-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hz0P6yrS6/A/WeOwphrv7i+hefUgcPfZ0EyBx/LvGw2uohzwk1Hy0ZWKqUmPt9Ok XZLCyxiR9t4TLyUgsab+uw== 0000889810-97-000132.txt : 19970603 0000889810-97-000132.hdr.sgml : 19970603 ACCESSION NUMBER: 0000889810-97-000132 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970627 FILED AS OF DATE: 19970602 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL TECHNICAL SYSTEMS INC /DE/ CENTRAL INDEX KEY: 0000110536 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [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: 97617979 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 (LOGO) 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 California corporation, will be held at the Company's Fullerton Test Facility, 1536 East Valencia Drive, Fullerton California 92631, on Friday, June 27, 1997 at 11:00 A.M. for the purpose of considering and acting upon the following: 1. To elect three directors for terms expiring in 2000; 2. To ratify Ernst & Young as auditors for the year ending January 31, 1998; 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 19, 1997 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, 1997, 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 Harold Lipchik Secretary Dated: June 2, 1997 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 Friday, June 27, 1997, 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 June 2, 1997. 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 19, 1997, 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 19, 1997, consisted of 6,788,860 shares of $.01 par value Common Stock. Each share is entitled to one vote, except that cumulative voting is permitted for the election of directors under the circumstances described below. Shareholders representing a majority of outstanding Common Stock must be present in person or by proxy to constitute a quorum at the Annual Meeting. In voting for the election of Directors, each shareholder has the right to cumulate his or her votes and give one nominee a number of votes equal to the number of Directors to be elected, multiplied by the number of shares he or she holds, or to distribute his or her votes on the same principle among the nominees to be elected in such manner as he or she may see fit. A shareholder may only cumulate his or her votes if his or her candidate or candidates' names have been placed in nomination prior to the voting and any shareholder gives notice at the meeting prior to the voting of that shareholder's intention to cumulate his or her votes. The persons named in the enclosed proxy may or may not elect to give such notice and vote the shares they represent in such a manner. -1- 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, 1998 and the approval of such other matters as may properly come before the Annual Meeting. 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 19, 1997, 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 of Beneficial Owner Beneficially Owned(1) Class ---------------- --------------------- ----- Aaron Cohen............................... 1,171,210 17.2% 24007 Ventura Boulevard Calabasas, California 91302 Jack Lin.................................. 1,108,947 16.2% 24007 Ventura Boulevard Calabasas, California 91302 Luis A. and Jacqueline E. Hernandez(2)... 430,425 6.3% 3069 Misty Harbor Las Vegas, Nevada 89117 Arthur Edelstein.......................... 355,557 5.2% 24007 Ventura Boulevard Calabasas, California 91302 - ------------- (1) Includes shares covered by options that are exercisable within 60 days as follows: Cohen 15,000, Lin, 37,500 and Edelstein 37,659 and shares in the National Technical Systems Employee Stock Ownership Plan, as follows: Lin 6,464 and Edelstein 4,685. (2) This information is based on Schedule 13D filed with the Securities and Exchange Commission on or about November 13, 1995. -2- 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 as of the record date a total of 1,838,860 shares, or 26.4% of the outstanding stock. Mr. Cohen, a consultant to the Company, became a senior executive vice president of the Company on February 1, 1997, and owns 17.2% of the outstanding Common Stock of the Company. See "Certain Transactions." 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 Class I 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 discretionary 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 I director and the Class II 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: -3-
Common Stock of the Company Bene- Director Year Term ficially owned as of Percent Name Age Position or Office Since Will Expire May 19, 1997 of Class ---- --- ------------------ ----- ----------- ------------------- -------- NOMINEES FOR CLASS I DIRECTORS Richard Short 54 Senior Vice President of 1988 2000* 92,899 1.4% the Company; Director William Traw 58 Senior Vice President 1988 2000* 63,823 ** of the Company; Director William McGinnis 39 Vice President of the 1994 2000* 32,189 ** Company; Director DIRECTORS CONTINUING IN OFFICE: CLASS II DIRECTORS Ralph Clements 64 President of Clements and 1975 1998 1,759 ** Associates; Director Harry Derbyshire 71 Chairman of the Board of 1983 1998 6,912 ** J.C. Carter Company, Inc.; Director Arthur Edelstein 59 Executive Vice President of 1980 1998 355,557 5.2% the Company; Director CLASS III DIRECTORS Aloysius Casey 65 Chairman of the Board of 1988 1999 24,321 ** the Company Jack Lin 64 President and Chief 1975 1999 1,108,947 16.2% Executive Officer of the Company; Director Robert Lin 39 Founder and President of 1988 1999 102,880 1.5% the Trilin Group, Inc.; Director - ---------------------- * If elected at the annual meeting ** Less than 1% Includes shares covered by options exercisable within 60 days, as follows: J. Lin, 37,500; R. Lin, 1,875; Short, 17,500; Traw, 24,423; McGinnis, 26,624; Clements, 1,250; and Edelstein, 37,659. Includes shares in the National Technical Systems Employee Stock Ownership Plan, as follows: J. Lin, 6,464, Traw, 3,060; Edelstein, 4,685; Short, 2,921; and McGinnis, 1,815.
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. -4- 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 aerospace company. Mr. Edelstein is an Executive Vice President of the Company and has been associated with the Company and it predecessors continuously since 1961. 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. 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 three regular meetings and one special meeting 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 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 of the Board of Directors makes recommendations regarding the grant of stock options. The Committee, which consists of Messrs. R. Lin and Clements, met twice during the year. The Nominating Committee which consists of Messrs. J. Lin and Derbyshire selects nominees for election to the Board of Directors. The Nominating Committee met once during the year. -5- 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, General 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, 1997, a total of $1,000 was paid to General Casey and $17,000 was paid to Mr. Clements for consulting services. EXECUTIVE OFFICERS OF THE COMPANY The only officer of the Company who is not a director is Mr. Lloyd Blonder, who is a Senior Vice President and the Chief Financial Officer of the Company. Mr Blonder is 57 years of age and has been associated with the Company since 1983. -6- EXECUTIVE COMPENSATION The following information is furnished with respect to the Chief Executive Officer and the other four most highly compensated executive officers of the Company whose aggregate direct remuneration from the Company during the fiscal year ended January 31, 1997 exceeded $100,000. SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation ------------------- ---------------------- Awards Payouts Other Restricted ------- All Name and Annual Stock LTIP Other Principal Compensation Award(s) Options/ Payouts Compen- Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) sation($) - -------- ---- ---------- --------- ------ --- -------- --- --------- Jack Lin 1997 294,097 60,000 0 0 0 0 0 President and Chief 1996 275,357 24,000 14,457 0 0 0 0 Executive Officer 1995 289,170 0 0 0 0 0 0 Arthur Edelstein 1997 179,637 36,000 0 0 0 0 0 Executive Vice President 1996 174,126 16,000 0 0 0 0 0 1995 160,429 0 0 0 0 0 0 Richard Short 1997 115,905 23,000 0 0 0 0 0 Senior Vice President 1996 111,393 12,000 0 0 0 0 0 1995 110,000 0 0 0 0 0 0 William Traw 1997 115,905 23,000 0 0 0 0 0 Senior Vice President 1996 111,393 12,000 0 0 0 0 0 1995 110,000 0 0 0 0 0 0 Lloyd Blonder 1997 106,792 22,000 0 0 0 0 0 Senior Vice President 1996 105,553 12,000 0 0 0 0 0 and Chief Financial 1995 105,000 0 0 0 0 0 0 Officer Does not include perquisites or personal benefits which are the lesser of $50,000 or 10% of the total annual salary and bonus reported for the named Executive Officer. Fair market value of 26,608 shares of restricted National Technical Systems, Inc. common stock at a value of $60,000 taken as a bonus in lieu of cash. Fair market value of 9,638 shares of restricted National Technical Systems, Inc. common stock at a value of $14,457 taken in lieu of cash compensation.
-7- 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 1997 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, 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 Company's Stock 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. The Chief Executive Officer participates in the Company's executive compensation plans generally on the same basis as all other executive officers and other key employees. In determining the Chief Executive Officer's compensation opportunities and performance objectives, the Compensation Committee conducts the same type of competitive review and analysis as it does for other executive officers. The last salary increase Mr. Lin received was in July 1996. The actual salary amounts received by Mr. Lin in any year may include salary unpaid but earned in prior years. POLICY WITH RESPECT TO INTERNAL REVENUE CODE SECTION 162(m). In 1993, the Internal Revenue Code of 1986 (the "Code") was amended to add Section 162(m). Section 162(m), and regulations thereunder adopted in 1995, place a limit of -8- $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 compensated 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. Where appropriate in light of specific compensation objectives, the Board intends to take necessary actions in the future to minimize the loss of tax deductions related to compensation. COMPENSATION COMMITTEE Ralph Clements Harry Derbyshire -9- INFORMATION CONCERNING STOCK OPTIONS The following tables set forth certain information at January 31, 1997 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 (1) ---------------------------------------------------------- -------------------------------------- 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 48,000(2) 20.1% $3.064 (2) - $ 57,248 $136,112 Arthur Edelstein 29,000(3) 12.1% $2.875 9/1/2006 - $ 52,434 $132,878 Richard Short 24,000(3) 10.0% $2.875 9/1/2006 - $ 43,394 $109,968 William Traw 24,000(3) 10.0% $2.875 9/1/2006 - $ 43,394 $109,968 Lloyd Blonder 24,000(3) 10.0% $2.875 9/1/2006 - $ 43,394 $109,968
- ------------- (1) 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. (2) Includes 16,380 non-qualified options at $2.875 per share which expire September 1, 2006 and 31,620 incentive stock options at $3.163 per share which expire September 3, 2001. All options become exercisable at 25% per year starting September 3, 1997. (3) All options become exercisable at 25% per year starting September 3, 1997. The following table sets forth information concerning the exercise of stock options during the fiscal year ended January 31, 1997 by each of the named executive officers and the fiscal year end spread on unexercised "in-the-money" options. -10- AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
Number of Value of Unexercised Unexercised In-the-money In-the-money Options/SARs at Options/SARs at FY-End($) Fy-End($)(2) Shares Acquired Value ----------------------------- ---------------------------- Name on Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable ---- -------------- ---------------- ----------- ------------- ----------- ------------- Jack Lin - - 25,000 73,000 - - Arthur Edelstein - - 32,659 39,000 27,531 - Richard Short 28,482 44,273 11,875 34,625 2,271 742 William Traw - 23,173 35,250 15,902 1,484 Lloyd Blonder - - 15,250 35,750 6,234 2,078
(1) 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. (2) Represents the difference between the closing price of the Company's Common Stock on January 31, 1997 and the exercise price of the options. 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 Technology Sector (formerly 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 -------------------------------------------------- 1/92 1/93 1/94 1/95 1/96 1/97 -------------------------------------------------- National Technical Systems, Inc. 100 139 292 227 206 221 Russell 2000 100 114 135 126 164 196 S&P Technology Sector 100 105 129 143 212 329 -11- 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 1997 all filing requirements applicable to officers and directors have been complied with. CERTAIN TRANSACTIONS During the fiscal year ended January 31, 1997, Aaron Cohen, beneficial owner of 1,171,210 shares or 17.2% of the Company's Common Stock, was paid consulting fees by the Company in the amount of $85,421 in cash and 7,539 shares of National Technical Systems, Inc. restricted stock with a value of $17,000. On February 1, 1997, Mr. Cohen became a senior executive vice president of the Company. RATIFICATION OF AUDITORS The Board of Directors has selected Ernst & Young as auditors for the Company for the fiscal year ending January 31, 1998. 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. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THIS PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS PROPOSAL UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. 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 1998) must be received by the Company at its principal executive office located at 24007 Ventura Boulevard, Calabasas, California 91302, not later than February 1, 1998. -12- P R O X Y NATIONAL TECHNICAL SYSTEMS, INC. BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING OF SHAREHOLDERS Friday, June 27, 1997, at 11:00 a.m. The undersigned hereby appoints Aloysius Casey and Jack Lin, and each of them, attorneys and agents with power of substitution, to vote, as designated below, all stock of the undersigned at the above meeting and at any adjournment or adjournments thereof. 1. Election of Directors WITHHOLD AUTHORITY FOR all nominees listed below to vote for all (except as marked to the nominees listed below [ ] contrary below) [ ] Richard Short, William Traw and William McGinnis (INSTRUCTION: to withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.) - ------------------------------------------------------------------------------ 2. To ratify the selection of Ernst & Young as auditors for the fiscal year ending January 31, 1998. FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment or adjournments thereof. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR AND FOR THE RATIFICATION OF ERNST & YOUNG AS AUDITORS. Dated __________________________, 1997 ______________________________________ Signature of Shareholder ______________________________________ Signature of Shareholder Please sign exactly as your name appears hereon. Please date, sign and return the Proxy promptly in the enclosed envelope. When signing as attorney, executor, administrator, trustee or guardian, please give full title. If the signature is for a corporation, please sign full corporate name by authorized officer. If the shares are registered in more than one name, all holders must sign. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE. -13- -----END PRIVACY-ENHANCED MESSAGE-----