duly authorized
attorney-in-fact. Proxies shall be filed with the Secretary immediately after
the meeting has been called to order.
(b) No proxy shall be valid after six months from the date of its
execution unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed seven years from the date of its execution.
(c) Each proxy shall be revocable before it has been voted unless
the proxy form conspicuously states that the proxy is irrevocable and the proxy
is coupled with an interest, including the appointment as proxy of (i) a
pledgee, (ii) a person who purchased or agreed to purchase, or owns or holds an
option to purchase, the shares, (iii) a creditor of the Company who extended it
credit under terms requiring the appointment, (iv) an employee of the Company
whose employment contract requires the appointment or (v) a party to a voting
agreement created under the General Corporation Law of the State of Nevada.
Subject to the provisions of Section 2.9(b), any proxy duly executed is not
revoked and continues in full force and effect until an instrument revoking it
or a duly executed proxy bearing a later date is filed with the Secretary of the
Company.
7
<PAGE>
(d) In the event that any instrument in writing shall designate two
or more persons to act as proxies, a majority of such persons present at the
meeting or, if only one shall be present, then that one, shall have and may
exercise all of the powers conferred by such written instrument upon all the
persons so designated unless the instrument shall otherwise provide.
SECTION 2.10 VOTING OF SHARES. Except as otherwise provided by law,
the Articles of Incorporation or these Bylaws, each stockholder shall be
entitled at each meeting of stockholders to one vote on each matter submitted to
a vote at such meeting for each share having voting rights registered in his
name on the books of the Company at the time of the closing of the stock
transfer books (or at the record date) for such meeting. When a quorum is
present at any meeting, except as provided below, action on a matter shall be
approved if the votes cast in favor of the matter exceed the votes cast opposing
the matter. In determining the number of votes cast, shares abstaining from
voting or not voted on a matter will not be treated as votes cast. The
provisions of this Section 2.10 will govern with respect to all votes of
stockholders except as otherwise provided for in these Bylaws or in the Articles
of Incorporation or by some specific statutory provision superseding the
provisions contained in these Bylaws or the Articles of Incorporation.
SECTION 2.11 VOTING OF SHARES BY CERTAIN HOLDERS. (a) Shares
standing in the name of another corporation may be voted by such officer, agent
or proxy as the bylaws of such corporation may authorize or, in the absence of
such authorization, as the board of directors of such corporation may determine.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him so long as such shares forming a part of an
estate are in the possession and form a part of the estate being served by him,
either in person or by proxy, without a transfer of such shares into his name.
Shares standing in the name of a trustee may be voted by him, either in
8
<PAGE>
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name as trustee.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
(d) A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Shares of the Company's stock (i) owned by the Company itself,
(ii) owned by another corporation, the majority of the voting stock of which is
owned or controlled by the Company or (iii) held by the Company in a fiduciary
capacity shall not be voted, directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding shares at any
given time.
(f) The person in whose name shares are registered in the stock
transfer books of the Company at any particular time (including, without
limitation, a record date fixed pursuant to these Bylaws) shall be deemed to be
the owner of the shares registered in his name at that time. The Company may
treat such registered owner as the person exclusively entitled to vote, to
receive notifications, and to otherwise exercise all the rights and powers of
the owner of the shares, and shall owe no duty to any other person in respect
thereof. Neither the Company nor any of its officers, directors, employees or
agents shall be under any liability to any person for any action taken in
reliance on the foregoing even though the registered owner of the shares may not
possess a certificate for the shares.
9
<PAGE>
SECTION 2.12 ELECTION OF DIRECTORS. At each election for directors,
each stockholder entitled to vote at such election shall, unless otherwise
provided by the Articles of Incorporation or by applicable law, have the right
to vote the number of shares owned by him for as many persons as there are to be
elected and for whose election he has a right to vote. Unless otherwise provided
by the Articles of Incorporation, no stockholder shall have the right or be
permitted to cumulate his votes on any basis.
SECTION 2.12 ACTION WITHOUT MEETING. Any action required by any
provision of law or of the Articles of Incorporation or these Bylaws to be taken
at a meeting of the stockholders or any action which may be taken at a meeting
of the stockholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by stockholders holding at
least a majority of the voting power entitled to vote with respect to the
subject matter thereof, except (a) that if any greater proportion of voting
power is required for such an action at a meeting, then the greater proportion
of written consents is required and (b) as otherwise specifically provided by
the General Corporation Law of the State of Nevada. Any such consent shall have
the same force and effect as a vote of the stockholders taken at a meeting
thereof.
SECTION 2.14 DETERMINATION OF RECORD DATE FOR ACTION BY WRITTEN
CONSENT. The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting shall be fixed by the
Board. Any stockholder seeking to have the stockholders authorize or take
corporate action by written consent without a meeting shall, by written notice,
request the Board to fix a record date. The Board shall, upon receipt of such a
request, fix the record date as the 15th day following receipt of the request or
such later date as may be specified by such stockholder. If the record date
falls on a Saturday, Sunday or legal holiday, the record date shall be the day
next following which is not a Saturday, Sunday or legal holiday.
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SECTION 2.15 DETERMINATION OF CONSENT DATE. The date for determining
if an action has been consented to by the holder or holders of shares of
outstanding stock of the Company having the requisite voting power to authorize
or take the action specified therein (the "CONSENT DATE") shall be the 31st day
after the date on which materials soliciting consents are mailed to stockholders
of the Company or, if no such materials are required to be mailed under
applicable law, the 31st day following the record date fixed by the Board
pursuant to Section 2.14. If the Consent Date falls on a Saturday, Sunday or
legal holiday, the Consent Date shall be the day next following which is not a
Saturday, Sunday or legal holiday.
ARTICLE III
DIRECTORS
SECTION 3.1 NUMBER AND QUALIFICATION. The Board shall be composed of
not less than three nor more than twenty members who shall be elected annually
by the stockholders. Subject to any limitations specified by law or in the
Articles of Incorporation, the number of directors may be increased or decreased
within such limits by Whole Board Approval. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Directors need not be residents of the State of Nevada or stockholders
of the Company.
SECTION 3.2 ELECTION AND TERM OF OFFICE. (a) The directors shall
be elected at the annual meeting of the stockholders (except as provided in
Sections 3.4 and 3.5).
(b) At any meeting of the stockholders at which directors are to be
elected, only persons who are nominated in accordance with the procedures set
forth in this Section 3.2(b) shall be eligible for election as directors and, of
such persons, the persons receiving the greatest number of votes entitled to be
cast shall be elected. Nominations of persons for election to the Board may only
be made (i) by Whole Board Approval or (ii) by any stockholder of record of the
Company
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entitled to vote for the election of directors at such meeting who
complies with the procedures set forth in this Section 3.2(b). All nominations
by stockholders of record shall be made pursuant to timely notice in proper
written form submitted to the Secretary of the Company. To be timely, the
stockholder's notice shall be delivered to or mailed and received at the
principal business office of the Company not less than 30 days prior to the
meeting; PROVIDED, HOWEVER, that in the event that less than 40 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
To be in proper written form, the stockholder's notice shall set forth in
writing (i) as to each person whom such stockholder proposes to nominate for
election or re-election as a director, (A) all information relating to such
person as would be required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, including,
without limitation, such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected and (B) evidence
that such person is eligible for election as a director and (ii) as to the
stockholder giving the notice (A) the name and address, as they appear on the
Company's books, of such stockholder and (B) the class and number of shares of
capital stock of the Company which are beneficially owned by such stockholder.
No person shall be eligible for election as a director unless such person is (i)
nominated in accordance with the procedures set forth in these Bylaws and (ii)
at the time of such election is at least 21 years of age and is not more than 75
years of age. At the request of the Board, any person nominated for election as
a director shall furnish to the Secretary of the Company all information
relating to such person's eligibility and qualifications to serve as a director
of the Company as may be reasonably requested by the Board. The Board shall
determine and declare to the meeting
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whether a nomination was made in accordance with the procedures prescribed by
these Bylaws and whether a person is eligible for election as a director. Any
such determination of the Board made in good faith shall be conclusive. If the
Board shall determine that a nomination is defective or that a person is
ineligible for election as a director, the defective nomination and/or
ineligible person shall be disregarded.
(c) Each director elected shall hold office until his successor
shall be elected at an appropriate annual meeting of the stockholders and shall
qualify, or until his death, resignation or removal in the manner hereinafter
provided.
SECTION 3.3 RESIGNATION. Any director may resign at any time by
giving written notice to the President or Secretary. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 3.4 REMOVAL. (a) Any director or directors, including the
entire Board, may be removed for Cause (as hereinafter defined) by the
affirmative votes of the holders of two-thirds of the shares of the Company
entitled to vote in the election of directors at any special meeting of
stockholders called expressly for that purpose; stockholders may not remove any
director without Cause. The Board may not remove any director for or without
Cause, and no recommendation by the Board that a director be removed for Cause
may be made to the stockholders, except upon Whole Board Approval.
(b) For purposes of these Bylaws, "CAUSE" shall mean and include
only:
(i) final conviction of a director of a felony-grade crime
involving moral turpitude;
(ii) the engaging by a director as an employee, officer or
director of any business engaged in activities in direct competition with the
Company; or
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(iii) gross and willful inattention to his duties as a
director for a continuous period of six months.
SECTION 3.5 VACANCIES. Except as otherwise provided by the Articles
of Incorporation, any vacancy occurring in the Board or any directorship to be
filled by reason of an increase in the number of directors may be filled (a) by
the affirmative vote of a majority of the remaining directors though less than a
quorum of the Board or by the sole remaining director or (b) by election at the
next annual meeting or at a special meeting of stockholders called for that
purpose. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office.
SECTION 3.6 GENERAL POWERS. The property, business and affairs of
the Company shall be managed by the Board. In addition to the powers and
authorities expressly conferred upon them by these Bylaws, the Board may
exercise all such powers of the Company and do all such lawful acts and things
as are not by law or by the Articles of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
SECTION 3.7 COMPENSATION. By resolution of the Board, the directors
may be paid their expenses, if any, of attendance at each meeting of the Board,
or of any committee thereof, and may be paid a fixed sum for attendance at each
meeting of the Board and a stated salary as director or committee member. No
such payment shall be construed to preclude any director from serving the
Company in any other capacity and receiving compensation therefor.
ARTICLE IV
MEETINGS OF THE BOARD
SECTION 4.1 PLACE OF MEETINGS. The directors of the Company may hold
their meetings, both regular and special, either within or without the State of
Nevada.
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SECTION 4.2 ANNUAL MEETING. The first meeting of each newly elected
Board shall be held immediately following the adjournment of the annual meeting
of the stockholders and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, or they may meet at such time and place as shall be
fixed by the consent in writing of all of the directors.
SECTION 4.3 REGULAR MEETINGS. Regular meetings of the Board, in
addition to the annual meetings referred to in Section 4.2, may be held without
notice at such time and place as shall from time to time be determined by the
Board.
SECTION 4.4 SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board, if one shall be elected, or by the
President, if a Chairman of the Board is not elected, on 24 hours' notice (oral
or written) to each director. Special meetings shall be called by the President
or the Secretary on like notice on the written request (which request shall
state the purpose of the meeting) of a majority of the Whole Board. Neither the
purpose of, nor the business to be transacted at, any special meeting of the
Board need be specified in the notice or waiver of notice of such meeting unless
so required by the Articles of Incorporation or these Bylaws.
SECTION 4.5 QUORUM AND ACTION. (a) At all meetings of the Board, the
presence of a majority of the directors shall be necessary and sufficient to
constitute a quorum for the transaction of business and the act of a majority of
the directors at any meeting at which a quorum is present shall be the act of
the Board unless the act of a greater or different number is required by law,
the Articles of Incorporation or these Bylaws. Unless limited by law or the
Articles of Incorporation, common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board which considers a
contract or transaction between the Company and one or more of its directors, or
between the Company and any other corporation, partnership
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or association in which one or more of the directors of the Company are
directors or officers, or have a financial interest therein. If a quorum shall
not be present at any meeting of directors, the directors present may adjourn
the meeting from time to time without notice other than announcement at the
meeting until a quorum shall be present.
(b) At any meeting of the Board one of the purposes of which is to
consider whether to (i) redeem the then outstanding rights ("RIGHTS") created
and issued under the Rights Agreement, dated as of June 1, 1988 (the "RIGHTS
AGREEMENT"), between the Company and First City National Bank, as rights agent,
(ii) extend the date upon which the Distribution Date (as defined in the Rights
Agreement) is to occur, (iii) extend the period for redemption of the Rights
pursuant to Section 24 of the Rights Agreement or (iv) amend or supplement the
Rights Agreement pursuant to Section 27 of the Rights Agreement, each of the
following shall be necessary to constitute a quorum for the consideration of
such matter: (A) the presence of a majority of the Whole Board; (B) a majority
of the Whole Board is Continuing Directors; and (C) there are not less than
three Continuing Directors. Board Approval shall be required for any action
involving (i) any redemption of the Rights pursuant to Section 24 of the Rights
Agreement, (ii) any extension of the date upon which the Distribution Date is to
occur, (iii) any extension of the period during which Rights may be redeemed
pursuant to Section 24 of the Rights Agreement or (iv) any supplement or
amendment of the Rights Agreement pursuant to Section 27 of the Rights
Agreement.
SECTION 4.6 PRESUMPTION OF ASSENT TO ACTION. A director who is
present at a meeting of the Board, or any committee thereof, at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to
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the Secretary of the Company immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
SECTION 4.7 TELEPHONE MEETINGS. Unless otherwise restricted by the
Articles of Incorporation, the directors may participate in a meeting of the
Board by means of a conference telephone network or similar communication method
by means of which all persons participating in the meeting can hear each other
and participation in a meeting pursuant to this Section 4.7 shall constitute
presence in person at such meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened. Each person
participating in such meeting shall sign the minutes of such meeting or a
counterpart thereof.
SECTION 4.8 ACTION WITHOUT MEETING. Unless otherwise restricted by
the Articles of Incorporation, any action required or permitted to be taken at a
meeting of the Board may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board and
such consent shall have the same force and effect as a unanimous vote at a
meeting. Such consent shall be filed with the minutes of proceedings of the
Board.
ARTICLE V
COMMITTEES OF THE BOARD
SECTION 5.1 MEMBERSHIP AND AUTHORITIES. Unless otherwise provided in
the Articles of Incorporation, the Board, by Whole Board Approval, may designate
three or more directors to constitute an Executive Committee and may designate
one or more directors to constitute such other committees, as the Board may
determine, each of which committees to the extent provided in such resolution,
shall have and may exercise all of the powers of the Board in the management of
the business and affairs of the Company, except that neither the Executive
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Committee nor any such other committee shall have any authority to act on (a)
any matter that these Bylaws specify that for action by the Board thereon a
special quorum is required (that is for such matter a quorum consists of more
than a mere majority of members of the Board) or (b) any matter where the
authority of the Board is specifically denied to the Executive Committee or such
other committee or committees by applicable law, the Articles of Incorporation,
these Bylaws or the resolution creating such committee. The designation of an
Executive Committee or other committee and the delegation thereto of authority
shall not operate to relieve the Board, or any member thereof, of any
responsibility imposed upon it or him by law. The members of each such committee
shall serve at the pleasure of the Board.
SECTION 5.2 MEETINGS AND NOTICES Each committee of directors shall
hold meetings, regular or special, at such time or times, at such place or
places and upon such notice as shall be specified by the Board or, in the
absence of any such specification, by its rules of procedure, PROVIDED that the
Chairman of the Board, if one shall be elected, or the President, if a Chairman
of the Board is not elected, may call a special meeting of any committee of
directors, and any member of a committee of directors may call a meeting of such
committee, on 24 hours' notice (written or oral) to each member of such
committee.
SECTION 5.3 QUORUM AND ACTION At all meetings of each committee of
directors, the presence of a majority of the members of such committee shall be
necessary and sufficient to constitute a quorum for the transaction of business
and, except as may be otherwise prescribed by the Board, the act of the majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee except as may be otherwise specifically provided by law,
by the Articles of Incorporation or by these Bylaws.
SECTION 5.4 MINUTES AND RULES OF PROCEDURE. Each committee
designated by the Board shall keep regular minutes of its proceedings and report
the same to the Board when
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required. Subject to the provisions of these Bylaws, the members of any
committee may fix such committee's own rules of procedure.
SECTION 5.5 VACANCIES. The Board shall have the power at any time to
fill vacancies in, to change the membership of, or to dissolve, any committee.
SECTION 5.6 TELEPHONE MEETINGS. Unless otherwise restricted by the
Articles of Incorporation, members of any committee designated by the Board may
participate in a meeting by means of conference telephone network or similar
communication method by which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this Section 5.6 shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened. Each person participating in such meeting shall sign the
minutes of such meeting or a counterpart thereof.
SECTION 5.7 ACTION WITHOUT MEETING. Unless otherwise restricted by
the Articles of Incorporation, any action required or permitted to be taken at a
meeting of any committee designated by the Board may be taken without a meeting
if a consent in writing, setting forth the action so taken, is signed by all the
members of the committee, and such consent shall have the same force and effect
as a unanimous vote at a meeting. Such consent shall be filed with the minutes
of proceedings of such committee.
ARTICLE VI
OFFICERS
SECTION 6.1 NUMBER. The officers of the Company shall be a Chairman
of the Board, a President, one or more Vice Presidents (the number and
categories thereof to be determined by the Board), a Secretary, a Treasurer and
a Controller. The Board may also elect
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one or more Assistant Secretaries and one or more Assistant Treasurers. Any
person may hold two or more offices.
SECTION 6.2 ELECTION, TERM OF OFFICE AND QUALIFICATION. The Board
shall elect officers, none of whom need be a member of the Board except for the
Chairman of the Board, at its first meeting after each annual meeting of
stockholders. Each officer so elected shall hold office until his successor
shall have been duly elected and qualified or until his death, resignation or
removal in the manner hereinafter provided.
SECTION 6.3 SUBORDINATE OFFICERS. The Board may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms, have such authority and perform such duties as the Board may from
time to time determine. The Board may delegate to any committee or officer the
power to appoint any such subordinate officer or agent. No subordinate officer
appointed by any committee or superior officer as aforesaid shall be considered
as an officer of the Company, the officers of the Company being limited to the
officers elected or appointed as such by the Board.
SECTION 6.4 RESIGNATION. Any officer may resign at any time by
giving written notice thereof to the Board or to the President or Secretary of
the Company. Any such resignation shall take effect at the time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 6.5 REMOVAL. Any officer elected or appointed by the Board
may be removed at any time with or without cause upon Whole Board Approval. Any
other officer may be removed at any time with or without cause by Whole Board
Approval or by any committee or superior officer in whom such power of removal
may be conferred by Whole Board Approval. The removal of any officer shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create any
contract rights.
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SECTION 6.6 VACANCIES. A vacancy in any office shall be filled for
the unexpired portion of the term by Whole Board Approval, but in case of a
vacancy occurring in an office filled by a committee or superior officer in
accordance with the provisions of Section 6.3, such vacancy may be filled by
such committee or superior officer.
SECTION 6.7 THE CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be a general executive officer of the Corporation, shall preside, or
direct that the President so preside, at all meetings of the stockholders and
Directors, and shall be EX OFFICIO a member of all standing committees. In
addition, the Chairman of the Board shall perform whatever duties and shall
exercise all powers that are assigned or delegated to the Chairman by the Board.
SECTION 6.8 THE PRESIDENT. The President shall be the chief
executive officer of the Corporation and, subject to the control of the Board of
Directors, shall have general and active management of the business of the
Corporation, shall have the general supervision and direction of all other
officers of the Corporation with full power to see that their duties are
properly performed, and shall see that all orders and resolutions of the Board
are carried into effect. In the absence of the Chairman of the Board, or at the
direction of the Chairman, the President shall preside at meetings of the
stockholders and Directors. The President may sign with any other proper
officer, certificates for shares of the Corporation and any deeds, bonds,
mortgages, contracts and other documents which the Board has authorized to be
executed, except where required by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board or these Bylaws to some other officer or agent of the Corporation. In
addition, the President shall perform whatever duties and shall exercise all the
powers that are assigned or delegated to the President by the Board or by the
Chairman of the Board, if one shall be elected.
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SECTION 6.9 THE VICE PRESIDENTS. The Vice Presidents shall perform
the duties as are given to them by these Bylaws and as may from time to time be
assigned to them by the Board, by the Chairman of the Board, or by the
President, and may sign, with any other proper officer, certificates for shares
of the Corporation. At the request of the President or, in his absence or
disability, the Vice President designated by the President (or in the absence of
such designation, the senior Vice President), shall perform the duties and
exercise the powers of the President.
SECTION 6.10 THE SECRETARY. The Secretary, when available, shall
attend all meetings of the Board and all meetings of the stockholders and record
all votes and the minutes of all proceedings in a book to be kept for that
purpose and shall perform like duties for the Executive Committee and standing
committees when required. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board as
required by law or these Bylaws, be custodian of the corporate records and have
general charge of the share transfer records of the Corporation and shall
perform such other duties as may be prescribed by the Board, by the Chairman of
the Board, or by the President under whose supervision the Secretary shall be.
The Secretary may sign, with any other proper officer, certificates for shares
of the Company and shall keep in safe custody the seal of the Company, and, when
authorized by the Board, affix the same to any instrument requiring it and, when
so affixed, it shall be attested by the signature of the Secretary or by the
signature of the Treasurer or an Assistant Secretary.
SECTION 6.11 ASSISTANT SECRETARIES. The Assistant Secretaries shall
perform the duties as are given to them by these Bylaws or as may from time to
time be assigned to them by the Board or by the Secretary. At the request of the
Secretary or, in the absence or disability of the Secretary, the Assistant
Secretary designated by the Secretary (or in the absence of such
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designation, the senior Assistant Secretary) shall perform the duties and
exercise the powers of the Secretary.
SECTION 6.12 THE TREASURER. The Treasurer shall have the custody and
be responsible for all corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Company and shall deposit all monies and other valuable effects in the name and
to the credit of the Company in such depositories as may be designated by the
Board. The Treasurer shall disburse the funds of the Company as may be ordered
by the Board, taking proper vouchers for such disbursements, and shall render to
the Chairman of the Board, the President and the directors, at the regular
meetings of the Board or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the Company. The
Treasurer may sign, with any other proper officer, certificates for shares of
the Company.
SECTION 6.13 ASSISTANT TREASURERS. The Assistant Treasurers shall
perform the duties as are given to them by these Bylaws or as may from time to
time be assigned to them by the Board or by the Treasurer. At the request of the
Treasurer or, in the absence or disability of the Treasurer, the Assistant
Treasurer designated by the Treasurer (or in the absence of such designation,
the senior Assistant Treasurer) shall perform the duties and exercise the powers
of the Treasurer.
SECTION 6.14 CONTROLLER. The Controller shall analyze all operating
expenses and capital expenditures to determine and establish effective methods
of control and shall cooperate with all corporate and divisional officers to
that end. The Controller shall perform such duties in regard to customer,
employee, stockholder and general public relations and such further duties as
from time to time may be assigned to The Controller by the Board, by the
Chairman of the Board, or by the President."
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SECTION 6.15 TREASURER'S BOND. If required by the Board, the
Treasurer and any Assistant Treasurer shall give the Company a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
Company, in case of his death, resignation, retirement or removal from office,
of all books, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Company.
SECTION 6.16 SALARIES. The salary or other compensation of officers
shall be fixed from time to time by the Board. The Board may delegate to any
committee or officer the power to fix from time to time the salary or other
compensation of subordinate officers and agents appointed in accordance with the
provisions of Section 6.3.
ARTICLE VII
CORPORATE SHARES
SECTION 7.1 SHARE CERTIFICATES. (a) The certificates representing
shares of the Company's capital stock shall be in such form, not inconsistent
with statutory provisions and the Articles of Incorporation, as shall be
approved by the Board. The certificates shall be signed by the Chairman of the
Board, if one shall be elected, the President or a Vice President and a
Secretary or Assistant Secretary, or such other or additional officers as may be
prescribed from time to time by the Board, and may be sealed with the corporate
seal or a facsimile thereof. The signatures of such officer or officers upon a
certificate may be facsimiles, if the certificate is countersigned by a transfer
agent, or registered by a registrar, either of which is other than the Company
itself or an employee of the Company. In case any officer who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer before
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such certificate is issued, it may be issued with the same effect as if he were
such officer at the date of its issuance.
(b) If the Company is authorized to issue shares of more than one
class or more than one series of any class of capital stock, there shall be set
forth on the face or back of the certificate or certificates, which the Company
shall issue to represent shares of such class or series of capital stock, such
legends or statements as may be required by applicable law and the Articles of
Incorporation and as may be approved by the Board.
(c) In the event the Company has, by its Articles of Incorporation,
limited or denied the preemptive right of stockholders of any class or series of
capital stock, there shall be set forth on the face or back of the certificate
or certificates, which the Company shall issue to represent shares of such class
or series of capital stock, such legends or statements as shall be required by
applicable law or the Articles of Incorporation and as may be approved by the
Board.
(d) All certificates for each class or series of capital stock shall
be consecutively numbered and the name of the person owning the shares
represented thereby, with the number of such shares and the date of issue, shall
be entered on the Company's books.
(e) All certificates surrendered to the Company shall be canceled,
and, except as provided in Section 7.2 with respect to lost, stolen or destroyed
certificates, no new certificate shall be issued until the former certificate
for the same number of shares has been surrendered and canceled.
SECTION 7.2 LOST CERTIFICATES, ETC. In the event of the loss, theft
or destruction of any certificate representing capital stock of this Company or
of any predecessor company, the Chairman of the Board, if one shall be elected,
the President, any Vice President, the Treasurer or the Secretary may issue (or,
in the case of any such stock as to which a transfer agent and registrar has or
have been appointed by the Company, may direct such transfer agent and registrar
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to issue, register and countersign) a certificate in lieu of that alleged to be
lost, stolen or destroyed and cause the same to be delivered to the owner of the
stock represented thereby upon (a) presentation by or on behalf of such owner of
such evidence showing the circumstances of the alleged loss, theft or
destruction and the ownership of the certificate as such officer considers
satisfactory, together with any other facts which such officer considers
pertinent and (b) presentation of a surety bond of indemnity in form and amount
satisfactory to such officer and the transfer agent and registrar (if
applicable), executed by a surety company satisfactory and acceptable to them,
which bond of indemnity shall indemnify the Company and its transfer agent and
registrar (if applicable) against any loss, cost or damage resulting from the
issue of such new certificate; PROVIDED, HOWEVER, that such officer may, in his
discretion, waive the requirement of a surety on the bond in cases where the
market value of the certificate lost, stolen or destroyed is at the time $500.00
or less (each such officer to have the authority to determine market value on
the basis of such information as he may select).
SECTION 7.3 TRANSFER OF SHARES. Subject to any restrictions upon
transfer, upon surrender to the Company or the transfer agent of the Company of
a certificate for shares of the Company's capital stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer and satisfaction of the Company that the requested transfer complies
with the provisions of applicable state and federal laws and regulations and any
agreements to which the Company is a party, the Company shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 7.5 OWNERSHIP OF SHARES. The Company shall be entitled to
treat and recognize the holder of record of any share or shares as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares
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on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise expressly provided by the laws of the State
of Nevada.
SECTION 7.5 CLOSING OF TRANSFER BOOKS. For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive a distribution
by the Company (other than a distribution involving a purchase or redemption by
the Company of its own shares) or a share dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board may
provide that the stock transfer books shall be closed for a stated period but
not to exceed, in any case, 60 days. If the stock transfer books shall be closed
for the purpose of determining stockholders entitled to notice of or to vote at
a meeting of stockholders, such books shall be closed for at least 10 days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than 60 days
and, in case of a meeting of stockholders, not less than 10 days prior to the
date on which the particular action requiring such determination of stockholders
is to be taken, and the determination of stockholders on such record date shall
apply with respect to the particular action requiring the same notwithstanding
any transfer of shares on the books of the Company after such record date.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 INDEMNIFICATION. (a) The Company shall indemnify any
person who was or is a witness, a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was, at any time
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prior to or during which this Article VIII is in effect, a director or officer
of the Company, or is or was, at any time prior to or during which this Article
VIII is in effect, serving at the request of the Company as a director or
officer (or in a similar capacity) of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan (whether or not
involving action in such person's official capacity as director or officer),
against reasonable expenses (including attorneys' fees), judgments, fines,
penalties, amounts paid in settlement and other liabilities actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) The Company shall indemnify any person who was or is a witness,
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he is or was, at any time prior to or
during which this Article VIII is in effect, a director or officer of the
Company, or is or was, at any time prior to or during which this Article VIII is
in effect, serving at the request of the Company as a director or officer (or in
a similar capacity) of another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan (whether or not involving action in
his official capacity as director or officer), against reasonable expenses
(including attorneys' fees) and amounts paid in settlement, actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner he
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reasonably believed to be in or not opposed to the best interests of the
Company; provided, that no indemnification shall be made under this subsection
(b) in respect of any claim, issue or matter as to which such person shall have
been adjudged by a court of appropriate jurisdiction, after exhaustion of all
appeals therefrom, to be liable for gross negligence, recklessness or willful
misconduct in the performance of his duty to the Company unless and only to the
extent that a court of appropriate jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case such person is fairly and reasonably entitled to
indemnity for such expenses which such court of appropriate jurisdiction shall
deem proper.
(c) Any indemnification under subsections (a) or (b) (unless ordered
by a court of appropriate jurisdiction) shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of the
director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the stockholders, (2) by the Board by a
majority vote of a quorum consisting of directors not parties to such action,
suit or proceeding, (3) if such quorum cannot be obtained, then by a majority
vote of a committee of the Board, duly designated to act in the matter by a
majority vote of all members of the Board (in which designation directors who
are parties may participate), such committee to consist solely of three or more
directors not parties to such proceeding at the time such committee is
constituted or (4) by special legal counsel, selected by the Board or the
committee selected as provided in (3) above, or, if the requisite quorum of the
full Board cannot be obtained therefor and such committee cannot be or is not
established, by a majority vote of the full Board (in which selection directors
who are parties may participate). In the event a determination is made under
this subsection (c) that the director or officer has met the applicable standard
of conduct as to some matters but not as to others, amounts to be indemnified
may be reasonably prorated.
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(d) Expenses incurred in appearing at, participating in or defending
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, shall be paid by the Company as they
are incurred and in advance of the final disposition of such action, suit or
proceeding upon receipt by the Company of a written undertaking by or on behalf
of the director or officer to repay such amount if it is ultimately determined
by a court of competent jurisdiction that he is not entitled to be indemnified
by the Company herein.
(e) It is the intent of the Company to indemnify the persons
referred to in this Article VIII to the fullest extent permitted by law and with
respect to any action, suit or proceeding arising from events which occur at any
time prior to or during which this Article VIII is in effect. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification may be or become
entitled under any law, the Articles of Incorporation or Bylaws of the Company,
agreement, vote of stockholders or disinterested directors, or otherwise, or
under any policy or policies of insurance purchased and maintained by the
Company on behalf of any such director or officer, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person.
(f) The indemnification provided by this Article VIII shall be
subject to all valid and applicable laws, and, in the event this Article VIII or
any of the provisions hereof or the indemnification contemplated hereby are
found to be inconsistent with or contrary to any such valid laws, the latter
shall be deemed to control and this Article VIII shall be regarded as modified
accordingly, and, as so modified, to continue in full force and effect.
SECTION 8.2 CONTINUING OFFER, RELIANCE, ETC. The provisions of this
Article VIII (a) are for the benefit of, and may be enforced by, each person
entitled to indemnification
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hereunder, the same as if set forth in their entirety in a written instrument
duly executed and delivered by the Company and such person and (b) constitute a
continuing offer to all present and future persons entitled to such
indemnification. The Company, by its adoption of these Bylaws, (x) acknowledges
and agrees that each such person has relied upon and will continue to rely upon
the provisions of this Article VIII in becoming, and serving in any of the
capacities referred to in this Article VIII, (y) waives reliance upon, and all
notices of acceptance of, such provisions by such persons and (z) acknowledges
and agrees that no present or future persons entitled to such indemnification,
shall be prejudiced in his right to enforce the provisions of this Article VIII
in accordance with their terms by any act or failure to act on the part of the
Company.
SECTION 8.3 EFFECT OF AMENDMENT. No amendment, modification or
repeal of this Article VIII or any provision hereof shall in any manner
terminate, reduce or impair the right of any person to be indemnified by the
Company, nor the obligation of the Company to indemnify any person, under and in
accordance with the provisions of this Article VIII as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 WAIVER OF NOTICE. (a Whenever, under the provisions of
applicable law or of the Articles of Incorporation or of these Bylaws, any
notice is required to be given to any stockholder or director, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be equivalent to the giving of
such notice.
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(b) Attendance of a director at a meeting shall constitute a waiver
of notice of such meeting except where a director attends a meeting for the
express purpose of objecting to the transaction of any business on the grounds
that the meeting is not lawfully called or convened.
SECTION 9.2 SEAL. The seal of the Company shall have inscribed
thereon the name of the Company, the State and year of its organization and the
words "Corporate Seal." Said seal may be used by causing it or a facsimile of it
to be impressed or affixed or in any manner reproduced.
SECTION 9.3 FISCAL YEAR. The fiscal year of the Company shall be
fixed by resolution of the Board.
SECTION 9.4 CHECKS, NOTES, ETC. All checks or demands for money and
notes of the Company shall be signed by such officer or officers or such other
person or persons as the Board may from time to time designate. The Board may
authorize any officer or officers or such other person or persons to enter into
any contract or execute and deliver any instrument in the name of and on behalf
of the Company, and such authority may be general or confined to specific
instances.
SECTION 9.5 EXAMINATION OF BOOKS AND RECORDS. The Board shall
determine from time to time whether, and if allowed, when and under what
conditions and regulations the accounts and books of the Company (except such as
may by statute be specifically opened to inspection) or any of them shall be
open to inspection by the stockholders, and the stockholders rights in this
respect are and shall be restricted and limited accordingly.
SECTION 9.6 VOTING UPON SHARES HELD BY THE COMPANY. Unless otherwise
ordered by the Board, the Chairman of the Board, if one shall be elected, or the
President, if a Chairman of the Board is not elected, acting on behalf of the
Company, shall have full power and authority to attend and to act and to vote at
any meeting of stockholders of any corporation in which
32
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the Company may hold shares and at any such meeting, shall possess and may
exercise any and all of the rights and powers incident to the ownership of such
shares which, as the owner thereof, the Company might have possessed and
exercised, if present. The Board by resolution from time to time may confer like
powers upon any other person or persons.
ARTICLE X
Section 10.1 Amendments. These Bylaws may be altered, amended or
repealed and new Bylaws adopted upon Whole Board Approval or by the affirmative
vote of the holders of not less than 50 percent of the Company's shares of
capital stock outstanding and entitled to vote generally in the election of
directors.
ARTICLE XI
SUBJECT TO ALL LAWS
SECTION 11.1 SUBJECT TO ALL LAWS. The provisions of these Bylaws
shall be subject to all valid and applicable laws, including, without
limitation, the General Corporation Law of the State of Nevada as now or
hereafter amended, and in the event that any of the provisions of these Bylaws
are found to be inconsistent with or contrary to any such valid laws, the latter
shall be deemed to control and these Bylaws shall be deemed modified
accordingly, and, as so modified, to continue in full force and effect.
33
EXHIBIT 10.a
TECH-SYM CORPORATION
1998 EQUITY INCENTIVE PLAN
(FIRST AMENDMENT)
Tech-Sym Corporation, a Nevada corporation (the "Company"), hereby adopts
this First Amendment of the Tech-Sym Corporation 1998 Equity Incentive Plan (the
"Plan"), which amends and restates the Plan effective as of June 17, 1998.
1. PURPOSE. The purpose of the Plan is to promote the interests of the
Company by encouraging employees of, and consultants to, the Company and its
Affiliates and the directors of the Company who are not also employees of the
Company or an Affiliate, to acquire or increase their equity interests in the
Company and to provide a means whereby such persons may develop a sense of
proprietorship and personal involvement in the development and financial success
of the Company, and to encourage them to remain with and devote their best
efforts to the business of the Company, thereby advancing the interests of the
Company and its stockholders. The Plan is also contemplated to enhance the
ability of the Company and its Affiliates to attract and retain the services of
individuals who are believed to be essential for the growth and profitability of
the Company.
2. DEFINITIONS. As used in this Plan:
(A) "AFFILIATE" means, at any time, any corporation, partnership or
other entity in which the Company, directly or indirectly, has a
significant equity interest, as determined by the Committee.
(B) "APPRECIATION RIGHT" means a right granted pursuant to Paragraph
5.
(C) "AWARD" means an Option Right, an Appreciation Right, a Director
Option, Phantom Shares, a Performance Unit, Bonus Stock, Restricted Stock
or a Cash Tax Right.
(D) "BOARD" means the Board of Directors of the Company.
(E) "BONUS STOCK" means unrestricted shares of Common Stock granted
pursuant to Paragraph 9.
(F) "CASH TAX RIGHT" means a right granted pursuant to Paragraph 10.
<PAGE>
(G) "CHANGE IN CONTROL" shall occur if:
(i) any "person," as such term is used on Section 13(d) and
14(d) of the Exchange Act (other than the Company or any employee
benefit plan of the Company) together with its "affiliates" and
"associates," as such terms are 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;
(ii) 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 (i), (iii) or (iv) of this definition) 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;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other company other than (1) 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 (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than 25%
of the combined voting power of the Company's then outstanding
securities; or
(iv) 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 (iv),
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
<PAGE>
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 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.
(h) "CODE" means the Internal Revenue Code of 1986, as in effect
from time to time.
(i) "COMMITTEE" means the Compensation Committee of the Board.
(j) "COMMON STOCK" means the Common Stock, $0.10 par value, of the
Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 14.
(k) "DATE OF GRANT" means (i) with respect to an Award other than a
Director Option, the date specified by the Committee on which such Award
will become effective (which date will not be earlier than the date on
which the Committee takes action with respect thereto) and (ii) with
respect to a Director Option, the automatic date of grant as provided in
Paragraph 11.
(l) "DIRECTOR" means a member of the Board who is not also an
employee of, or consultant to, the Company or an Affiliate.
(m) "DIRECTOR OPTION" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 11.
(n) "DIVIDEND EQUIVALENT" means, with respect to an Option Right or
Phantom Share, an amount equal to the amount of any dividends that are
declared and become payable after the Date of Grant for such Award and on
or before the date such Award is exercised, paid or forfeited, as the case
may be.
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(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(p) "GRANT PRICE" means the price per share of Common Stock at which
an Appreciation Right not granted in tandem with an Option Right is
granted.
(q) "MARKET VALUE PER SHARE" means, at any date, the closing sale
price per share of the Common Stock on that date (or, if there are no
sales on that date, the last preceding date on which there was a sale) in
the principal market in which the Common Stock is traded.
(r) "OPTION PRICE" means the purchase price per share payable on
exercise of an Option Right or Director Option.
(s) "OPTION RIGHT" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 4.
(t) "PARTICIPANT" means an employee of, or consultant to, the
Company or any of its Affiliates who is selected by the Committee to
receive an Award under any of Paragraphs 4 through 10 and shall also
include a Director who has received an automatic grant of Director Options
pursuant to Paragraph 11.
(u) "PERFORMANCE OBJECTIVES" means the objectives, if any,
established by the Committee that are to be achieved with respect to an
Award granted under this Plan, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to
performance of a division, Subsidiary, department or function within the
Company or a Subsidiary in which the Participant receiving the Award is
employed or in individual or other terms, and which will relate to the
period of time (Performance Cycle) determined by the Committee. The
Performance Objectives intended to qualify under Section 162(m) of the
Code shall be with respect to one or more of the following (i) net
earnings; (ii) operating income; (iii) earnings before interest and taxes
("EBIT"); (iv) earnings before interest, taxes, depreciation, and
amortization expenses ("EBITDA"); (v) earnings before taxes and unusual or
nonrecurring items; (vi) revenue; (vii) return on investment; (viii)
return on equity; (ix) return on total capital; (x) return on assets; (xi)
total stockholder return; (xii) return on capital employed in the
business; (xiii) stock price performance; (xiv) earnings per share growth;
and (xv) cash flows. Which objectives to use with respect to an Award, the
weighting of the objectives if more than one is used, and whether the
objective is to be measured against a Company-established budget or
target, an index or a peer group of companies, shall be determined by the
Committee in its discretion at the time of grant of the Award. A
Performance Objective need not be based on an increase or a positive
result and may include, for example, maintaining the status quo or
limiting economic losses. The Committee, in its sole discretion and
<PAGE>
without the consent of the Participant, may amend (i) any stock-based
Award to reflect (1) a change in corporate capitalization, such as a stock
split or dividend, (2) a corporate transaction, such as a corporate
merger, a corporate consolidation, any corporate separation (including a
spinoff or other distribution of stock or property by a corporation), any
corporate reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code), (3) any partial
or complete corporate liquidation, or (4) a change in accounting rules
required by the Financial Accounting Standards Board and (ii) any Award
that is not intended to meet the requirements of Section 162(m) of the
Code, to reflect significant event that the Committee, in its sole
discretion, believes to be appropriate to reflect the original intent in
the grant of the Award. With respect to an Award that is subject to
Section 162(m) of the Code, the Committee must first certify that the
Performance Objectives have been achieved before the Award may be paid.
(v) "PERFORMANCE UNIT" means a unit equivalent to $100 (or such
other value as the Committee determines) awarded pursuant to Paragraph 8.
(w) "PHANTOM SHARES" means notional shares of Common Stock awarded
pursuant to Paragraph 7.
(x) "RESTRICTED STOCK" means shares of Common Stock granted or sold
pursuant to Paragraph 6 as to which neither the ownership restrictions nor
the restriction on transfers referred to therein has expired.
(y) "RULE 16B-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from
time to time.
(z) "SPREAD" means the amount determined by multiplying (i) the
excess of the Market Value per Share on the date when an Appreciation
Right is exercised over the Option Price provided for in the related
Option Right or, if there is no tandem Option Right, the Grant Price
provided for in the Appreciation Right by (ii) the number of shares of
Common Stock in respect of which the Appreciation Right is exercised.
(aa) "SUBSIDIARY" means, at any time, any corporation in which at
the time the Company then owns or controls, directly or indirectly, not
less than 50% of the total combined voting power represented by all
classes of stock issued by such corporation.
3. SHARES AVAILABLE UNDER PLAN. Subject to adjustments as provided in
Paragraph 14, 750,000 is the maximum number of shares of Common Stock which may
be issued or transferred and covered by all outstanding Awards under this Plan,
of which number no more than 150,000 shares may be issued or transferred as
Restricted Stock and/or Phantom Shares, the vesting of which is not subject to
the achievement of
<PAGE>
Performance Objectives, and/or as Bonus Stock. Such shares may be shares of
original issuance or treasury shares or a combination of the foregoing. Upon
exercise of any Appreciation Rights or the payment of any Phantom Shares, there
will be deemed to have been delivered under this Plan for purposes of this
Paragraph 3 the number of shares of Common Stock covered by the Appreciation
Rights or equal to the Phantom Shares, as applicable, regardless of whether such
Appreciation Rights or Phantom Shares were paid in cash or shares of Common
Stock. Subject to the provisions of the preceding sentence, any shares of Common
Stock which are subject to Option Rights, Appreciation Rights, or Phantom Shares
awarded or sold as Restricted Stock that are terminated unexercised, forfeited
or surrendered or which expire for any reason will again be available for
issuance under this Plan. No person may receive Appreciation Rights, Option
Rights, Phantom Shares, Bonus Stock and Restricted Stock awards with respect to
more than 250,000 shares during any calendar year; but disregarding any
Appreciation Rights granted in tandem with any Option Rights granted that year.
Similarly, the maximum value of Performance Units that may be granted to any
person during any calendar may not exceed $1 million.
4. OPTION RIGHTS. The Committee may from time to time authorize grants to
any Participant (other than a Director) of options to purchase shares of Common
Stock upon such terms and conditions as it may determine in accordance with the
following provisions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains and whether Dividend Equivalents are awarded with
respect to the option, and; if awarded, the payment or crediting of such
Dividend Equivalents.
(b) Each grant will specify its Option Price, which may not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable
(i) in cash or by check payable and acceptable to the Company or (ii) to
the extent provided in the grant agreement, (a) by tendering (actually or
constructively) to the Company shares of Common Stock owned by the
optionee (for more than six months if acquired pursuant to the prior
exercise of an Option Right) having an aggregate Market Value Per Share as
of the date of exercise and tender that is not greater than the full
Option Price for the shares with respect to which the option is being
exercised and by paying any remaining amount of the Option Price as
provided in (i) above 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 Price and any required tax
withholding amounts; provided that in the event the optionee chooses to
pay the Option 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
<PAGE>
the Committee shall prescribe as a condition of such payment procedure, or
(iii) by a combination of such payment methods. Payment instruments will
be received subject to collection.
(d) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company and the Affiliates
and/or the Performance Objectives (if any) to be achieved before the
Option Rights or installments thereof will become exercisable, and any
grant may provide for the earlier exercise of the Option Rights in the
event of a Change in Control or other corporate transaction or event or
upon termination of the Participant's employment due to death, disability,
retirement or otherwise, including an involuntary termination other than
for cause.
(f) Each grant the exercise of which, or the timing of the exercise
of which, is dependent, in whole or in part, on the achievement of
Performance Objectives may specify a minimum level of achievement in
respect of the specified Performance Objectives below which no Options
Rights will be exercisable and may set forth a formula or other method for
determining the number of Option Rights that will be exercisable if
performance is at or above such minimum but short of full achievement of
the Performance Objectives.
(g) Option Rights granted under this Plan may be (i) options which
are intended to qualify as incentive stock options under Section 422 of
the Code, provided, however, such options may only be granted to employees
of the Company, its parent corporation and subsidiaries of the Company,
(ii) options which are not intended to so qualify or (iii) combinations of
the foregoing.
(h) Option Rights granted to a Participant who is an officer of the
Company or a Subsidiary may, in the discretion of the Committee, provide
for an automatic "reload" grant upon the exercise of the Option Right,
with such terms and conditions on any such reload grant as the Committee
may choose, provided, however, the Option Price may not be less than 100%
of the Market Value per Share on the Date of Grant of the reload option
and its term may not exceed the remaining term for the exercised option.
(i) Each grant may, in the discretion of the Committee, provide that
the Common Stock acquired upon exercise of the Option Right shall remain
subject to "forfeiture" upon such terms and conditions as the Committee
may determine.
(j) Each grant shall specify the period during which the Option
Right may be exercised, but no Option Right will be exercisable more than
ten years from the Date of Grant.
<PAGE>
(k) Each grant of Option Rights will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to the
Participant and containing such terms and provisions, consistent with this
Plan, as the Committee may approve.
5. APPRECIATION RIGHTS. The Committee may also from time to time authorize
grants to any Participant (other than a Director) of Appreciation Rights upon
such terms and conditions as it may determine in accordance with this Paragraph.
Appreciation Rights may be granted in tandem with Option Rights or separate and
apart from a grant of Option Rights. An Appreciation Right will be a right of
the Participant granted such Award to receive from the Company, upon exercise,
an amount which will be determined by the Committee at the Date of Grant and
will be expressed as a percentage of the Spread (not exceeding 100%) at the time
of exercise. An Appreciation Right granted in tandem with an Option Right may be
exercised only by surrender of the related Option Right. Each grant of an
Appreciation Right may utilize any or all of the authorizations, and will be
subject to all of the limitations, contained in the following provisions:
(a) Each grant will state whether it is made in tandem with Option
Rights and, if not made in tandem with any Option Rights, will specify the
number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Option Rights will specify the
Option Price and each grant not made in tandem with Option Rights will
specify the Grant Price, which in either case will not be less than 100%
of the Market Value per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash or Company
check, (ii) shares of Common Stock having an aggregate Market Value per
Share equal to the Spread or (iii) any combination thereof, as determined
by the Committee in its sole discretion.
(d) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at
the Date of Grant (valuing shares of Common Stock for this purpose at
their Market Value per Share at the date of exercise).
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company and its Affiliates
and/or Performance Objectives to be achieved before the Appreciation
Rights or installments thereof will become exercisable, and will provide
that no Appreciation Right may be exercised except at a time when the
Spread is positive and, with respect to any grant made in tandem with
Option Rights, when the related Option Right is also exercisable. Any
grant may provide for the earlier exercise of the Appreciation Rights in
the event of a Change in Control or other
<PAGE>
corporate transaction or event or upon the Participant's termination due
to death, disability or retirement, including an involuntary termination
other than for cause.
(f) Each grant the exercise of which, or the timing of the exercise
of which, is dependent, in whole or in part, on the achievement of
Performance Objectives may specify a minimum level of achievement in
respect of the specified Performance Objectives below which no
Appreciation Rights will be exercisable and may set forth a formula or
other method for determining the number of Appreciation Rights that will
be exercisable if performance is at or above such minimum but short of
full achievement of the Performance Objectives.
(g) Each grant of an Appreciation Right will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered
to and accepted by the Participant receiving the grant, which agreement
will describe such Appreciation Right, identify any Option Right granted
in tandem with such Appreciation Right, state that such Appreciation Right
is subject to all the terms and conditions of this Plan and contain such
other terms and provisions, consistent with this Plan, as the Committee
may approve.
6. RESTRICTED STOCK. The Committee may also from time to time authorize
grants or sales to any Participant (other than a Director) of Restricted Stock
upon such terms and conditions as it may determine in accordance with the
following provisions:
(a) Each grant or sale will constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of
the performance of services, entitling such Participant to voting and
other ownership rights, but subject to the restrictions hereinafter
referred to. Each grant or sale may limit the Participant's dividend
rights during the period in which the shares of Restricted Stock are
subject to any such restrictions.
(b) Each grant or sale will specify the Performance Objectives, if
any, that are to be achieved in order for the ownership restrictions to
lapse. Each grant or sale that is subject to the achievement of
Performance Objectives will specify a minimum acceptable level of
achievement in respect of the specified Performance Objectives below which
the shares of Restricted Stock will be forfeited and may set forth a
formula or other method for determining the number of shares of Restricted
Stock with respect to which restrictions will lapse if performance is at
or above such minimum but short of full achievement of the Performance
Objectives.
(c) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
<PAGE>
(d) Each such grant or sale will provide that the shares of
Restricted Stock covered by such grant or sale will be subject, for a
period to be determined by the Committee at the Date of Grant, to one or
more restrictions, including, without limitation, a restriction that
constitutes a "substantial risk of forfeiture" within the meaning of
Section 83 of the Code and the regulations thereunder; provided, however,
with respect to any such Award that is intended on its Date of Grant be a
"performance based" Award under Section 162(m) of the Code, the minimum
restricted period shall be one year, and, with respect to any such Award
that is not intended on its Date of Grant to be such a "performance based"
Award, the minimum restricted period shall be three years. Notwithstanding
the foregoing however, any grant or sale may provide for the earlier
termination of such period in the event of a Change in Control or other
corporate transaction or event or upon termination of the Participant's
employment due to death, disability, retirement or otherwise, including an
involuntary termination other than for cause, to the extent the inclusion
of such acceleration provision(s) on the Date of Grant would not preclude
an Award intended to be "performance based" under Section 162(m) from so
qualifying.
(e) Each such grant or sale will provide that during the period for
which such restriction or restrictions are to continue, the
transferability of the Restricted Stock will be prohibited or restricted
in a manner and to the extent prescribed by the Committee at the Date of
Grant (which restrictions may include, without limitation, rights of
repurchase or first refusal in the Company or provisions subjecting the
Restricted Stock to continuing restrictions in the hands of any
transferee).
(f) Each grant or sale of Restricted Stock will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered
to and accepted by the Participant and containing such terms and
provisions, consistent with this Plan, as the Committee may approve.
(g) Unless otherwise approved by the Committee, certificates
representing shares of Common Stock transferred pursuant to a grant of
Restricted Stock will be held in escrow pursuant to an agreement
satisfactory to the Committee until such time as the restrictions on
transfer have expired or the shares have been forfeited.
7. PHANTOM SHARES. The Committee may also from time to time authorize
grants to any Participant (other than a Director) of Phantom Shares upon such
terms and conditions as it may determine in accordance with the following
provisions:
(a) Each grant will specify the number of Phantom Shares to which it
pertains and the payment or crediting of any Dividend Equivalents with
respect to such Phantom Shares.
<PAGE>
(b) Each grant will specify the Performance Objectives, if any, that
are to be achieved in order for the Phantom Shares to be earned. Each
grant that is subject to the achievement of Performance Objectives will
specify a minimum acceptable level of achievement in respect of the
specified Performance Objectives below which the Phantom Shares will be
forfeited and may set forth a formula or other method for determining the
number of Phantom Shares to be earned if performance is at or above such
minimum but short of full achievement of the Performance Objectives.
(c) Each grant will specify the time and manner of payment of
Phantom Shares which have been earned, which payment may be made in (i)
cash, (ii) shares of Common Stock or (iii) any combination thereof, as
determined by the Committee in its sole discretion.
(d) Each grant of Phantom Shares will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and
accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve, including
provisions relating to a Change in Control or other corporate transaction
or event or upon the Participant's termination due to death, disability or
retirement or otherwise, including an involuntary termination other than
for cause.
8. PERFORMANCE UNITS. The Committee may also from time to time authorize
grants to any Participant (other than a Director) of Performance Units upon such
terms and conditions as it may determine in accordance with the following
provisions:
(a) Each grant will specify the number of Performance Units to which
it pertains.
(b) Each grant will specify the Performance Objectives that are to
be achieved in order for the Performance Units to be earned. Each grant
will specify a minimum acceptable level of achievement in respect of the
specified Performance Objectives below which no payment will be made and
may set forth a formula or other method for determining the amount of
payment to be made if performance is at or above such minimum but short of
full achievement of the Performance Objectives.
(c) Each grant will specify the time and manner of payment of
Performance Units which have become payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an aggregate Market Value per
Share equal to the aggregate value of the Performance Units which have
become payable or (iii) any combination thereof, as determined by the
Committee in its sole discretion at the time of payment.
(d) Each grant of a Performance Unit will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered
to and
<PAGE>
accepted by the Participant and containing such terms and provisions,
consistent with this Plan, as the Committee may approve, including
provisions relating to a Change in Control or other corporate transaction
or event or upon the Participant's termination of employment due to death,
disability, retirement or otherwise, including an involuntary termination
other than for cause.
9. BONUS STOCK. The Committee may also from time to time authorize grants
to any Participant (other than a Director) of Bonus Stock, which shall
constitute a transfer of shares of Common Stock, without other payment therefor,
as additional compensation for the Participant's services to the Company or its
Affiliates, provided, however, that no more than 10% of the shares of Common
Stock available for Awards under the Plan may be granted as Bonus Stock, but
excluding from this limitation all Bonus Stock grants made in lieu of salary or
cash bonuses having a value equal to the Bonus Stock Award.
10. CASH TAX RIGHTS.
(a) The Committee may also from time to time authorize grants to any
Participant (other than a Director) of Cash Tax Rights upon such terms and
conditions as it may determine in accordance with this Paragraph. Cash Tax
Rights may only be granted in tandem with an Award that is payable in
shares of Common Stock. A Cash Tax Right will be the right of the
Participant granted such Award to receive from the Company, upon receipt
of shares of Common Stock pursuant to the tandem Award, an amount of cash,
which will be determined by the Committee at the Date of Grant and will be
expressed as a percentage of the Market Value per Share (not exceeding
100%) of each share of Common Stock received upon payment of the tandem
Award.
(b) Each grant of a Cash Tax Right will (i) state the Award it is
made in tandem with and will specify the percentage of the Market Value
per Share that shall be payable in cash and (ii) be evidenced by an
agreement extended on behalf of the Company by any officer and delivered
to and accepted, by the Participant and containing such terms and
provisions, consistent with this Plan, as the Committee may approve,
including provisions relating to a Change in Control or other corporate
transaction or event or upon the Participant's termination of employment
due to death, disability, retirement or otherwise, including an
involuntary termination other than for cause.
11. DIRECTOR OPTIONS.
(a) Each Director who is elected or appointed to the Board for the
first time at or after the 1998 Annual Meeting of the Stockholders of the
Company shall automatically receive, on the date of his or her election or
appointment as a Director, a Director Option for 10,000 shares of Common
Stock.
(b) On the day of the regular Annual Meeting of the Stockholders of
the Company in each year that this Plan is in effect (commencing with the
1999
<PAGE>
Annual Meeting of Stockholders), each Director who is in office on that
day and who was not elected or appointed for the first time on such date
shall automatically receive a Director Option for 5,000 shares of Common
Stock.
(c) Each Director Option will be subject to all of the limitations
contained in the following provisions:
(i) Each Director Option shall be fully exercisable (vested)
on its Date of Grant.
(ii) The Option Price of each Director Option shall be the
Market Value per Share on its Date of Grant.
(iii) Each Director Option may be exercised in full at one
time or in part from time to time by giving written notice to the
Company, stating the number of shares of Common Stock with respect
to which the Director Option is being exercised, accompanied by
payment in full of the Option Price for such shares, which payment
may be (1) in cash by check acceptable to the Company, (2) by
tendering (actually or constructively) to the Company shares of
Common Stock owned by the optionee (for more than six months if
acquired pursuant to the prior exercise of a Director Option) 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 (i) above, (3) 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 and any required tax withholding amounts; provided
that in the event the optionee chooses to pay the exercise price in
this manner, 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, or (4) by a combination of such methods of
payment. Payment instruments will be received subject to collection.
(iv) Each Director Option shall expire 10 years from the Date
of Grant thereof, but shall be subject to earlier termination as
follows: Director Options must be exercised within one year of
Director ceasing to be a member of the Board unless such termination
results from the Director's death, disability (as determined by the
Committee) or retirement (as determined by the Committee), in which
case the Director Options may be exercised by the optionee or the
optionee's legal representative or the person to whom the Director's
rights shall pass by will or the laws of descent and distribution,
as the case may be, within
<PAGE>
three years from the date of termination; provided however, that no
such event shall extend the normal expiration date of such Director
Options.
(v) In the event that the number of shares of Common Stock
available for grants under this Plan is insufficient to make all
automatic grants provided for in this Paragraph 11 on the applicable
date, then all Directors who are entitled to a grant on such date
shall share ratably in the number of shares then available for grant
under this Plan, and shall have no right to receive a grant with
respect to the deficiencies in the number of available shares and
all future grants under this Paragraph 11 shall terminate.
(vi) Grants made pursuant to this Paragraph 11 shall be
subject to all of the terms and conditions of this Plan; however, if
there is a conflict between the terms and conditions of this
Paragraph 11 and the terms and conditions of any other Paragraph,
then the terms and conditions of this Paragraph 11 shall control.
The Committee may not exercise any discretion with respect to this
Paragraph 11 which would be inconsistent with the intent that this
Plan meet the requirements of Rule 16b-3.
12. LSARS. Notwithstanding anything in Paragraphs 4, 5 or 11 above to the
contrary, if during the 60-day period following the date of a Change in Control
or, with respect to an option, Appreciation Right or Director Option granted to
a Participant who is 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, Appreciation Right or Director Option (but not to exceed the remaining
term of such option, Appreciation Right or Director Option), a Participant (or
beneficiary thereof) elects to exercise an option, Appreciation Right or
Director Option, as applicable, the holder shall receive in cash whichever of
the following amounts is applicable:
(a) with respect to an acquisition of Common Stock described in
clause (i) of the definition of Change in Control, an amount equal to the
Acquisition Spread (as defined below);
(b) with respect to a change in composition of the Board described
in clause (ii) of the definition of Change in Control, an amount equal to
the Spread (as defined below); or
(c) with respect to stockholder approval of an agreement or adoption
of a plan described in clause (iii) or (iv) of the definition of Change in
Control, an amount equal to the Merger Spread (as defined below).
As used in this Paragraph 12, the following terms shall have the meaning
indicated:
<PAGE>
(i) 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
(i) 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, Appreciation Right or Director Option is
exercised.
(ii) 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, Appreciation Right or Director Option is
exercisable, by (ii) the number of shares of Common Stock with
respect to which such option, Appreciation Right or Director Option
is being exercised.
(iii) 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,
Appreciation Right or Director Option is exercised, and (ii) the
highest Market Value per Share for any day during the 60-day period
ending on the date on which such option, Appreciation Right or
Director Option is exercised.
(iv) 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, Appreciation Right or Director Option is
exercisable, by (ii) the number of shares of Common Stock with
respect to which such option, Appreciation Right or Director Option
is being exercised.
(v) 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, Appreciation Right or Director Option is
exercised over (B) the price per share of Common Stock at which the
option, Appreciation Right or Director Option is exercisable, by
(ii) the number of shares of Common Stock with respect to which such
option, Appreciation Right or Director Option is being exercised.
The Company intends that this Paragraph 12 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 Paragraph 12 not be necessary to comply with the
requirements of the Rule or should any additional provisions be necessary for
this Paragraph 12 to comply with the requirements
<PAGE>
of the Rule, the Board may amend the Plan to add to or modify the provisions of
the Plan accordingly.
13. TRANSFERABILITY. Except as provided below, no Award will be
transferable by a Participant other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order. Director
Options, Option Rights or Appreciation Rights will be exercisable during the
Participant's lifetime only by the Participant or by the Participant's guardian
or legal representative. The Committee may, in its discretion, adopt rules or
guidelines under which any option (other than an incentive stock option) granted
to a Participant may be transferred (in whole or in part pursuant to such form
as approved by the Company) by the Participant to (i) the spouse, children or
grandchildren of the Participant ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of the Immediate Family Members and, if
applicable, the Participant, (iii) a partnership, limited liability company or
other entity in which such Immediate Family Members and, if applicable, the
Participant are the only partners, members or stockholders, or (iv) to other
persons or entities as approved by the Committee in its discretion. Following
transfer, any such option shall continue to be subject to the same terms and
conditions as were applicable to the option immediately prior to transfer;
provided, however, that no transferred option shall be exercisable or payable,
as the case may be, unless arrangements satisfactory to the Company have been
made to satisfy any tax withholding obligations the Company may have with
respect to the option.
14. ADJUSTMENTS. The Board may make or provide for such adjustments in the
maximum number of shares specified in Paragraph 3, in the numbers of shares of
Common Stock covered by outstanding Director Options, Option Rights,
Appreciation Rights and Phantom Shares granted hereunder, in the Option Price or
Grant Price applicable to any such Director Options, Option Rights and
Appreciation Rights, and/or in the kind of shares covered thereby (including
shares of another issuer), as the Board, in its sole discretion exercised in
good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants that otherwise would result from any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, merger, consolidation,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities or any other corporation transaction or event having an
effect similar to any of the foregoing.
15. FRACTIONAL SHARES. The Company will not be required to issue any
fractional share of Common Stock pursuant to this Plan. The Committee may
provide for the elimination of fractions for the settlement of fractions in
cash.
16. WITHHOLDING OF TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any grant or
payment made to a Participant or any other person under this Plan, it will be a
condition to the receipt of such grant or payment that the Participant or such
other person make arrangements satisfactory to the Company for the payment of
such taxes. With respect to any Participant who is subject to Rule 16b-3 at the
time withholding is required, the
<PAGE>
Participant may direct the Company to withhold from such Award, to the extent
such withholding is not satisfied by a tandem Cash Tax Right, if any, a number
of shares of Common Stock having an aggregate Market Value per Share equal to
the amount of taxes required to be withheld by the Company.
17. PARACHUTE TAX GROSS-UP. To the extent that the acceleration of the
vesting or payment of any Award to a Participant (a "Benefit") is subject to
excise tax under Section 4999(a) of the Code (a "Parachute Tax"), the Company
shall pay such Participant an amount of cash (the "Gross-up Amount") such that
the "net" Benefit received by the Participant under this Plan, after paying all
applicable Parachute Taxes (including those on the Gross-up Amount) and any
taxes on the Gross-up Amount, shall be equal to the Benefit that such
Participant would have received if such Parachute Tax had not been applicable.
18. ADMINISTRATION OF THE PLAN.
(a) This Plan will be administered by the Committee. A majority of
the Committee will constitute a quorum, and the action of the members the
Committee present at any meeting at which a quorum is present, or acts
unanimously approved writing, will be the acts of the Committee.
(b) The interpretation and construction by the Committee of any
provision of this Plan or of any agreement, notification or document
evidencing the grant of an Award and any determination by the Committee
pursuant to any provision of this Plan or of any such agreement,
notification or documentation will be final and conclusive. No member of
the Committee will be liable for any such action or determination made in
good faith or in the absence of gross negligence or willful misconduct on
the part of such member.
19. AMENDMENTS, ETC.
(a) This Plan may be amended from time to time by the Board but may
not be amended without the approval by the stockholders of the Company if
such amendment would change the class of eligible Participants or increase
the number of shares available for Awards.
(b) This Plan will not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or
any Affiliate, nor will it interfere in any way with any right the Company
or any Affiliate would otherwise have to terminate such Participant's
employment or other service at any time.
20. TERM. This Plan became effective on April 28, 1998, upon its approval
by the Company's stockholders. Unless sooner terminated, this Plan shall
terminate on December 31, 2007, and no further Awards shall be made, but all
outstanding Awards on such date shall remain effective in accordance with their
terms and the terms of this Plan.
EXHIBIT 10.b
TERMINATION AGREEMENT
THIS AGREEMENT, made and entered into as of May 1, 1998 is by and
between TECH-SYM CORPORATION, a Nevada corporation (the "Company"), and J.
MICHAEL CAMP (the "Employee").
W I T N E S S E T H:
WHEREAS, Employee presently serves the Company or one or more of its
subsidiaries as a senior executive officer; and
WHEREAS, the services of Employee and Employee's business experience
and knowledge are of great value to the Company; and
WHEREAS, the Company considers it prudent to enter into this
Agreement with employee in order to ensure Employee's continued services and
managerial guidance, to receive the benefits of Employee's business knowledge
and experience and to define the nature and terms of Employee's termination
benefits;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and Employee
hereby agree as follows:
1. TERM. This Agreement shall commence on the date hereof and shall
continue until December 31, 2000; provided, however, that commencing on January
1, 2000, and on each January 1st thereafter, the term of this Agreement shall
automatically be extended for one additional year unless at least 90 days prior
to such January 1st date, the Company shall have given written notice to
Employee of the termination of this Agreement as of the December 31 next
following the January 1st in respect of which such notice is given by the
Company; and provided further, that this Agreement shall automatically terminate
in all events on the earlier of Employee's death or 65th birthday if it has not
been earlier terminated as provided above. Termination of this Agreement after a
change in control of the Company shall not alter or impair the rights of
Employee arising hereunder prior to such termination.
2. CHANGE IN CONTROL. For purposes of this Agreement, a "change in control
of the Company" shall be deemed to have occurred upon, and shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person"), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 25% or more
<PAGE>
of either (i) the then outstanding shares of Common Stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); PROVIDED, HOWEVER, that the following acquisitions shall not
constitute a change of control: (w) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of a
conversion privilege), (x) any acquisition by the Company, (y) any
acquisition by any employee benefit plan(s) (or related trust(s))
sponsored or maintained by the Company or any corporation controlled by
the Company or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions described in
clauses (i), (ii) and (iii) of subsection (c) of this Section 2 are
satisfied;
(b) Individuals who, as of the date hereof, constitute the Company's
Board of Directors (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Company's Board of Directors (the
"Board"); PROVIDED, HOWEVER, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either (i) an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act), or an actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board or (ii) a plan or agreement to replace a majority of
the members of the Board then comprising the Incumbent Board; or
(c) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case unless, immediately following such
reorganization, merger or consolidation, (i) more than 60% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan(s) (or related trust(s))
of the Company and/or its subsidiaries or such corporation resulting from
such reorganization, merger or
2
<PAGE>
consolidation and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly, 25%
of more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement providing for such reorganization,
merger or consolidation; or
(d) Approval by the stockholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which immediately following
such sale or other disposition, (A) more than 60% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (B) no person (excluding the Company and any employee benefit
plan (or related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 25% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and
(C) at least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for
such sale or other disposition of assets of the Company.
3. TERMINATION OF EMPLOYMENT. If a change in control of the Company occurs
during the Term while Employee is employed by the Company, Employee shall be
entitled to the benefits provided in Section 4 hereof if during the Termination
Period (as hereinafter defined) Employee becomes disabled or Employee's
employment is terminated, unless such termination is (a) due to Employee's
death, (b) by the Company for Cause or Employee's Disability or (c) by Employee
for other than Good Reason. For
3
<PAGE>
purposes of this Agreement, the "Termination Period" shall mean the period of
time beginning with the change in control of the Company and ending on the
earlier to occur of Employee's 65th birthday or the third anniversary of such
change in control of the Company. If Employee's employment is terminated prior
to both (x) a change in control of the Company and (y) May 1, 2000 (such period
being the "Alternative Termination Period") either by the Company other than (1)
for Cause or (2) Employee's Disability or by Employee for a Good Reason, then
Employee shall be entitled to the benefits provided in Section 4(iv) hereof.
(i) DISABILITY. If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from Employee's duties
with the Company on a full-time basis for 150 consecutive calendar days,
and within 30 days after written Notice of Termination (as defined
hereinafter) Employee shall not have returned to the full-time performance
of Employee's duties, the Company may terminate Employee's employment for
"Disability"; provided, however, a termination of Employee's employment
for Disability for purposes of this Agreement shall not alter or impair
Employee's rights as a "disabled employee" under any of the Company's
employee benefit plans.
(ii) CAUSE. The Company may terminate Employee's employment for Cause. For
the purposes of this Agreement, the Company shall have "Cause" to
terminate Employee's employment hereunder only upon (A) the willful and
continued failure by Employee to perform substantially Employee's duties
with the Company, other than any such failure resulting from Employee's
incapacity due to physical or mental illness, which continues unabated
after a demand for substantial performance is delivered to Employee by the
Board that specifically identifies the manner in which the Board believes
that Employee has not substantially performed Employee's duties or (B)
Employee willfully engages in gross misconduct materially and demonstrably
injurious to the Company. For purposes of this paragraph, an act or
failure to act on Employee's part shall be considered "willful" if done or
omitted to be done by Employee otherwise than in good faith and without
reasonable belief that Employee's action or omission was in the best
interest of the Company. Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated for Cause unless and until there shall
have been delivered to Employee a copy of a resolution duly adopted by the
affirmative vote of not less than 75% of the entire membership of the
Board, including at least 50% of the "continuing directors,"as hereinafter
defined, at a meeting of the Board called and held for the purpose (after
reasonable notice to Employee and an opportunity for Employee, together
with Employee's counsel, to be heard before the Board), finding that in
the good faith opinion of the Board Employee was guilty of conduct set
forth in clauses (A) or (B) of the first sentence of this subsection (ii)
and specifying the particulars thereof in reasonable detail. The term
"continuing director" shall mean an individual who was a member of the
Board elected by the public stockholders prior to the time of the
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<PAGE>
change in control of the Company or the individual recommended to succeed
a continuing director by a majority of continuing directors.
(iii) GOOD REASON. Employee may terminate Employee's employment for Good
Reason. For purposes of this Agreement "Good Reason" shall mean:
(A) without Employee's express written consent, Employee is assigned
any duties inconsistent with Employee's positions, duties,
responsibilities and status with the Company immediately prior to a
change in control of the Company, or a change in Employee's
reporting responsibilities, titles or offices as in effect
immediately prior to a change in control of the Company, or any
removal of Employee from or any failure to re-elect or appoint
Employee to any of such responsibilities, titles, offices or
positions, except in connection with the termination of Employee's
employment for Cause or Disability, or as a result of Employee's
death, or by Employee for other than Good Reason;
(B) a reduction in Employee's annual rate of base salary as in
effect immediately prior to the change in control of the Company or
as the same may be increased from time to time thereafter (referred
to hereinafter as the "Base Salary");
(C) a failure by the Company to continue the Company's Incentive
Bonus Plan as the same may be modified from time to time, but
substantially in the form in effect immediately prior to the change
in control of the Company (the "Bonus Plan"), or a failure by the
Company to continue Employee as a participant in the Bonus Plan in
at least the same amount (the "Bonus Amount") as the average annual
amount paid or payable to Employee with respect to the two full
calendar years immediately preceding a change in control of the
Company or with respect to such shorter period during which the
Employee has been employed by the Company (bonus amounts related to
less than a full year shall be annualized);
(D) the failure by the Company to continue in effect any other
employee benefit or compensation plan program or policy, in which
Employee is participating immediately prior to a change in control
of the Company, unless the Company establishes such new plans,
programs or policies as is necessary to provide Employee with
substantially comparable benefits; the taking of any action by the
Company not required by law that would adversely affect Employee's
participation in or reduce Employee's benefits under any of such
plans, programs or policies or deprive Employee of any fringe
benefit enjoyed by Employee immediately prior to the change in
control of the Company;
5
<PAGE>
(E) the relocation of the Company's principal executive offices to a
location outside the greater Houston area, or the Company's
requiring Employee to relocate anywhere other than the location of
the Company's principal executive offices except for required travel
on the Company's business to an extent substantially consistent with
Employee's business travel obligations immediately prior to the
change in control of the Company;
(F) the amendment, modification or repeal of any provision of the
Certificate of Incorporation, as amended, or the Bylaws of the
Company which was in effect immediately prior to such change in
control of the Company, if such amendment, modification or repeal
would materially adversely effect Employee's right to
indemnification by the Company;
(G) the failure of the Company to obtain the assumption of the
agreement to perform this Agreement by any successor as contemplated
in Section 6 hereof; or
(H) any purported termination of Employee's employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of subparagraph (iv) below and, if applicable,
subparagraph (ii) above; and for purposes of this Agreement, no such
purported termination shall be effective.
Employee's right to terminate his employment for Good Reason
hereunder shall not be affected by his incapacity due to a physical or
mental illness nor shall Employee's continued employment following any
circumstance that constitutes Good Reason hereunder, regardless of the
length of such continued employment, constitute a consent to or a waiver
of Employee's rights hereunder with respect to such circumstance.
With respect to a termination of Employee's employment during the
Alternative Termination Period, "Good Reason" shall be determined as
provided in Clauses (A) through (H) above, but by substituting "the
Employee's termination of employment" for "the change in control of the
Company" where applicable in such clauses.
(iv) NOTICE OF TERMINATION. Any termination by the Company pursuant to
subparagraphs (i) or (ii) above or by Employee pursuant to subparagraph
(iii) above, shall be communicated by written Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Employee's employment under the provision so indicated.
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<PAGE>
(v) DATE OF TERMINATION. "Date of Termination" shall mean (A) if Employee
is terminated for Disability, 30 days after Notice of Termination is
given, provided that Employee shall not have returned to the performance
of Employee's duties on a full-time basis during such 30-day period, (B)
if Employee's employment is terminated pursuant to subparagraph (iii)
above, the date specified in the Notice of Termination and (C) if
Employee's employment is terminated for any other reason, the date on
which a Notice of Termination is given; provided, however, that if within
10 days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party in writing that a dispute
exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding and final arbitration award or by a
final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been
perfected); and provided further, that for purposes of this Section 3,
notwithstanding a final determination of the Date of Termination occurring
beyond the Termination Period, such termination shall be deemed to have
occurred within the Termination Period as of the initial date of the
Notice of Termination.
4. COMPENSATION DURING DISABILITY OR UPON TERMINATION.
(i) If during the Termination Period Employee fails to perform Employee's
normal duties as a result of incapacity due to physical or mental illness,
Employee shall continue during the period of disability to receive
Employee's full Base Salary and any awards, deferred and nondeferred,
payable during such period of disability under the Bonus Plan, less any
amounts paid to Employee during such period of disability pursuant to the
Company's disability or sick-leave program(s) until Employee's employment
is terminated for Disability pursuant to Section 3(i) hereof. This Section
4(i) shall not reduce or impair Employee's rights to terminate his
employment for Good Reason as otherwise provided herein.
(ii) If during the Termination Period Employee's employment shall be
terminated for Cause, the Company shall pay Employee's earned but unpaid
Base Salary through the Date of Termination and the Company shall have no
further obligations to Employee under this Agreement.
(iii) If during the Termination Period the Company shall terminate
Employee other than pursuant to Section 3(i) or 3(ii) hereof, or if during
the Termination Period Employee shall terminate Employee's employment for
Good Reason, then the Company shall pay to Employee, by wire transfer or
certified or bank cashier's check, the amounts (and at the time or times)
specified in subparagraphs A through C below and shall provide Employee
the continued welfare benefits as provided in subparagraph D below:
7
<PAGE>
(A) beginning with the first of the month coincident with or next
following the Date of Termination and continuing for each month (or
part thereof) during the Termination Period or until Employee's
death, if earlier, (the "Employment Period") an amount equal to
1/12th of Employee's Base Salary, reduced by the amount(s), if any,
of monthly base salary paid to Employee by another employer for that
month or net earnings from self-employment received by Employee that
month;
(B) within 15 business days of (1) the close of each annual bonus
period under the Bonus Plan (for purposes of this subparagraph (B),
the Bonus Plan, if in existence on the date of the change in control
of the Company, shall be deemed to have been continued for the
entire Employment Period, regardless of whether it is terminated
following such change in control) ending coincident with or
subsequent to the Date of Termination and prior to or coincident
with the end of the Employment Period, an amount equal to the Bonus
Amount and (2) the end or the Employment Period, if the end of the
Employment Period does not coincide with the end of an annual bonus
period, an amount equal to the product of the Bonus Amount and a
fraction the numerator of which is the number of days from the end
of the immediately preceding annual bonus period and the denominator
of which is 365, reduced by the amount of bonus paid to Employee for
such bonus period(s) by another employer;
(C) within 15 business day after the Date of Termination, an amount
equal to that portion of Employee's Base Salary earned, and vacation
pay vested for the prior year and accrued for the current year, to
the Date of Termination but not paid, and all other amounts
previously deferred by Employee or earned but not paid as of such
date under all Company bonus or pay plans or programs; and
(D) the Company shall maintain in full force and effect for the
continued benefit of Employee and his dependents for the Employment
Period all group life, accidental death and dismemberment, long-term
disability and health benefits available to Employee and his
dependents by virtue of being an employee of the Company as of the
Date of Termination, provided that Employee's continued
participation is possible under the general terms and provisions of
such plans and programs, and provided further that Employee pays the
regular active employee contribution, if any, required by such
programs. In the event that participation by Employee in any such
plan or program after the Date of Termination is barred pursuant to
the terms thereof, the Company shall obtain comparable coverage
under individual insurance policies with Employee paying an amount
of the premium not greater than that which he would have been
required to pay under the Company's group program. At the end of the
Employment Period, which end shall be treated by the
8
<PAGE>
Company as the beginning of Employee's COBRA continuation period for
all purposes, the Company shall arrange to make available to
Employee and his dependents comparable insurance coverage by taking
all action necessary to enable Employee to convert his coverage
under the group plans or programs to an individual insurance policy
for the benefit of Employee and his dependents, or to assume any
individual insurance policies, with Employee paying the full
premiums after the end of the Employment Period (or, with respect to
any group health plan under which Employee has elected COBRA
continuation coverage, after the end of such COBRA continuation
period); provided, however, if Employee retires on the Date of
Termination, Employee's participation shall continue in such group
plans and programs to the extent such group plans and programs
provide benefits for retirees. In the event Employee becomes covered
by another employer's group plan or programs during the Employment
Period, the Company's plans or programs shall be liable for benefits
only to the extent such benefits are not covered by the subsequent
employer's plans or programs. Notwithstanding anything herein to the
contrary, if Employee's continued coverage under any health plan of
the Company that is self-insured results in Employee being taxed on
such coverage or benefits received thereunder, the Company shall
make employee "whole" on an after-tax basis for the consequences of
such coverage or benefits under such plan.
(iv) Subject to Section 5 below, if during the Alternative Termination
Period the Company shall terminate Employee other than pursuant to Section
3(i) or Section 3(ii) hereof, or if during the Alternative Termination
Period Employee shall terminate Employee's employment for Good Reason,
then the Company shall pay to Employee, by wire transfer or certified or
bank cashiers check, beginning with the first of the month coincident with
or next following the Date of Termination and continuing until April 30,
2000 or Employee's death, if earlier (the "Continuation Period"), an
amount equal to 1/12th of Employee's Base Salary, reduced by the
amount(s), if any, of monthly base salary paid to Employee by another
employer for that month or net earnings from self-employment received by
Employee that month.
5. MITIGATION OF DAMAGES AND EXPENSES. Employee shall be required to
mitigate the amount of any payments provided for under Section 4 (iii)(A) and
(B) of this Agreement (but not under Section 4(iv) by making reasonable efforts
to seek other employment during the Employment Period; however, Employee shall
not be required to accept any employment with respect to which Employee's
position, authority, duties or responsibilities shall be in any material
respect, as determined by Employee in his good faith opinion, inconsistent with
those contemplated in Section 3 of this Agreement or which is based at any
office or location outside the greater Houston area.
9
<PAGE>
If any contest or dispute shall arise under this Agreement involving
the termination of Employee's employment with the Company or involving the
failure or refusal of the Company, its successors or assigns to perform in
accordance with the terms hereof, the Company shall reimburse Employee, on a
current basis, for all legal fees and expenses, if any, incurred by Employee in
connection with such contest or dispute, together with interest in an amount
equal to the base rate of Chase Bank, Texas, from time to time in effect but in
no event higher than the maximum legal rate permissible under applicable law on
all payments due under the terms of this Agreement and withheld by the Company,
its successors or assigns, such interest to accrue from the date such payment(s)
become due through the date of payment thereof.
Employee agrees that during the Continuation Period Employee shall
not, in those states in the United States of America in which either the Company
or any of its affiliates is then engaged in business or has, at the Date of
Termination, adopted plans to commence business within such state(s) within the
Continuation Period, directly or indirectly, (i) in any manner whatsoever engage
in any capacity with any business competitive with any business then engaged in
by the Company or any of its affiliates (collectively, the "Company's Business")
for Employee's own benefit or for the benefit of any person or entity other than
the Company or any affiliate of the Company, or (ii) have any interest as an
owner, sole proprietor, shareholder, partner, lender, director, officer,
manager, employee, consultant, agent, member or otherwise in any business
competitive with the Company's Business; PROVIDED, HOWEVER, that Employee may
own, directly or indirectly, solely as an investment, not more than 1% of the
outstanding securities of any person or entity which are listed on any national
securities exchange or regularly traded on the Nasdaq Stock Market
notwithstanding the fact that such person or entity is engaged in a business
competitive with the Company's Business. Employee further agrees that if
Employee breaches the foregoing noncompetition provisions of this paragraph, no
further payments shall be due Employee pursuant to Section 4(iv) after the date
of such breach.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Company, by
agreement in form and substance reasonably satisfactory to Employee,
expressly to assume and agree to perform this Agreement in the same manner
and to the same extent as the Company would have been required if no such
succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle Employee to compensation from
the Company in the same amount and on the same terms as Employee would be
entitled hereunder if Employee terminated Employee's employment for Good
Reason, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall
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<PAGE>
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid that executes and delivers the agreement
provided for in this Section 6 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amounts would still be payable to Employee
hereunder if Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee, or other designee or, if
there be no such designee, to Employee's estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or five days after deposit in the United
States mail, registered and return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the last page of this Agreement, or to
such other address as either party shall have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
8. EMPLOYMENT WITH SUBSIDIARIES. Employment with the Company for purposes
of this Agreement (other than in Section 3(iii)) includes employment with any
corporation in which the Company has a direct or indirect ownership interest of
50% or more of the total combined voting power of all classes of stock.
9. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Employee and by the President or other authorized officer of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
10. VALIDITY. The interpretation, construction and performance of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Texas without regard to the principle of conflicts of laws.
The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
each of which shall remain in full force and effect.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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<PAGE>
12. DESCRIPTIVE HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
13. CORPORATE APPROVAL. This Agreement has been approved by the Company's
Board of Directors, and has been duly executed and delivered by Employee and on
behalf of the Company by its duly authorized representative.
14. ARBITRATION. Any dispute or controversy arising out of or in
connection with this Agreement as to the existence, construction, validity,
interpretation or meaning, performance, non-performance, enforcement, operation,
breach, continuance or termination thereof shall be submitted to arbitration
pursuant to the following procedure:
(a) Either party may demand such arbitration in writing after the
controversy arises, which demand shall include the name of the arbitrator
appointed by the party demanding arbitration, together with a statement of
the matter in controversy.
(b) Within 15 days after such demand, the other party shall name an
arbitrator, or in default thereof, such arbitrator shall be named by the
Arbitration Committee of the American Arbitration Association and the two
arbitrators so selected shall name a third arbitrator within 15 days or,
in lieu of such agreement on a third arbitrator by the two arbitrators so
appointed a third arbitrator shall be appointed by the Arbitration
Committee of the American Arbitration Association.
(c) The Company shall bear all arbitration costs and expenses
incurred by Employee.
(d) The arbitration hearing shall be held at a site in Houston,
Texas, to be agreed to by a majority of the arbitrators on 10 days'
written notice to the parties.
(e) The arbitration hearing shall be concluded within 10 days unless
otherwise ordered by a majority of the arbitrators, and the award thereon
shall be made within 10 days after the close of the submission of
evidence. An award rendered by a majority of the arbitrators appointed
pursuant to this Agreement shall be final and binding on all parties to
the proceeding during the period of this Agreement, and judgment on such
award may be entered by either party in the highest court, state or
federal, having jurisdiction; provided, however, that Employee shall be
entitled to specific performance of Employee's right to be paid until the
Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
The parties stipulate that the provisions hereof shall be a complete
defense to any suit, action, or proceeding instituted in any federal, state, or
local court or before
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<PAGE>
any administrative tribunal with respect to any controversy or dispute arising
during the period of this Agreement and which is arbitrable as herein set forth.
The arbitration provisions hereof shall, with respect to such controversy or
dispute, survive the termination of this Agreement.
Notwithstanding the pendency of any dispute or controversy pursuant
to this Section 14, the Company will continue to pay Employee Employee's full
Base Salary in effect when the notice giving rise to the dispute was given and
continue Employee as a participant in all compensation, benefit and insurance
plans in which Employee was participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved in accordance with
Section 3(v) hereof. Amounts paid under this Section 14 are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
IN WITNESS WHEREOF, the Company and Employee have entered into this
Agreement effective for all purposes as of the day and year first above written.
TECH-SYM CORPORATION
Dated: June 17, 1998 By:/s/Wendell W. Gamel
Chairman
EMPLOYEE
Dated: By: /s/ J. MICHAEL CAMP
J. Michael Camp
Addresses:
If to the Company:
Tech-Sym Corporation
10500 Westoffice
Houston, Texas 77042-5391
Attn: General Counsel
If to Employee:
___________________________
___________________________
___________________________
13
EXHIBIT 10.c
FIRST AMENDMENT
TO
EXECUTIVE RETIREMENT AGREEMENT
(AS AMENDED AND RESTATED)
THIS FIRST AMENDMENT to the EXECUTIVE RETIREMENT AGREEMENT (as amended
and restated) dated as of April 30, 1992, between TECH-SYM CORPORATION (the
"Company") and WENDELL W. GAMEL (the "Executive") is made and entered into as of
April 30, 1998.
WITNESSETH:
WHEREAS, the Company wants to receive the continued benefit of
Executive's knowledge and experience in the affairs of the Company after the
resignation of the Executive as President of Tech-Sym Corporation and wishes to
compensate such Executive for his services without preventing the Executive from
receiving the benefits to which he is entitled pursuant to the Executive
Retirement Agreement (as amended and restated;
NOW, THEREFORE, the Company and the Executive agree to delete
paragraphs 1.1, 1.2, 1.3, and 1.5 from the Executive Retirement Agreement (as
amended and restated) and replace them with the following paragraphs:
1.1 QUALIFICATIONS FOR BENEFITS. The Executive (or his surviving spouse, as
the case may be) shall be entitled to receive the benefits provided by this
Agreement.
1.2 AMOUNT OF RETIREMENT BENEFITS. The Executive shall receive, beginning
on May 1, 1998, (the "Commencement Date"), an annual retirement benefit equal to
65% of the highest rate of annual base salary in effect for the Executive with
the Company at any time prior to the Executive's 61st birthday (the "Base
Salary") with such benefit payable on each January 1 on or after the
Commencement Date on which he is living; provided the Executive shall receive a
partial annual retirement benefit for the remainder of the year in which such
Commencement Date occurs in an amount equal to the full annual benefit that will
commence on the next January 1 but reduced by a fraction, the numerator of which
is the number of calendar months during such year that have elapsed prior to the
Commencement Date (with any partial month rounded up to a complete month), and
the denominator of which is 12 and such partial benefit shall be paid to the
Executive on the first day of the month coinciding with or next following the
Commencement Date.
1.3 DEATH BENEFITS. If the Executive is married on his date of death his
surviving spouse ("Spouse") shall receive an annual survivor's benefit hereunder
in an amount equal to 37 1/2% of the Executive's Base Salary. The Spouse's
benefit shall commence on the first day of the month coinciding with or next
following the Executive's date of death. Subsequent payment(s) of the Spouse's
benefit shall be made on each anniversary of the date such survivor payments
first began, provided that the Spouse is alive on such anniversary date, and
shall cease when either a total of 10 annual survivor benefit payments have been
paid to the Spouse hereunder or the Spouse dies, whichever occurs first.
<PAGE>
1.5 CONTINUED HEALTH BENEFITS. On or after the Executive's termination of
employment, the Executive shall be entitled to continue, for as long as he
lives, his participation and that of his qualified dependents, if any, in the
Company's group health plan for active employees in which the Executive
participated immediately prior to such termination of employment provided that
the Executive continues to pay the regular active employee premium, if any,
required by such plan; however, in the event that continued participation by the
Executive in such plan after the date of his employment termination is not
permitted by the plan or such plan is terminated or benefits under such plan
would be taxable to the Executive, the Company shall either obtain comparable
coverage under another group health plan of the Company (and under which
benefits to the Executive would not be taxable) or, if there is none, an
individual insurance policy providing comparable benefits with the Executive
paying an amount of the premium therefor that is not greater than that which he
would have been required to pay from time to time under the Company's group
health plan for active employees had his participation continued in such plan
and the Company paying the balance of such cost and any taxes on any income the
Executive would have as a result of such Company-provided coverage.
IN WITNESS WHEREOF the Company has caused this First Amendment to be
executed by its duly authorized officer and the Executive has executed this
First Amendment for all purposes as of the date first written above.
TECH-SYM CORPORATION
Dated: May 11, 1998 By:/s/ Ray F. Thompson
Title: Vice President
EXECUTIVE
Dated: May 15, 1998 /s/ Wendell W. Gamel
WENDELL W. GAMEL
2
EXHIBIT 10.d
FIRST AMENDMENT
TO
EXECUTIVE RETIREMENT AGREEMENT
(AS AMENDED AND RESTATED)
THIS FIRST AMENDMENT to the EXECUTIVE RETIREMENT AGREEMENT (as amended
and restated) dated as of April 30, 1992, between TECH-SYM CORPORATION (the
"Company") and COY J. SCRIBNER (the "Executive") is made and entered into as of
April 30, 1998.
WITNESSETH:
WHEREAS, the Company wants to receive the continued benefit of
Executive's knowledge and experience in the affairs of the Company after the
resignation of the Executive as President of Metric Systems Corporation and
wishes to compensate such Executive for his services without preventing the
Executive from receiving the benefits to which he is entitled pursuant to the
Executive Retirement Agreement (as amended and restated;
NOW, THEREFORE, the Company and the Executive agree to delete
paragraphs 1.1, 1.2, 1.3, and 1.5 from the Executive Retirement Agreement (as
amended and restated) and replace them with the following paragraphs:
1.1 QUALIFICATIONS FOR BENEFITS. The Executive (or his surviving spouse, as
the case may be) shall be entitled to receive the benefits provided by this
Agreement.
1.2 AMOUNT OF RETIREMENT BENEFITS. The Executive shall receive, beginning
on May 1, 1998, (the "Commencement Date"), an annual retirement benefit equal to
65% of the highest rate of annual base salary in effect for the Executive with
the Company at any time prior to the Executive's 61st birthday (the "Base
Salary") with such benefit payable on each January 1 on or after the
Commencement Date on which he is living; provided the Executive shall receive a
partial annual retirement benefit for the remainder of the year in which such
Commencement Date occurs in an amount equal to the full annual benefit that will
commence on the next January 1 but reduced by a fraction, the numerator of which
is the number of calendar months during such year that have elapsed prior to the
Commencement Date (with any partial month rounded up to a complete month), and
the denominator of which is 12 and such partial benefit shall be paid to the
Executive on the first day of the month coinciding with or next following the
Commencement Date.
1.3 DEATH BENEFITS. If the Executive is married on his date of death his
surviving spouse ("Spouse") shall receive an annual survivor's benefit hereunder
in an amount equal to 37 1/2% of the Executive's Base Salary. The Spouse's
benefit shall commence on the first day of the month coinciding with or next
following the Executive's date of death. Subsequent payment(s) of the Spouse's
benefit shall be made on each anniversary of the date such survivor payments
first began, provided that the Spouse is alive on such anniversary date, and
shall cease when either a total of 10 annual survivor benefit payments have been
paid to the Spouse hereunder or the Spouse dies, whichever occurs first.
<PAGE>
1.5 CONTINUED HEALTH BENEFITS. On or after the Executive's termination of
employment, the Executive shall be entitled to continue, for as long as he
lives, his participation and that of his qualified dependents, if any, in the
Company's group health plan for active employees in which the Executive
participated immediately prior to such termination of employment provided that
the Executive continues to pay the regular active employee premium, if any,
required by such plan; however, in the event that continued participation by the
Executive in such plan after the date of his employment termination is not
permitted by the plan or such plan is terminated or benefits under such plan
would be taxable to the Executive, the Company shall either obtain comparable
coverage under another group health plan of the Company (and under which
benefits to the Executive would not be taxable) or, if there is none, an
individual insurance policy providing comparable benefits with the Executive
paying an amount of the premium therefor that is not greater than that which he
would have been required to pay from time to time under the Company's group
health plan for active employees had his participation continued in such plan
and the Company paying the balance of such cost and any taxes on any income the
Executive would have as a result of such Company-provided coverage.
IN WITNESS WHEREOF the Company has caused this First Amendment to be
executed by its duly authorized officer and the Executive has executed this
First Amendment for all purposes as of the date first written above.
TECH-SYM CORPORATION
Dated: May 11, 1998 By:/s/ Ray F. Thompson
Title: Vice President
EXECUTIVE
Dated: May 15, 1998 /s/ Coy J. Scribner
COY J. SCRIBNER
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM TECHSYM CORPORATION FORM 10Q SECOND QUARTER AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,833
<SECURITIES> 100
<RECEIVABLES> 68,907
<ALLOWANCES> 0
<INVENTORY> 73,796
<CURRENT-ASSETS> 196,129
<PP&E> 49,335
<DEPRECIATION> 0
<TOTAL-ASSETS> 294,606
<CURRENT-LIABILITIES> 79,746
<BONDS> 0
0
0
<COMMON> 802
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 294,606
<SALES> 132,412
<TOTAL-REVENUES> 0
<CGS> 86,043
<TOTAL-COSTS> 120,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,941
<INCOME-PRETAX> 11,768
<INCOME-TAX> 3,883
<INCOME-CONTINUING> 6,775
<DISCONTINUED> 702
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,477
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.21
</TABLE>
