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[SYMETRICS INDUSTRIES LOGO]
January 12, 1998
Dear Stockholder:
Enclosed is an Information Statement of Symetrics Industries, Inc.
("Symetrics" or the "Company") provided to you under Section 14(f), of the
Securities Exchange Act of 1934, as amended. Under Section 14(f), the Company is
required to mail an Information Statement to its stockholders at least ten days
prior to a change in a majority of the Board of Directors of the Company other
than as a result of a meeting of the stockholders of the Company. Such a change
in the Company's Board of Directors is expected to occur pursuant to an
Agreement and Plan of Merger dated December 18, 1997 (the "Merger Agreement"),
entered into by the Company, Tel-Save Holdings, Inc., a Delaware corporation
("TSH"), and TSHCo., Inc., a Delaware corporation and a wholly owned subsidiary
of TSH ("Purchaser"). Pursuant to the Merger Agreement, Purchaser has commenced
a tender offer for all of the outstanding common stock of the Company, and
intends to purchase any stock not so acquired in a merger to follow consummation
of the tender offer. If the tender offer is successfully consummated, Purchaser
will have the right to designate a majority of the Board of Directors of the
Company, on the terms more fully provided in the Merger Agreement.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION.
Sincerely,
/s/ Dudley E. Garner, Jr.
Dudley E. Garner, Jr.,
Chairman of the Board, President and
Chief Executive Officer
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================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
INFORMATION STATEMENT
PURSUANT TO SECTION 14(f) OF
THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
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SYMETRICS INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 0-4025 59-0954868
(State of Incorporation) (Commission File No.) (IRS Employer ID Number)
1615 WEST NASA BLVD., MELBOURNE, FLORIDA 32901
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER: (407) 254-1500
================================================================================
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SYMETRICS INDUSTRIES, INC.
1615 WEST NASA BLVD.
MELBOURNE, FLORIDA 32901
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about January 12, 1998 to
the holders of shares of common stock, $.25 par value ("Common Stock" or
"Shares"), of Symetrics Industries, Inc., a Florida corporation ("Symetrics" or
the "Company"), in conjunction with a previously furnished
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
of the Company. The Schedule 14D-9 relates to the offer (the "Offer"), disclosed
in a Tender Offer Statement on Schedule 14D-1 filed with the Securities and
Exchange Commission on December 22, 1997 by Tel-Save Holdings, Inc., a Delaware
corporation ("TSH"), and TSHCo., Inc., a Delaware corporation and a wholly owned
subsidiary of TSH ("Purchaser"), by Purchaser to purchase all outstanding Common
Stock at a price of $15.00 per share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated December
22, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with the Offer to Purchase, constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of December 18, 1997 (the "Merger Agreement"), among TSH, Purchaser and the
Company under which Purchaser would merge with and into the Company following
consummation of the Offer (the "Merger"), with the Company becoming a wholly
owned subsidiary of TSH. Pursuant to the Merger, each Share not acquired by
Purchaser in the Offer will be exchanged for the same consideration payable
under the Offer. The Merger will occur as soon as practicable following the
consummation of the Offer.
You are receiving this Information Statement in connection with the
possible election of persons designated by Purchaser to a majority of the seats
on the Board of Directors of the Company (the "Board" or the "Board of
Directors"). The Company has agreed under the Merger Agreement, at the request
of Purchaser, to take all action necessary to cause Purchaser's designees (the
"TSH Designees") to be elected to the Board under the circumstances described
therein. This Information Statement is required by Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-1
thereunder. See "Board of Directors."
You are urged to read this Information Statement carefully. You are not,
however, requested to take any action pertaining to the election of directors
described herein.
In accordance with the Merger Agreement, Purchaser commenced the Offer on
December 22, 1997. The Offer is scheduled to expire at midnight on Wednesday,
January 21, 1998, New York City time. Purchaser has informed the Company that
promptly after the expiration of the Offer, if all conditions of the Offer have
been satisfied or waived, it intends to purchase all Shares validly tendered
pursuant to the Offer and not withdrawn.
The information contained in this Information Statement concerning TSH and
Purchaser, and the TSH Designees, has been furnished to the Company by TSH,
Purchaser, and the TSH Designees, and the Company assumes no responsibility for
the accuracy or completeness of such information.
VOTING SECURITIES
As of December 18, 1997, there were 1,627,713 Shares of Common Stock issued
and outstanding and entitled to vote. The Company has no voting securities
outstanding, other than the Shares. Each stockholder of record of the Shares is
entitled to one vote per Share held on all matters submitted to a vote of
stockholders.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 18, 1997, certain
information with respect to all persons known by the Company to be the
beneficial owner of 5% or more of its outstanding Common Stock, each Director,
the sole Executive Officer of the Company who is listed in the Summary
Compensation Table set forth below, and all Directors and Executive Officers of
the Company as a group.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) OF CLASS
----------------------------------------------------- -------------------------- --------
Jane J. Beach........................................ 2,800 0.2
1506 39th Ave.
Vero Beach, FL 32960
Earl J. Claire....................................... 1,500 0.1
4450 C
Enterprise Court
Melbourne, FL 32934
Edwin H. Eichler..................................... 35,555(3) 2.2
7585 West Pigeon Road
Pigeon, MI 48755
Dudley E. Garner, Jr................................. 170,895(4) 10.4
1361 Meadowbrook Rd. N.E.
Palm Bay, FL 32905
Donald W. Ingram..................................... 4,444(5) 0.3
18 Sydenham St. East
Aylmer, Ontario, Canada N5H 3E7
Michael D. Jensen.................................... 44,444(6) 2.7
116 Harriman Ave. N.
Amery, WI 54001
Michael E. Terry..................................... 1,875 0.1
408 E. Strawbridge Ave.
Melbourne, FL 32901
Tel-Save Holdings, Inc............................... 145,000(7) 8.8
6805 Route 202
New Hope, PA 18938
All Directors and Executive Officers as a group (13
persons)........................................... 345,809 20.1
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(1) Except as otherwise indicated, all shares are beneficially owned and sole
voting and investment power is held by the persons named.
(2) Includes shares covered by options exercisable on or before February 16,
1998 as follows: Beach, 1,500; Claire, 1,500; Terry, 750; and all Directors
and Executive Officers as a group (13 persons), 20,250.
(3) Includes 13,333 shares owned by Pigeon Telephone Company ("PTC") and 22,222
shares owned by Agri-Valley Communications, Inc., PTC's parent company. Mr.
Eichler is president and general manager of PTC and president of Agri-Valley
Communications, Inc.
(4) Includes 170,895 shares held in the Dudley E. Garner Jr. and Sue C. Garner
Revocable Trust dated July 8, 1993.
(5) Includes 4,444 shares owned by Amtelecom Group, Inc. Mr. Ingram is the
president and CEO of Amtelecom Group, Inc.
(6) Includes 22,222 shares owned by Amery Telephone Company. Mr. Jensen is
president and general manager of Amery Telephone Company.
(7) According to a report filed with the Securities and Exchange Commission on
Schedule 13D, dated December 8, 1997, Tel-Save Holdings, Inc. owns 145,000
shares of Common Stock. In connection with the Offer, (i) the Company has
entered into a Stock Option Agreement, dated as of December 18, 1997 with
TSH (the "Stock Option Agreement"), and (ii) each of Jane J. Beach, Earl J.
Claire, Dudley E. Garner, Jr., Michael E. Terry, Edwin H. Eichler , Donald
W. Ingram, Michael D. Jensen, D. Mitchell
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Garner, Robert A. Lyons, W. Campbell McKegg, Jr., Richard E. Nichols, Jerry
Sinclair and Anton Szpendyk has entered into a Tender and Option Agreement,
dated as of December 18, 1997 on identical terms (the "Tender and Option
Agreements") with TSH. The Stock Option Agreement and the Tender and Option
Agreements are more fully described below. The amount of Shares set forth
above does not include Shares which may be acquired by TSH upon exercise of
the Stock Option Agreement or the Tender and Option Agreements.
In connection with the transactions contemplated by the Merger Agreement,
TSH has entered into Tender and Option Agreements with the directors and
executive officers of the Company (the "Management"), pursuant to which, among
other things, the Management has agreed to tender validly in the Offer, and not
withdraw, all of the Shares that they now own or subsequently may acquire (the
"Management Shares") (which, amounted to 345,809 Shares beneficially owned
(including options exercisable on or before February 16, 1998 for Shares) as of
December 18, 1997, and which constitute approximately 19% of the Shares on a
fully diluted basis). In addition, the Management agreed in the Tender and
Option Agreements that, at any meeting of the Company's stockholders (however
called), it would (i) vote the Management Shares in favor of the Merger, (ii)
vote the Management Shares against any action or agreement that would result in
a breach in any material respect of any covenant, representation or warranty or
any other obligation of the Company under the Merger Agreement, and (iii) vote
the Management Shares against any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the Merger or the
Offer. The Tender and Option Agreements provide that for a period of six months
from the date thereof TSH shall have (i) the Option to purchase the Management
Shares if a third party makes an Acquisition Proposal (as defined in the Merger
Agreement) and (ii) a right of first refusal if any Management holder intends to
sell his or her Shares to a third party. The Tender and Option Agreements shall
terminate on the first to occur of (i) the effective time of the Merger and (ii)
the termination of the Merger Agreement.
The Company, TSH and Purchaser have entered into a Stock Option Agreement
pursuant to which, in the event the Merger Agreement is terminated under certain
circumstances, including the acquisition by a person other than TSH or Purchaser
of 20% or more of the Shares, the Company shall grant to Purchaser an option to
purchase at a price of $15.00 per Share that number of Shares which would equal
19.9% of the aggregate number of Shares outstanding after giving effect to the
exercise of such option.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's stock to file initial reports of ownership and reports of changes in
ownership of the Company's stock with the Securities and Exchange Commission.
These executive officers, directors, and beneficial owners are required to
furnish the Company with copies of all Section 16(a) forms that they file. Based
solely on a review of copies of such forms furnished to the Company and written
representations from the Company's Executive Officers and Directors, the Company
notes that, for its fiscal year ended March 31, 1997, all forms were timely
filed except a Form 4, with respect to a single transaction, was inadvertently
filed late by each of Messrs. M. Garner, R. Lyons and R. Nichols, and Mr. Lyons
filed an Initial Statement of Beneficial Ownership of Securities on Form 3 late.
BOARD OF DIRECTORS
The Board of Directors currently consists of seven members of whom one
third are elected each year to serve for terms of three years. The Company's
Articles of Incorporation provide that its Board of Directors shall consist of
not less than three nor more than 15 directors and that directors shall serve
three year, staggered terms. The By-laws provide that the exact number of
directors is determined by the shareholders, or by the Board of Directors.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of such number of Shares as represents at least a majority of the outstanding
Shares (on a fully diluted basis) and from time to time thereafter, Purchaser
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as will give Purchaser
representation on the Board
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of Directors of the Company equal to the product of (a) the number of directors
on the Board of Directors of the Company (after giving effect to the appointment
of such directors) and (b) the percentage that such number of Shares so
purchased bears to the number of Shares outstanding, and the Company will, upon
request by Purchaser, promptly (i) increase the size of the Board of Directors
of the Company to the extent permitted by its Articles of Incorporation and
By-Laws (and amend its Articles of Incorporation and By-Laws, if so required, to
increase the size of the Board of Directors to allow for such additional
directors), or (ii) take all steps necessary and appropriate to secure the
resignations of such number of directors as is necessary to enable TSH's
Designees to be elected to the Board of Directors of the Company (and will hold
a Board meeting for such purpose), provided however, that prior to the effective
time of the Merger, the Board of Directors shall at all times have at least one
"Disinterested Director" (as such term is defined in Section 607.0901 of the
Florida Business Corporation Act).
TSH and Purchaser have informed the Company that they will choose the TSH
Designees from the persons listed on Schedule I to this Information Statement.
Schedule I also sets forth the present principal occupation or employment and
five-year employment history and citizenship for each of the persons who may be
designated as a director. TSH and Purchaser, and the TSH Designees have advised
the Company that none of the TSH Designees beneficially owns any securities (or
rights to acquire securities) of the Company or has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates that are required to be disclosed pursuant to the rules of the
Securities and Exchange Commission, except as may be disclosed in the Offer to
Purchase. TSH and Purchaser have informed the Company that each of the persons
listed on Schedule I to this Information Statement has consented to act as a
director, if so designated.
It is expected that the TSH Designees may assume office at any time
following consummation of the Offer, and that, upon assuming office, the TSH
Designees will thereafter constitute at least a majority of the Board. This step
will be accomplished at a meeting or by written consent of the Board providing
that the size of the Board will be increased and/or sufficient numbers of
current directors will resign to enable the TSH Designees to be elected to the
Board of Directors. Of the current directors of the Company, it is expected that
Mr. Garner will continue as a director following the purchase of Shares pursuant
to the Offer.
CONTINUING DIRECTORS
The following is certain biographical information, as of December 18, 1997,
with respect to the current member of the Board of Directors who may continue to
serve on the Board of Directors after the appointment of the TSH Designees to
constitute a majority of the Board.
Mr. Dudley E. Garner, Jr., age 62, has served as President, Chief Executive
Officer, Treasurer, and Chairman of the Board of Directors of Symetrics since
November 1982, except for a one year period from November 1988 until November
1989, when he resigned and was temporarily retired.
COMMITTEES OF THE BOARD OF DIRECTORS AND DIRECTOR COMPENSATION
The Board met five times during the fiscal year ended March 31, 1997.
Certain other actions were taken by unanimous written consent of the Board. All
directors participated in all of the meetings. The Board does not have a
standing nominating or compensation committee, or committees performing similar
functions. The Board has established an Audit Committee consisting of Ms. Beach,
Dr. Claire and Mr. Terry, who chairs the committee. The Audit Committee met one
time during the fiscal year ended March 31, 1997. The function of the Audit
Committee is to review the internal and external audit functions of the Company
and other matters that may arise from time to time and to make recommendations
to the Board with respect thereto.
Outside directors are paid for a maximum of five meetings each year at a
rate of $100 for each director's meeting they attend unless they reside
out-of-state in which case they are paid $500 plus travel expenses.
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MANAGEMENT
The following table sets forth certain information as of December 18, 1997,
as to the executive officers of the Company.
NAME AGE POSITION
- ----------------------------------- --- ----------------------------------------------------
Earl J. Claire..................... 57 President/American Digital Switching, Inc.
Dudley E. Garner, Jr............... 62 Chairman, President, Chief Executive Officer and
Treasurer
D. Mitchell Garner................. 33 Vice President/Operations
Robert A. Lyons.................... 58 Vice President
W. Campbell McKegg................. 36 Vice President/Finance
Richard E. Nichols................. 51 Vice President/ Computer Telephony Systems
Jerry Sinclair..................... 61 Vice President/Marketing and Engineering
Anton Szpendyk..................... 41 Vice President/Contract Manufacturing
All executive officers are elected by and serve at the discretion of the
Board, subject to existing employment agreements. Mr. Dudley E. Garner, Jr. is
employed pursuant to an employment agreement described below under "Employment
Contracts and Termination of Employment and Change in Control Arrangements."
For biographical information regarding Mr. Dudley E. Garner, Jr., see his
biography under "Continuing Directors" above.
Dr. Earl J. Claire, age 57, became president of the Company's wholly owned
subsidiary, American Digital Switching, Inc. ("ADS"), in September 1997. From
March 1995 until joining ADS, Dr. Claire was the executive director and chief
executive officer of the Southeastern Technology Center ("STC") in Augusta,
Georgia. STC is a non-profit corporation established to encourage and facilitate
the transfer of government-owned technology to the private sector for commercial
development. From August 1989 until joining STC, Dr. Claire was executive
director of the Center for Microelectronics Research at the University of South
Florida at Tampa, Florida.
Mr. D. Mitchell Garner has served the Company since 1986 in positions of
increasing responsibility progressing to his current position as Vice President
of Operations. Mr. Garner is the son of Dudley E. Garner, Jr.
Mr. McKegg has served the Company since 1989, starting as Manager of
Accounting and progressing to his current position as Vice President of Finance.
Mr. Lyons has been with the Company since May 1996, and manages the Defense
Products and Contract Manufacturing Divisions. Prior to joining Symetrics in May
1996, Mr. Lyons was sr. vice president for PSC, Inc. and general manager for its
subsidiary LazerData, Inc., in Orlando, Florida from March 1993 to November
1995. LazerData, Inc. is involved in automated bar code scanning equipment for
use in airline baggage handling and product inventory tracking. Previously, from
July 1987 through December 1992, Mr. Lyons was employed by defense prime
contractor Martin Marietta, Electronic Systems, of Orlando, Florida.
Mr. Nichols has been employed by the Company since June 1993 as the
director and currently the Vice President of the Computer Telephony Systems
Division. Previously, starting in 1989, Mr. Nichols was president and chief
executive officer of ACI Communications, a telephone interconnect company, and
Consolidated Engineering International, an engineering consulting firm, both
located in Melbourne, Florida.
Mr. Sinclair has been employed by the Company since June 1993, as director
of its largest contract, the Improved Data Modem, for the U.S. Government. In
January 1994, Mr. Sinclair was promoted to Vice President and currently serves
as Vice President of Marketing and Engineering. From 1989 through October 1992,
Mr. Sinclair was an executive in business development and project management for
Analex Corporation, an engineering services company, of Titusville, Florida.
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Mr. Szpendyk has been Vice President of Manufacturing for the Company's
Contract Manufacturing Division since January 1995. Previously, starting April
1993, Mr. Szpendyk was president and chief executive officer of Southern Circuit
Technologies, Inc., a Melbourne, Florida company specializing in the assembly of
electronics equipment. From 1989 to 1993 Mr. Szpendyk was vice president of
operations of M.C. Assembly and Test of Melbourne, Florida.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes annual and long term compensation awarded or
paid to, or earned by, the Company's Chief Executive Officer for services to the
Company during fiscal years ended March 31, 1997, 1996, and 1995. No other
executive officer of the Company had total compensation exceeding $100,000
during the fiscal year ended March 31, 1997 (the last completed fiscal year of
the Company).
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------------------- ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS LTIP PAYOUT COMPENSATION(2)(3)
- -------------------------------------- ---- -------- -------- ------------ ------------------
D.E. Garner, Jr....................... 1997 $167,860 $ 71,353 $ 80,000 $ 11,890
President & CEO 1996 $172,108 $120,542 -- $ 12,066
1995 $166,165 $ 84,530 -- $ 11,637
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(1) Other Annual Compensation for Mr. Garner is not included in this table, as
the amount of such compensation does not exceed the lesser of $50,000 or 10%
of total salary and bonus for Mr. Garner.
(2) All other compensation for the Company's fiscal year ended March 31, 1997
includes (i) insurance benefits in the amount of $5,428 and (ii) the
Company's contribution to the 401(k) Plan in the amount of $6,462.
(3) Mr. Garner's employment agreement is described below.
STOCK OPTION INFORMATION
The Company has in effect the Symetrics Industries, Inc. Stock Option Plan
(the "Plan"), pursuant to which options to purchase shares of the Company's
common stock may be granted to key employees, officers and directors of the
Company and its subsidiary. A total of 50,268 options were granted and 10,500
options were exercised during the Company's fiscal year ended March 31, 1997.
The Company's prior Incentive Stock Option Plan has been terminated. Mr. Dudley
Garner does not hold any options to purchase common stock of the Company. On the
effective date of the Merger, each option to purchase Shares of the Company will
be canceled by virtue of the Merger. In consideration of such cancellation, each
option holder will receive a cash payment equal to the excess of $15.00 over the
exercise price per Share of such option.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On December 15, 1997, the Company extended for an additional three year
term effective January 1, 1998, its employment agreement with Dudley E. Garner,
Jr., its President, Chief Executive Officer, and Chairman of the Board, upon the
same terms and conditions set forth in Mr. Garner's Employment Agreement dated
February 9, 1994. Mr. Garner's employment agreement provides for a current
annual base salary of $190,798. In the event of termination without cause, the
Company is required to pay Mr. Garner a minimum of $381,596 determined by the
amount equal to the greater of (i) two years base salary or (ii) the base salary
for the remaining term of the employment agreement. The agreement also provides
for a bonus under certain circumstances.
On November 1, 1983, the Company entered into a Deferred Compensation and
Salary Continuation Agreement with Dudley E. Garner, Jr. The agreement provides
that Mr. Garner will perform consulting services for the Company for a period of
three years following termination of his employment, and that he will
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not compete with the Company during his employment or during the term of his
consulting services. Pursuant to the agreement, as amended, Mr. Garner or his
estate, at their discretion, is entitled to receive a lump sum or annual
benefits equivalent to $80,000 for an additional eight years. In fiscal year
1997, Mr. Garner received $80,000 as benefits under the agreement.
Effective January 1, 1990, the Company established a profit-sharing plan,
as provided for under Section 401(k) of the Internal Revenue Code, whereby all
eligible employees are entitled to defer up to the lesser of $9,500 or fifteen
(15%) of their salary. Substantially all employees are eligible to participate
in the plan, depending on the length of service and attainment of minimum age
requirements. Under the terms of the plan, the Company contributes an amount
equal to seventy-five percent (75%) of the first six percent (6%) of
compensation each employee elects to defer. At the discretion of the Board of
Directors, the Company may make additional contributions to the plan or modify
the employer matching contribution percentages. Employer contributions to the
plan in fiscal 1997 were $70,319, including $6,462 for Mr. Garner.
Pursuant to a letter agreement dated December 18, 1997 between the Company
and TSH (the "Letter Agreement"), the Purchaser and TSH have agreed that: (i) at
the effective time of the Merger, the Company shall pay to Mr. Garner a cash
amount equal to the portion of his base salary that would have been payable
under his employment agreement for a period of eighteen months (Mr. Garner's
current annual base salary is $190,798); (ii) at TSH's request, Mr. Garner shall
remain employed by the Company for a mutually agreed upon time not to exceed six
months in consideration of his compensation payable under his employment
agreement; and (iii) at the effective time of the Merger; the Company shall pay
to Mr. Garner the amount of deferred compensation that has been duly accrued
pursuant to his Deferred Compensation and Salary Continuation Agreement dated as
of November 1, 1983, which amount shall not exceed $440,000.
Pursuant to the Letter Agreement, TSH has also agreed to cause the Company
and its subsidiary, American Digital Switching, Inc. ("ADS"), to retain the
following executive officers in the same or in a substantially comparable
position with the Company or ADS, at compensation at least commensurate with the
level of such employee's current compensation for a period of two years from the
effective time of the Merger: Earl J. Claire, Robert A. Lyons, Jr., Jerry L.
Sinclair, W. Campbell McKegg, Jr., D. Mitchell Garner, Anton Szpendyk, and
Richard E. Nichols.
TSH has further agreed to use its reasonable best efforts to negotiate
individual contractual arrangements with each of the aforementioned officers
relating to their employment with the Company on or before the effective time of
the Merger. Such individual arrangements shall supersede any arrangements set
forth in the Letter Agreement.
Pursuant to the Letter Agreement, the aforementioned officers may be
terminated for cause, as defined therein. "Cause" is defined as such employee's
(i) failure to perform substantially the employee's duties owed to the Company
after a written demand for substantial performance is delivered to such employee
which specifically identifies the nature of such nonperformance, or (ii)
engaging in dishonorable or disruptive behavior which would be reasonably
expected to harm the Company, its business or its employees. In the event such
employee is terminated without cause (which shall include relocation of such
employee required by the Company, TSH or Purchaser), such terminated employee
shall be entitled to receive in a lump sum by Company check on the day of
termination of employment, the portion of the base salary to which such employee
would have been entitled as indicated in the Letter Agreement, had such employee
remained employed by the Company until the end of the two-year period referred
to above.
TSH has also agreed that with respect to Earl J. Claire, President of ADS
and a member of the Board of Directors of the Company, Mr. Claire shall be
entitled to receive the same payment on the same terms as set forth above in the
event of his termination with cause, as he would have been entitled to receive
had such termination occurred without cause. Effective December 8, 1997, Mr.
Claire's base salary was increased to $112,008 per year as a result of his 90
day performance review.
On December 17, 1997, the Board of Directors of the Company elected to
accelerate the vesting of all outstanding stock options under such plan. All
such options will become fully vested and exercisable with respect to 100% of
the shares covered thereby immediately prior to the effective time of the
Merger.
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The following table sets forth the net value of Company options (if fully
vested) to be received by reason of the consummation of the Merger by each
director and executive officer of the Company.
NET
NAME TITLE VALUE
------------------------------------------------ ------------------------- --------
Anton Szpendyk.................................. Vice President $111,300
W. Campbell McKegg, Jr. ........................ Vice President -- Finance $ 37,200
D. Mitchell Garner.............................. Vice President $ 37,200
Earl J. Claire.................................. President -- ADS $ 59,325
Jane J. Beach................................... Director $ 11,130
Jerry L. Sinclair............................... Vice President $ 37,200
Michael E. Terry................................ Director $ 5,565
Richard E. Nichols.............................. Vice President $ 61,875
Robert A. Lyons................................. Vice President $ 45,750
CERTAIN TRANSACTIONS
In October 1996, KTA Management, Inc. ("KTA") acquired from a third party
for $1,000,000 the Company's facility at 557 North Harbor City Boulevard in
Melbourne, Florida (the "Property"). Mr. Michael E. Terry is a Director of the
Company and an officer and shareholder of KTA. The Company guaranteed a loan in
the same amount from a commercial bank to KTA, the proceeds of which were used
by KTA to purchase the Property. The Company and KTA have entered into a five
year lease agreement for the Property providing for a monthly rental of
$10,988.28 plus applicable tax. The Company has guaranteed proceeds of
$1,000,000 to KTA upon the resale of the Property, net of commissions, closing
costs and a $20,000 fee to KTA.
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SCHEDULE I
TO INFORMATION STATEMENT
INFORMATION CONCERNING THE PURCHASER DESIGNEES
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY AND CITIZENSHIP
- ------------------------------ -------------------------------------------------------------
Daniel Borislow............... Mr. Borislow, a U.S. citizen, founded TSH's predecessor in
1989 and has served as a director and as Chief Executive
Officer of TSH since its inception in 1995. Prior to founding
TSH's predecessor, Mr. Borislow formed and managed a cable
construction company.
Gary W. McCulla............... Mr. McCulla, a U.S. citizen, joined TSH's predecessor in
March 1994 and currently serves as TSH's President and
Director of Sales and Marketing. In 1991, Mr. McCulla founded
GNC and was its President until March 1994. GNC was a
privately-held independent marketing company and a partition
of TSH's predecessor. In March 1994, TSH's predecessor
acquired certain assets of GNC.
Emanuel J. DeMaio............. Mr. DeMaio, a U.S. citizen, joined TSH's predecessor in
February 1992 and currently serves as TSH's Chief Operations
Officer. From 1981 through 1992, Mr. DeMaio held various
technical and managerial positions with AT&T.
George Farley................. Mr. Farley, a U.S. citizen, became Chief Financial Officer
and Treasurer of TSH effective October 29, 1997. Mr. Farley
is formerly Group Vice President of Finance/Chief Financial
Officer of Twin County Grocers, Inc. ("Twin County"), a food
distribution company. Prior to joining Twin County in
September 1995, Mr. Farley was a partner of BDO Seidman, LLP,
an accounting firm, where he had served as a partner since
1974.
Harold First.................. Mr. First, a U.S. citizen, is a certified public accountant
and is currently a Financial Consultant. Mr. First served as
Chief Financial Officer of Icahn Holdings Corporation and
related entities from December 1990 through December 1992.
Mr. First currently serves as a director of Cadus
Pharmaceutical Corporation, Marvel Entertainment Group, Inc.,
Panaco, Inc. and Toy Biz, Inc. Mr. First has served as a
director of TSH since 1995.
Ronald R. Thoma............... Mr. Thoma, a U.S. citizen, currently serves as Executive Vice
President of Crown Cork and Seal Company, Inc., a
manufacturer of packaging products, where he has been
employed since 1955. Mr. Thoma has served as a director of
TSH since 1995.
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