SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
TECH-SYM CORPORATION
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
TECH-SYM CORPORATION
10500 WESTOFFICE DRIVE, SUITE 200
HOUSTON, TEXAS 77042-5391
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1998
To the Stockholders
of Tech-Sym Corporation:
The Annual Meeting of Stockholders of Tech-Sym Corporation will be held in
the Concord Room of the DoubleTree Hotel at 2001 Post Oak Blvd., Houston, Texas,
on Tuesday, April 28, 1998, at 10:00 AM, Houston Time, for the following
purposes:
1. To elect seven directors to serve until the next annual meeting of
stockholders and or until their successors are elected and qualified.
2. To consider and act upon a proposal to ratify the appointment of
Price Waterhouse LLP as independent accountants for the year 1998.
3. To consider and act upon a proposal to approve the adoption of the
Tech-Sym Corporation 1998 Equity Incentive Plan.
And to vote on all other matters incident to the conduct of the meeting or
any adjournment(s) thereof.
Stockholders of record at the close of business on March 13, 1998, are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited and urged to attend the meeting.
EVEN IF YOU EXPECT TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ADDRESSED ENVELOPE. If you should
attend, you may vote in person, if you wish, whether or not you have sent in
your proxy.
By Order of the Board of Directors.
J. RANKIN TIPPINS
GENERAL COUNSEL AND SECRETARY
MARCH 27, 1998
<PAGE>
TECH-SYM CORPORATION
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Tech-Sym Corporation (the
"Company") for use at the annual meeting of stockholders of the Company to be
held in the Concord Room of the DoubleTree Hotel at 2001 Post Oak Blvd.,
Houston, Texas, on Tuesday, April 28, 1998, at 10:00 AM, Houston Time, and at
any adjournment(s) thereof pursuant to and for the purposes set forth in the
accompanying Notice of Meeting.
The cost of solicitation of these proxies will be borne by the Company,
including the reasonable costs incurred by custodians, nominees, fiduciaries,
and other agents in forwarding the proxy material to their principals. The
Company has engaged Georgeson & Company, Inc., a firm of professional proxy
solicitors, to solicit proxies and will pay such firm a fee of approximately
$6,500, plus expenses for so acting. In addition to such solicitation and the
solicitation made hereby, certain directors, officers, and regular employees of
the Company may solicit proxies by telefax, telephone, and personal interview.
A proxy will be voted in accordance with the stockholder's instruction or,
if no instruction is indicated, it will be voted in favor of the proposals set
forth in the notice attached hereto. Any stockholder may revoke his or her proxy
at any time prior to its use by a later dated proxy. The proxy also may be
revoked if the stockholder is present at the meeting and elects to vote in
person. It is anticipated that the proxy materials will be first mailed or given
to stockholders on or about March 30, 1998.
SUBMISSION OF STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement
relating to the 1999 annual meeting of stockholders, stockholder proposals must
be received at the Company's principal executive office no later than November
27, 1998, and must otherwise comply with the requirements of Rule 14a-8 under
the Securities Act of 1934, as amended.
VOTING SECURITIES
At the close of business on March 13, 1998, the record date for
determination of stockholders entitled to notice of and to vote at the meeting,
there were outstanding 6,059,181 shares of Common Stock (exclusive of 1,951,900
treasury shares), each share being entitled to one vote upon each of the matters
to be voted on at the meeting. There are no other voting securities outstanding.
The holders of a majority of the shares entitled to vote, present in person
or by proxy, shall constitute a quorum at all meetings of stockholders. For
purposes of determining the presence of a quorum, shares entitled to vote
include shares as to which there is an abstention from voting on some or all
matters submitted for voting and include shares as to which a broker will vote
on at least one matter pursuant to discretionary authority of such broker to
vote on such matter pursuant to applicable stock exchange rules. In the absence
of a quorum (3,029,591 shares) at the meeting, either in person or by proxy, the
meeting may be adjourned from time to time without notice other than
announcement at the meeting until a quorum shall be formed.
In conformity with the corporate law of Nevada (the state of the Company's
organization) and the Company's articles of incorporation and bylaws, at any
meeting of stockholders at which a quorum is present, a majority of the shares
entitled to vote, present in person or represented by proxy, shall decide any
matter submitted to such a meeting for vote, unless the matter is one upon which
by laws or by express
<PAGE>
provision of the articles of incorporation or bylaws the vote of a greater
number is required, in which case the vote of such greater number shall govern
and control the decision of such matter. None of the proposals set forth in this
proxy statement require a greater vote than a majority of shares. For purposes
of determining whether a majority has been obtained with respect to a particular
matter, shares as to which there is an abstention from voting and shares as to
which a broker does not have authority to vote on such matter will not be
treated as present and entitled to vote with respect to such matter.
The following table sets forth as of January 31, 1998, the beneficial
ownership of the Company's Common Stock with respect to each person known by the
Company to be the beneficial owner of more than five percent of the Company's
currently outstanding shares of Common Stock.
NAME AND BUSINESS ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------- -------------------- --------
FMR Corp............................. 635,700(a) 10.47%
82 Devonshire Street
Boston MA 02109
Neuberger & Berman, LLC.............. 615,075(b) 10.13%
605 Third Avenue
New York NY 10158-3698
Heartland Advisors, Inc.............. 613,400(c) 10.10%
790 North Milwaukee Street
Milwaukee WI 53202
Dimensional Fund Advisors, Inc....... 388,200(d) 6.39%
1299 Ocean Avenue, 11th Floor
Santa Monica CA 90401
Glickenhaus & Co..................... 309,900(e) 5.10%
6 East 43rd Street
New York NY 10017
Merrill Lynch Trust Company of Texas
as Trustee of the Tech-Sym
Retirement Plan
and GeoScience Retirement Plan
(the "Trustee").................. 373,756(f) 6.16%
Suite 1150
2121 San Jacinto Street
Dallas, Texas 752015
- ------------
(a) According to an amended Schedule 13G dated February 10, 1998, and filed
with the Securities and Exchange Commission by FMR Corp., FMR Corp. had
sole voting power with respect to 141,400 of such shares and sole
dispositive power with respect to all such shares.
(b) According to an amended Schedule 13G dated February 6, 1998, and filed
with the Securities and Exchange Commission by Neuberger & Berman, LLC,
Neuberger & Berman, LLC, had sole voting power with respect to 383,975 of
such shares and shared dispositive power with respect to all such shares.
(c) According to a Schedule 13G dated February 5, 1998, and filed with the
Securities and Exchange Commission by Heartland Advisors, Inc., Heartland
Advisors, Inc., had sole voting power with respect to 589,100 of such
shares and sole dispositive power with respect to all such shares.
(d) According to a Schedule 13G dated February 9, 1998, and filed with the
Securities and Exchange Commission by Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor,
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
2
<PAGE>
Dimensional is deemed to have beneficial ownership of 388,200 shares of
Company stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit plans, all
of which Dimensional serves as investment manager. Dimensional had sole
voting power with respect to 254,800 of such shares and sole dispositive
power with respect to all such shares. Dimensional disclaims beneficial
ownership of all such shares.
(e) According to a Schedule 13G dated January 12, 1998, and filed with the
Securities and Exchange commission by Glickenhaus & Co., Glickenhaus & Co.
had sole voting power with respect to 48,600 of such shares and sole
dispositive power with respect to all such shares.
(f) According to financial statements as of January 31, 1998, provided by the
Trustee. The shares are held for the benefit of employees and former
employees of the Company who participate in the Tech-Sym Retirement Plan
or the GeoScience Retirement Plan. Each participant may direct the Trustee
regarding the voting of such shares allocated to the participant's
account. The total number of shares does not include 26,328 shares
allocated to the accounts of the executive officers which are included in
the table of beneficial ownership by officers and directors below.
The following table sets forth as of January 31, 1998, the beneficial
ownership of the Common Stock of the Company ("Tech-Sym") and its GeoScience
Corporation ("GeoScience") subsidiary with respect to each director and
nominee for director, each of the executive officers named in the Summary
Compensation Table below, all executive officers and directors of the Company as
a group, and Tech-Sym as regards GeoScience.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWENERSHIP
------------------------------------------------------------------------------
GEOSCIENCE CORPORATION TECH-SYM CORPORATION
------------------------------------ ---------------------------------------
SOLE VOTING OPTIONS SOLE VOTING OPTIONS
AND EXERCISABLE AND EXERCISABLE
NAME OF INDIVIDUAL INVESTMENT WITHIN PERCENT INVESTMENT WITHIN PERCENT
OR GROUP POWER 60 DAYS OF CLASS POWER 60 DAYS OF CLASS
- ------------------------------------- ----------- ----------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C>
W. L. Creech......................... 41,000 22,000 * 1,000 6,000 *
Michael C. Forrest................... 2,500 22,000 * 1,500 11,000 *
A. A. Gallotta, Jr................... 300 10,000 * 300 16,000 *
Wendell W. Gamel..................... 6,000 6,250 * 84,826(a)(b) 46,000 2.14%
Christopher C. Kraft, Jr............. 2,000 22,000 * 3,500 16,000 *
Robert M. McDonald................... 1,000 0 * 8,868(a) 16,000 *
Richard F. Miles..................... 2,615(a) 6,250 * 826(a) 7,000 *
Coy J. Scribner...................... 500 1,250 * 11,154(a) 37,000 *
Ray F. Thompson...................... 4,000 3,750 * 21,097(a) 31,000 *
Charles K. Watt...................... 1,000 10,000 * 0 16,000 *
All directors and executive officers
as a group (13 persons)............ 67,515 108,500 1.74% 151,002 231,600 6.07%
Tech-Sym Corporation................. 7,900,000 0 79.16%
</TABLE>
- ------------
* Less than one percent (1%)
(a) Includes shares allocated to the employee through his participation in the
Tech-Sym Retirement Plan or the GeoScience Retirement Plan.
(b) Includes 5,000 shares held in trust for Mr. Gamel's children in which he
disclaims beneficial ownership.
3
<PAGE>
ELECTION OF DIRECTORS
PROPOSAL 1: THE BOARD OF DIRECTORS BY A UNANIMOUS VOTE NOMINATED AND URGES
YOU TO VOTE FOR THE SEVEN NOMINEES LISTED BELOW. PROXIES SOLICITED HEREBY WILL
BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK PRESENT IN
PERSON OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED FOR APPROVAL
OF THIS PROPOSAL.
The Board recommends the election of the nominees listed below as directors
to hold office until the next annual meeting of stockholders and until their
successors are elected and qualified. Each of such nominees is presently a
member of the Board. If at the time of the 1998 annual meeting of stockholders,
any of such nominees should be unable to serve or is unwilling to serve, the
discretionary authority provided in the Proxy will be used to vote for a
substitute or substitutes designated by the Board of Directors. The Board of
Directors has no reason to believe that any substitute nominee or nominees will
be required.
The Articles of Incorporation provide that the affairs of the Company shall
be conducted by a Board of Directors of not less than three nor more than twenty
members and empower the Board to increase or decrease its size within such
limits. The Board in its discretion and in accordance with such authority has
fixed its size at seven members. No proxy will be voted for a greater number of
persons than the number of nominees named herein. If deemed desirable in the
best interests of the Company, the Board of Directors (pursuant to authority
contained in the Articles of Incorporation) may, subsequent to the annual
meeting of stockholders, increase its size and elect one or more additional
qualified persons to fill the vacancies which then exist pending the next annual
meeting of stockholders.
The nominees, and certain information with respect to each of them, are as
follows:
W. L. CREECH Succession Committee Chairman Age 70
Director since 1989 Compensation Committee Member
Since his retirement from the United States Air Force as a Four Star General in
1984, General Creech has been an independent business consultant. During his
military career spanning more than 37 years, General Creech held a succession of
important posts, including as his last assignment Commander of the Tactical Air
Command USAF. General Creech also serves as a director of Comarco, Inc., ESEA
Corporation, and GeoScience Corporation.
MICHAEL C. FORREST Audit Committee Member Age 64
Director since 1995 Succession Committee Member
Mr. Forrest has been a consultant to the petroleum exploration industry since
his retirement in 1997 from his position as the Senior Vice President of
Technology and Business Development at Maxus Energy Corporation, a position he
held since 1994. Mr. Forrest joined Maxus in 1992 as Vice Chairman and Chief
Operating Officer and served on its Board from 1992 to 1995, at which time Maxus
was acquired by YPF. Prior to that, Mr. Forrest was president of Pecten
International Co., a subsidiary of Shell U.S.A., and had worked within the
exploration and production divisions of Shell for thirty-seven years. He also
serves as a director of GeoScience Corporation.
4
<PAGE>
A. A. GALLOTTA, JR. Audit Committee Chairman Age 65
Director since 1986 Succession Committee Member
Admiral Gallotta has been President of AAG Associates, Inc., a consulting firm
for electronic companies, since 1985, the year that he retired from the United
States Navy as a Rear Admiral. From 1988 to 1990, he served as President and
Director of SWL, Inc., a technical support contractor to the United States
Department of Defense and a subsidiary of Flow General Corporation. Admiral
Gallotta dedicated 23 years of his naval career to electronic warfare related
activities and was Vice Commander, Naval Electronics System Command, at the time
of his retirement.
WENDELL W. GAMEL Age 68
Director since 1966
Mr. Gamel was first elected President of the Company in 1975. In 1980, he was
elected Chairman of the Board and has continuously served in both capacities
ever since. He also serves as a director of GeoScience Corporation.
CHRISTOPHER C. KRAFT, JR. Compensation Committee Chairman Age 74
Director since 1983 Succession Committee Member
Dr. Kraft has been a consultant to the aerospace industry since his retirement
as Director of the NASA Johnson Space Center in 1982. He was Flight Director for
all of the Mercury missions and many of the Gemini missions. He also serves as a
director of GeoScience Corporation.
COY J. SCRIBNER Age 66
Director since 1983
From 1972, continuing to the present, Mr. Scribner has been President of Metric
Systems Corporation, a subsidiary of the Company engaged in the business of
designing and manufacturing electronic systems primarily used in defense. He was
elected as a Vice President of the Company in 1985 and also serves as Chairman
of Enterprise Electronics Corporation, a subsidiary of the Company engaged in
the business of designing and manufacturing weather information systems.
CHARLES K. WATT Compensation Committee Member Age 60
Director since 1987
Since 1988, Dr. Watt has served as Chairman of Scientific Research Corporation,
a company involved in advanced technology products and services in which both
the Company and Dr. Watt have equity interests. Since April 1990, Professor Watt
has been a faculty member and Executive Assistant to the President at Clemson
University. Prior to this appointment, he served as a laboratory director and
faculty member at the Georgia Institute of Technology and as Director of Defense
Test and Evaluation in the Office of the Secretary of Defense.
The Board has standing audit, compensation, and succession committees (the
"Audit Committee," the "Compensation Committee," and the "Succession
Committee," respectively) that are composed of directors of the Company. The
Board does not have a standing nominating committee, but considers and selects
as a whole directors to fill Board vacancies that arise between annual meetings
of stockholders as well as nominates candidates for election at such meetings.
The Audit Committee's functions include making recommendations concerning the
engagement of independent accountants, reviewing with the independent
accountants the plan and results of the auditing engagement, approving
professional services provided by the independent accountants, reviewing the
independence of the independent accountants and reviewing the adequacy of the
Company's internal accounting controls. The Compensation Committee makes
recommendations to the Board as to compensation to be paid to (i) the officers
of the Company, (ii) the chief executive officers and general managers of
subsidiaries and divisions except for GeoScience and its subsidiaries, and (iii)
all employees of the Company and its subsidiaries, except GeoScience and its
5
<PAGE>
subsidiaries, regardless of position, whose compensation exceeds a certain
amount. The Compensation Committee also reviews, and makes recommendations to
the Board with respect to, all incentive compensation plans proposed for the
Company and its subsidiaries. The Compensation Committee administers the 1990
Stock Option Plan of the Company and has sole authority to grant options and
stock appreciation rights under the 1990 Stock Option Plan. Subject to
stockholder approval of the Tech-Sym Corporation 1998 Equity Incentive Plan (the
"Plan") at the meeting to which this Proxy Statement relates, the Compensation
Committee will cease granting options under the 1990 Stock Option Plan and will
have sole authority to grant stock options and other equity based incentives
under the Plan. The Compensation Committee will continue to oversee
administration of the 1990 Stock Option Plan as well as the 1998 Equity
Incentive Plan. See Proposal 3: Approval of the Adoption of the Tech-Sym 1998
Equity Incentive Plan. The Succession Committee was established on June 20,
1997, to recommend to the Board of Directors a successor as president of the
Corporation. During 1997, the Audit Committee had four meetings, the
Compensation Committee had three meetings, the Succession Committee had four
meetings, and the Board of Directors had six meetings. All members of the Board
of Directors attended 75% or more of the total number of meetings of the Board
and Board committees on which they served.
DIRECTORS' REMUNERATION
Members of the Board of Directors who are not employees of the Company are
paid a fee of $1,300 for attendance at each Board meeting and a fee of $250 for
attendance at each Board committee meeting except for committee chairmen who are
paid $500 for attendance at each Board committee meeting which they chair. Board
members who are employees of the Company receive a fee of $100 for attendance at
each Board meeting. Members of the Board who are not current or former employees
of the Company are also paid an Annual Director Fee of $20,000.
NONEMPLOYEE DIRECTORS RETIREMENT PLAN
Each director who is not a present or former officer or employee of the
Company covered by a Company retirement plan or agreement is automatically
covered by the Company's Nonemployee Directors Retirement Plan. Upon retirement
on or after reaching age 65 or termination of service due to disability, each
such director will be entitled to receive from the Company an annual retirement
benefit equal to 65% of the Annual Director Fee in effect prior to retirement or
disability. If a director leaves the Board prior to reaching age 65 for reasons
other than disability, his retirement benefit will not begin until the director
reaches age 65 and, if the director has served less than ten years as a
director, retirement benefit will be reduced by 10% for each such year.
The surviving spouse of a deceased director who was entitled to receive a
retirement benefit under this plan will receive an annual benefit from the
Company, beginning with the director's death, equal to 37 1/2% of the Annual
Director Fee, subject to a reduction of 10% for each year less than 10 served as
a director unless such director was a member of the Board on the date of death
or had been previously terminated due to a disability. The spouse's benefit will
continue for ten years or until the spouse's death, whichever occurs first.
In the event of a change in control of the Company, as defined in the plan,
the retirement benefits become 100% vested regardless of a director's length of
service and are payable in a lump sum. The Company has contributed certain
assets to a trust with a commercial bank to provide for the payment of the
benefits under the plan. The amounts held in trust remain available to the
claims of creditors of the Company in the event of its bankruptcy or insolvency.
6
<PAGE>
STOCK OPTION PLAN
The Company's 1990 Stock Option Plan (the "1990 Option Plan") provides
for the automatic grant of non-qualified stock options and stock appreciation
rights ("SARs") to nonemployee directors of the Company. An individual who
becomes a nonemployee director is automatically granted options and SARs with
respect to 10,000 shares of Common Stock as of the date such person first
becomes a member of the Board of Directors. Each nonemployee director is
automatically granted options and SARs with respect to an additional 2,000
shares of Common Stock effective as of the date of each regular annual meeting
at which such person is reelected or continues to serve as a director. The
exercise price of such options and SARs may not be less than 100% of the fair
market value per share of the Common Stock on the date of grant. The stock
options and SARs are exercisable on and after the first anniversary of the date
of grant and have a term of ten years unless earlier terminated in the event a
nonemployee director ceases to be a member of the Board for any reason except
death, permanent disability, or retirement. The 1990 Option Plan provides that,
upon a change in control of the Company, all outstanding stock options and SARs
would be immediately exercisable (with certain exceptions).
The Compensation Committee has recommended, and the Board of Directors has
approved, subject to stockholder approval, adoption of the 1998 Equity Incentive
Plan (the "Plan"). The Plan is scheduled to be acted on at the 1998 Annual
Meeting of Stockholders. See Proposal 3: Approval of the Adoption of the
Tech-Sym Corporation 1998 Equity Incentive Plan. The Board of Directors has
determined that, upon stockholder approval of the Plan, further grants of stock
options and stock appreciation rights pursuant to the 1990 Option Plan shall
immediately cease.
The Plan provides for the automatic grant of non-qualified stock options to
nonemployee directors of the Company. An individual who becomes a nonemployee
director, and has not previously been an employee director, shall be
automatically granted options with respect to 10,000 shares of Common Stock as
of the date such person first becomes a member of the Board of Directors. Each
nonemployee director shall be automatically granted options with respect to an
additional 2,000 shares of Common Stock effective as of the date of each regular
annual meeting at which such person is reelected or continues to serve as a
director. The exercise price of such options may not be less than 100% of the
fair market value per shares of the Common Stock on the date of grant. The stock
options are fully exercisable on their date of grant and have a term of ten
years unless earlier terminated in the event a nonemployee director ceases to be
a member of the Board for any reason except death, disability, or retirement.
The Plan provides that, upon a change in control of the Company, all outstanding
stock options would be immediately exercisable (with certain exceptions).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since September 12, 1988, Dr. Watt has served as Chairman of Scientific
Research Corporation ("SRC") in which both the Company and Dr. Watt have
equity interests. Mr. Gamel serves on the SRC Board of Directors which
determines the compensation for Dr. Watt.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and, if any, persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission and the New York Stock Exchange reports relating to ownership and
changes in ownership of such Common Stock. Copies of these reports must also be
furnished to the Company. Based on a review of these reports and on written
representations from the reporting persons that no other reports were required,
the Company believes that all applicable Section 16(a) reporting requirements
were fulfilled.
7
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has a Compensation Committee comprised of three
non-employee directors which reviews and recommends to the Board the payment of
(i) compensation to any employee of the Company or its subsidiaries, except
GeoScience and its subsidiaries, with an annual salary of $100,000 or more, and
(ii) compensation, regardless of amount, to any division or subsidiary general
manager or chief executive officer except GeoScience and its subsidiaries. In
addition, the Compensation Committee reviews and recommends to the Board all
incentive compensation plans including, without limitation, bonus plans, stock
option plans, stock purchase plans, and key employee compensation agreements.
The Board has final approval concerning the Compensation Committee's
recommendations.
The Compensation Committee also administers the Company's 1990 Stock Option
Plan and grants stock options and attendant stock appreciation rights to
officers and key employees under the 1990 Stock Option Plan. The Board does not
have any approval or disapproval authority concerning the grants awarded by the
Compensation Committee.
The executive compensation policies and practices are designed to provide
competitive levels of compensation that integrate pay with the Company's annual
and long-term performance goals. Compensation of the executive officers of the
Company is primarily comprised of salary, incentive bonus, and stock options. In
addition, all of the executive officers are eligible to participate in either
the Company's or GeoScience's Section 401(k) Retirement Plan. Certain executive
officers are also parties to Termination Agreements and Executive Retirement
Agreements with the Company.
SALARY
The base salaries of the executive officers are established at a level
deemed appropriate to attract and retain qualified executives. In establishing
its recommendations, the Compensation Committee considers the recommendations of
management, the amount of responsibilities of the executive officers, the
salaries of others similarly situated both within and outside of the Company,
the recent performance in the executive's area of responsibility, the relative
performance of other companies in similar businesses, and any changes in the
cost-of-living. The salaries of the executive officers are usually reviewed
annually with the performance of the prior year taken into account. As a result,
the salaries received in 1997 were determined in part by each individual's
performance in 1996.
INCENTIVE BONUS PLANS
The Company has an incentive bonus plan which provides for incentive
compensation for its officers and key employees, as well as the presidents of
its wholly owned subsidiaries. The Company's subsidiaries have separate profit
sharing incentive bonus plans. Under the Company's plan, the aggregate bonus
pool from which such awards can be made in any year cannot exceed 2% of the
Company's consolidated earnings before federal and state income taxes plus an
amount equal to 25% of the incentive bonus pool accrued by each wholly owned
subsidiary pursuant to its plan. The apportionment of that part of the Company's
incentive bonus pool paid to the executive officers, excluding those executive
officers employed by GeoScience or its subsidiaries, is determined by the
Company's Board of Directors, pursuant to recommendations of the Compensation
Committee, according to levels of responsibilities and individual performance.
Under the GeoScience incentive bonus plan, the aggregate bonus pool from
which awards can be made in any year cannot exceed 2% of GeoScience's
consolidated earnings before federal and state income taxes.
8
<PAGE>
The apportionment of that part of the GeoScience incentive bonus pool paid to
the executive officers is determined by the GeoScience Board of Directors,
pursuant to recommendations of its Compensation Committee, according to levels
of responsibilities and individual performance. No bonus is payable if
GeoScience fails to earn a profit.
Under the incentive bonus plan for the Company's wholly owned subsidiaries,
officers and key employees of each of the subsidiaries, excluding the presidents
of the subsidiaries, are eligible to share in a bonus pool, calculated
separately for each subsidiary, amounting to not less than 6% and not more than
15% of such subsidiary's annual earnings before state and federal income taxes.
Bonus amounts earned in excess of 6% pre-tax earnings depend upon the degree by
which each subsidiary exceeds certain performance criteria, such as sales, net
profit and return on investment. The apportionment of the total amount of the
bonus and the recipients thereof are determined by the senior management of the
Company and the respective subsidiary according to levels of responsibility and
individual performance except that approval of the Board of Directors of the
Company, respectively, pursuant to recommendations of the Compensation
Committee, is required for an award to (i) any recipient whose annual salary is
equal to or greater than $100,000 and (ii) any division or subsidiary general
manager or chief executive officer, regardless of the amount of compensation. No
bonus is payable if the subsidiary fails to earn a profit.
The amount of the bonus pool of the Company and of each subsidiary is
subject to reduction by the amount of (i) any bonuses such as year-end holiday
bonuses paid to employees for such year, (ii) the matching contributions which
each such company would be required to make to the retirement plan, if any, on
the total bonus pool amount for the accounts of its bonus recipients and (iii)
certain marketing incentives paid to employees for such year.
STOCK OPTION PLAN
The Company's and GeoScience's Stock Option Plans are designed to align the
long-term interests of key employees with shareholder interests. The exercise
price of such options may not be less than 100% of the fair market value per
share of the Common Stock on the date of the grant. The employees awarded stock
options benefit only when the market price of the Company's or GeoScience's
stock increases to the benefit of all shareholders. It has been the practice to
grant Tech-Sym stock options to executive officers every three to five years
with the options vesting incrementally over a three-year period. GeoScience
stock options have been granted to executive officers annually and the options
vest incrementally over a four-year period. The number of options granted to any
individual is dependent on the individual's level of responsibility and ability
to influence the performance of the Company and its subsidiaries.
CEO COMPENSATION
As with the other executive officers, the compensation of Mr. Gamel
consists primarily of salary, incentive bonus, and stock options. Mr. Gamel's
salary is reviewed on an annual basis by the Compensation Committee and the
Board of Directors at the time of the annual election of officers at the
Director's meeting held in conjunction with the annual stockholders' meeting
held in April of each year. The incentive bonus is determined after the end of
each year when financial results are available. Stock option grants are not
automatic nor awarded on a regular basis.
The Committee determined that a 4.3% salary increase for Mr. Gamel,
effective May of 1997, was appropriate in light of a 2% cost-of-living increase,
the Company's 30.6% increase in sales and 76% increase in earnings per share
from 1995 to 1996. When the results of several non-recurring items were
excluded, the Company's 1996 earnings were 4% greater than those in 1995. The
Board of Directors approved the recommendation of the Committee.
9
<PAGE>
A major portion of Mr. Gamel's compensation consists of an annual incentive
bonus under the Incentive Bonus Plan described above and, as such, fluctuates
with the financial performance of the Company. The Company's earnings in 1997
were approximately 65% less than 1996 when the results of several 1996
non-recurring items were included and 29% less when the non-recurring items were
excluded. The Committee recommended, and the Board approved, a 1997 bonus for
Mr. Gamel that was 52% less than that received for 1996.
The Compensation Committee did not award Mr. Gamel any stock options during
1997. The GeoScience Compensation Committee granted Mr. Gamel stock options for
12,500 shares of GeoScience Corporation Common stock with an exercise price of
$9.375 per share, which was 100% of the closing sale price on the date of grant.
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, (the "Securities Act"), or under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporated this information by reference, and shall not otherwise
be deemed filed under such acts.
The foregoing report is given by the following members of the Compensation
Committee.
Christopher C. Kraft, Jr. W. L. Creech Charles K. Wattiiiii
10
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
the Chief Executive Officer and the four other most highly compensated executive
officers in 1997 (as the term "executive officer" is defined for proxy
purposes by the Securities and Exchange Commission) for services rendered in all
capacities during the years ended December 31, 1997, 1996, and 1995. The dollar
value of other annual compensation not properly categorized as salary or bonus,
such as perquisites and other personal benefits, did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus for any of the named
executive officers in any of the years listed.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------
SECURITIES SECURITIES
UNDERLYING UNDERLYING
ANNUAL COMPENSATION TECH-SYM GEOSCIENCE ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(A) (#)(B) (C)(#) ($)(D)
- ------------------------------------- ----- --------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
W. W. Gamel.......................... 1997 360,000 92,000 -0- 12,500 8,592
Chairman of the Board, President, 1996 343,667 190,000 25,000 25,000 8,505
and Chief Executive Officer 1995 325,333 184,000 -0- -- 8,093
R. F. Thompson....................... 1997 187,000 75,000 -0- 7,500 7,922
Vice President, Treasurer, 1996 172,000 150,000 15,000 15,000 7,714
and Chief Financial Officer 1995 163,167 124,000 -0- -- 7,425
C. J. Scribner....................... 1997 293,589 81,000 -0- -0- 8,755
President of Metric 1996 278,371 89,811 15,000 5,000 8,227
Systems Corporation 1995 262,673 65,500 -0- -- 7,646
R. F. Miles.......................... 1997 201,667 35,000 -0- 12,500 7,179
President of GeoScience 1996 195,000 140,350 5,000 25,000 6,854
Corporation 1995 183,000 67,920 -0- -- 5,695
Robert M. McDonald................... 1997 178,658 46,795 -0- -0- 6,471
President of Continental 1996 166,501 35,813 -0- -0- 6,489
Electronics Corporation 1995 160,000 10,983 -0- -- 6,255
</TABLE>
- ------------
(a) Incentive bonus amounts were earned during the years indicated, but paid
in the first quarter of the following year.
(b) Includes stock appreciation rights (SARs) awarded in tandem with each
stock option.
(c) GeoScience stock options were not available in 1995 because the Company
was not formed until 1996.
(d) Each of the amounts in this column are matching contributions by the
Company to the executive officer's account in the Company's Retirement
(401(k)) Plan. The amounts for Messrs. Gamel and Scribner each include
$600 in 1995 and 1997 and $700 and $600, respectively, in 1996 for
attending Board meetings.
11
<PAGE>
OPTION/SAR GRANTS TABLE
The following table sets forth information concerning grants during 1997 of
Tech-Sym stock options and GeoScience stock options to each of the named
executive officers.
<TABLE>
<CAPTION>
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED
UNDERLYING TO EXERCISE
OPTIONS EMPLOYEES OR BASE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT VALUE
NAME COMPANY (#)(A) YEAR ($/SH) DATE ($)(B)
- ------------------------------------- ----------- ---------- --------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. W. Gamel.......................... Tech-Sym -0- -0- n/a n/a -0-
GeoScience 12,500 3 9.375 4/27/07 77,975
R. F. Thompson....................... Tech-Sym -0- -0- n/a n/a -0-
GeoScience 7,500 2 9.375 4/27/07 46,785
C. J. Scribner....................... Tech-Sym -0- -0- n/a n/a -0-
GeoScience -0- -0- n/a n/a -0-
R. F. Miles.......................... Tech-Sym -0- -0- n/a n/a -0-
GeoScience 12,500 3 9.375 4/27/07 77,975
R. M. McDonald....................... Tech-Sym -0- -0- n/a n/a -0-
GeoScience -0- -0- n/a n/a -0-
- ------------
</TABLE>
(a) No Tech-Sym options were granted to the named executive officers in 1997.
According to the shareholder approved GeoScience 1996 Equity Incentive
Plan, as amended, the exercise price of stock options and stock
appreciation rights may not be less than the market value per share on the
date of grant. GeoScience options are exercisable starting twelve months
from grant date, with 25% of the shares covered thereby becoming
exercisable at that time and 25% of the option shares becoming exercisable
every year thereafter with full vesting occurring on the fourth
anniversary date. The options are not transferable other than by will or
by the laws of descent and distribution. The option expires three months
after the optionee's employment terminates except in the event of death,
permanent disability, or retirement. The options and any gains therefrom
may also be forfeited by the optionee under certain conditions including
the commission of an illegal act and working with a competitor of
GeoScience.
(b) In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was used to estimate the value of the
GeoScience options to be $6.238 per option share as of the grant date. The
model's mathematical formula is primarily used to value traded stock
options and is premised on immediate exercisability and transferability of
the options. This is not true for the GeoScience options granted to
executive officers and other employees. Therefore, the values shown are
theoretical and are not intended to reflect the actual values the
recipients may eventually realize, if any. Any ultimate value will depend
on the excess of the stock price over the exercise price on the date the
optionee, in his sole discretion, exercises the option. The following
assumptions were used for the purpose of estimating the Grant Date present
value: (i) option term of eight years, (ii) volatility of 0.54, (iii)
dividend yield of zero, (iv) and risk-free rate of return of 6.49%.
12
<PAGE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table summarizes for each of the named executive officers the
number of Tech-Sym and GeoScience stock options and stock appreciation rights
(SARs), if any, exercised during the year ended December 31, 1997, the aggregate
dollar value realized upon exercise, the total number of unexercised options and
SARs, if any, held at December 31, 1997, and the aggregate dollar value of
in-the-money, unexercised options and SARs, if any, held at December 31, 1997.
Value realized upon exercise is the difference between the fair market value of
the underlying stock on the exercise date and the exercise or base price of the
option or SAR. Value of the unexercised, in-the-money options or SARs at fiscal
year-end is the difference between its exercise or base price and the fair
market value of the underlying stock on December 31, 1997, which was $25.4375
per share for Tech-Sym and $11.75 per share for GeoScience. THESE VALUES, UNLIKE
THE AMOUNTS SET FORTH IN THE COLUMN HEADED "VALUE REALIZED," HAVE NOT BEEN,
AND MAY NEVER BE REALIZED. THE UNDERLYING OPTIONS OR SARS HAVE NOT BEEN, AND MAY
NOT BE, EXERCISED; AND ACTUAL GAINS, IF ANY, ON EXERCISE WILL DEPEND ON THE
VALUE OF TECH-SYM AND GEOSCIENCE COMMON STOCK ON THE DATE OF EXERCISE. THERE CAN
BE NO ASSURANCE THAT THESE VALUES WILL BE REALIZED. Unexercisable options are
those which have not yet vested under the vesting schedule in the Company's 1990
Stock Option Plan or GeoScience's 1996 Equity Incentive Plan.
AGGREGATED OPTION/SAR EXERCISES
IN 1997 AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END
SHARES AT FY-END(#)(A) ($)(B)
ACQUIRED ON VALUE --------------------------- -----------
NAME COMPANY EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. W. Gamel....................... Tech-Sym -0- -0- 46,000 15,000 395,250 -0-
GeoScience -0- -0- 6,250 31,250 -0- 29,688
Ray F. Thompson................... Tech-Sym -0- -0- 31,000 9,000 280,938 -0-
GeoScience -0- -0- 3,750 18,750 -0- 17,813
Coy J. Scribner................... Tech-Sym -0- -0- 37,000 9,000 346,813 -0-
GeoScience -0- -0- 1,250 3,750 -0- -0-
R. F. Miles....................... Tech-Sym 6,000 112,875 7,000 3,000 48,438 -0-
GeoScience -0- -0- 6,250 31,250 -0- 29,688
R. M. McDonald.................... Tech-Sym -0- -0- 16,000 6,000 116,250 -0-
GeoScience -0- -0- -0- -0- -0- -0-
</TABLE>
- ------------
(a) Includes stock appreciation rights (SARs) awarded in tandem with each
Tech-Sym stock option.
(b) In-the-Money Options/SARs are those where the fair market value of the
underlying security exceeds the exercise or base price of the option or
SAR.
13
<PAGE>
EXECUTIVE RETIREMENT AGREEMENTS
The executive officers named in the Summary Compensation Table, except Mr.
McDonald, are each parties to retirement agreements with the Company which
provide for the payment to each such officer an annual retirement benefit for
the remainder of his life commencing at his retirement on or after age 65 in an
amount equal to 65% of such executive's highest rate of base salary in effect at
any time prior to his reaching age 61 ("Base Salary"). If such executive
voluntarily terminates his employment prior to age 65, but on or after age 62,
he shall commence receiving his retirement benefit reduced by 1.39% for each
full calendar month which his date of termination precedes his 65th birthday,
unless such reduction is waived by the Board. The applicable Base Salaries to
date of Messrs. Gamel, Thompson, Scribner, and Miles, are $240,000, $193,000,
$231,000, and $205,000, respectively. The agreements further provide for the
payment of a surviving spouse's benefit equal to 37 1/2% of the officer's Base
Salary, which is payable annually upon his death to his surviving spouse, if
any, for the lesser of ten years or the remainder of her life. The Company's
obligation under each of the agreements to pay the retirement benefits
terminates if the officer voluntarily leaves the employ of the Company prior to
reaching age 62 (other than due to death or total and permanent disability) or
is terminated for cause. The benefits remain payable in the event of either the
executive's termination of employment prior to age 62 because of his total and
permanent disability or his termination after reaching age 62, but in both
instances are subject to reduction for their early commencement unless such
reduction is waived by the Board. Under each of the agreements, the surviving
spouse's benefit is not payable if the officer voluntarily leaves the employ of
the Company prior to age 62 or is terminated for cause, but is payable if the
executive dies while still in the employ of the Company, or after his
termination of employment after reaching age 62 or after his termination due to
a disability. The agreements also provide the executive with continued
Company-provided health benefits after his retirement. The benefits under the
agreements are completely vested except for those contained in the agreement
with Mr. Miles which provides for 50% vesting after ten years of continuous
employment with the Company (such employment commencing January 29, 1990) with
an additional 10% each year thereafter until fully vested.
The Company has contributed certain assets to a trust with a commercial
bank to provide for the payment of the benefits under the retirement agreements.
The amounts held in trust remain available to the claims of creditors of the
Company in the event of its bankruptcy or insolvency.
TERMINATION AGREEMENTS
The Company has entered into Termination Agreements with certain key
employees, including Messrs. Miles and Thompson, which provide that if the
employee's employment is terminated during the three-year period following a
Change in Control of the Company, as defined in the agreements, other than for
cause or by the employee for other than "good reason," the employee will
continue to be paid his base salary, participate in the Bonus Plan and receive
certain other benefits for the remainder of such three-year period, reduced by
any amounts payable to the employee (i) pursuant to a Retirement Agreement and
(ii) from other employment.
STOCK OPTION PLANS
The Company's 1990 Stock Option Plan, as amended (the "1990 Option
Plan"), provides for the grant of stock options to purchase shares of the
Company's Common Stock and for the grant of Stock Appreciation Rights ("SARs")
in tandem therewith to (i) key employees of the Company and its subsidiaries as
determined by the Company's compensation committee and (ii) the members of the
Board of
14
<PAGE>
Directors of the Company who are not employees of the Company. The maximum
number of shares of Common Stock as to which options or SARs may be granted
under the 1990 Option Plan is 1,158,000 shares, subject to certain adjustments
to prevent dilution. As of March 27, 1998, there were 248,370 shares of Common
Stock available for grants of options and SARs under the 1990 Option Plan. The
exercise price of such options and SARs may not be less than 100% of the fair
market value per share of the Common Stock on the date of grant. The 1990 Option
Plan provides that, upon a change in control of the Company, all outstanding
stock options and SARs would become immediately vested and exercisable (with
certain exceptions).
Pursuant to the recommendation of the Compensation Committee, the Board of
Directors has approved, subject to stockholder approval, adoption of the 1998
Equity Incentive Plan (the "Plan"). The Plan is scheduled to be acted on at
the 1998 Annual Meeting of Stockholders. See Proposal 3: Approval of the
Adoption of the Tech-Sym Corporation 1998 Equity Incentive Plan. The Board of
Directors has determined that, upon stockholder aproval of the Plan, further
grants of stock options and stock appreciation rights pursuant to the 1990
Option Plan shall immediately cease.
The GeoScience Corporation 1996 Equity Incentive Plan provides for the
grant of stock options, SARs, restricted stock, dividend equivalents,
performance nits, phantom shares, limited stock appreciation rights ("LSARs"),
bonus stock and cash tax rights to (i) all officers and employees of, and any
consultants to, GeoScience or any affiliate of GeoScience as determined by the
GeoScience Compensation Committee and (ii) the directors of GeoScience who are
not employees or consultants of GeoScience or an affiliate who will receive only
automatic grants of Director options with tandem LSARs. The maximum number of
shares of GeoScience Common Stock as to which options or SARs may be granted
under the 1996 Equity Incentive Plan is 1,500,000 shares, subject to certain
adjustments to prevent dilution. The exercise price of such options and SARs may
not be less than 100% of the fair market value per share of the GeoScience
Common Stock on the date of grant. The 1996 Equity Incentive Plan provides that,
upon a change in control of the Company or, if GeoScience ceases to be a
subsidiary of the Company, a change of control of GeoScience, all outstanding
stock options, SARs, and other awards under the plan would become immediately
vested and exercisable (with certain exceptions).
SHARE INVESTMENT PERFORMANCE
The following graph reflects a comparison of the cumulative total return
(change in stock price plus reinvested dividends) of the Company's Common Stock
from December 31, 1992, through December 31, 1997, with the cumulative total
returns reflected in the Media General Financial Services Composite Market Value
Index (a broad market index which includes over 7,000 publicly held companies)
and the Media General Financial Services Industry Group 171 Index -- Electronic
Equipment Manufacturers (a market index reflecting performance of the Company's
peers and which includes the Company). The data presented assumes a hypothetical
investment of $100 in the Company's stock and in the underlying stocks of each
of the two indices as of January 1, 1993, and that all dividends were
reinvested.
15
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
------------------------------------------------------------
1992 1993 1994 1995 1996 1997
---- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
TECH-SYM CORPORATION................. 100 155.96 172.48 232.11 218.35 186.70
ELECTRONIC EQUIPMENT MANUFACTURERS... 100 144.08 159.92 220.41 302.01 324.09
COMPOSITE MARKET VALUE............... 100 114.79 113.84 147.60 178.25 231.46
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
The foregoing price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that the Company specifically incorporates
this graph by reference, and shall not otherwise be deemed filed under such
Acts.
There can be no assurance that the Company's share performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future share
performance.
16
<PAGE>
RATIFICATION OF INDEPENDENT ACCOUNTANTS
PROPOSAL 2: THE BOARD OF DIRECTORS HAS UNANIMOUSLY SELECTED PRICE
WATERHOUSE LLP, AND URGES YOU TO VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
SUCH FIRM, AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE YEAR 1998. PROXIES
SOLICITED HEREBY WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR
PROXIES. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK
PRESENT IN PERSON OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED
FOR APPROVAL OF THIS PROPOSAL.
By action of the Board of Directors, Price Waterhouse LLP has been selected
as independent accountants of the Company for the year ending December 31, 1998,
and the Board of Directors proposes the ratification of such selection. Price
Waterhouse LLP has audited the accounts of the Company since 1967. A
representative of such firm is expected to be present at the annual meeting of
stockholders with the opportunity to make a statement if he desires to do so and
will be available to answer appropriate questions.
APPROVAL OF THE ADOPTION
OF THE 1998 EQUITY INCENTIVE PLAN
PROPOSAL 3: THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND URGES YOU
TO VOTE FOR THE ADOPTION OF THE 1998 EQUITY INCENTIVE PLAN, WHICH PROVIDES FOR
STOCK AND STOCK-RELATED AWARDS THEREUNDER WITH RESPECT TO 750,000 SHARES OF THE
COMMON STOCK OF THE COMPANY. UPON STOCKHOLDER APPROVAL OF THE 1998 EQUITY
INCENTIVE PLAN, NO ADDITIONAL AWARDS WILL BE MADE UNDER THE COMPANY'S 1990 STOCK
OPTION PLAN. PROXIES WILL BE SO VOTED UNLESS THE STOCKHOLDERS SPECIFY OTHERWISE
IN THEIR PROXIES. PROPOSAL 3 WILL BE ADOPTED BY THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE SHARES PRESENT IN PERSON OR BY PROXY AT THE MEETING AND ENTITLED
TO VOTE.
The Board recommends the approval of the adoption of the Tech-Sym
Corporation 1998 Equity Incentive Plan (the "Plan"), which authorizes the
grant of various stock and stock-related awards. The Plan was adopted by the
Board on February 19, 1998, contingent upon its approval by the stockholders.
The Board believes the Company's success and long-term progress are dependent
upon attracting and retaining officers, employees, directors and consultants of
the Company and its subsidiaries and affiliates. The Plan gives the Compensation
Committee maximum flexibility to use various forms of incentive awards as part
of the Company's overall compensation program. The Company's current equity
incentive plan (the 1990 Option Plan) is limited in the types of equity awards
available for grants. As of March 27, 1998, there were 248,370 shares of Common
Stock available for grants of options and SARs under the 1990 Option Plan. No
additional awards will be made under the 1990 Option Plan if Proposal 3 is
adopted.
The Plan is intended to encourage employees, directors and consultants of
the Company, its subsidiaries and affiliated entities to acquire or increase
their equity interest in the Company. Additionally, the Plan is intended to
provide a means whereby employees, directors and consultants 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, its subsidiaries and affiliated entities to attract and
retain the services of individuals who can contribute to the program, growth and
profitability of the Company.
The full text of the Plan is set forth in Exhibit A to this Proxy
Statement. The essential features of the Plan are summarized below, but such
summary is qualified in its entirety by reference to the full text of the Plan.
All capitalized terms not defined herein shall have the meaning as defined in
the Plan.
17
<PAGE>
TYPES OF AWARDS
The Plan permits the granting of any or all of the following types of
awards ("Awards"): stock appreciation rights ("SARs"), stock options,
restricted stock, dividend equivalents, performance units, Director options,
phantom shares, limited stock appreciation rights ("LSAR's"), bonus stock, and
cash tax rights.
ELIGIBILITY FOR PARTICIPATION. All officers and employees of, and any
consultants to, the Company or any affiliate of the Company will be eligible for
participation in all Awards under the Plan other than Director options. The
non-employee directors of the Company will only receive automatic grants of
Director options with tandem LSAR's.
ADMINISTRATION. The Plan is administered by the Compensation Committee of
the Company's Board of Directors, which consists solely of non-employee
directors within the meaning of Rule 16b-3 of the Exchange Act. Except with
respect to the automatic grant of Director options, the Compensation Committee
will select the participants who will receive Awards, determine the type and
terms of Awards to be granted and interpret and administer the Plan.
AMENDMENT AND TERMINATION. The Board of Directors of the Company may
terminate or amend the Plan without stockholder approval, except that
stockholder approval is required for any amendment that would increase the
number of shares authorized or otherwise cause the Plan to cease to satisfy the
requirements of Rule 16b-3 of the Exchange Act.
TERM OF THE PLAN. Unless sooner terminated, the Plan will terminate on
December 31, 2007, after which time no additional Awards may be made under it;
however, all then outstanding Awards will continue pursuant to their terms.
SHARES SUBJECT TO THE PLAN. Subject to adjustment as described below,
750,000 shares of Common Stock may be awarded under the Plan, of which no more
than 150,000 shares may be issued as non-performance based restricted stock
and/or phantom stock awards.
EMPLOYEE/CONSULTANT STOCK OPTIONS. Stock options granted under the Plan
are subject to such terms and conditions as may be established by the
Compensation Committee, which may include conditioning the exercisability of an
option on the achievement of one or more performance goals, except that in all
events: (i) no stock options may be granted after the termination of the Plan;
(ii) the option exercise price cannot be less than the market value per share of
the Common Stock at the date of grant; and (iii) no stock option may be
exercised more than 10 years after it is granted. Stock options may be granted
either as incentive stock options ("ISOs") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), non-qualified stock options, or
any combination thereof. However, ISOs can only be granted to participants who
are employees of the Company or a subsidiary of the Company. In addition, the
Compensation Committee may provide, with respect to an option granted to a key
employee, that such grant will have an automatic "reload" grant feature, with
such terms and conditions as the Compensation Committee may establish for such
reload, including limitations on exercisability conditioned on the holding of
the stock acquired on the exercise triggering such reload grant.
The Compensation Committee will determine the form in which payment of the
optionee's exercise price may be made, which may include cash, shares of Common
Stock owned for more than six months by the optionee, a "cashless exercise"
through a broker, or any combination thereof.
DIRECTOR STOCK OPTIONS. Each non-employee director of the Company on the
date of each annual meeting of the Company's stockholders meeting (commencing
with the 1998 meeting) an option to purchase 2,000 shares of Common Stock at an
exercise price per share equal to the fair market value of the
18
<PAGE>
Common Stock on the date of grant. Each non-employee director of the Company who
first becomes a director after the Plan's effective date shall receive an
initial option award to purchase 10,000 shares of Common Stock on the date of
such person's election or appointment as a non-employee director at an exercise
price per share equal to the fair market value of the Common Stock on the date
of grant. Neither the Compensation Committee nor the Board of Directors has any
discretion with respect to Director options. Each such Director option shall be
exercisable in full from the date of grant and have a term of 10 years, subject
to earlier termination depending upon continuity of service on the Board.
STOCK APPRECIATION RIGHTS. An SAR may be granted in tandem with stock
options or separate and apart from a grant of a stock option. The grant price of
an SAR shall not be less than the fair market value per share of Common Stock on
the date of grant and shall have a term not to exceed 10 years. The spread on
the exercise of an SAR may be paid in cash, Common Stock or any combination
thereof, as the Compensation Committee may determine.
RESTRICTED STOCK. The Compensation Committee may also make grants of
restricted stock, which are shares of Common Stock that may not be disposed of
by the participant until the restrictions specified in the Award expire. The
restrictions may include the achievement of specified performance goals. The
participant will have, with respect to restricted stock, the right to vote the
shares and, subject to such limitation (if any) established by the Compensation
Committee, receive any cash dividends. Except as otherwise determined by the
Compensation Committee, upon termination of a participant's employment for any
reason during the restricted period, all restricted stock will be forfeited by
the participant.
PHANTOM SHARES. The Compensation Committee may grant Awards of phantom
shares of Common Stock, which may be payable in cash, shares of Common Stock or
a combination thereof, in consideration of the fulfillment of such conditions as
the Compensation Committee may specify, which may include the achievement of
specified performance goals.
PERFORMANCE UNITS. Performance units are units equivalent to $100 (or such
other value as the Compensation Committee determines) and may consist of
payments in cash, shares of Common Stock or a combination thereof, payable upon
the achievement of specified performance goals. The Compensation Committee shall
determine the performance goals to be achieved during any performance period and
the length of any performance period.
BONUS STOCK. The Compensation Committee may deliver unrestricted shares of
Common Stock to eligible persons as additional compensation for the person's
services to the Company and its affiliates or in lieu of cash bonuses payable to
a participant.
DIVIDEND EQUIVALENTS. The Compensation Committee may provide, with respect
to a stock option (other than Director options) or phantom share Awards that
such awards shall be credited (on an immediate or deferred basis) with dividend
equivalents, which are equal to any cash dividends paid on the Common Stock
while the Award is outstanding.
LSARS. The Plan provides, with respect to each SAR, Director option and
stock option for automatic tandem, LSAR's that provide the participant with the
right to receive, for a limited period following a change of control of the
Company, the "spread" on his SAR's, Director options and Option Rights in
cash, based on the value of the consideration paid in the change of control.
CASH TAX RIGHTS. The Compensation Committee may grant cash tax rights in
tandem with any Award payable in shares of Common Stock. A cash tax right is a
right to receive cash upon receipt of the shares of Common Stock pursuant to the
tandem Award.
19
<PAGE>
PERFORMANCE GOALS. The Compensation Committee may, in its discretion,
subject any Award (other than Director options) to the attainment of certain
performance goals. Such performance goals, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to performance
of the division, department or function within the Company or a subsidiary in
which the employee receiving the Award is employed or in individual or other
terms, and which will relate to a period of time determined by the Compensation
Committee. The performance goals that may be used include one or more of the
following: (i) net earnings; (ii) operating income; (iii) earnings before
interest, taxes, depreciation and amortization expenses ("EBITDA"); (iv)
earnings before interest and taxes ("EBIT"); (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 Compensation Committee in its discretion
at the time of grant of the Award. A performance goal need not be based on an
increase or a positive result and may include, for example, maintaining the
status quo or limiting economic losses.
ANNUAL AWARD LIMITS. The maximum number of stock options, SARs not in
tandem with stock options, Bonus Stock, Phantom Stock and Restricted Stock
awards that any person can receive during any calendar year is 250,000. In
addition, no person can receive Performance Unit grants having a value in excess
of $1 million in any calendar year.
TRANSFERABILITY. Except as provided below, no Award under the Plan that
has not become payable or earned will be transferable other than by will or the
laws of descent and distribution. The Compensation Committee, in its discretion,
may permit the transfer of a non-qualified stock option by a participant to a
member of the participant's immediate family, family trust or family
partnership.
ADJUSTMENTS. The Compensation Committee may provide for adjustment of
Awards under the Stock Plan if it determines such adjustment is required to
prevent dilution or enlargement of the rights of participants in the Stock Plan
that would otherwise result from a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, reorganization or other similar
corporate transaction.
The Plan permits the Company to allow an optionee, upon exercise of an
option, to satisfy any applicable federal income tax requirements in the form of
either cash or, at the discretion of the Compensation Committee, shares of
Common Stock, including shares issuable upon exercise of such option.
CHANGE IN CONTROL. The Plan provides that Awards may, pursuant to their
terms, provide that upon a "change of control" of the Company the Award would
become immediately vested and exercisable or payable, as the case may be. A
"change of control" of the Company shall be deemed to occur if a person or
group acquires 25% or more of the Company's voting securities, the Directors of
the Company at the beginning of any two-year period cease to constitute a
majority of the Board of Directors during such period for any reason, the
stockholders of the Company approve a merger or consolidation of the Company
with any other company (with certain exceptions), the stockholders of the
Company approve an agreement for the sale, exchange or disposition by the
Company of all or a substantial portion of the Company's assets or the
stockholders of the Company adopt a plan of complete liquidation of the Company.
AMENDMENTS. The Board of Directors of the Company may amend, suspend or
terminate the Plan at any time, except that any amendment that would (i)
materially increase the benefits accruing to participants under the Plan, (ii)
materially increase the number of securities which may be issued under the Plan
and (iii)
20
<PAGE>
materially modify the requirements as to eligibility for participation in the
Plan requires stockholder approval unless, in each case, such approval is not
required to meet the requirements of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Unless the term of the Plan is
extended or earlier terminated, the Plan will terminate on December 31, 2007.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary
of certain of the federal income tax consequences of certain transactions under
the Plan based on federal income tax laws in effect on January 1, 1998. This
summary is not intended to be exhaustive and does not describe state or local
tax consequences. Additional or different federal income tax consequences to the
employee or the Company may result depending upon other consideration not
described below.
In general: (i) no income will be recognized by an optionee at the time a
non-qualified stock option (an option not qualified under Section 422 of the
Code) ("NQO") is granted; (ii) at the time of exercise of a NQO, ordinary
income will be recognized by the optionee in an amount equal to the difference
between the option price paid for the shares and the fair market value of the
shares if they are nonrestricted on the date of exercise; (iii) at the time of
sale of shares acquired pursuant to the exercise of a NQO, any appreciation (or
depreciation) in the value of the shares after the date of exercise will be
treated as either short term, mid-term or long term capital gain (or loss)
depending on how long the shares have been held.
No income generally will be recognized by an optionee upon the grant or
exercise of an ISO, although the excess of the fair market value on the date of
exercise over the option price is included in alternative minimum taxable income
for alternative minimum tax purposes. However, if the optionee exercises the ISO
and disposes of the shares of Common Stock in the same year and the amount
realized is less than the fair market value on the date of exercise, only the
difference between the amount realized and the adjusted basis of the stock will
be included in alternative minimum taxable income. If shares of Common Stock are
issued to an optionee pursuant to the exercise of an ISO and no disposition of
the shares is made by the optionee within two years after the date of grant or
within one year after the transfer of the shares to the optionee (the "Holding
Periods"), then, upon the sale of the shares, any amount realized in excess of
the option price will be taxed to the optionee as long term or mid-term capital
gain and any loss sustained will be a long term or mid-term capital loss.
If shares of Common Stock acquired upon the exercise of an ISO are disposed
of prior to the expiration of either Holding Period described above, the
optionee generally will recognize ordinary income in the year of disposition in
an amount equal to any excess of the fair market value of the shares at the time
of exercise (or, if less, the amount realized on the disposition of the shares
in a sale or exchange) over the option price paid for the shares. Any further
gain (or loss) realized by the optionee generally will be taxed as short term,
mid-term or long term capital gain (or loss) depending on the holding period.
No income will be recognized by a participant in connection with the grant
of an SAR. When the SAR is exercised, the participant normally will be required
to include as taxable ordinary income in the year of exercise an amount equal to
the amount of any cash and the fair market value of any nonrestricted shares of
Common Stock received pursuant to the exercise.
A recipient of restricted stock generally will be subject to tax at
ordinary income rates on the fair market value of the restricted stock reduced
by any amount paid by the recipient at such time as the shares are no longer
subject to a risk of forfeiture or restrictions on transfer for purposes of
Section 83 of the Code. Further, any dividends received with respect to
restricted stock that are subject at that time to a risk of forfeiture or
restrictions on transfer generally will be treated as compensation that is
taxable as ordinary income to the recipient. However, a recipient who so elects
under Section 83(b) of the Code within 30 days of the date of transfer of shares
will have taxable ordinary income on the date of transfer of the shares equal
21
<PAGE>
to the excess of the fair market value of the shares (determined without regard
to the risk of forfeiture or restrictions on transfer) over any purchase price
paid for the shares and any dividend received while the shares are subject to a
substantial risk of forfeiture or restrictions will be treated as dividend
income to the recipient.
No income generally will be recognized upon the grant of phantom shares or
performance units. Upon payment in respect of phantom shares or earned
performance units, the recipient generally will be required to include as
taxable ordinary income in the year of receipt an amount equal to the amount of
cash received and the fair market value of any nonrestricted shares of Common
Stock received less any amount paid for such award at the time of payment or
transfer pursuant to the fulfillment of the specified conditions or the
achievement of the performance goals.
The recipient of bonus stock generally will be subject to tax at ordinary
income rates on the fair market value of nonrestricted shares of Common Stock on
the date that such shares are transferred to the recipient, reduced by any
amount paid by the recipient, and the capital gain or loss holding period for
such shares will also commence on that date.
No income will be recognized upon the grant of a cash tax right. The
recipient of a cash tax right will be subject to tax at ordinary income rates on
the cash received pursuant to the Award.
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which the
participant performs services will be entitled to a corresponding deduction for
federal income tax purposes provided that, among other things, (i) the income
meets the test of reasonableness, is an ordinary and necessary business expense
and is properly reported by the Company, (ii) is not an "excess parachute
payment" within the meaning of Section 280G of the Code and (iii) if the $1.0
million limitation of Section 162(m) of the Code is exceeded, the compensation
qualifies as "performance based" under such section.
OTHER MATTERS
The Board of Directors of the Company knows of no business to be presented
at the annual meeting other than that stated in the notice of such meeting. In
the event, however, that other matters properly come before the meeting or any
adjournment thereof, it is intended that the persons named in the accompanying
Proxy and acting thereunder will vote in accordance with their best judgment.
Regardless of the number of shares owned by you, it is important that they
be represented at the meeting, and you are respectfully requested to sign, date
and return the accompanying Proxy at your earliest convenience.
ANNUAL REPORT
The annual report to stockholders, including consolidated financial
statements for the years ended December 31, 1997 and 1996, has been mailed to
all stockholders.
22
<PAGE>
FORM 10-K REPORT
UPON THE WRITTEN REQUEST OF EACH STOCKHOLDER SOLICITED HEREBY, ADDRESSED TO
THE COMPANY, ATTENTION: J. RANKIN TIPPINS, SECRETARY, 10500 WESTOFFICE DRIVE,
SUITE 200, HOUSTON, TEXAS 77042-5391, THE COMPANY WILL PROVIDE WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE YEAR ENDED DECEMBER 31, 1997. THE COMPANY'S ANNUAL REPORT ON FORM 10-K IS
ALSO AVAILABLE THROUGH THE U.S. SECURITIES AND EXCHANGE COMMISSION HOME PAGE AT
HTTP://WWW.SEC.GOV.
By Order of the Board of Directors.
J. RANKIN TIPPINS
GENERAL COUNSEL AND SECRETARY
March 27, 1998
23
<PAGE>
EXHIBIT A
TECH-SYM CORPORATION
1998 EQUITY INCENTIVE PLAN
Tech-Sym Corporation, a Nevada corporation (the "Company"), hereby adopts
this Tech-Sym Corporation 1998 Equity Incentive Plan (the "Plan"), effective
as of April 28, 1998, subject to stockholder approval.
I. 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.
II. DEFINITIONS. As used in this Plan:
1. "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.
2. "APPRECIATION RIGHT" means a right granted pursuant to Paragraph 5.
3. "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.
4. "BOARD" means the Board of Directors of the Company.
5. "BONUS STOCK" means unrestricted shares of Common Stock granted pursuant
to Paragraph 9.
6. "CASH TAX RIGHT" means a right granted pursuant to Paragraph 10.
7. "CHANGE IN CONTROL" shall occur if:
a) 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;
b) during any period of two consecutive years (not including any period
prior to the effective date of this Plan), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (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;
A-1
<PAGE>
c) 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
d) the stockholders of the Company adopt a plan of complete liquidation of
the Company or approve an agreement for the sale, exchange or disposition by the
Company of all or a significant portion of the Company's assets. For purposes of
this clause (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 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.
8. "CODE" means the Internal Revenue Code of 1986, as in effect from time to
time.
9. "COMMITTEE" means the Compensation Committee of the Board.
10. "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.
11. "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.
12. "DIRECTOR" means a member of the Board who is not also an employee of, or
consultant to, the Company or an Affiliate.
13. "DIRECTOR OPTION" means the right to purchase a share of Common Stock
upon exercise of an option granted pursuant to Paragraph 11.
A-2
<PAGE>
14. "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.
15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
16. "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.
17. "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.
18. "OPTION PRICE" means the purchase price per share payable on exercise of
an Option Right or Director Option.
19. "OPTION RIGHT" means the right to purchase a share of Common Stock upon
exercise of an option granted pursuant to Paragraph 4.
20. "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.
21. "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 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.
A-3
<PAGE>
22. "PERFORMANCE UNIT" means a unit equivalent to $100 (or such other value
as the Committee determines) awarded pursuant to Paragraph 8.
23. "PHANTOM SHARES" means notional shares of Common Stock awarded pursuant
to Paragraph 7.
24. "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.
25. "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.
26. "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.
27. "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.
II. 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 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.
III. 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:
1. 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.
2. 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.
3. 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
A-4
<PAGE>
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
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.
4. Successive grants may be made to the same Participant whether or not any
Option Rights previously granted to such Participant remain unexercised.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
IV. 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
A-5
<PAGE>
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:
1. 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.
2. 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.
3. 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.
4. 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).
5. 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 corporate transaction or
event or upon the Participant's termination due to death, disability or
retirement, including an involuntary termination other than for cause.
6. 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.
7. 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.
V. 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-6
<PAGE>
1. 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.
2. 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.
3. 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.
4. 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, and 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.
5. 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).
6. 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.
7. 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.
VI. 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:
1. 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.
2. 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
A-7
<PAGE>
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.
3. 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.
4. 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.
VII. 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:
1. Each grant will specify the number of Performance Units to which it
pertains.
2. 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.
3. 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.
4. 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 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.
VIII. 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.
IX. CASH TAX RIGHTS.
1. 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.
A-8
<PAGE>
2. 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.
X. DIRECTOR OPTIONS.
1. 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, a
Director Option for 10,000 shares of Common Stock.
2. 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 1998 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 2,000 shares of Common Stock.
3. Each Director Option will be subject to all of the limitations contained in
the following provisions:
a) Each Director Option shall be fully exercisable (vested) on its
Date of Grant.
b) The Option Price of each Director Option shall be the Market Value
per Share on its Date of Grant.
c) 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.
d) 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 three years from the
date of termination; provided however, that no such event shall extend the
normal expiration date of such Director Options.
A-9
<PAGE>
e) 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.
f) 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.
XI. 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:
1. 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);
2. 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
3. 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:
a) 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.
b) 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.
c) 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.
A-10
<PAGE>
d) 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.
e) 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 of the Rule, the Board may
amend the Plan to add to or modify the provisions of the Plan accordingly.
I. 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.
II. 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.
A-11
<PAGE>
III. 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.
IV. 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 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.
V. 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.
VI. ADMINISTRATION OF THE PLAN.
1. 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.
2. 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.
VII. AMENDMENTS, ETC.
1. 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.
2. 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.
TERM. This Plan shall be effective as of April 28, 1998, subject to
approval by the Company's stockholders; provided, however, no Award shall be
exercisable or payable prior to the date of such stockholders' approval. In the
event that this Plan is not approved by the stockholders of the Company within
twelve months after the date of its adoption by the Board, this Plan and all
Awards made under this Plan shall be automatically null and void. 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.
A-12
<PAGE>
PROXY TECH-SYM CORPORATION PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) WENDELL W. GAMEL, RAY F. THOMPSON and J.
RANKIN TIPPINS, or any of them, lawful attorneys and proxies of the undersigned
to vote as Proxy at the Annual Stockholders' Meeting of Tech-Sym Corporation
(herein the "Company") to be held on April 28, 1998, and any adjournment(s)
thereof, according to the number of votes owned by the undersigned as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBERED 1, 2 AND 3.
PROPOSAL 1. The Election of Directors: [ ] FOR nominees [ ] WITHHOLD AUTHORITY
listed below
(except as marked to vote for all nominees
to the contrary below) listed below
W. Creech, M. Forrest, A. Gallotta, W. Gamel, C. Kraft, C. Scribner, C. Watt
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME HERE:
- -------------------------------------------------------------------------------
PROPOSAL 2: Ratification of the appointment of Price Waterhouse LLP as the
independent accountants of the Company for the year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3: To approve the adoption of the Tech-Sym Corporation 1998 Equity
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued and to be signed on other side)
In accordance with their discretion, said Attorneys and Proxies are authorized
to vote upon such other matters or proposals not known at the time of
solicitation of this proxy which may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. ANY PRIOR PROXY IS HEREBY REVOKED.
Dated: ___________________, 1998
--------------------------------
Signature
--------------------------------
(Signature if held jointly)
Please sign exactly as your name
appears at the left. When shares
are held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by president or other
authorized person. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE, AND
RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
THANK YOU.
