-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MqC5BunTYRohhsybnV4M0oGUNvYGey8mQ5Xj41yPXPVqZMweuRqbg/KsM70POm8i 2hNEekZYkQxLTYu7I6Mvzg== 0000889810-95-000035.txt : 19950717 0000889810-95-000035.hdr.sgml : 19950717 ACCESSION NUMBER: 0000889810-95-000035 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950629 FILED AS OF DATE: 19950530 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS INC /DE/ CENTRAL INDEX KEY: 0000110536 STANDARD INDUSTRIAL CLASSIFICATION: 8734 IRS NUMBER: 954134955 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16438 FILM NUMBER: 95543434 BUSINESS ADDRESS: STREET 1: 24007 VENTURA BLVD CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185910776 MAIL ADDRESS: STREET 1: 24007 VENTURA BLVD CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS /DE/ DATE OF NAME CHANGE: 19880218 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL TECHNICAL SERVICES INC DATE OF NAME CHANGE: 19810712 FORMER COMPANY: FORMER CONFORMED NAME: LINCOLN FUND INC DATE OF NAME CHANGE: 19760315 DEF 14A 1 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 [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 [ ] Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) National Technical Systems, Inc. ------------------------------------------------------ (Name of Registrant as Specified In Its Charter) Ralph Clements, Harry Derbyshire ------------------------------------------------------ (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: _______________________________________________________________ 2) Aggregate number of securities to which transaction applies: _______________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):_______________________________________________ 4) Proposed maximum aggregate value of transaction:_______________ 5) Total fee paid:________________________________________________ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: $250 -------------------------------------- 2) Form, Schedule or Registration Statement No.: N/A ---------------- 3) Filing Party: N/A ------------------------------------------------ 4) Date Filed: N/A -------------------------------------------------- Notes: Check numbers 104129 and 104130 were deposited on September 8, 1992 in the total amount of $250. This amount remains as available, non-restricted fees. Page 1 of 16 NATIONAL TECHNICAL SYSTEMS, INC. 24007 Ventura Boulevard Calabasas, California 91302 NOTICE OF ANNUAL MEETING To the Shareholders: Notice is hereby given that the annual meeting of shareholders of National Technical Systems, Inc., a Delaware corporation, will be held at the Company's Rye Canyon Test Facility, 25100 Rye Canyon Road, Building #202, Valencia, California 91355, on Thursday, June 29, 1995 at 11:00 A.M. for the following purposes: 1. To elect three directors for terms expiring in 1998; 2. To ratify Ernst & Young as auditors for the year ending January 31, 1996; and 3. To transact such other business and to consider and take action upon any and all matters that may properly come before the meeting or any adjournment or adjournments thereof. Management has no information of any such other matters. Pursuant to the provisions of the Company's Bylaws, the Board of Directors has fixed the close of business on May 12, 1995 as the record date for the determination of shareholders entitled to notice of and to vote at the meeting or any adjournment thereof. Financial information concerning the Company is contained in the Annual Report for the fiscal year ended January 31, 1995, which accompanies this Notice of Annual Meeting. If you are unable to attend the meeting in person, please execute the enclosed Proxy and return it in the enclosed self-addressed, stamped envelope. If you later find that you can be present, you may, if you wish, vote in person, or you may revoke your proxy or file a new proxy bearing a later date with the Secretary at any time before the voting. By Order of the Board of Directors /s/ Harold Lipchik Harold Lipchik Secretary Dated: May 30, 1995 Page 2 of 16 NATIONAL TECHNICAL SYSTEMS, INC. 24007 Ventura Boulevard, Calabasas, California 91302 _____________________ PROXY STATEMENT _____________________ SOLICITATION The accompanying Proxy is solicited by the Board of Directors for use at the annual meeting of shareholders to be held on Thursday, June 29, 1995, or any adjournment thereof. A Proxy may be revoked by the person giving it at any time before it is exercised, either by giving another proxy bearing a later date or by notifying the Secretary of the Company in writing of such revocation. The giving of the Proxy will not affect your right to vote in person if you later should find it convenient to attend the meeting. The Proxy will be voted in accordance with the specifications made. The Company will bear the entire cost of preparing, assembling, printing, and mailing this Proxy Statement, the Proxy, and any additional material which may be furnished to shareholders by the Company. Copies of solicitation material may be furnished to brokerage houses, fiduciaries, and custodians to forward to their principals, and the Company may reimburse them for their expenses in so doing. The Company does not expect to pay any commission or remuneration to any person for solicitation of proxies. This Proxy Statement and the Proxy are being mailed to shareholders on or about May 30, 1995. Solicitation may be made by mail, personal interview, telephone, and telegraph by officers and regular employees of the Company. The close of business on May 12, 1995, has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. The outstanding voting securities of the Company at May 12, 1995, consisted of 6,650,777 shares of $.01 par value Common Stock. Each share is entitled to one vote. Cumulative voting is not permitted for the election of directors or otherwise. The presence in person or by proxy of the holders of a majority of the shares entitled to vote, will constitute a quorum for the transaction of business at the Annual Meeting. A plurality of the votes cast in person or by proxy and entitled to vote at the Annual Meeting is required for the election of directors. The affirmative vote of the holders of shares of Common Stock representing a majority of votes is required for ratification of Ernst & Young as auditors for the year ending January 31, 1996 and the approval of such other matters as may properly come before the Annual Meeting. Page 3 of 16 Abstention and broker non-votes have the same effect as votes against proposals presented to shareholders other than the election of directors. They have no effect on the election of directors. A broker non-vote occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following tabulation indicates as of May 12, 1995, those persons known to the Company to be beneficial owners of five percent or more of the Company's Common Stock. Name and Address of Number of Shares Percent Beneficial Owner Beneficially Owned of Class - - - ------------------- ---------------------- -------- Aaron Cohen.................... 1,124,771 16.9% P.O. Box 1960 Fontana, California 92334 Jack Lin....................... 1,120,718 16.8% 24007 Ventura Boulevard Calabasas, California 91302 Arthur Edelstein............... 345,534 5.2% 24007 Ventura Boulevard Calabasas, California 91302 Luis A. and Jacqueline E. Hernandez................. 330,400 5.0% 3069 Misty Harbor Las Vegas, Nevada 89117 [FN] Includes shares covered by options that are exercisable within 60 days as follows: Edelstein, 27,659 and Cohen 5,000, and shares in the National Technical Systems Employee Stock Ownership Plan, as follows: Lin 6,437 and Edelstein 4,662. Pursuant to an Interlocutory Judgment of Dissolution of Marriage between Jack Lin and Lilyan P. Lin dated August 9, 1978, Mr. Lin has Ms. Lin's Proxy to vote all shares of the Company owned by the latter, so long as certain conditions set forth in the Judgment continue to be met by Mr. Lin. Mr. Lin and Ms. Lin also have cross rights of first refusal to purchase the other's shares when proposed to be sold in a private transaction. Mr. Lin's 1,120,718 shares includes Mrs. Lin's 77,042 shares of the Common Stock of the Company. Page 4 of 16 This information is based on a Schedule 13D filed with the Securities and Exchange Commission on or about July 13, 1994. To the knowledge of management, no other person owns beneficially as much as 5% of the outstanding stock of the Company. The tabulation under "Nomination and Election of Directors" indicates the number of shares owned beneficially by each nominee as of the record date. The directors and executive officers of the Company, as a group (10 persons), owned beneficially (including shares owned by Lilyan P. Lin and subject to Mr. Lin's proxy) as of the record date a total of 1,782,143 shares, or 26.8% of the outstanding stock. ELECTION OF DIRECTORS The Board of Directors of the Company currently consists of nine members, who are divided into three classes. Directors are elected for terms of three years. At the Annual Meeting, the term of office of the Class I directors will expire and three directors will be elected to serve for a term of three years and until their respective successors are elected. The Board intends to cause the nomination of the three persons named below for election as directors. The directors will be elected by the holders of the Common Stock. The persons named as proxy holders in the accompanying form of proxy have advised the Company that they intend at the Annual Meeting to vote the shares covered by proxies held by them for the election of the nominees named below. If any or all of such nominees should for any reason become unable to serve or for good cause will not serve, the persons named in the accompanying form of proxy may vote for the election of such substitute nominees, and for such lawful term or terms, as the Board may propose. The accompanying form of proxy contains a discre- tionary grant of authority with respect to this matter. The Board of Directors has no reason to believe the nominees named, or any of them, will be unable to serve if elected. No arrangement or understanding exists between any of the nominees and any other person or persons pursuant to which any nominee was or is to be selected as a director or nominee. The names of the nominees for Class II director and the Class I and Class III directors who will continue in office after the Annual Meeting until the expiration of their respective terms, together with certain information regarding them, including the amount of Common Stock beneficially owned by them, are as follows: Page 5 of 16
Common Stock of the Company Year Beneficially Term owned as of Director Will May 12, 1995 Percent Name Age Position or Office Since Expire of Class - - - ---- --- ------------------ -------- ------ -------------- -------- Nominees for Class II Directors - - - ------------------ Ralph Clements 62 President of 1975 1998 1,134 Clements and Associates; Director Harry Derbyshire 69 Chairman of the 1983 1998 0 Board of J.C. Carter Company, Inc.; Director Arthur Edelstein 57 Executive Vice 1980 1998 345,534 5.2% President of the Company; Director Directors Continuing in Office - - - -------------------- Class I Directors - - - ----------------- Richard Short 52 Senior Vice 1988 1997 90,383 1.4% President of the Company; Director William Traw 56 Senior Vice 1988 1997 51,308 President of the Company; Director William McGinnis 37 Vice President of 1994 1997 13,218 the Company Class III Directors - - - ------------------- Aloysius Casey 63 Chairman of the 1988 1996 18,036 Board of the Company Jack Lin 62 President and Chief 1975 1996 1,120,718 16.8% Executive Officer of the Company; Director Robert Lin 37 Founder and 1988 1996 103,952 1.6% President of the Trilin Group, Inc.; Director
Page 6 of 16 [FN] If elected at the annual meeting Less than 1% Includes shares covered by options exercisable within 60 days, as follows: Clements 625; R. Lin, 9,895; Edelstein, 27,659; Short, 33,482; Traw 11,923; McGinnis, 13,218; and J. Lin, 12,500. Includes shares in the National Technical Systems Employee Stock Ownership Plan, as follows: J. Lin, 6,437, Traw, 3,045; Edelstein, 4,662; Short, 2,905; and McGinnis, 1,803. Does not include 11,238 shares owned by Mr. J. Lin's family other than shares owned by R. Lin. Mr. Lin disclaims any beneficial interest in shares owned by his respective family members. Includes 77,042 shares owned by Mr. J. Lin's former wife, the voting rights of which are subject to Mr. Lin's proxy. See "Security Ownership of Certain Beneficial Owners." Mr. Clements has been President of Clements and Associates, a Sherman Oaks, California management consulting firm, for more than five years. Mr. Derbyshire has since January 1987 been Chairman of the Board of J. C. Carter Company, Inc., a manufacturer of aerospace products. Prior to his retirement in 1985, Mr. Derbyshire was Executive Vice President, Chief Financial Officer and a director of Whittaker Corporation, a Los Angeles, California diversified health sciences company with additional business activities in the metals, marine, technology and chemical fields. Mr. Derbyshire is also a director of Western Waste Industries, a waste management services company. Mr. Edelstein is Executive Vice President of the Company and has been associated with the Company and it predecessors continuously since 1961. Mr. Short is a Senior Vice President of the Company and has been associated with the Company and its predecessors continuously since 1961. Mr. Traw is a Senior Vice President of the Company and has been associated with the Company and its predecessors continuously since 1963. Mr. McGinnis is a Vice President of Company and has been associated with the Company since 1980. General Casey retired from the United States Air Force on July 1, 1988 after a 34-year career. At the time of his retirement he was the Commander of the Space Division, Air Force Systems Command, Los Angeles Air Force Base, California. Page 7 of 16 Mr. Jack Lin is a founder and President of the Company and has been associated with the Company and its predecessors continuously since 1961. Mr. Robert I. Lin is a founder and President, of Trilin Group, Inc., a privately-owned manufacturer and distributor of products for the advertising specialty and premium markets. Robert Lin is the son of Jack Lin. The Board of Directors of the Company held four regular and special meetings during the last fiscal year. No Director attended fewer than 75% of the meetings of the Board or of the Committees of which he was a member. The Company's Board of Directors has an Audit Committee which consists of Messrs. Casey, Clements and Derbyshire. The function of the Audit Committee is to meet with the independent certified public accountants engaged by the Company to review (a) the scope and findings of the annual audit, (b) accounting policies and procedures and the Company's financial reports, and (c) the internal controls employed by the Company. The Audit Committee held two meetings during the year. The Compensation Committee of the Board of Directors considers and makes recommendations to the Board of Directors on salaries, bonuses, stock options and other forms of compensation for the Company's executive officers. The Compensation Committee, which consists of Messrs. Clements and Derbyshire, met twice during the year. The Stock Option Committee, which consists of Messrs. Casey and Derbyshire, met twice during the year. The Nominating Committee which consists of Messrs. Derbyshire and J. Lin selects nominees for election to the Board of Directors. The Nominating Committee met once during the year. Directors, other than employee-directors who receive no additional compensation for serving on the Board, receive an annual retainer of $10,000. In his capacity as Chairman of the Board, Mr. Casey is paid an annual fee of $36,000. Directors also are reimbursed for expenses which they reasonably incur in the performance of their duties as directors of the Company. During the fiscal year ended January 31, 1995, a total of $4,800 was paid to General Casey for consulting services. STOCK OPTIONS AND PENSION PLANS The Company has a 1981 employee incentive stock option plan ("1981 Plan"), a 1982 non-qualified stock option plan ("1982 Plan"), a 1988 stock option plan (the "1988 Plan") and a 1994 stock option plan (the "1994 Plan"). The 1981, 1982 and 1988 Plans have expired and no new options may be granted thereunder. As of January 31, 1995, there were outstanding options covering 33,253 shares in the 1981 Plan, 4,041 shares in the 1992 Plan, 239,509 in the 1988 Plan and 256,063 shares in the 1994 Plan, which were unexercised. Page 8 of 16 Outstanding options under all plans are exercisable at 100% or more of fair market (as determined by the Board of Directors) on the date of grant. The options are contingent upon continued employment and are exercisable, unless otherwise specified, on a cumulative basis of one- fourth (or more for the 1982 Plan) of the total shares each year, commencing one year from the date of grant. Options expire five to seven years from the date of grant. At January 31, 1995, outstanding options under all four plans represented 532,866 shares and reflected an average price per share of $2.29 (range from $1.00 to $4.125), of which 223,183 were exercisable. During the year ended January 31, 1995, options representing 76,484 shares were exercised under these plans at an average price of $1.15 (range from $1.00 to $1.16) per share. The Company has an employee stock ownership plan covering all employees. Contributions by the Company are at the discretion of the Board of Directors. The Company did not make a contribution in 1995, 1994 or 1993. EXECUTIVE OFFICERS OF THE COMPANY The only officer of the Company who is not a director is Mr. Lloyd Blonder who is Senior Vice President and Chief Financial Officer. Mr. Blonder is 55 years of age and has been associated with the Company since 1983. EXECUTIVE COMPENSATION The following information is furnished with respect to the Chief Executive Officer and the other most highly compensated executive officers of the Company whose aggregate direct remuneration from the Company during the fiscal year ended January 31, 1995 exceeded $100,000. Page 9 of 16 SUMMARY COMPENSATION TABLE
Long Term Compensation ---------------------- Annual Compensation Awards --------------------- ---------------------- All Other Annual Other Name and Compensation Restricted Compen- Principal Annual ($) Stock Awards Options/ sation Position Year Salary ($) Bonus ($) ($) SARs (#) ($) - - - ------------- ------ ---------- --------- ------------ ----------- -------- ------ Jack Lin 1995 289,170 0 0 0 0 0 President and Chief 1994 261,564 8,000 12,115 0 0 0 Executive Officer 1993 228,173 0 33,317 0 0 0 Arthur Edelstein 1995 160,429 0 0 0 0 0 Executive Vice 1994 166,417 4,500 0 0 0 0 President 1993 147,964 0 0 0 0 0 Richard Short 1995 110,000 0 0 0 0 0 Senior Vice President 1994 108,010 4,500 0 0 0 0 1993 93,004 0 0 0 0 0 William Traw 1995 110,000 0 0 0 0 0 Senior Vice President 1994 103,858 4,500 0 0 0 0 1993 86,515 0 0 0 0 0 Lloyd Blonder 1995 105,000 0 0 0 0 0 Senior Vice President 1994 102,688 4,500 0 0 0 0 and Chief Financial 1993 86,515 0 0 0 0 0 Officer
[FN] Fair market value of 10,202 shares of restricted National Technical Systems, Inc. common stock at a value of $12,115 taken in lieu of cash compensation. Fair market value of 27,827 shares of restricted National Technical Systems, Inc. common stock at a value of $33,317 taken in lieu of cash compensation. Does not include perquisites or personal benefits which are the lesser of $50,000 or 10% of total annual salary and bonus reported for the named Executive Officer. Page 10 of 16 REPORT OF THE COMPENSATION COMMITTEE The Compensation Committee of the Board of Directors (the "Compensation Committee") is composed of the two independent, non-employee directors named below. See the description of the Compensation Committee functions above. COMPENSATION POLICIES. Policies governing the compensation of the Company's executives are established and monitored by the Compensation Committee. All decisions relating to the compensation of the Company's executives during fiscal year 1995 were made by the Compensation Committee. In administering its compensation program, the Compensation Committee follows its belief that compensation should reflect the value created for shareholders while supporting the Company's strategic goals. In doing so, the compensation programs reflect the following themes: 1. The Company's compensation programs should be effective in attracting, motivating, and retaining key executives; 2. There should be a correlation among the compensation awarded to an executive between, the performance of the Company as a whole, and the executive's individual performance; 3. The Company's compensation programs should provide the executives with a financial interest in the Company similar to the interests of the Company's shareholders; and 4. The Company's compensation program should strike an appropriate balance between short and long term performance objectives. The Company's executives are compensated through a combination of salary, performance bonuses, and grants of stock options under the Option Plans. The annual salaries of the executives are reviewed from time to time and adjustments are made where necessary in order for the salaries of the Company's executives to be competitive with the salaries paid by similar companies. Performance bonuses, where appropriate, are generally determined after the end of the Company's fiscal year based on an assessment of the Company's results and the level of an individual's particular performance for that year. Stock option grants are considered by the Stock Option Committee from time to time. CHIEF EXECUTIVE OFFICER'S COMPENSATION. Mr. Lin's compensation is determined pursuant to the principles noted above. The Stock Option Committee granted to Mr. Lin on June 30, 1994, a ten-year non-qualified stock option to purchase 13,700 shares of the Company's Common Stock at an exercise price of $2.50 per share and a ten-year incentive stock option to purchase 36,300 shares at $2.75 per share. All of the options are exercisable in 25% annual increments commencing June 30, 1995. The last salary increase Mr. Lin received was in June 1993. POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(M). In 1993, the Internal Revenue Code of 1986 (the "Code") was amended to add Page 11 of 16 Section 162(m). Section 162(m), and regulations proposed thereunder, place a limit of $1,000,000 on the amount of compensation that may be deducted by the Company in any year with respect to certain of the Company's most highly compensation officers. Section 162(m) does not, however, disallow a deduction for qualified "performance-based compensation" the material terms of which are disclosed to and approved by shareholders. At the present time, the Company's executive officer compensation levels are substantially below the $1,000,000 pay limit and the Company believes that it will most likely not be affected by the regulation in the near future. The Board of Directors plans to review the final regulations when issued and, where appropriate in light of specific compensation objectives, take necessary actions in the future to minimize the loss of tax deductions related to compensation. COMPENSATION COMMITTEE Ralph Clements Harry Derbyshire Page 12 of 16 INFORMATION CONCERNING STOCK OPTIONS The following tables set forth certain information at January 31, 1995 and for the fiscal year then ended with respect to stock options granted to and exercised by the individuals named in the Summary Compensation Table above. No stock appreciation rights have been granted and no options have been granted at an option price below fair market value on the date of the grant. OPTION GRANTS IN THE LAST FISCAL YEAR Potential Realizable Value at Assumed Annual Rates of Stock Appreciation Individual Grants for the Option Term
Number of % of total Exercise At 0% At 5% At 10% Options/ Options/SAR's or Base Annual Annual Annual SAR's Granted to all Price per Expiration Growth Growth Growth Name of Executive Granted Employees Share Date Rate Rate Rate - - - ----------------- -------- -------------- --------- ---------- ------ ------ ------ Jack Lin 50,000 19.45% $2.68 6/30/2004 - $84,319 $213,681 Arthur Edelstein 20,000 7.78% $2.50 6/30/2004 - $31,445 $ 79,687 Richard Short 20,000 7.78% $2.50 6/30/2004 - $31,445 $ 79,687 William Traw 20,000 7.78% $2.50 10/12/2004 - $31,445 $ 79,687 Lloyd Blonder 20,000 7.78% $2.50 10/12/2004 - $31,445 $ 79,687
[FN] These amounts represent certain assumed rates of appreciation only. Actual gains, if any on stock option exercises or stock holdings are dependent on the future performance of the stock and overall market conditions. There can be no assurance that the amounts reflected in this table will be achieved. Includes 13,700 non-qualified options at $ 2.50 per share and 36,300 incentive stock options at $2.75 per share. All options become exercisable at the rate of 25% per year starting 6/30/95. Incentive stock options: all options become exercisable at the rate of 25% per year starting 6/30/95. Incentive Stock options: all options become exercisable at the rate of 25% per year starting 10/12/95. Page 13 of 16 The following table sets forth information concerning the exercise of stock options during the fiscal year ended January 31, 1995 by each of the named executive officers and the fiscal year end spread on unexercised "in-the-money" options. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Unexercised Value of In-the-Money Unexercised In-the- Shares Value Options/SARs at Money Options/SARs Acquired on Realized FY-End(#) at FY-End ($) Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable - - - --------- ----------- -------- ----------- ------------- ----------- ------------- Jack Lin - - 12,500 37,500 - - Art Edelstein - - 27,659 15,000 $30,631 - Richard Short - - 33,482 17,500 $38,097 3,281 William Traw 16,084 $ 35,696 11,923 22,500 $15,908 3,281 Lloyd Blonder 18,296 $ 37,846 3,500 23,500 $ 4,594 4,594
[FN] Market Value of underlying securities at exercise date, minus the exercise or base price of "in-the-money" options/SARs. "Value Realized" is on a pre-tax basis. Represents the difference between the closing price of the Company's Stock on January 31, 1995 and the exercise price of the options. Page 14 of 16 STOCK PRICE PERFORMANCE GRAPH The following graph shows a five-year comparison of cumulative total returns on investment for the Company, the Russell 2000 Index and the S&P High Tech Composite Index. The stock price performance shown on the graph below is not necessarily indicative of future price performance. Cumulative Total Return ------------------------------------------- 1/90 1/91 1/92 1/93 1/94 1/95 ------------------------------------------- National Technical Sys Inc 100 65 65 90 189 146 Russell 2000 100 96 139 158 187 176 S & P High Tech Composite 100 115 123 128 158 176 Page 15 of 16 COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 The Company's officers, directors and consultants are required to file initial reports of ownership and reports of change in ownership with the Securities and Exchange Commission. Officers and directors are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on information provided to the Company by individual officers, directors and consultants, the Company believes that during fiscal 1995 all filing requirements applicable to officers and directors have been complied with, except that a late report was filed by Mr. Cohen upon his gift to a charitable institution of 1,000 shares of the Common Stock of the Company. CERTAIN TRANSACTIONS During the fiscal year ended January 31, 1995, Aaron Cohen, beneficial owner of 1,124,771 shares or 17.0% of the Common Stock, was paid consulting fees by the Company in the amount of $110,065 in cash, of which $72,853 was for services rendered to S&W Technical Services, a wholly owned subsidiary of the Company, and $37,212 was paid for consulting services to the Company. RATIFICATION OF AUDITORS The Board of Directors has selected Ernst & Young as auditors for the Company for the year ending January 31, 1996. That firm became auditors for the Company during the fiscal year ended January 31, 1990. The Board recommends ratification of this action. Representatives of Ernst & Young are expected to be present at the meeting and will be given the opportunity to make a statement if they desire to do so. It is also expected that they will be available to respond to appropriate questions from shareholders at the meeting. OTHER MATTERS Management is not aware of any other matters to be presented for action at the meeting or any adjournment thereof. However, if any matters come before the meeting, it is intended that shares represented by Proxy will be voted in accordance with the judgment of the persons voting them. SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING Any proposals of shareholders intended to be presented at the next annual meeting (to be held in June 1996) must be received by the Company at its principal executive office located at 24007 Ventura Boulevard, Calabasas, California 91302, not later than February 1, 1996. Page 16 of 16 -----END PRIVACY-ENHANCED MESSAGE-----