SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under to Rule 14a-12
AXSYS TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies: N/A
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(2) Aggregate number of securities to which transaction
applies: N/A
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined): N/A
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(4) Proposed maximum aggregate value of transaction: N/A
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/ / 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
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[LOGO]
April 24, 2000
Dear Axsys Technologies Stockholder:
On behalf of the Board of Directors and management, I cordially invite you
to attend the Annual Meeting of Stockholders on May 22, 2000, at 10:00 a.m., at
the offices of Republic National Bank, 452 Fifth Avenue, Third Floor, New York,
New York, 10018.
The accompanying Notice of Annual Meeting and Proxy Statement describes the
proposals to be considered at the meeting.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend personally, please complete and mail the enclosed proxy
card in the return envelope.
Very truly yours,
/s/ Stephen W. Bershad
Stephen W. Bershad
Chairman of the Board
Chief Executive Officer
AXSYS TECHNOLOGIES, INC. - 910 SYLVAN AVENUE - SUITE 180 - ENGLEWOOD CLIFFS, NJ
07632
201.871.1500 - FAX 201.871.7750 - web: www.axsys.com
[LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TO BE HELD
MONDAY, MAY 22, 2000
10:00 A.M.
To the Stockholders:
The annual meeting of stockholders of Axsys Technologies, Inc. (the
"Company") will be held on May 22, 2000 at 10:00 a.m., at the offices of
Republic National Bank, 452 Fifth Avenue, Third Floor, New York, New York,
10018. The meeting will be held for the following purposes:
1. To elect four directors.
2. To approve certain amendments to the Company's Amended and Restated
Long-Term Stock Incentive Plan.
3. To ratify the selection of Arthur Andersen LLP as independent
accountants of the Company for the fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record of the Company's common stock, par value $.01
per share (the "Common Stock"), at the close of business on April 5, 2000 (the
"Record Date"), are entitled to notice of and to vote at the meeting and any
adjournments thereof. A list of such stockholders will be open for examination
by any stockholder for any purpose germane to the annual meeting, during
ordinary business hours, for ten days prior to the meeting at the offices of
Republic National Bank, 452 Fifth Avenue, New York, New York, 10018.
By Order of the Board of Directors,
/s/ Richard Morin
Richard Morin
Acting Secretary
-IMPORTANT-
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED FOR YOUR
CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE
PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY STOCKHOLDER PRESENT AT
THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON ALL
MATTERS BROUGHT BEFORE THE ANNUAL MEETING.
THANK YOU FOR ACTING PROMPTLY.
[LOGO]
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PROXY STATEMENT
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INTRODUCTION
This proxy statement, which is first being mailed to stockholders on or
about April 24, 2000, is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (sometimes referred to as the
"Board") of Axsys Technologies, Inc. (the "Company"), 910 Sylvan Avenue, Suite
180, Englewood Cliffs, New Jersey, 07632, for use at the Annual Meeting of
Stockholders to be held at 10:00 a.m., on May 22, 2000, and for all adjournments
thereof (the "Annual Meeting"), at the offices of Republic National Bank 452
Fifth Avenue, Third Floor, New York, New York, 10018.
The Board of Directors has fixed the close of business of April 5, 2000 as
the record date (the "Record Date") for determination of the stockholders of the
Company who are entitled to receive notice of and to vote at the Annual Meeting.
As of the Record Date, 3,974,429 shares of the Company's Common Stock were
outstanding and entitled to vote at the Annual Meeting. The holders of Common
Stock are entitled one vote for each share of Common Stock held on the Record
Date.
The presence, either in person or by proxy, of stockholders entitled to cast
a majority of the votes which all stockholders are entitled to cast will
constitute a quorum (the "Quorum") for the conduct of business at the Annual
Meeting. The election of each nominee for director, as set forth in Proposal
No. 1 below, the approval of the amendments to the Amended and Restated
Long-Term Stock Incentive Plan (the "Stock Incentive Plan"), as set forth in
Proposal 2 below, and the ratification of the selection of Arthur Andersen LLP
as independent accountants, as set forth in Proposal No. 3 below, each require
the affirmative vote of a majority of the votes cast by stockholders entitled to
vote, present in person or by proxy, at the Annual Meeting. Shares that are
voted "FOR", "AGAINST" or "ABSTAIN" on a matter are treated as being present at
the meeting for purposes of establishing the Quorum, but only shares voted "FOR"
or "AGAINST" are treated as votes cast with respect to such matter. Accordingly,
abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of the Quorum for the transaction of business, but will not
be counted for purposes of determining the number of votes cast with respect to
a proposal.
Stockholders are encouraged to specify the way they wish to vote their
shares by marking the appropriate boxes on the enclosed proxy. Shares
represented by proxies that are properly executed and returned will be voted as
specified on the proxy. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3 DESCRIBED IN THIS PROXY STATEMENT. A stockholder may revoke
a proxy at any time before it is actually voted by delivering written notice of
revocation to the Secretary of the
1
Company, by submitting a properly executed proxy bearing a later date, or by
attending the meeting and voting in person.
The Board of Directors does not intend to present any matters for a vote at
the meeting except the proposals described in this Proxy Statement. The persons
named in the proxy will, however, have discretionary voting authority regarding
any other business that may properly come before the meeting.
The expense of preparing, printing and mailing this Proxy Statement and the
related proxy solicitation material will be borne by the Company. Proxies are
being solicited principally by mail. Proxies may also be solicited by directors,
officers and regular employees of the Company, personally, by telephone or
similar means without additional compensation. The Company will reimburse
brokerage firms and others for their expenses in forwarding proxy solicitation
materials to the beneficial owners of the Company's Common Stock.
NOMINATION AND ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINEES OF THE PRESENT BOARD OF DIRECTORS
The Company's By-Laws provide for a Board of Directors of not less than two
directors, as determined from time to time by resolution of the Board. The Board
currently consists of four directors. As noted above, proxies will be voted,
unless authority is withheld, FOR the election as directors of the four nominees
listed below, who are the current directors, to serve until the next annual
meeting of stockholders and until their respective successors shall be duly
elected and qualified. If any nominee should become unavailable for election,
proxies will be voted, unless authority is withheld, for an alternate or
alternates, if any, designated by the Board. The Board has no reason to believe
that any nominee will become unavailable for election.
The current members of the Board, whose terms expire at the Annual Meeting,
are Stephen W. Bershad, Anthony J. Fiorelli, Jr., Eliot M. Fried and Richard V.
Howitt, all of whom are nominees.
The following table lists the name of each current member of the Board of
Directors, his age at April 5, 2000 and the period during which he has served as
a director.
DIRECTOR
NAME AGE SINCE
- ---- -------- --------
Stephen W. Bershad...................................... 58 1986
Anthony J. Fiorelli, Jr................................. 69 1986
Eliot M. Fried.......................................... 67 1994
Richard V. Howitt....................................... 56 1997
Mr. Bershad has been Chairman and Chief Executive Officer of the Company
since 1986 and was President of the Company from 1986 to August 1999. Prior
thereto, he was a Managing Director of Lehman Brothers, Inc. and its predecessor
firms, where he held a series of senior management positions in merchant banking
and mergers and acquisitions, prior to joining the Company.
2
Mr. Bershad is a director of Emcor Group, Inc., an electrical and mechanical
construction and facilities services company.
Mr. Fiorelli, Jr. has been a private investor since January 1, 1997. From
December 1985 until June 1997, he was President of Strategic Management
Consulting Services, Inc., a management consulting firm. Prior to that time,
Mr. Fiorelli was President and Chief Executive Officer of General Defense
Corporation, a diversified engineering and manufacturing company. Mr. Fiorelli
also serves as a director of the United States Merchant Marine Academy
Foundation.
For more than five years prior to his retirement in February 2000,
Mr. Fried was a Managing Director - Corporate Finance at Lehman Brothers Inc. He
is currently affiliated with Abner, Herrman and Brock, a New York based asset
management firm. Mr. Fried is a director of Blount International, Inc. a
manufacturer of industrial products and sporting equipment, and Grant
Prideco Inc., an oil field products company.
Mr. Howitt is a co-founder of Teletrac, Inc. ("Teletrac"), a subsidiary of
the Company, and has been President of Teletrac since 1970. Prior to his
full-time employment at Teletrac, he was a member of the technical staff and
Section Head of Optical Metrology at Santa Barbara Research Center.
THE BOARD AND COMMITTEES
The Board of Directors is responsible for the management and direction of
the Company and for establishing broad corporate policies. There are no family
relationships among any of the directors and executive officers of the Company.
The Board of Directors met six times during 1999. The Board of Directors has
standing Audit, Compensation and Stock Incentive Plan Committees. The Board
currently has no standing nominating committee.
The Audit Committee is comprised of Messrs. Fiorelli and Fried. The Audit
Committee is responsible for reviewing the Company's internal and external audit
procedures. The Audit Committee met twice in 1999.
The Compensation Committee is comprised of Messrs. Fiorelli and Fried. The
Compensation Committee oversees compensation policies of the Company. The
Compensation Committee met once in 1999.
The Stock Incentive Plan Committee is comprised of Messrs. Fiorelli and
Fried. The Stock Incentive Plan Committee administers and makes awards under the
Company's Stock Incentive Plan. The Stock Incentive Plan Committee met twice in
1999.
Except for Mr. Fried who was unable to attend one meeting of the Board of
Directors, all meetings of the Board and of the Committees were attended by all
directors or Committee members, as applicable. The compensation of directors is
fixed by the Board of Directors. Directors who are not employees of the Company
receive meeting fees of $2,500 for each Board meeting attended and $1,000 for
each committee meeting attended other than in connection with a Board meeting.
Directors who are employees of the Company or any subsidiary do not receive fees
or other compensation for their services as directors. All directors are
reimbursed for travel and other expenses incurred in the performance of their
duties.
3
Non-employee directors may be granted options to purchase Common Stock from
time to time for their services as directors. The options granted on March 12,
1999, had an exercise price of $18.1875 per share with an expiration date of
March 12, 2009. The options granted on July 1, 1999, had an exercise price of
$11.5625 per share with an expiration date of July 1, 2009. The options vest at
the rate of 20% per year commencing on the first anniversary of the date of
grant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF
ALL OF THE NOMINEES.
EXECUTIVE OFFICERS
The following table lists the name of each current executive officer of the
Company, his age at April 5, 2000, and his current position with the Company.
NAME AGE POSITION
- ---- -------- --------
Stephen W. Bershad..................... 58 Chairman of the Board and Chief Executive
Officer
Mark J. Bonney......................... 46 President and Chief Operating Officer
Kenneth F. Stern....................... 39 Vice President, Strategic Planning and Corporate
Development
John M. Clark.......................... 41 Vice President, Operations
John E. Hanley......................... 43 Vice President, Chief Financial Officer
Mr. Bonney joined the Company in August 1999 as President and Chief
Operating Officer. For more than five years prior thereto, Mr. Bonney held
various executive positions at Zygo Corporation, a manufacturer of metrology
systems and optical components.
Mr. Stern has been a Vice President of the Company since October 1994. From
December 1992 to October 1994, Mr. Stern was a management consultant
specializing in strategic planning and corporate development for technology
companies at Monitor Company.
Mr. Clark became Vice President of Operations of the Company in December
1999. From March 1999 to December 1999, Mr. Clark was a General Manager at Zygo
Corporation, a manufacturer of metrology systems and optical components. Prior
to March 1999 he was Vice President of Operations at CBW Automation, a robotics
manufacturer for 7 years.
Mr. Hanley joined the Company as Vice President, Chief Financial Officer in
March 1999. Prior thereto, Mr. Hanley held various positions at Lydall,
Incorporated, a manufacturer of specialty materials, for 19 years.
All of the executive officers serve at the pleasure of the Board of
Directors. Severance agreements have been entered into with certain executive
officers. See the discussion under "Agreements with Directors and Officers"
below.
4
BENEFICIAL STOCK OWNERSHIP
The following table sets forth information as of April 5, 2000 concerning
beneficial ownership of Common Stock by (i) the only persons known to the
Company to be beneficial owners of 5% or more of the outstanding Common Stock,
(ii) each director, (iii) the five executive officers of the Company who had the
highest combination of salary and bonus during 1999, and (iv) all executive
officers and directors as a group. Included in share ownership are shares that
may be acquired upon the exercise of options that are currently exercisable or
become exercisable on or before June 5, 2000 ("Exercisable Options"). All
persons have sole voting and investment power except as otherwise indicated.
SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT (1)
- ------------------------ ----------------------- -----------
Stephen W. Bershad (2) (4)........................ 1,267,411 31.8%
Mark J. Bonney (4)................................ -- --
David L. Concannon (3)............................ -- --
Raymond F. Kunzmann (5)........................... 4,000 *
Kenneth F. Stern (6).............................. 18,200 *
Richard V. Howitt (7)............................. 43,760 1.1%
Anthony J. Fiorelli, Jr. (8)...................... 18,085 *
Eliot M. Fried (9)................................ 4,200 *
All officers and directors as a group 1,355,656 33.7%
(10 persons)....................................
- ------------------------------
* Less than 1%.
(1) Applicable ownership percentage is based on 4,017,936 shares of Common
Stock, consisting of 3,974,429 shares outstanding on April 5, 2000, 39,000
shares that may be acquired upon the exercise of Exercisable Options and
4,507 shares issuable in connection with the acquisition of Teletrac. See
"Certain Transactions."
(2) Includes 14,400 shares that may be acquired upon the exercise of Exercisable
Options. Mr. Bershad owns 662,247 shares of Common Stock directly and
590,764 shares of Common Stock indirectly through SWB Holding Corporation,
of which he is the sole shareholder and Chairman. Mr. Bershad's address is
910 Sylvan Avenue, Suite 180, Englewood Cliffs, New Jersey, 07632. Excludes
3,861 shares representing his interest in the Axsys Technologies, Inc.
401(k) Retirement Plan (the "401(k) Plan").
(3) Mr. Concannon terminated his employment with the Company in January 2000.
(4) Stephen W. Bershad and Mark J. Bonney, who are executive officers of the
Company, are the sole trustees of the 401(k) Plan and may be deemed to
beneficially own shares of Common Stock held by the 401(k) Plan. Except to
the extent of his individual interest therein, each of Messrs. Bershad and
Bonney disclaims beneficial ownership of such 401(k) Plan shares.
(5) Excludes 2,495 shares representing his interest in the 401(k) Plan.
Mr. Kunzmann terminated his employment with the Company in February 2000.
(6) Includes 12,200 shares that may be acquired upon the exercise of Exercisable
Options. Excludes 1,575 shares representing his interest in the 401(k) Plan.
(7) Includes 4,000 shares that may be acquired upon the exercise of Exercisable
Options.
(8) Includes 4,200 shares that may be acquired upon the exercise of Exercisable
Options.
(9) Represents 4,200 shares that may be acquired upon the exercise of
Exercisable Options.
5
PRINCIPAL STOCKHOLDERS
The Company knows of no person who, as of April 5, 2000, beneficially owned
more than five percent of the Common Stock outstanding, except for Mr. Bershad,
and except as set forth below.
NATURE OF BENEFICIAL AMOUNT AND PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------ -------------------- -------------------
John W. Gildea (1)............................ 377,718 9.5%
Gildea Management Company
115 East Putnam Avenue
Greenwich, CT 06830
Albert Fried & Company LLC (2)................ 482,985 12.2%
40 Exchange Plaza
New York, New York 10005
Dimensional Fund Advisors (3)................. 208,200 5.2%
1299 Ocean Avenue, 11(th) Floor
Santa Monica, CA 90401
- ------------------------------
(1) On February 8, 2000, Mr. Gildea and Network Fund III, Ltd ("Network Fund")
filed an amendment to a report on Schedule 13G with the Securities and
Exchange Commission reflecting holdings of the Company's Common Stock. The
amount shown includes 352,718 shares of Common Stock beneficially owned by
Network Fund as to which shares Gildea Management Co., a Delaware
corporation, has dispositive power by virtue of an investment advisory
agreement. Mr. Gildea is the Chairman of the Board of Directors, Chief
Executive Officer, President and sole shareholder of Gildea Management Co.,
and as such may be deemed the beneficial owner of the shares owned by Gildea
Management Co. Mr. Gildea also owns 25,000 shares of Common Stock in his
individual capacity.
(2) On February 14, 2000, Albert Fried & Company LLC filed Schedule 13G with the
Securities and Exchange Commission reflecting holdings of the Company's
Common Stock.
(3) On February 3, 2000, Dimensional Fund Advisors filed Schedule 13G with the
Securities and Exchange Commission reflecting holdings of the Company's
Common Stock.
6
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation during
the years ended December 31, 1997, 1998 and 1999 for services in all capacities
awarded to, earned by or paid to the Company's Chief Executive Officer and the
other four most highly compensated executive officers of the Company during 1999
(collectively, the "Named Executives"):
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
COMPENSATION COMPENSATION
--------------------- --------------------
NUMBER OF SECURITIES ALL OTHER
BONUS UNDERLYING OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) (1) (# OF SHARES) (2) ($) (3)
- --------------------------- -------- ---------- -------- -------------------- -------------
Stephen W. Bershad......................... 1999 300,000 -- 12,500 28,372
Chairman of the Board and 1998 300,000 -- 7,500 19,716
Chief Executive Officer 1997 300,000 161,500 10,400 5,814
Mark J. Bonney............................. 1999 73,558 -- 50,000 1,585
President and Chief Operating
Officer (4)
David L. Concannon......................... 1999 175,000 -- 6,000 27,397
Vice President, General 1998 100,962 -- 5,000 3,793
Counsel and Secretary
Raymond F. Kunzmann........................ 1999 164,846 -- 9,000 16,080
Vice President, Finance and 1998 155,000 -- 4,000 14,775
Chief Financial Officer 1997 146,922 84,196 32,000 10,383
Kenneth F. Stern........................... 1999 159,846 16,000 9,000 11,489
Vice President, Strategic Planning 1998 150,000 -- 4,000 11,479
and Corporate Development 1997 138,173 79,777 32,000 9,560
- ------------------------
(1) Reflects payments under the Company's Annual Incentive Plan.
(2) Reflects awards under the Stock Incentive Plan.
(3) Reflects: (i) matching contributions under the Company's 401(k) Plan which
in 1999 totaled $4,800 for Mr. Bershad, $4,800 for Mr. Kunzmann, $4,800 for
Mr. Stern and $4,800 for Mr. Concannon; (ii) payments under the Company's
executive health insurance plan which in 1999 totaled $21,832 for
Mr. Bershad, $1,005 for Mr. Bonney, $20,857 for Mr. Concannon, $9,540 for
Mr. Kunzmann and $4,949 for Mr. Stern; and (iii) payments of premiums for
term life insurance maintained on behalf of the Named Executives which in
1999 totaled $1,740 for Mr. Bershad, $580 for Mr. Bonney, $1,740 for
Mr. Concannon, $1,740 for Mr. Kunzmann and $1,740 for Mr. Stern. The
Company's executive health insurance plan, which covers only officers,
provides for the reimbursement of deductible and coinsurance amounts and
certain medical expenses not covered under the Company's basic medical
plans.
(4) In August 1999, the Company entered into an agreement with Mr. Bonney which
provides that Mr. Bonney will receive an annual salary of $225,000, be
eligible for annual incentive compensation up to 50% of his annual base
compensation and be entitled to benefits consistent with other senior
executives of the Company.
7
STOCK OPTION GRANTS IN FISCAL 1999
The following table sets forth certain information regarding the options
granted pursuant to the Stock Incentive Plan during the year ended December 31,
1999, to the Named Executives. No options were exercised in that period by such
executive officers.
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES THROUGH PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (1) DECEMBER 31, 1999 ($/SHARE) DATE ($) (2)
- ---- ----------- ------------------ --------- ---------- -------------
Stephen W. Bershad....... 5,000 2.7% 20.01 3/12/09 52,525
7,500 4.0% 12.72 7/1/09 50,088
Mark. J. Bonney.......... 50,000 26.9% 10.50 8/30/09 339,112
David L. Concannon....... 3,000 1.6% 18.19 3/12/09 35,243
3,000 1.6% 11.56 7/1/09 22,405
Raymond F. Kunzmann...... 3,000 1.6% 18.19 3/12/09 35,243
6,000 3.2% 11.56 7/1/09 44,811
Kenneth F. Stern......... 3,000 1.6% 18.19 3/12/09 35,243
6,000 3.2% 11.56 7/1/09 44,811
- ------------------------------
(1) Options vest at the rate of 20% per year commencing on the first anniversary
of the date of grant. Vesting of such options will be accelerated in the
event of certain changes in control of the Company.
(2) The estimated grant date present value used was estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions: expected volatility of 65%; risk-free interest rate of 5.9%;
expected life of 6 years (5 years as to Mr. Bershad's options) and no
dividend yield. The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, the Black-Scholes
model requires the input of highly subjective assumptions, including the
expected stock price volatility. Because the Company's stock-based awards to
employees have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing model does not necessarily provide a reliable single measure of the
fair value of awards pursuant to the Stock Incentive Plan.
8
1999 FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the value of
unexercised stock options granted pursuant to the Stock Incentive Plan as of
December 31, 1999, held by the Named Executives; no options were exercised by
the Named Executives during the year ended December 31, 1999.
FISCAL YEAR-END OPTION VALUES
---------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE MONEY OPTIONS
UNEXERCISED OPTIONS AT FISCAL YEAR-END
AT FISCAL YEAR-END ($) (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Stephen W. Bershad............... 11,300 19,100 8,400 7,500
Mark J. Bonney................... -- 50,000 -- 50,000
David L. Concannon............... 1,000 10,000 -- 3,000
Raymond F. Kunzmann.............. 12,200 36,800 4,000 6,000
Kenneth F. Stern................. 10,200 36,800 2,000 6,000
- ------------------------------
(1) Includes only those options whose exercise prices are lower than $13.25 per
share, the closing price for the Common Stock on the Nasdaq Stock Market on
December 31, 1999.
TERMINATED PENSION PLAN
The Company had a defined benefit pension plan which was terminated on
July 31, 1989. The estimated annual benefit payable upon retirement to
Mr. Bershad, the only Named Executive participating in such plan, is $22,121
assuming retirement at age 65.
CERTAIN TRANSACTIONS
On May 30, 1997, the Company, Teletrac and Mr. Howitt and the other then
shareholders of Teletrac (collectively, the "Sellers") entered into a stock
purchase agreement pursuant to which the Sellers sold 177,937 Teletrac shares to
the Company for a purchase price of approximately $7.7 million and the issuance
of 153,000 shares of Common Stock, 53,000 of which were issued at closing. The
Company was granted the right to acquire the remaining 29,880 shares of
Teletrac's capital stock retained by the Sellers in exchange for 100,000 shares
of Common Stock issuable pursuant to the Stockholder Agreement described below.
Mr. Howitt, who was elected director of the Company following the closing of the
transaction, sold 82,053 Teletrac shares to the Company and retained 5,229
shares. The 53,000 shares of Common Stock issued at closing are subject to
registration rights.
On May 30, 1997, the Company, on the one hand, and Mr. Howitt and certain
other Teletrac shareholders (collectively, the "Minority Shareholders"), on the
other hand, entered into a stockholder agreement (the "Stockholder Agreement")
relating to the 29,880 Teletrac shares retained by the Minority Shareholders.
Pursuant to the Stockholder Agreement, the Minority Shareholders have the
option, exercisable on written notice to the Company, to elect to sell any
remaining Teletrac shares to the Company in exchange for an aggregate of 100,000
shares of the Company's Common
9
Stock (3.3467 shares of the Company's Common Stock for each Teletrac share) for
a period of three years from the date of the Stockholder Agreement. In addition,
pursuant to the terms of the Stockholder Agreement, the Company has the option,
exercisable on written notice to each Minority Shareholder, to elect to purchase
each Minority Shareholder's Teletrac shares, in exchange for an aggregate of
100,000 shares of the Company's Common Stock (3.3467 shares of the Company's
Common Stock for each Teletrac share) at any time after three years from the
date of the Stockholder Agreement or, on a prior date, upon certain other
circumstances. Such shares of Common Stock, when issued, will be entitled to
certain registration rights. As of April 5, 2000, 95,493 shares of Common Stock
have been issued to the Minority Stockholders pursuant to the Stockholder
Agreement. Under the Stockholder Agreement, the Company was appointed as proxy
to vote the Teletrac shares retained by the Minority Shareholders for the term
of the agreement expiring on May 30, 2007.
In connection with the purchase of Teletrac, Teletrac entered into an
employment agreement with Mr. Howitt dated May 30, 1997 (the "Employment
Agreement") and Mr. Howitt also executed a Non-Competition Agreement (the
"Non-Competition Agreement") in favor of the Company under which he has agreed
not to compete with or solicit customers or employees from the Company for a
period of six years expiring in June 2003.
Pursuant to the terms of the Employment Agreement, Mr. Howitt is entitled to
receive an annual salary of $225,000 and a bonus in accordance with the terms of
the Teletrac Management Incentive Compensation Plan (the "Teletrac Plan"), as
determined by the committee administering the Plan. Mr. Howitt's employment is
for a period of three years expiring June 1, 2000. Under the terms of the
Employment Agreement, Teletrac may terminate Mr. Howitt's employment upon
Mr. Howitt's death or "disability" or for "cause," and Mr. Howitt may terminate
his employment with Teletrac at any time without Teletrac's consent or for "good
reason" (as such terms are defined in the Employment Agreement). If the
Employment Agreement is terminated by Teletrac for death, "disability" or
"cause" or by Mr. Howitt without "good reason," Teletrac is obligated to pay
Mr. Howitt (or his estate) all amounts earned but not paid to such termination
date and certain other benefits accrued to such termination date pursuant to
Teletrac's benefit plans. If the Employment Agreement is terminated by the
Company other than for death, "disability" or "cause" or by Mr. Howitt with
"good reason," Mr. Howitt will be entitled to receive all amounts earned and not
paid to such date, the salary payable after such date for the balance of the
term of the Employment Agreement, 40% of any amounts payable after such
termination date pursuant to the Teletrac Plan and certain medical, dental and
insurance benefits during the balance of the term of the Employment Agreement.
Throughout his employment, Mr. Howitt is bound by a covenant not to compete with
Teletrac and not to disclose "confidential information" (as defined in the
Employment Agreement). The Teletrac Plan terminated on January 3, 2000, and no
amounts were payable under the Teletrac Plan for the year ended December 31,
1999.
10
AGREEMENTS WITH DIRECTORS AND OFFICERS
The Company has entered into indemnification agreements with its directors
and certain officers in order to induce them to continue to serve as directors
and officers of the Company, indemnifying them for any and all liabilities
incurred by them arising out of their service as directors or officers, other
than liabilities arising out of conduct which has been determined in a final
adjudication to constitute bad faith or a knowing violation of law or receipt by
such person of an improper personal benefit. The rights to indemnification under
such agreements are in addition to any rights to indemnification contained in
the Company's Certificate of Incorporation or By-Laws, which provide for
indemnification under certain circumstances. The Company has agreed to pay
Mr. Stern up to one year's base compensation and certain other benefits in the
event of termination by the Company other than for cause.
In February of 1999, in connection with its exploration of strategic
alternatives, the Company entered into severance protection agreements with
certain officers and key employees of the Company, including Stephen W. Bershad,
Kenneth F. Stern and Richard V. Howitt, which provide for certain benefits if
their employment is terminated within two years following a Change in Control
(as defined in the agreements) of the Company. In August of 1999, the Company
entered into a severance protection agreement with Mark J. Bonney in connection
with his employment with the Company. The purpose of the severance protection
agreements is to foster the continued employment of officers and employees by
allowing them to focus attention on their assigned responsibilities without
distraction in the event of circumstances arising from the possibility of a
change in control of the Company.
If a Change in Control occurs, and the executive's employment is terminated
by the Company other than for cause, death or disability or by the executive for
good reason within two years thereafter, the executive will be entitled to
receive a maximum lump sum cash payment equal to, in the case of
Messrs. Bershad, Bonney and Stern, 2.99 times the executive's "base amount" (as
defined under Section 280G of the Internal Revenue Code of 1986 and generally
consisting of the average annual compensation of the executive by the Company
for the five-year period immediately preceding the date of determination), in
the case of Mr. Howitt, 1.5 times the executive's base amount and, at the
executive's election, one year of continuation of healthcare benefits or its
cash equivalent. The severance protection agreements of each of
Messrs. Bershad, Bonney and Stern also provide that the executive will be
entitled to the foregoing severance benefits in the event he terminates his
employment, with or without good reason, at any time during the one-month period
commencing six months following a Change in Control.
Each of the severance protection agreements has a term of two years from the
date of execution and will automatically renew for a one-year period on each
anniversary thereafter, unless either party gives advance notice of non-renewal.
Notwithstanding the foregoing, if there is a Change in Control, the agreements
will not terminate prior to the expiration of twenty-four months after the date
of the Change in Control.
11
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, composed of
Messrs. Fiorelli and Fried, has furnished the following report on executive
compensation.
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies which
seek to enhance the profitability of the Company, and thus shareowner value, by
aligning closely the financial interests of the Company's senior managers with
those of its shareowners. In furtherance of these goals, the Company relies to a
large degree on annual bonus and longer-term stock incentive compensation to
attract and retain executive officers and other key employees and to motivate
them to perform to the full extent of their abilities. Both types of incentive
compensation are not guaranteed and are variable and closely tied to corporate,
business unit and individual performance in a manner designed to encourage a
sharp and continuing focus on building profitability and shareowner value. The
annual bonus and stock incentive compensation is more closely tied to the
Company's success in achieving significant financial and other
performance-oriented goals. The Committee considers the total compensation
(earned or potentially available) of each of the executive officers and the
other senior managers in establishing each element of compensation. Eligible
persons must be employed by the Company at the time bonus compensation is
awarded.
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer, the Committee took note of the Company's failure to
achieve at least a specified minimum percentage of its budgeted net income
before taxes, as well as its failure to achieve budgeted goals with respect to
return on investment and bookings. As such, the Committee determined not to
grant any award to the Chief Executive Officer under the Annual Incentive
Compensation Plan for the fiscal year ended December 31, 1999.
During each fiscal year, the Stock Incentive Plan Committee considers the
desirability of recommending that the Board of Directors grant senior
executives, including executive officers, awards under the Stock Incentive Plan,
which provides the flexibility to grant longer-term incentives in a variety of
forms, including performance units, stock options, stock appreciation rights and
restricted stock. At December 31, 1999, options covering 308,850 shares of
Common Stock had been awarded under the Stock Incentive Plan. In respect of
1999, the Stock Incentive Plan Committee determined to recommend the grant of
additional awards under the Stock Incentive Plan to Mr. Bershad in the amount of
12,500 options, Mr. Concannon in the amount of 6,000 options, Mr. Kunzmann in
the amount of 9,000 options and Mr. Stern in the amount of 9,000 options. In
addition, Mr. Bonney was granted options to purchase 50,000 shares in connection
with his commencement of employment with the Company. Each of these grants was
approved by the Stock Incentive Plan Committee and ratified and approved by the
full Board of Directors.
The Committee believes that the compensation policies the Committee has
implemented and administered have contributed to focusing senior management of
the Company on achieving significant improvements in long-term financial
performance.
12
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a deduction to any publicly held corporation for compensation paid in
excess of $1 million in a taxable year to its chief executive officer or any of
the four other most highly compensated executive officers employed by such
corporation on the last day of its taxable year. The Compensation Committee
considers the impact of Section 162(m) on the compensation of its executive
officers. The Company structured and intends to administer the stock option,
stock appreciation right and performance unit portions of the Stock Incentive
Plan with the intention that the deduction limitation will not apply to the
executive officers' compensation payable under this plan. The Compensation
Committee intends to monitor the impact of Section 162(m) and consider
structuring executive compensation arrangements so that the deduction limitation
will continue not to apply.
By: Compensation Committee
Anthony J. Fiorelli, Jr.
Eliot M. Fried
13
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Each of the Compensation Committee and Stock Incentive Plan Committee is
composed of Messrs. Fiorelli and Fried. There are no Compensation Committee
interlocks between the Company and any other entities involving the Company's
executive officers and directors who serve as executive officers of such
entities.
PROPOSAL REGARDING AMENDED AND RESTATED
LONG-TERM STOCK INCENTIVE PLAN
(PROPOSAL NO. 2)
The Company's stockholders are being asked to approve amendments to the
Company's Amended and Restated Long-Term Stock Incentive Plan, (a) to increase
the number of shares reserved for issuance thereunder by 200,000 and (b) to
extend the term of the Stock Incentive Plan by eight years to August 31, 2009.
The Stock Incentive Plan was originally adopted in August 1991. It provides
for granting Stock Options, Restricted Stock, Performance Units, Stock
Appreciation Rights ("SARs") or a combination of any of the foregoing to
directors, officers and other key employees of the Company or its subsidiaries.
Non-employee directors may be granted Stock Options under the Stock Incentive
Plan.
Following are summaries of the principal provisions and the principal
federal income tax consequences of the Stock Incentive Plan. Capitalized terms
used in this summary that are not defined herein have the meanings ascribed to
them in the Stock Incentive Plan. The following description of the Stock
Incentive Plan is not complete. Shareholders are advised to review the entire
text of the Stock Incentive Plan, as proposed to be amended, as set forth in
Exhibit A attached to this Proxy Statement.
OPERATION OF THE PLAN
DURATION OF THE PLAN. The Stock Incentive Plan expires in August 2001. As
amended, the Stock Incentive Plan would be extended for eight years until
August 31, 2009.
PLAN ADMINISTRATION. The Stock Incentive Plan is administered by the Stock
Incentive Plan Committee (the "Committee"), a committee of the Board consisting
of two or more directors. The Stock Incentive Plan states that (a) the Committee
must consist of "non-employee directors" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act") and (b) to the extent
necessary for grants and awards to qualify for favorable treatment under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Committee must be composed solely of two or more "outside directors" as that
term is used in Section 162(m) of the Code. The Committee will select those
officers and other key employees of the Company and its subsidiaries who are to
receive Awards or Options; establish rules and guidelines relating to the Stock
Incentive Plan; establish and modify terms and conditions of Awards and Options;
and take such other actions as may be necessary for proper administration of the
Stock Incentive Plan.
14
SHARES AVAILABLE FOR ISSUANCE. The Stock Incentive Plan currently
authorizes the issuance of 400,000 shares of Common Stock and, subject to
stockholder approval of the proposed 200,000 share increase in the number of
shares of Common Stock that may be issued, delivered or made subject to Awards
or Options under the Stock Incentive Plan (the "Proposed Increase"), 600,000
shares of Common Stock. As of March 31, 2000, Options for 410,450 shares of
Common Stock were outstanding under the Stock Incentive Plan, of which Options
for 10,450 shares of Common Stock are subject to approval of the Proposed
Increase. The closing price per share of the Common Stock on April 5, 2000 was
$15.00. Whenever any Option terminates or is cancelled for any reason without
having been exercised, shares of Common Stock subject to an Award or Option are
resold to the Company or forfeited, or any shares of Common Stock are delivered
to pay the exercise price of an Option, such shares will then become available
for grants of Options or Awards under the Stock Incentive Plan.
In order to comply with Section 162(m) of the Code, the Stock Incentive Plan
imposes limits on the number of Shares with respect to which Options or Awards
may be granted to any Eligible Participant in any calendar year. The Stock
Incentive Plan provides that an Eligible Participant may not be granted Awards
or Options in the aggregate in respect of more than 60,000 Shares per calendar
year.
PLAN PARTICIPANTS. The Committee may select any director, officer or other
employee to receive Awards or Options under the Stock Incentive Plan. Currently,
there are approximately 40 individuals eligible to participate in the Stock
Incentive Plan.
AWARDS AVAILABLE UNDER THE PLAN. Grants under the Stock Incentive Plan may
take the form of Options to purchase shares of Common Stock, SARs, Restricted
Stock and Performance Units (collectively, "Stock Incentives"). The Committee
will determine the provisions of Stock Incentive awards, including whether the
awards may be exercised all at once or in installments and at what prices they
may be exercised.
TERMS OF EXERCISE. Each Stock Incentive will be exercisable, in whole or in
part, prior to its cancellation or termination, by written notice to the
Company. With respect to the exercise of any Option, the Stock Incentive Plan
requires that such notice be accompanied by payment in full of the purchase
price in cash, or if acceptable to the Committee, in shares of Common Stock or a
combination of the two. The Company will be able to make loans to such
participants as the Committee, in its discretion, may determine in connection
with the exercise of Options in an amount up to the exercise price of the option
plus any applicable withholding taxes. Such loans may not exceed the Fair Market
Value, at the date of exercise, of the shares covered by the Option exercised.
TRANSFERABILITY AND TERMINATION. Stock Incentives will not be transferable
except by devise or by the laws of descent and distribution. In general, Option
and Award Agreements provide for termination upon the earlier of (i) the date
fixed by the Committee when the Stock Incentive is granted or (ii) in the event
of termination of employment other than for cause, up to 90 days after the
holder's termination of employment to the extent the Stock Incentive was then
exercisable unless determined otherwise by the Committee.
15
STOCK OPTIONS. Stock Options meeting the requirements of Section 422 of the
Code ("Incentive Stock Options") and those that do not so qualify
("Non-Qualified Options") are both available for grant under the Stock Incentive
Plan. The term of each Option will be determined by the Committee at the time of
grant. In the event of death or termination due to disability, the Stock
Incentive Plan will permit the exercise of Options, to the extent then
exercisable, for up to one year thereafter. In the event of termination for
cause, any and all Options of the terminated participant will be immediately
canceled. In general, the Options have a term of ten years, unless extended.
STOCK APPRECIATION RIGHTS. SARs may be granted by themselves or in
conjunction with all or a portion of the shares covered by an Option under the
Stock Incentive Plan. A SAR granted in conjunction with an Option will entitle
the holder to receive the excess of the Fair Market Value of a share of Common
Stock at the date of exercise over the exercise price for each surrendered
Option. Such a SAR is exercisable only at such times and to the extent that the
related Options are exercisable. Upon exercise of a SAR, the related Options
will be canceled as to the number of shares of Common Stock on which the SAR was
exercised. The Stock Incentive Plan permits the Committee to grant SARs
unrelated to Options. In such cases, the Committee will determine the terms and
conditions of SARs, including vesting and duration, at the time of grant.
PERFORMANCE UNITS. The Committee may grant Performance Units under the
Stock Incentive Plan payable in shares of Common Stock, the Fair Market Value of
such shares in cash, or a combination of the two upon the attainment of certain
performance objectives. The Committee will determine the performance objectives
as well as other terms at the time of grant. The Stock Incentive Plan provides
an exclusive list of permissible performance standards, which may be applicable
to Options and all other Awards: net earnings or net worth, return on equity or
assets, earnings per share of Common Stock, share price of Common Stock, pre-tax
profits, gross revenues, EBITDA (earnings before interest, taxes, depreciation
and amortization), dividends, market share or market penetration, or any
combination of the foregoing.
With respect to any Performance Unit intended to qualify under
Section 162(m) of the Code, the Stock Incentive Plan requires the Committee to
certify that the appropriate performance objectives were satisfied prior to the
vesting, payment, settlement or lapsing of restrictions. In the event of
termination of employment, any nonvested Performance Units will be forfeited
unless determined otherwise by the Committee.
RESTRICTED STOCK. The Committee may grant Restricted Stock, which entitles
the holder to receive shares of Common Stock subject to risk of forfeiture based
upon certain conditions determined by the Committee. The Stock Incentive Plan
provides that, subject to the restrictions of the Award Agreement, the holder of
Restricted Stock is entitled to all rights of a stockholder with respect to the
Restricted Stock, including the rights to vote and receive dividends. However,
dividends and distributions will be held in escrow where they will accumulate
interest until all restrictions are satisfied, lapsed or waived.
CHANGE OF CONTROL. The Stock Incentive Plan provides that the Committee has
discretion to determine that all Stock Incentives which have not terminated and
which are then held by any participant will become immediately exercisable upon
a change of control. With respect to awards
16
intended to qualify as performance-based compensation under Section 162(m), the
Committee must set forth and define in each applicable Option or Award Agreement
the terms or events upon which the vesting or exercisability of the Options or
Awards will accelerate. With respect to awards not intended to so qualify, the
Stock Incentive Plan permits the Committee to exercise sole discretion to
accelerate the vesting or exercisability upon the occurrence of a change of
control as defined by the Committee.
INTERPRETATION. The Stock Incentive Plan includes certain rules of
interpretation and administration. Under these rules, the Board will be
authorized to amend the Stock Incentive Plan and modify Option or Award
Agreements to ensure compliance with the reporting requirements of the Exchange
Act. In addition, the Stock Incentive Plan provides that (except in certain
instances regarding payments made upon a change of control), unless otherwise
stated in the applicable Option or Award Agreement, each Option, SAR and
Performance Unit granted to an executive officer of the Company is intended to
qualify as "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Code, and that the Committee is prohibited from
exercising any discretion which would jeopardize such treatment. Finally, these
rules will permit the Board or the Committee selectively to apply provisions
designed to satisfy the requirements of Section 162(m) of the Code only to those
individuals whose compensation is subject to such section.
CERTAIN PLAN BENEFITS
As described above, the selection of Eligible Participants who will receive
Awards or Options under the Stock Incentive Plan and the size and type of the
Awards or Options is to be determined by the Committee in its sole discretion.
In March 2000, the Committee granted 90,000 Options to certain executive
officers, directors and employees of the Company. The number of Options granted
exceeded the number of shares then available for issuance under the Stock
Incentive Plan by 10,450. The Options granted, in respect of the 10,450 shares,
are subject to stockholder approval of the Proposed Increase.
The following table sets forth information concerning Options granted in
March 2000 by the Compensation Committee to (i) certain executive officers of
the Company who had the highest combination of salary and bonus during 1999,
(ii) all current executive officers as a group (the "Executive Group"),
(iii) all current directors who are not executive officers as a group (the
"Non-Executive Group") and (iv) all employees, including all current officers
who are not executive officers, as a group (the "Non-Executive Officer Employee
Group").
17
NEW PLAN BENEFIT TABLE
NAME AND POSITION NUMBER OF SHARES
- ----------------- -----------------
Stephen W. Bershad.......................................... 6,000
Chairman of the Board and Chief Executive Officer
Mark J. Bonney.............................................. 5,000
President and Chief Operating Officer
David L. Concannon (1)...................................... --
Vice President, General Counsel and Secretary
Raymond F. Kunzmann (2)..................................... --
Vice President--Finance and Chief Financial Officer
Kenneth F. Stern............................................ 2,000
Vice President, Strategic Planning and Corporate
Development
Executive Group (5 persons)................................. 43,000
Non-Executive Director Group (3 persons).................... 6,000
Non-Executive Officer Employee Group (34 persons)........... 43,000
- ------------------------------
(1) Mr. Concannon voluntarily left the Company in January 2000.
(2) Mr. Kunzmann voluntarily left the Company in February 2000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of Awards under the Stock Incentive Plan based upon current federal
income tax laws. The Stock Incentive Plan is not qualified under Section 401(a)
of the Code. The summary is not intended to be comprehensive and, among other
things, does not describe state, local or foreign tax consequences.
STOCK OPTIONS. Generally, an Optionee will not recognize taxable income at
the time of grant of a Non-Qualified Option. Upon exercise of the Option, the
difference between the Fair Market Value of the Shares on the date of exercise
and the exercise price will be taxable as ordinary income to the Optionee. If
the Company satisfies applicable reporting requirements, the Company will
receive a commensurate tax deduction at the time of exercise, subject to the
deduction limitation under Section 162(m) of the Code (which is discussed
below).
Subject to the discussion below, an Optionee will not recognize taxable
income at the time of grant or exercise of an Incentive Stock Option, and the
Company will not be entitled to a tax deduction with respect to such grant or
exercise. However, upon exercise, the difference between the Fair Market Value
of the Shares and the exercise price is an item of tax preference subject to the
possible application of the alternative minimum tax.
Generally, if an Optionee holds Shares acquired upon the exercise of an
Incentive Stock Option for at least one year after the date of exercise and for
at least two years after the date of grant of the Incentive Stock Option, upon
disposition of such Shares by the Optionee, the difference, if any, between the
sales price of the Shares and the exercise price will be treated as long-term
capital gain
18
or loss to the Optionee. If an Optionee sells or disposes of Shares acquired
upon the exercise of an Incentive Stock Option within one year after the date of
exercise or within two years after the date of grant of the Incentive Stock
Option (a "disqualifying disposition"), then (i) any excess of the Fair Market
Value of such Shares at the time of exercise of the Option over the exercise
price of such Option will constitute ordinary income to the Optionee, (ii) any
excess of the amount realized by the Optionee on the disqualifying disposition
over the Fair Market Value of the Shares on the date of exercise will generally
be capital gain, and (iii) the Company may be entitled to a deduction equal to
the amount of such ordinary income recognized by the Optionee, subject to the
deduction limitation under Section 162(m) of the Code.
If an Option is exercised through the use of Shares previously owned by the
Optionee, such exercise generally will not be considered a taxable disposition
of the previously-owned Shares and thus no gain or loss will be recognized with
respect to such Shares upon such exercise. However, if an Incentive Stock Option
is exercised through the use of previously-owned Shares that were acquired on
the exercise of an Incentive Stock Option, and the holding period requirement
for those Shares is not satisfied at the time they are used to exercise the
Option, such use will constitute a disqualifying disposition of the
previously-owned Shares resulting in the recognition of ordinary income in the
amount described above with respect to disqualifying dispositions.
STOCK APPRECIATION RIGHTS. No income will be realized by a Grantee in
connection with the grant of a SAR. The Grantee must include in ordinary income
the amount of cash received and the Fair Market Value on the exercise date of
any Shares received upon the exercise of a SAR. If the Company satisfies
applicable reporting requirements, the Company will be entitled to a deduction,
subject to the deduction limitation under Section 162(m) of the Code, equal to
the amount included in such Grantee's income by reason of the exercise of a SAR.
RESTRICTED STOCK. A grant of Restricted Stock generally does not constitute
a taxable event for a Grantee or the Company. However, the Grantee will be
subject to tax, at ordinary income rates, when any restrictions on ownership of
the Restricted Stock lapse. If the Company satisfies applicable reporting
requirements, the Company will be entitled to take a commensurate deduction at
that time, subject to the deduction limitation under Section 162(m) of the Code.
A Grantee may elect to recognize taxable ordinary income at the time
Restricted Stock is awarded in an amount equal to the Fair Market Value of the
Shares at the time of grant, determined without regard to any forfeiture
restrictions. If such an election is made and if the Company satisfies
applicable reporting requirements, the Company will be entitled to a deduction
at that time in the same amount, subject to the deduction limitation under
Section 162(m) of the Code. Future appreciation of the Shares will be taxed at
the capital gains rate when the Shares are sold. However, if, after making such
an election, the Shares are forfeited, the Grantee will be unable to claim a
deduction.
PERFORMANCE UNITS. Generally, a Grantee will not recognize any taxable
income and the Company will not be entitled to a deduction upon the award of
Performance Units. At the time the Grantee receives a payment in respect of
Performance Units, the Fair Market Value of any Shares or the amount of any cash
received in payment for such Performance Units generally is taxable to the
19
Grantee as ordinary income and, if the Company satisfies applicable reporting
requirements, the Company will be entitled to a tax deduction, subject to the
deduction limitation under Section 162(m) of the Code.
NON-EMPLOYEE DIRECTOR AWARDS. Non-Employee Director options will receive
the same federal income tax treatment as other Non-Qualified Options.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Code
generally disallows a federal income tax deduction to any publicly held company
for compensation paid in excess of $1 million in any taxable year to the chief
executive officer or any of the other four most highly compensated executive
officers employed by the corporation on the last day of the taxable year.
Exceptions are made for, among other things, qualified "performance-based
compensation." Qualified performance-based compensation means compensation paid
solely on account of the attainment of objective performance goals, provided
that (i) performance goals are established by a compensation committee
consisting solely of two or more outside directors, (ii) the material terms of
the performance-based compensation are disclosed to and approved by shareholders
in a separate shareholder vote prior to payment and (iii) prior to payment, the
compensation committee certifies that the performance goals were attained and
other material terms were satisfied. The Stock Incentive Plan is designed to
conform with the performance-based compensation exception to Section 162 (m) of
the Internal Revenue Code.
SECTION 280G OF THE CODE. Under certain circumstances, the accelerated
vesting or exercise of Options or SARs or the accelerated lapse of restrictions
with respect to other Awards in connection with a change of control of the
Company might be deemed an "excess parachute payment" for purposes of the golden
parachute tax provisions of Section 280G of the Code. To the extent it is so
considered, the Grantee may be subject to a 20% excise tax and the Company may
be denied a tax deduction.
BOARD RECOMMENDATION
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENTS TO THE STOCK
INCENTIVE PLAN THEREBY INCREASING THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER THE STOCK INCENTIVE PLAN AND EXTENDING THE TERM OF THE STOCK INCENTIVE
PLAN TO AUGUST 31, 2009.
20
INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL NO. 3)
Subject to stockholder ratification, the Board of Directors upon the
recommendation of its Audit Committee, has selected Arthur Andersen LLP as the
independent accountants to audit the consolidated books and accounts of the
Company for the fiscal year ending December 31, 2000. A representative of Arthur
Andersen LLP will be present at the meeting and will have the opportunity to
make a statement if he so desires and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR
ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE INDICATED PERIOD.
21
STOCK PRICE PERFORMANCE GRAPH
The following graph shows the value of a $100 investment in Common Stock
from December 31, 1994 through December 31, 1999, as of the dates indicated,
compared with the value of a similar investment in the Nasdaq Stock Market
Index, the Nasdaq Non-Financial Stock Index and the S&P High Technology
Composite Index at such times. The Nasdaq Stock Market Index is a broad market
index comprising all domestic shares traded on the Nasdaq National Market and
the Nasdaq SmallCap Market. The Nasdaq Non-Financial Stock Index is an index
comprising all non-financial common shares traded on the Nasdaq National Market
and the Nasdaq SmallCap Market. The S&P High Technology Composite Index is an
index comprising common shares of companies in the aerospace/defense,
communications equipment, electronics and office equipment and supplies
industries. The Nasdaq Stock Market Index, the Nasdaq Non-Financial Stock Index
and the S&P High Technology Composite Index are calculated on a total return
basis to include the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AXSYS TECHNOLOGIES, INC. NASDAQ STOCK NASDAQ S&P 500 HIGH TECHNOLOGY
Common Stock Market Index Non-Financial Index Composite Index
12/31/94 $100 $100 $100 $100
12/30/95 $160 $141 $139 $143
12/29/96 $360 $174 $169 $202
12/31/97 $590 $213 $198 $253
12/31/98 $448 $300 $290 $436
12/31/99 $424 $542 $559 $762
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
Axsys Technologies, Inc. Common Stock.................... $100 $160 $360 $590 $448 $424
Nasdaq Stock Market Index................................ $100 $141 $174 $213 $300 $542
Nasdaq Non-Financial Index............................... $100 $139 $169 $198 $290 $559
S&P 500 High Technology Composite Index.................. $100 $143 $202 $253 $436 $762
22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company with the Securities and Exchange Commission (the
"SEC") and the Nasdaq National Market. Officers, directors and stockholders
owning more than 10% are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's knowledge, based
solely on the information furnished to the Company, all applicable
Section 16(a) filing requirements were complied with during the year ended
December 31, 1999.
STOCKHOLDER PROPOSALS FOR THE COMPANY'S
2001 ANNUAL MEETING OF STOCKHOLDERS
Under SEC rules, a stockholder who intends to present a proposal at the next
annual meeting of stockholders and who wishes the proposal to be included in the
proxy statement for that meeting must submit the proposal in writing to the
Secretary of the Company at 910 Sylvan Avenue, Suite 180, Englewood Cliffs, New
Jersey, 07632. The proposal must be received no later than December 25, 2000.
Stockholders who do not wish to follow the SEC rules in proposing a matter
for action at the next annual meeting must notify the Company in writing of the
proposal and the information required by the provisions of the Company's by-laws
dealing with stockholder proposals. The notice must be submitted in writing to
the Company generally not less than 60 days nor more than 90 days in advance of
an annual meeting. It is presently anticipated that next year's annual meeting
will be held on May 21, 2001 and, accordingly, any such stockholder proposal for
next year's annual meeting submitted to the Company on or between February 20,
2001 and March 22, 2001 will be considered filed on a timely basis. With respect
to any such proposals that are not filed timely, proxies solicited by the
Company for the year 2001 annual meeting may confer discretionary authority to
vote on any such proposals. A copy of the Company's by-laws which describes the
advanced notice procedures can be obtained from the Secretary of the Company.
The Company knows of no other matter to be brought before the meeting. If
any other matter requiring a vote of the shares should come before the meeting,
it is the intention of the persons named in the proxy to vote with respect to
any such matter in accordance "Other Matters" with their best judgment.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1999, as filed with the SEC, will be provided to stockholders
without charge upon receipt of a written request to: Investor Relations, Axsys
Technologies, Inc., 910 Sylvan Avenue, Suite 180, Englewood Cliffs, New Jersey,
07632.
April 24, 2000
23
EXHIBIT A
AMENDED AND RESTATED LONG-TERM STOCK INCENTIVE PLAN
(AS PROPOSED TO BE AMENDED)
1. PURPOSE. The Purpose of the Plan is to provide additional incentive to
those directors, officers and other employees of the Company and its
Subsidiaries whose substantial contributions are essential to the continued
growth and success of the Company's business in order to strengthen their
commitment to the Company and its Subsidiaries, to motivate such officers and
employees to faithfully and diligently perform their assigned responsibilities
and to attract and retain competent and dedicated individuals whose efforts will
result in the long-term growth and profitability of the Company. The purpose of
the Plan is also to secure for the Company and its stockholders the benefits of
the incentive inherent in increased common stock ownership by the members of the
Board who are not employees of the Company or any of its subsidiaries. To
accomplish such purposes, the Plan provides that the Company may grant Incentive
Stock Options, Nonqualified Stock Options, Restricted Stock Awards, Performance
Units or Stock Appreciation Rights.
2. DEFINITIONS. For purposes of this Plan:
(a) "Award" means a grant of Restricted Stock, Performance Units or Stock
Appreciation Rights, or any or all of them.
(b) "Award Agreement" means the written agreement between the Company and a
Grantee evidencing the grant of an Award and setting forth the terms and
conditions thereof.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means the willful failure by an Optionee or Grantee to perform
his duties with the Company or with the Subsidiary or the willful
engaging in conduct which is injurious to the Company or any Subsidiary,
monetarily or otherwise.
(e) "Change in Capitalization" means any increase, reduction, change or
exchange of Shares for a different number or kind of shares or other
securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means a committee, consisting of at least two directors of
the Company, which is appointed by the Board to administer the Plan and
to perform the functions set forth herein; provided, however, that if the
Committee consists of less than the entire Board, each member shall be a
"Non-Employee Director" within the meaning of Exchange Act Rule 16b-3;
provided, further, however, that to the extent necessary for any Option
or Award intended to qualify as performance-based compensation under
Section 162(m) of the Code to so qualify, each member of the Committee
shall be an "outside director" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder.
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(h) "Company" means Axsys Technologies, Inc., a Delaware corporation.
(i) "Disability" means the condition which results when an individual has
become permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code.
(j) "Eligible Participant" means any director, officer or employee of the
Company or a Subsidiary designated by the Committee as eligible to
receive Options or Awards subject to the conditions set forth herein.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means the fair market value of the Shares as
determined by the Committee in its sole discretion; provided, however,
that (A) if the Shares are listed on a national securities exchange,
including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of the Nasdaq Stock Market ("Nasdaq"), Fair Market Value
on any date shall be the closing sales price for the Shares (or the
closing bid, if no sales were reported) on such date as such price is
officially reported on Nasdaq or as such price is quoted in the composite
tape of transactions on such exchange; or (B) if the Shares are admitted
to quotation on Nasdaq but selling prices are not reported, Fair Market
Value on any date shall be the average of the high bid and low asked
prices on the date of determination, on the last day on which there are
quoted prices prior to the date of determination.
(m) "Grantee" means a person to whom an Award has been granted under the
Plan.
(n) "Incentive Stock Option" means an Option that is intended to satisfy the
requirements of Section 422 of the Code and is designated an Incentive
Stock Option at the time of grant.
(o) "Nonqualified Stock Option" means an Option which is designated at the
time of grant as not constituting an Incentive Stock Option.
(p) "Option" means an Incentive Stock Option, a Nonqualified Stock Option,
or either or both of them.
(q) "Option Agreement" means the written agreement between the Company and
an Optionee evidencing the grant of an Option and setting forth the terms
and conditions thereof.
(r) "Optionee" means a person to whom an Option has been granted under the
Plan.
(s) "Parent" means any corporation that, with respect to the Company, is
described in section 424(e) of the Code.
(t) "Performance Unit" means a performance unit granted under Section 9 of
the Plan
(u) "Plan" means the Vernitron Corporation Long-Term Stock Incentive Plan as
set forth in this instrument and as it may be amended from time to time.
(v) "Restricted Stock" means Shares issued or transferred to an Eligible
Participant which are subject to restrictions as provided in Section 8
hereof.
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(w) "Shares" means the common stock, par value $.01 per shares, of the
Company (including any new, additional or different stock or securities
resulting from a Change in Capitalization).
(x) "Stock Appreciation Right" means a right to receive all or some portion
of the increase in the value of shares of Common Stock as provided in
Section 7 hereof.
(y) "Subsidiary" means any corporation that, with respect to the Company, is
described in Section 424(f) of the Code.
(z) "Successor Corporation" means a corporation, or a Parent or Subsidiary
thereof, which issues or assumes a stock option in a transaction to which
Section 424(a) of the Code applies.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration
of the Plan. The Committee shall keep minutes of its meetings. A majority
of the Committee shall constitute a quorum and a majority of a quorum may
authorize any action. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith
with respect to the Plan, the Options or the Awards, and all members of
the Committee shall be fully indemnified and held harmless by the Company
with respect to any such action, determination or interpretation.
(b) Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(1) to determine those Eligible Participants to whom Options shall be
granted under the Plan and the number of Shares subject to Incentive
Stock Options and/or Nonqualified Options to be granted to each
Eligible Participant and to prescribe the terms and conditions
(which need not be identical) of each Option, including the purchase
price per share of each Option;
(2) to select those Eligible Participants to whom Awards shall be granted
under the Plan and to determine the number of Performance Units,
shares of Restricted Sock and/or Stock Appreciation Rights to be
granted pursuant to each Award, the terms and conditions of each
Award, including the restrictions or performance criteria relating
to such units, shares or rights, the purchase price per share, if
any, of Restricted Stock, the maximum value, if any, of the amount
payable pursuant to each Performance Unit and whether Stock
Appreciation Rights will be granted alone or in conjunction with an
Option;
(3) to construe and interpret the Plan and the Options and Awards granted
thereunder and to establish, amend and revoke rules and regulations
for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to
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the extent it shall deem necessary or advisable to make the Plan
fully effective, and all decisions and determinations by the
Committee in the exercise of this power shall be final and binding
upon the Company or a Subsidiary, the Optionees and the Grantees, as
the case may be;
(4) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee or Grantee without constituting a
termination of employment or service for purposes of the Plan; and
(5) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interest of the
Company with respect to the Plan.
4. STOCK SUBJECT TO PLAN.
(a) The maximum number of Shares that may be issued or transferred pursuant
to Options and Awards under this Plan is 600,000 (or the number and kind
of shares of stock or other securities which are substituted for those
Shares or to which those Shares are adjusted upon a Change in
Capitalization) and the Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares held in
the Company's treasury, or partly out of each, such number of Shares as
shall be determined by the Board.
(b) Whenever any outstanding Option or portion thereof expires, is cancelled
or is otherwise terminated (other than by exercise of the Option or any
related Stock Appreciation Right), the shares of Common Stock allocable
to the unexercised portion of such Option may again be the subject of
Options and Awards hereunder.
(c) Whenever any Shares subject to an Award or Option are resold to the
Company, or are forfeited for any reason pursuant to the terms of the
Plan, or any Shares are delivered to pay the exercise price of an Option,
any such Shares may again be the subject of Options and Awards hereunder.
(d) An executive officer may not be granted Options and Awards in the
aggregate in respect of more than 60,000 Shares per calendar year and no
Eligible Participant (other than an executive officer) may be granted
Options and Awards in the aggregate in respect of more than 60,000 Shares
per calendar year.
5. ELIGIBILITY. Subject to the provisions of the Plan, the Committee shall
have full and final authority to select those Eligible Participants who will
receive Options and/or Awards; provided, however, that no Eligible Participant
shall receive any Incentive Stock Option unless he is an employee of the Company
or a Subsidiary at the time the Incentive Stock Option is granted.
6. STOCK OPTIONS. The Committee may grant Options in accordance with the
Plan, the terms and conditions of which shall be set forth in an Option
Agreement. Each Option and Option Agreement shall be subject to the following
conditions:
(a) PURCHASE PRICE. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Option shall be set forth
in the Option Agreement.
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(b) DURATION. Options granted hereunder shall be for such term as the
Committee shall determine. The Committee may, subsequent to the granting
of any Option, extend the term thereof.
(c) NON-TRANSFERABILITY. No Option granted hereunder shall be transferable
by the Optionee to whom granted otherwise than by will or the laws of
descent and distribution, and an Option may be exercised during the life
time of such Optionee only by the Optionee or his guardian or legal
representative. The terms of such Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of the
Optionee.
(d) VESTING. Subject to Section 12(c) hereof, each Option shall be
exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Option
Agreement. To the extent not exercised, installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the Option expires. The
Committee may accelerate the exercisability of any Option or portion
thereof at any time.
(e) METHOD OF EXERCISE. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the
number of Shares to be purchased and accompanied by payment therefor and
otherwise in accordance with the Option Agreement pursuant to which the
Option was granted. The purchase price for any Shares purchased pursuant
to the exercise of an Option shall be paid in full upon such exercise in
cash, by check, or at the discretion of the Committee and upon such terms
and conditions as the Committee shall approve, by transferring Shares to
the Company. Any Shares transferred to the Company as payment of the
purchase price under an Option shall be valued at their Fair Market Value
on the day preceding the date of exercise of such Option. If requested by
the Committee, the Optionee shall deliver the Option Agreement evidencing
the Option and the Option Agreement evidencing any related Stock
Appreciation Right to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such agreement(s), to the
Optionee. No less than 100 Shares may be purchased at any time upon the
exercise of an Option unless the number of Shares so purchased
constitutes the total number of Shares then purchasable under the Option.
(f) RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered the shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of
records on the books of the Company. Thereupon, the Optionee shall have
full voting, dividend and other ownership rights with respect to such
Shares.
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(g) TERMINATION OF EMPLOYMENT. In the event that an Optionee ceases to be
employed by the Company or any Subsidiary, any outstanding Options held
by such Optionee shall, unless the Option Agreement evidencing such
Option provides otherwise, terminate as follows:
(1) If the Optionee's termination of employment is due to his death or
Disability, the Option (to the extent exercisable at the time of the
Optionee's termination of employment) shall be exercisable for a
period of one (1) year following such termination of employment, and
shall thereafter terminate;
(2) If the Optionee's termination of employment is by the Company or a
Subsidiary for Cause, the Option shall terminate on the date of the
Optionee's termination of employment;
(3) (a) If the Optionee's termination of employment is by the Company or
any Subsidiary for any other reason (including an Optionee's
ceasing to be employed by a Subsidiary as a result of the sale
of such Subsidiary or an interest in such Subsidiary), the
Option (to the extent exercisable at the time of the Optionee's
termination of employment) shall be exercisable for a period of
ninety (90) days following such termination of employment, and
shall thereafter terminate; and
(b) If the Optionee's termination of employment is by the Optionee
(other than as set forth in paragraph (1) above) the Option (to
the extent exercisable at the time of the Optionee's termination
of employment) shall be exercisable for a period of ten
(10) days following such termination of employment and shall
thereafter terminate; and
(c) If the Optionee's employment terminates due to Disability (as
described in paragraph (1) above) or under circumstances
described in paragraph (3) above, and the Optionee dies prior to
the permissible period of exercise for any outstanding Option
then held by the Optionee, the Option (to the extent exercisable
at the time of the Optionee's death) shall be exercisable for a
period of one (1) year following the Optionee's termination of
employment, and shall thereafter terminate.
Notwithstanding the foregoing, the Committee may provide, either at the
time an Option is granted or thereafter, that the Option may be exercised
after the periods provided for in this Section 6(g), but in no event
beyond the term of the Option.
(h) Subject to the terms of the Plan, the Committee may modify outstanding
Options or accept the surrender of outstanding Options (to the extent not
exercised) and grant new Options in substitution therefor.
Notwithstanding the forgoing, no modification of an Option shall alter or
impair any rights or obligations under the Option without the Optionee's
consent.
7. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, either
alone or in connection with the grant of an Option, grant Stock Appreciation
Rights in accordance with the Plan, the terms and conditions of which shall be
set forth in an Award Agreement. If granted in connection with an Option, a
Stock Appreciation Right shall cover the same Shares covered by the Option (or
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such lesser number of Shares as the Committee may determine) and shall, except
as provided in this Section 7, be subject to the same terms and conditions as
the related Option.
(a) TIME OF GRANT. A Stock Appreciation Right may be granted:
(1) at any time if unrelated to an Option; or
(2) if related to an Option, either at the time of grant, or at any time
thereafter during the term of the Option.
(b) STOCK APPRECIATION RIGHTS RELATED TO AN OPTION.
(i) PAYMENT. A Stock Appreciation Right granted in connection with an
Option shall entitle the holder thereof, upon exercise of the Stock
Appreciation Right or any portion thereof, to receive payment of an
amount computed pursuant to Section 7(b)(iii).
(ii) EXERCISE. A Stock Appreciation Right granted in connection with an
Option shall be exercisable at such time or times and only to the
extent that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be
transferable. A Stock Appreciation Right granted in connection with
an Incentive Stock Option shall be exercisable only if the Fair
Market Value of a Share on the date of exercise exceeds the purchase
price specified in the related Incentive Stock Option.
(iii) AMOUNT PAYABLE. Except as otherwise provided in an Award Agreement
(as contemplated by Section 12(c), upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (A) the
excess of the Fair Market Value of a Share on the date of exercise
of such Stock Appreciation Right over the per Share purchase price
under the related Option, by (b) the number of Shares as to which
such Stock Appreciation Right is being exercised. Notwithstanding
the foregoing, the Committee may limit in any manner the amount
payable with respect to any stock Appreciation Right by including
such a limit in the Award Agreement evidencing the Stock
Appreciation Right at the time it is granted.
(iv) TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON
EXERCISE. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the
extent of the number of Shares as to which the Stock Appreciation
Right is exercised, and upon the exercise of an Option granted in
connection with a Stock Appreciation Right or the surrender of such
Option as may be provided for in any Option Agreement, the Stock
Appreciation Right shall be cancelled to the extent of the number of
Shares as to which the Option is exercised or surrendered.
(v) CUMULATIVE EXERCISE OF STOCK APPRECIATION RIGHT AND OPTION. The
Committee may provide, either at the time a Stock Appreciation Right
is granted in connection with a Nonqualified Stock Option or
thereafter during the term of the Stock Appreciation Right, that,
upon exercise of such Option or the surrender of the Option as may
be
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provided for in any Option Agreement, the Stock Appreciation Right
shall automatically be deemed to be exercised to the extent of the
number of Shares as to which the Option is exercised or surrendered.
In such event, the Grantee shall be entitled to receive the amount
described in Section 7(b)(iii) or, if otherwise provided for in the
Award Agreement, as set forth therein, in addition to the Shares
acquired or cash received pursuant to the exercise or surrender of
the Option. The inclusion in an Award Agreement evidencing a Stock
Appreciation Right of a provision described in this
Section 7(b)(v) may be in addition to and not in lieu of the right
to exercise the Stock Appreciation Right as otherwise provided
herein and in the Award Agreement.
(c) STOCK APPRECIATION RIGHTS UNRELATED TO AN OPTION. The Committee may
grant to Eligible Participants Stock Appreciation Rights unrelated to
Options. Stock Appreciation Rights unrelated to Options shall contain
such C-6 terms and conditions as to exercisability, vesting and duration
as the Committee shall determine. Except as otherwise provided in an
Award Agreement (as contemplated by Section 1(c), the amount payable upon
exercise of such Stock Appreciation Rights shall be determined in
accordance with Section 7(b)(iii), except that "Fair Market Value of a
Share on the date of the grant of the Stock Appreciation Right" shall be
substituted for "purchase price under the related Option."
(d) METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Award Agreement evidencing the Stock
Appreciation Right being exercised and the Option Agreement evidencing
any related Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such agreement(s) to the
Grantee.
(e) FORM OF PAYMENT. Payment of the amount determined under Sections
7(b)(iii) or 7(c), shall be made, at the sole discretion of the
Committee, either (i) solely in whole shares of Common Stock in a number
determined at their Fair Market Value on the date of exercise of the
Stock Appreciation Right, (ii) solely in cash, (iii) by delivery of a
Note or other security, or (iv) in a combination of any of the foregoing.
If the Committee decides to make full payment in Shares, and the amount
payable results in a fractional Share, payment for the fractional Share
will be made in cash.
8. RESTRICTED STOCK. The Committee may grant Awards of Restricted Stock
which shall be evidenced by an Award Agreement between the Company and the
Grantee. Each Award Agreement shall contain such restrictions, terms and
conditions as the Committee may require and (without limiting the generality of
the foregoing) such Award Agreements may require that an appropriate legend be
placed on Share certificates. Awards of Restricted Stock shall be subject to the
following terms and provisions:
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(a) RIGHTS OF GRANTEE.
(i) Shares of Restricted Stock granted pursuant to an Award hereunder
shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted and the purchase price, if
any, is paid by the Grantee, provided that the Grantee has executed
an Award Agreement evidencing the Award, an escrow agreement,
appropriate stock powers and any other documents which the
Committee, in its absolute discretion, may require as a condition to
the issuance of such Shares. If a Grantee shall fail to execute the
Award Agreement evidencing a Restricted Stock Award, an escrow
agreement or appropriate blank stock powers or shall fail to pay the
purchase price, if any, for the Restricted Stock, the Award shall be
null and void. Shares issued in connection with a Restricted Stock
award shall be deposited together with the stock powers with an
escrow agent designated by the Committee. Except as restricted by
the terms of the Award Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote
the Shares and to receive all dividends or other distributions paid
or made with respect to the Shares.
(ii) If a Grantee receives any dividends or other distributions with
respect to any Shares which were awarded to him as Restricted Stock
prior to the lapsing of restrictions imposed upon such Shares, such
dividends and distributions shall be held by the escrow agent
subject to the restrictions and obligations (including forfeiture
provisions) provided by this Plan. Any such dividends and
distributions shall be held by the escrow agent for the account of
the Grantee prior to the earlier of (i) the lapsing of restrictions
imposed upon such Shares and (ii) the forfeiture of such Shares;
and, upon the lapsing of such restrictions, there shall be credited
to the Grantee interest at a rate to be determined by the Committee
on any cash dividend paid thereon for the period held by the escrow
agent pursuant hereto.
(b) NON-TRANSFERABILITY. Until any restrictions upon the Shares of
Restricted Stock award to a Grantee shall have lapsed in the manner set
forth in Section 8(c), such Shares hall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated,
nor shall they be delivered to the Grantee. Upon the termination of
employment of the Grantee, all of such Shares with respect to which
restrictions have not lapsed shall be resold by the Grantee to the
Company at the same price, if any, paid by the Grantee for such Shares or
shall be forfeited and automatically transferred to and reacquired by the
Company at no cost to the Company if no purchase price had been paid for
such Shares. The Committee may also impose such other restrictions and
conditions on the Shares as it deems appropriate.
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(c) LAPSE OF RESTRICTIONS.
(i) Restrictions upon Shares of Restricted Stock awarded hereunder shall
lapse at such time or times and on such terms, conditions and
satisfaction of performance criteria as the Committee may determine;
provided, however, that the restrictions upon such Shares shall
lapse only if the Grantee on the date of such lapse is then and has
continuously been an employee of the Company or a Subsidiary from
the date the Award was granted.
(ii) In the event of termination of employment as a result of the death
or Disability of a Grantee, the Committee, in its absolute
discretion, may determine that the restrictions upon some or all
Shares of Restricted Stock awarded to the Grantee shall thereupon
immediately lapse. The Committee may also decide at any time, in its
absolute discretion and on such terms and conditions as it deems
appropriate, to remove or modify the restrictions upon Shares of
Restricted Stock awarded hereunder.
(d) DELIVERY OF SHARES. Upon the lapse of the restrictions on Shares of
Restricted Stock awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions.
9. PERFORMANCE UNITS. The Committee may grant Performance Units, the terms
and conditions of which shall be set forth in an Award Agreement between the
Company and the Grantee. Each Performance Unit shall represent the right to
receive a Share, or a cash payment equal to the Fair Market Value thereof,
contingent upon the Company's attainment of specified performance objectives
within a specified award period. Each Award Agreement shall specify the number
of the Performance Units to which it relates, the performance objectives which
must be satisfied in order for the Performance Units to vest, and the award
period within which such objectives must be satisfied.
(a) PERFORMANCE OBJECTIVES. Performance objectives may be expressed in terms
of (a) net earnings or net worth, (b) return on equity or assets,
(c) earnings per Share, (d) Share price, (e) pre-tax profits, (f) gross
revenues, (g) EBITDA, (h) dividends, (i) market share or market
penetration or (j) any combination of the foregoing, and may be
determined before or after accounting changes, special charges, foreign
currency effects, acquisitions, divestitures or other extraordinary
events. Performance objectives may be absolute or relative and may be
expressed in terms of a progression within a specified range, with the
Grantee being entitled to all Performance Units covered by an Award only
in the event a specified maximum objective is met or surpassed but being
entitled to a percentage of such Performance Units in the event a
specified minimum objective is met or surpassed and to increasing
percentages of such Performance Units in the event specified intermediate
objectives are met or surpassed.
(b) VESTING AND FORFEITURE. A Grantee shall become vested with respect to
the Performance Units to the extent that the performance objectives set
forth in the Award Agreement are satisfied within the award period.
Subject to the terms of any Award Agreement (as contemplated by
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Section 12(c) hereof), if the specified performance objectives are not
satisfied within the award period, the Grantee's rights with respect to
the Performance Units shall be forfeited.
(c) PAYMENT OF AWARDS. Subject to the terms of any Award Agreement (as
contemplated by Section 12(c)), payments to Grantees in respect of vested
Performance Units shall be made within the later of (x) 2 weeks after the
availability of financial statements for the award period to which such
Award relates; provided, however, that prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Performance
Unit intended to qualify as performance-based compensation under
Section 162(m) of the Code, the Committee shall certify in writing that
the applicable performance objectives have been satisfied. Such payments
may be made entirely in Shares, entirely in cash, or in a combination of
Shares and cash, in each case as the Committee shall determine. Except as
provided in the terms of any Award Agreement (as contemplated by
Section 12(c)), if payment is made in the form of cash, the amount
payable in respect of any Share shall be equal to the Fair Market Value
of such Share on the last day of the award period.
(d) TERMINATION OF EMPLOYMENT. In the event that a Grantee ceases to be
employed by the Company or a Subsidiary prior to the expiration of an
award period for any reason, any nonvested Performance Units previously
awarded to said Eligible Participant shall be forfeited unless the
Committee in its discretion determines that some part or all of said
Performance Units shall continue in effect under the Plan to the extent
the applicable performance objectives are satisfied within the award
period.
(e) NON-TRANSFERABILITY. No amounts payable under this Plan in respect of
Performance Units shall be transferable by the Grantee otherwise than by
will or by the laws of descent and distribution provided that the Grantee
may designate a beneficiary to receive such amounts in the event of the
Grantee's death.
10. LOANS.
(a) The Company or any Subsidiary may make loans to a Grantee or Optionee in
connection with the purchase of Share pursuant to an Award or in
connection with the exercise of an Option, subject to the following terms
and conditions and such other terms and conditions not inconsistent with
the Plan including the rate of interest, if any, as the Committee shall
impose from time to time.
(b) No loan made under the Plan shall exceed the sum of (i) the aggregate
purchase price payable pursuant to the Option or Award with respect to
which the loan is made plus (ii) the amount of the reasonably estimated
income taxes payable by the Optionee or Grantee with respect to the
Option or Award. In no event may any such loan exceed the Fair Market
Value, at the date of exercise, of any such Shares.
(c) No loan shall have an initial term exceeding ten (10) years; provided,
that loans under the Plan shall be renewable at the discretion of the
Committee; and provided, further, that the indebtedness under each loan
shall become due and payable, as the case may be, on a date no later than
(i) one (1) year after termination of the Optionee's or Grantee's
employment
A-11
due to death, retirement or Disability, or (ii) the date of termination
of the Optionee's or Grantee's employment for any reason other than
death, retirement or Disability.
(d) Loans under the Plan may be satisfied by an Optionee or Grantee, as
determined by the Committee, in cash or, with the consent of the
Committee, in whole or in part by the transfer to the Company of Shares
whose Fair Market Value on the date of such payment is equal to the cash
amount due and payable under such loans.
(e) A loan shall be secured by a pledge of Shares with a Fair Market Value
of not less than the principal amount of the loan. After partial
repayment of a loan, pledged Shares no longer required as security may,
at the discretion of the Committee, be released to the Optionee or
Grantee.
(f) Every loan shall meet all applicable laws, regulations and rules of the
Federal Reserve Board and any other governmental agency having
jurisdiction.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the
maximum number and class of shares of stock with respect to which Options
or Awards may be granted under the Plan, the number and class of shares
or units as to which Options or Awards may be granted under the Plan, the
number and class of shares or units as to which Options or Awards have
been granted under the Plan, and the purchase price therefor, if
applicable.
(b) Any such adjustment in the Shares or other securities subject to
outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the code and only to the
extent otherwise permitted by Section 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an Award shall
be entitled to new, additional or different shares of stock, securities
or Performance Units (other than rights or warrants to purchase
securities), such new additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria
which were applicable to the Shares or units pursuant to the Award prior
to such Change in Capitalization.
12. EFFECT OF CERTAIN TRANSACTIONS. (a) In the event of (i) a merger or
consolidation in which the Company is not the surviving corporation or (ii) the
sale or disposition of all or substantially all of the Company's assets, the
Company shall have the authority to make provision in connection with such
transaction (x) for the assumption of Options or Awards theretofore granted
under the Plan, or the substitution for such Options or Awards of new options or
awards of the Successor Corporation, with appropriate adjustment as to the
number and kind of shares and the purchase price for shares thereunder, or
(y) for the surrender of outstanding Options and Awards and the payments of cash
in consideration therefor at their fair market value.
(b) Notwithstanding any other provisions of the Plan to the contrary, in the
event any Option or Award is granted to any Eligible Participant who is a
non-employee director of the
A-12
Company (a "Non-Employee Director"), the Committee, in its sole
discretion, shall determine at the time of grant, and shall set forth in
the applicable Award Agreement or Option Agreement, as the case may be,
appropriate provisions with respect to the effect of the termination of
the Non-Employee Director's service, including, without limitation, with
respect to the exercisability or vesting of each such Option or Award.
(c) Except with respect to awards intended to qualify as performance-based
compensation under Section 162(m) of the Code, the Committee may, in its
sole discretion, accelerate or agree to accelerate the exercisability or
vesting of any Option, Restricted Stock, Performance Unit or Stock
Appreciation Right granted under the Plan, or any or all of them, or any
portion thereof, at any time, for any reason, including, but not limited
to, the occurrence of a change of control (as defined by the Committee in
its sole discretion), and provide or agree to provide for payments in
consideration for the exercise of, surrender or repurchase of an Option
or Award (at such times and in such amounts determined by the Committee
in its sole discretion, which amounts, in the case of a change of
control, may be based upon the highest price per share paid in the
transaction even if greater than the Fair Market Value at the time of
exercise, surrender or repurchase). Any such determination by the
Committee may be set forth in the applicable Option Agreement, Award
Agreement or otherwise. With respect to Options and Awards intended to
qualify as performance based compensation under Section 162(m) of the
Code, the Committee shall set forth in the applicable Option Agreement or
Award Agreement any terms as to acceleration of the exercisability or
vesting of the Option or Award (including, but not limited to,
acceleration upon the occurrence of a change of control (as defined in
the applicable Option Agreement or Award Agreement)).
13. RELEASE OF FINANCIAL INFORMATION. A copy of the Company's annual
report to stockholders shall be delivered to each Optionee and Grantee at the
time such report is distributed to the Company's stockholders. Upon request, the
Company shall furnish to each Optionee and Grantee a copy of its most recent
annual report and each quarterly report and current report filed under the
Exchange Act, since the end of the Company's prior fiscal year.
14. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall terminate on
August 31, 2009 and no Option or Award may be granted thereafter. The Board may
sooner terminate or amend the Plan at any time, and from time to time and in any
manner. Except as provided in Sections 11 and 12 hereof, rights and obligations
under any Option or Award granted before any amendment of the Plan shall not be
altered or impaired by such amendment, except with the consent of the Optionee
or Grantee, as the case may be.
15. NON-EXCLUSIVITY OF THE PLAN. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
A-13
16. LIMITATION OF LIABILITY. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(a) give any person any right to be granted an Option or Award other than at
the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;
(c) limit in any way the right of the Company or a Subsidiary to terminate
the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or implied,
that the Company or any Subsidiary will employ any person in any
particular position at any particular rate of compensation or for any
particular period of time.
17. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
(a) This Plan and the rights of all persons claiming any interest hereunder
shall be construed and determined in accordance with the laws of the
State of Delaware without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by federal law.
(b) The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
(c) Except as otherwise provided in Section 15, the Board may make such
changes as may be necessary or appropriate to comply with the rules and
regulations of any government authority, or to obtain for Eligible
Participants granted Incentive Stock Options the tax benefits under the
applicable provisions of the Code and regulations promulgated thereunder.
(d) Each Option and Award is subject to the requirement that, if at any time
the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an
Option or the issuance of Shares, no Options shall be granted or payment
made or Shares issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of
any conditions as acceptable to the Committee.
(e) In the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the
extent required by the Securities Act of 1933, as amended, or regulations
thereunder,
A-14
and the Committee may require any individual receiving Shares pursuant to
the Plan, as a condition precedent to receipt of such Shares (including
upon exercise of an Option), to represent to the Company in writing that
the Shares acquired by such individual are acquired for investment only
and not with a view to distribution.
18. MISCELLANEOUS.
(a) MULTIPLE AGREEMENTS. The terms of each Option or Award may differ from
other Options or Awards granted under the Plan at the same time, or at
some other time. The Committee may also grant more than one Option or
Award to a given Eligible Participant during the term of the Plan, either
in addition to, or in substitution for, one or more Options or Awards
previously granted to that Eligible Participant. The grant of multiple
Options and/or Awards may be evidenced by a single Agreement or multiple
Agreements, as determined by the Committee.
(b) WITHHOLDING OF TAXES. The Company shall have the right to deduct from
any distribution of cash to any Optionee or Grantee an amount equal to
the federal, state and local income taxes and other amounts required by
law to be withheld with respect to any Option or Award. Notwithstanding
anything to the contrary contained herein, if any Optionee or Grantee is
entitled to receive Shares upon exercise of an Option or pursuant to an
Award, the Company shall have the right to require such Optionee or
Grantee, prior to the delivery of such Shares, to pay to the Company the
amount of any federal, state or local income taxes and other amounts
which the Company is required by law to withhold. The Plan Agreement
evidencing any Incentive Stock Options granted under this Plan shall
provide that if the Optionee makes a disqualifying disposition, within
the meaning of Section 421(b) of the Code and the regulations promulgated
thereunder, of any Share or Shares issued to him or her pursuant to his
or her exercise of the Incentive Stock Option he or she shall, within ten
(10) days of such disqualifying disposition, notify the Company thereof
and immediately deliver to the Company any amount of federal income tax
withholding required by law.
(c) DESIGNATION OF BENEFICIARY. Each Optionee and Grantee may, with the
consent of the Committee, designate a person or persons to receive in the
event of his/her death, any Option or Award or any amount payable
pursuant thereto, to which he/she would then be entitled. Such
designation will be made upon forms supplied by and delivered to the
Company and may be revoked by the Optionee or Grantee in writing. If an
Optionee or Grantee fails effectively to designate a beneficiary, then
his/her estate will be deemed to be the beneficiary.
19. INTERPRETATION.
(a) RULE 16B-3. The Plan is intended to comply with Exchange Act Rule 16b-3
and the Committee shall interpret and administer the provisions of the
Plan or any Option Agreement or Award Agreement in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan. The Board is
authorized to amend the Plan and to make any such modifications to Option
A-15
Agreements or Award Agreements to comply with Exchange Act Rule 16b-3, as
it may be amended from time to time, and to make any other such
amendments or modifications deemed necessary or appropriate to better
accomplish the purposes of the Plan in light of any amendments made to
Exchange Act Rule 16b-3.
(b) SECTION 162(M) OF THE CODE. Unless otherwise expressly stated in the
relevant Option Agreement or Award Agreement, each Option, Stock
Appreciation Right and Performance Unit granted under the Plan to an
executive officer of the Company is intended to be performance-based
compensation within the meaning of Section 162(m)(4)(c) of the Code
(except that, upon a change of control (as defined in the applicable
Option Agreement or Award Agreement), payment of an Option or Award to an
Eligible Participant who remains a "covered employee" with respect to
such payment within the meaning of Section 162(m)(3) of the Code may not
qualify as performance-based compensation). The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options and Awards if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options and Awards to fail to qualify
as performance-based compensation. Notwithstanding anything to the
contrary in the Plan, the provisions of the Plan may at any time be
bifurcated by the Board or the Committee in any manner so that certain
provisions of the Plan or any Option or Award intended (or required in
order) to satisfy the applicable requirements of Section 162(m) of the
Code are only applicable to persons whose compensation is subject to
Section 162(m).
20. POOLING TRANSACTION. Notwithstanding anything contained in the Plan or
any Option Agreement or Award Agreement to the contrary, in the event of a
change of control which is also intended to be treated as a "pooling of
interests" under generally accepted accounting principles (a "Pooling
Transaction"), the Committee shall take such actions, if any, as are
specifically recommended by an independent accounting firm retained by the
Company to the extent reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including, without limitation, (i) deferring
the vesting, exercise, payment, settlement or lapsing of restrictions with
respect to any Option or Award, (ii) providing that the payment or settlement in
respect of any Option or Award be made in the form of cash, Shares or securities
of a successor or acquirer of the Company, or a combination of the foregoing,
and (iii) providing for the extension of the term of any Option or Award to the
extent necessary to accommodate the foregoing, but not beyond the maximum term
permitted for any Option or Award.
21. EFFECTIVE DATE. The effective date of the Plan shall be the date of
its adoption by the Board, subject only to the approval by the affirmative vote
of a majority of the votes eligible to be cast at a meeting of stockholders of
the Company to be held within twelve (12) months of such adoption.
A-16
AXSYS TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS--MAY 22, 2000
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Richard Morin and John Hanley, and each of
them, the attorneys and proxies of the undersigned (each with power to act
without the other and with power of substitution) to vote, as designated on the
reverse side, all shares of Common Stock of Axsys Technologies, Inc., which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to be
held at the offices of Republic National Bank, Third Floor, 452 Fifth Avenue,
New York, New York 10018, on the 22nd day of May 2000, at 10:00 a.m., and any
adjournment thereof, on any matter properly coming before the meeting, and
specifically the matters described on the reverse side hereof:
Date:
- ------------------------------------------------------------
- ------------------------------------------------------------
(Signature of Stockholder)
- ------------------------------------------------------------
(Signature of Stockholder)
Note: Please sign your name exactly as it is shown at the left. When signing
as attorney, executor, administrator, trustee, guardian or corporate
officer, please give your full title as such. EACH joint owner is
requested to sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
- --------------------------------------------------------------------------------
(CONTINUED ON REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR PROPOSALS 1, 2 AND 3.
/X/
PLEASE MARK
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
1. TO ELECT AS DIRECTORS ALL OF THE NOMINEES TO SERVE UNTIL THE NEXT ANNUAL
MEETING OF STOCKHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS SHALL BE DULY
ELECTED AND QUALIFIED.
/ / FOR ALL NOMINEES LISTED BELOW / /
(except as marked to the contrary)
/ / WITHHOLD AUTHORITY
(to vote for all nominees listed below)
STEPHEN W. BERSHAD, ANTHONY J. FIORELLI, JR., ELIOT M. FRIED AND RICHARD V.
HOWITT.
(Instructions: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below)
- --------------------------------------------------------------------------------
2. To approve the amendments to the Company's Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
3. To ratify the selection of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, FOR THE APPROVAL OF THE
AMENDMENTS TO THE COMPANY'S STOCK INCENTIVE PLAN, FOR THE RATIFICATION OF
ACCOUNTANTS AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF. THE PROPOSALS HEREIN ARE PROPOSED BY THE BOARD OF
DIRECTORS OF THE COMPANY AND ARE NOT RELATED TO OR CONDITIONED ON EACH OTHER.