SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
[_]CONFIDENTIAL, FOR USE OF THE
Check the appropriate box: COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DATAMETRICS CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
14a-6(j)(2).
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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[X] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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DATAMETRICS CORPORATION
21135 ERWIN STREET
WOODLAND HILLS, CALIFORNIA 91367
----------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
To The Stockholders of
Datametrics Corporation
Notice is hereby given that the Annual Meeting of the Stockholders of
DATAMETRICS CORPORATION (the "Company") will be held at 21135 Erwin Street,
Woodland Hills, California, on Tuesday, March 19, 1996, at 10:00 a.m., for the
following purposes:
1. To elect Directors for the ensuing year to serve until the next Annual
Meeting of Stockholders and until their successors are elected and have
qualified. The present Board of Directors of the Company has nominated and
recommends for election as directors the following seven persons, all of
whom are presently Directors of the Company:
Dann V. Angeloff Richard W. Muchmore Kenneth Zeiger
Richard A. Foster Garland S. White
Burton L. Kaplan Sidney E. Wing
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock
from 15,000,000 to 20,000,000 shares.
3. To approve the Company's 1995 Stock Option Plan.
4. To approve the Company's Employee Qualified Stock Purchase Plan.
5. To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on January 31, 1996
as the record date for this solicitation.
Accompanying this Notice is a Proxy. WHETHER OR NOT YOU EXPECT TO BE AT THE
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth S. Polak, Secretary
Woodland Hills, California
February 6, 1996
DATAMETRICS CORPORATION
21135 ERWIN STREET
WOODLAND HILLS, CALIFORNIA 91367
----------------
PROXY STATEMENT
The Board of Directors of Datametrics Corporation, a Delaware corporation
(the "Company") is soliciting the enclosed Proxy for use at the Annual Meeting
of Stockholders of the Company to be held on Tuesday, March 19, 1996, at 21135
Erwin Street, Woodland Hills, California. This Proxy Statement was first
mailed to stockholders on or about February 6, 1996.
All stockholders who find it convenient to do so are cordially urged to
attend the Meeting in person. In any event, please sign, date and return the
Proxy in the enclosed envelope.
A Proxy may be revoked by written notice to the Secretary of the Company at
any time prior to the voting of the Proxy, or by executing a later Proxy or by
attending the Meeting and voting in person. Unrevoked Proxies will be voted in
accordance with the instructions therein indicated, or if there are no such
instructions, such Proxies will be voted for (i) the election of the Board's
nominees for directors, (ii) the approval of an amendment to Company's
Restated Certificate of Incorporation increasing the authorized number of
shares of Common Stock from 15,000,000 to 20,000,000, (iii) the approval of
the Company's 1995 Stock Option Plan, and (iv) the approval of the Company's
Employee Qualified Stock Purchase Plan.
The close of business on January 31, 1996 is the record date with respect to
this solicitation. As of that date, 12,118,412 shares of common stock, $.01
par value ("Common Stock"), of the Company were outstanding. Each share of
Common Stock is entitled to one vote. A majority of the outstanding shares of
the Company, represented in person or by Proxy at the Meeting, constitutes a
quorum. All shares represented by Proxies that reflect abstentions or include
"broker non-votes" will be treated as shares that are present and entitled to
vote for purposes of determining the presence of quorum. Abstentions or
"broker non-votes" do not constitute a vote "for" or "against" any matter and
thus will be disregarded in the calculation of "votes cast."
The cost of preparing, assembling and mailing the Notice, Proxy Statement
and Proxy will be borne by the Company.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of December 15, 1995, the number and
percentage ownership of the Company's Common Stock by each director of the
Company, certain executive officers and by all officers and directors of the
Company as a group. To the Company's knowledge, no person or entity owns 5% or
more of the Company's Common Stock. Except as otherwise indicated, and subject
to applicable community property and similar laws, each of the persons named
has sole voting and investment power with respect to the Common Stock shown as
beneficially owned. An asterisk denotes beneficial ownership of less than 1%.
AMOUNT AND
NATURE OF PERCENTAGE
BENEFICIAL OF OUTSTANDING
NAME AND ADDRESS(1) OWNERSHIP SHARES
------------------- ---------- --------------
DIRECTORS
Burton L. Kaplan................................ 338,628(2) 2.8%
Sidney E. Wing.................................. 184,340(3) 1.5%
Garland S. White................................ 121,084(4) 1.0%
Richard A. Foster............................... 41,250(5) *
Kenneth K. Zeiger............................... 29,850(6) *
Dann V. Angeloff................................ 13,750(7) *
Richard W. Muchmore............................. 2,188(8) *
NAMED EXECUTIVE OFFICERS (excluding those listed
above)
Harry P. Alteri................................. 83,488(9) *
Ronald N. Iverson............................... 32,187(10) *
Carl C. Stella.................................. 86,721(11) *
John J. Van Buren............................... 91,536(12) *
All Officers and Directors as a group (16 per-
sons).......................................... 1,240,035 9.8%
1
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(1) The address for all persons listed is c/o the Company, 21135 Erwin
Street, Woodland Hills, California 91367.
(2) Includes 16,250 shares subject to non-qualified stock options which are
presently exercisable. Of such options, 15,000 have an exercise price of
$2.875 and expire on December 17, 1998 and 1,250 have an exercise price
of $5.75 and expire on December 17, 1999. Excludes 18,750 shares subject
to non-qualified stock options which are not presently exercisable. Of
such options, 15,000 have an exercise price of $2.875 and expire on
December 17, 1998 and 3,750 have an exercise price of $5.75 and expire on
December 17, 1999.
(3) Includes 181,875 shares subject to incentive stock options which are
presently exercisable. Of such options, 150,000 have an exercise price of
$1.25 and expire on September 5, 1998, 28,125 have an exercise price of
$3.25 and expire on October 28, 1998, and 3,750 have an exercise price of
$5.75 and expire on February 22, 2000. Excludes 38,125 shares subject to
incentive stock options which are not presently exercisable. Of such
options, 21,875 have an exercise price of $3.25 and expire on October 28,
1995, and 16,250 have an exercise price of $5.75 and expire on February
22, 2000.
(4) Includes 19,375 shares subject to non-qualified stock options which are
presently exercisable. Of such options, 3,125 have an exercise price of
$1.375 and expire on August 13, 2001, 15,000 have an exercise price of
$2.875 and expire on December 17, 1998, and 1,250 have an exercise price
of $5.75 and expire on December 17, 1999. Excludes 18,750 shares subject
to non-qualified stock options which are not presently exercisable. Of
such options, 15,000 have an exercise price of $2.875 and expire on
December 17, 1998 and 3,750 have an exercise price of $5.75 and expire on
December 17, 1999.
(5) Includes 41,125 shares subject to non-qualified stock options which are
presently exercisable. Of such options, 25,000 have an exercise price of
$1.375 and expire on August 13, 2001, 15,000 have an exercise price of
$2.875 and expire on December 17, 1998, and 1,250 have an exercise price
of $5.75 and expire on December 17, 1999. Excludes 18,750 shares subject
to non-qualified stock options which are not presently exercisable. Of
such options 15,000 have an exercise price of $2.875 and expire on
December 17, 1998 and 3,750 have an exercise price of $5.75 and expire on
December 17, 1999.
(6) Includes 3,250 shares subject to non-qualified stock options which are
presently exercisable. Of such options, 2,000 have an exercise price of
$2.875 and expire on December 17, 1998 and 1,250 have an exercise price
of $5.75 and expire on December 17, 1999. Excludes 18,750 shares subject
to non-qualified stock options which are not presently exercisable. Of
such options, 15,000 have an exercise price of $2.875 and expire on
December 17, 1998 and 3,750 have an exercise price of $5.75 and expire on
December 17, 1999.
(7) Includes 8,750 shares subject to non-qualified stock options which are
presently exercisable. Of such options, 7,500 have an exercise price of
$2.875 and expire on December 17, 1998 and 1,250 have an exercise price
of $5.75 and expire on December 17, 1999. Excludes 11,250 shares subject
to non-qualified stock options which are not presently exercisable. Of
such options, 7,500 have an exercise price of $2.875 and expire on
December 17, 1998 and 3,750 have an exercise price of $5.75 and expire on
December 17, 1999.
(8) Includes 2,188 shares subject to non-qualified stock options which are
presently exercisable. Of such options 1,875 have an exercise price of
$2.875 and expire on December 17, 1998 and 313 have an exercise price of
$5.75 and expire on December 17, 1999. Excludes 18,750 shares subject to
non-qualified stock options which are not presently exercisable. Of such
options, 15,000 have an exercise price of $2.875 and expire on December
17, 1998 and 3,750 have an exercise price of $5.75 and expire on December
17, 1999.
(9) Includes 16,687 shares subject to incentive stock options which are
presently exercisable. Of such options, 5,000 have an exercise price of
$2.875 and expire on December 17, 1998, 10,937 have an exercise price of
$2.6875 and expire on April 8, 1999, and 750 have an exercise price of
$5.75 and expire on February 22, 2000. Excludes 22,313 shares subject to
incentive stock options which are not presently exercisable. Of such
options, 5,000 have an exercise price of $2.875 and expire on December
17, 1998, 14,063 have an exercise price of $2.6875 and expire on April 8,
1999, and 3,250 have an exercise price of $5.75 and expire on February
22, 2000.
(10) Includes 32,187 shares subject to incentive stock options which are
presently exercisable. Of such options, 15,000 have an exercise price of
$1.4375 and expire on August 17, 2003, 15,312 have an exercise price of
$2.6875 and expire on April 8, 1999, and 1,875 have an exercise price of
$5.75 and expire on February 22, 2000. Excludes 45,313 shares subject to
incentive stock options which are not presently exercisable. Of such
options 17,500 have an exercise price of $1.4375 and expire on August 17,
2003, 19,688 have an exercise price of $2.6875 and expire on April 8,
1999, and 8,125 have an exercise price of $5.75 and expire on February
22, 2000.
(11) Includes 6,575 shares subject to incentive stock options which are
presently exercisable. Of such options, 4,700 have an exercise price of
$2.875 and expire on December 17, 1998 and 1,875 have an exercise price
of $5.75 and expire on February 22, 2000. Excludes 20,625 shares subject
to incentive stock options which are not presently exercisable. Of such
options, 12,500 have an exercise price of $2.875 and expire on December
17, 1998 and 8,125 have an exercise price of $5.75 and expire on February
22, 2000.
(12) Includes 64,375 shares subject to incentive stock options which are
presently exercisable. Of such options, 45,000 have an exercise price of
$1.25 and expire on April 26, 1999, 5,000 have an exercise price of $0.75
and expire on September 7, 2000, 12,500 have an exercise price of $2.875
and expire on December 17, 1998, and 1,875 have an exercise price of
$5.75 and expire on February 22, 2000. Excludes 20,625 shares subject to
incentive stock options which are not presently exercisable. Of such
options, 12,500 have an exercise price of $2.875 and expire on
December 17, 1998 and 8,125 have an exercise price of $5.75 and expire on
February 22, 2000.
2
ELECTION OF DIRECTORS
The Board of Directors of the Company has nominated and recommends for
election as Directors the following seven persons to serve until the next
Annual Meeting of Stockholders and until their respective successors shall
have been duly elected and shall qualify. All of the seven nominees are
presently Directors of the Company. The enclosed Proxy will be voted in favor
of the persons nominated unless otherwise indicated. If any of the nominees
should be unable to serve or should decline to do so, the discretionary
authority provided in the Proxy will be exercised by the present Board of
Directors to vote for a substitute or substitutes to be designated by the
Board of Directors. The Board of Directors has no reason to believe that any
substitute nominee or nominees will be required. In the event that a nominee
for Director is proposed at the Annual Meeting, the enclosed proxy may be
voted in favor of or against such nominee or any other nominee proposed by the
Board of Directors. Directors shall be elected by a plurality of the votes
cast at the Annual Meeting.
The table below indicates the principal occupation, position with the
Company and age of each nominee for Director.
NAME, PRINCIPAL OCCUPATION DIRECTOR
AND POSITION WITH COMPANY AGE SINCE
-------------------------- --- --------
GARLAND S. WHITE 67 1962
Chairman of the Board of the Company
SIDNEY E. WING 64 1988
President and Chief Executive Officer of the Company
DANN V. ANGELOFF 60 1993
President of The Angeloff Company and Director of the Company
RICHARD A. FOSTER 60 1990
Business Consultant and Director of the Company
BURTON L. KAPLAN 67 1982
Business Consultant and Director of the Company
RICHARD W. MUCHMORE 76 1967
Business Consultant and Director of the Company
KENNETH K. ZEIGER 63 1986
Business Consultant and Director of the Company
Mr. White has held his present position of Chairman of the Board of
Directors since March 10, 1986. Mr. White is also the President of GW Products
Management, a sole-proprietorship founded in 1990. Mr. White was Chief
Executive Officer of the Company for more than five years until September
1988. Mr. White was President of the Company for more than five years until
August 1986 and then became President again from January 1988 to September
1988.
Mr. Wing was appointed to his present position in September 1988. From
September 1986 to September 1988, he was President and Chief Operating Officer
of Resdel Engineering in Arcadia, California. Prior to this time for more than
five years, he was Vice President of Business Development with Interstate
Electronics in Anaheim, California. Mr. Wing is a director of Hi Shear
Technology Corp.
Mr. Angeloff became a director of the Company in May 1993. Since 1976, he
has been the president of The Angeloff Company, a corporate financial advisory
firm founded by Mr. Angeloff. Mr. Angeloff is also a director of
Nicholas/Applegate Growth Equity Fund, Nicholas/Applegate Investment Trust,
Seda Specialty Packaging, Storage Equities, Inc. and Storage Properties, Inc.
Mr. Foster has been an independent business consultant since August 1991.
For more than five years prior to that time he was President of Interstate
Electronics Corporation, Anaheim, California. Mr. Foster was appointed as a
director of the Company in December 1990.
Mr. Kaplan became a director of the Company in 1982. From July 1975 until
his retirement on February 28, 1986, Mr. Kaplan was President and Chief
Operating Officer of Burtree, Inc., Van Nuys, California, a privately-held
manufacturer of precision machined and sheet metal fabricated components for
electronics and hydraulics industries. Since February 28, 1986, Mr. Kaplan has
been a business consultant.
3
Mr. Muchmore became a director of the Company in 1967. From February 1957 to
March 1974, Mr. Muchmore was a Vice President and a Director of Raychem
Corporation, engaged in the electronics component manufacturing business
located in Menlo Park, California. Mr. Muchmore has been an independent
business consultant since March 1974. Mr. Muchmore resigned as Chairman of the
Board of Directors on March 10, 1986 while remaining on the Board of
Directors.
Mr. Zeiger has been a director of the Company since 1986. From March 1988 to
March 1991, he was President, Chief Operating Officer and a Director of AVW
Electronic Systems, Inc. From October 1987 until March 1988 and since March
1991, Mr. Zeiger has been an independent business consultant.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES THEREOF
The Board of Directors held six (6) in-person meetings and three (3)
telephonic meetings during fiscal 1995. Each person who was a director during
fiscal 1995 attended more than 75% of the total number of meetings of the
Board, except Richard A. Foster who attended 67% of the meetings.
The Company has an Audit Committee currently consisting of Richard A.
Foster, Chairman, Garland S. White and Dann V. Angeloff. The Audit Committee
held one (1) meeting during fiscal 1995 which was attended by all members. The
Audit Committee's responsibilities during fiscal 1995 included, among other
things, the selection of Ernst & Young as the Company's independent certified
public accountants and meetings with Ernst & Young regarding their management
letters and the fiscal 1995 audit.
The Board of Directors has a Compensation and Stock Option Committee
consisting of Richard W. Muchmore, Chairman, Richard A. Foster and Kenneth K.
Zeiger. The Compensation and Stock Option Committee held two (2) meetings
during fiscal 1995 which were attended by all members. The functions of the
Compensation and Stock Option Committee are to establish compensation for all
executive officers of the Company and to administer the Company's stock option
plans.
The Board of Directors has a Nominating Committee consisting of Kenneth K.
Zeiger, Chairman, and Sidney E. Wing. The Nominating Committee held no
meetings during fiscal 1995. The Nominating Committee seeks out, evaluates and
recommends to the Board of Directors qualified nominees for election as
directors of the Company and considers other matters pertaining to the size
and composition of the Board. The Nominating Committee will give appropriate
consideration to qualified persons recommended by stockholders for nomination
as directors provided that such recommendations are accompanied by information
sufficient to enable the Nominating Committee to evaluate the qualifications
of the nominee.
COMPENSATION OF BOARD OF DIRECTORS
Mr. White receives an annual retainer of $15,000 plus a monthly retainer fee
of $1,000 for services as Chairman of the Board of Directors. He receives no
other fees for Board or Committee meetings. From November 1994 to February
1995, Mr. Angeloff received a $3,000 monthly retainer for service on the Board
of Directors and for providing financial advisory and consulting services to
the Company. In February 1995, the Board approved a new consulting agreement
with Mr. Angeloff under which the monthly retainer was increased to $6,000. In
addition, the agreement provides that if Mr. Angeloff's services are requested
on a capital raising or merger/acquisition assignment the Company will pay Mr.
Angeloff additional monthly retainers of $10,000 and $7,500, respectively, for
a minimum two month term. In fiscal 1995, Mr. Angeloff received an aggregate
of $128,000 in consulting fees under his consulting agreement, including
$50,000 in monthly retainers for capital raising activities and $15,000 in
monthly retainers for merger/acquisition activities. Mr. Angeloff received no
other fees for Board or Committee meetings. All other directors receive an
annual retainer fee of $7,500 for services as directors. In addition, they
receive $800 for each in-person Board meeting and Committee meeting, together
with reimbursement of out-of-pocket expenses. The Committee chairmen receive
$1,600 per in-person Committee meeting.
4
EXECUTIVE COMPENSATION
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation and Stock Option Committee (the "Committee") is
composed entirely of independent outside members of the Company's Board of
Directors. The Committee reviews and approves each of the elements of the
executive compensation program of the Company and continually assesses the
effectiveness and competitiveness of the program. In addition, the Committee
administers the stock option program and other key provisions of the executive
compensation program and reviews with the Board of Directors all aspects of
compensation for the Company's executives.
COMPENSATION PHILOSOPHY
The goals of the Company's executive compensation program are to reward the
achievement of the Company's strategic goals and the creation of stockholder
value. The Company positions base salaries slightly below competitive levels;
however, the annual bonus is positioned to reward above competitive levels for
exceptional performance relative to the Company's peers. The Company also
believes in providing rewards for the creation of stockholder value through
the use of stock options. The Company and the Committee believe this
philosophy will motivate the executives and, thereby, reinforce the
accomplishment of the Company's strategic and financial goals. The Committee
retains the consulting services of Compensation Resource Group, Inc. to assist
in determining competitive compensation in the industry and to recommend
executive compensation strategy.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
Base Salaries
The Company's salary levels for executive officers are set at a rate
slightly below the median level of other high technology companies of similar
revenues, considering the experience, achievements and contributions of the
employees. Salary increases are designed to reflect competitive practices in
the industry, financial performance of the Company and individual performance
of the executive.
In March 1994, all employees' salaries were reduced 4% to 10% in order to
conserve cash while the Company focused on the development of commercial
printer products. Mr. Sidney E. Wing and the other Named Executive Officers
(as defined on page 12) all received a 10% reduction in their base salary
level. Based upon the Company's achievement of operating income for fiscal
1994, in November 1994, all salaries were returned to the March 1994 levels
and in December 1994 a portion of the salary reduction was returned to the
employees from a pool generated by the Company's fiscal 1994 profits.
Fiscal 1995 Interim Bonus Plan
In May 1995, the Board of Directors adopted an interim bonus plan linked to
the fiscal year 1995 performance of the Company's Defense Business Unit. All
employees, including the Named Executive Officers, were eligible to receive
bonuses under this plan (except for certain engineering personnel working
under a separate bonus plan). Based on the Defense Business Unit's level of
operating income in fiscal 1995, the maximum amount available under such plan
was paid in December 1995 to all participants, in an amount representing
approximately 1% of each such employee's annual salary/wages.
Annual Incentive Plan
In fiscal 1995, the Company did not establish an annual incentive plan,
except for the interim bonus plan described above.
5
Long-Term Incentives
The objectives of the Company's long-term incentive program are to offer
opportunities for stock ownership that are competitive with those at the peer
companies and to encourage and create ownership and retention of the Company's
stock by key employees. Grant levels under the Company's employee stock option
plans are made in consideration of awards to officers within the peer
companies and an assessment of the executive's tenure, responsibilities and
current stock and option holdings.
CEO Compensation
The Committee is responsible for recommending the compensation of the CEO
and such compensation is determined in the same manner as the compensation of
the other officers of the Company.
As noted above, in March 1994 all employees' salaries, including Mr. Wing's,
were reduced 4% to 10%. In November 1994, Mr. Wing's annual salary was raised
from $156,499 to his "pre-reduction" level of $173,888. In addition, Mr.
Wing's share of the 1995 interim bonus plan was $2,454, which was paid to him
in December 1995.
In September 1995, in view of the significant progress the Company had
achieved in fiscal 1995 in developing its CYMax(R) 3240 commercial color
printer products, in obtaining strategic partners for the distribution and
service of the CYMax products, and in successfully completing its 2,300,000
share Common Stock offering in June 1995, resulting in net proceeds of
approximately $16.6 million to the Company, the Committee raised Mr. Wing's
salary to $200,000 per year.
Section 162(m) Compliance
The Company does not presently anticipate any of the Named Executive
Officers to exceed the million dollar non-performance based compensation
threshold of Section 162(m) of the Internal Revenue Code. The Company and the
Committee will continue to monitor the compensation levels of the Named
Executive Officers and determine the appropriate response to Section 162(m)
when and if necessary. It is the Company's intent to bring the stock option
program into compliance with Section 162(m), if necessary, to insure that
stock option grants are excluded from the compensation calculation for the
purposes of Section 162(m).
Compensation and Stock Option Committee
Richard W. Muchmore
Richard A. Foster
Kenneth K. Zeiger
December 14, 1995
6
The following table shows, for fiscal years 1993, 1994 and 1995, the
compensation earned by the Chief Executive Officer and the four most highly
compensated executive officers of the Company (the "Named Executive Officers")
in fiscal 1995:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- ------------------- ---------
LONG- ALL
OTHER NUMBER TERM OTHER
ANNUAL RESTRICTED OF INCENTIVE COMPEN-
NAME AND PRINCIPAL COMPEN- STOCK OPTIONS/ PLAN SATION
POSITION(S) YEAR SALARY($) BONUS($) SATION(1) AWARDS SARS (#) PAYOUTS ($)(2)
- ------------------- ---- --------- -------- -------- ---------- -------- --------- -------
Sidney E. Wing, 1995 $178,240 $ 2,454 $-- $0 20,000 $0 $ 0
President and Chief 1994 $163,846 $ 0 -- $0 0 $0 $ 0
Executive Officer 1993 $165,864 $17,930 -- $0 50,000 $0 $1,134
Carl C. Stella, 1995 $127,011 $ 1,816 $-- $0 10,000 $0 $ 0
Senior Vice President 1994 $119,811 $ 0 -- $0 25,000 $0 $ 0
1993 $126,029 $11,490 -- $0 0 $0 $1,134
Harry P. Alteri, 1995 $126,138 $ 1,784 $-- $0 4,000 $0 $ 0
Vice President 1994 $117,311 $ 0 -- $0 35,000 $0 $ 0
1993 $122,653 $ 8,857 -- $0 0 $0 $1,134
Ronald N. Iverson, 1995 $124,516 $ 1,761 $-- $0 10,000 $0 $ 0
Vice President 1994 $117,420 $ 0 -- $0 35,000 $0 $ 0
1993 $ 36,928 $ 0 -- $0 40,000 $0 $ 0
John J. Van Buren,
Senior Vice President, 1995 $122,436 $ 1,732 $-- $0 10,000 $0 $ 0
Chief Financial Offi- 1994 $114,278 $ 0 -- $0 25,000 $0 $ 0
cer 1993 $119,662 $10,959 -- $0 0 $0 $1,134
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(1) Perquisites to each officer did not exceed the lesser of $50,000 or 10% of
the total salary and bonus for such officer.
(2) Company matching contributions to the Company's 401(k) plan.
The following table sets forth information regarding the grant of stock
options during fiscal 1995 to the Named Executive Officers:
OPTION GRANTS IN FISCAL 1995
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
-------------------------------------------------- PRICE
PERCENT OF APPRECIATION
TOTAL OPTIONS FOR OPTION
NUMBER OF GRANTED TO TERM(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------
NAME GRANTED FISCAL 1995(1) PER SHARE DATE(2) 5% 10%
---- --------- -------------- -------------- ---------- ------- -------
Sidney E. Wing.......... 20,000 13.99% $5.75 2/22/00 $31,800 $70,200
Carl C. Stella.......... 10,000 6.99% $5.75 2/22/00 $15,900 $35,100
Harry P. Alteri......... 4,000 2.80% $5.75 2/22/00 $ 6,360 $14,040
Ronald N. Iverson....... 10,000 6.99% $5.75 2/22/00 $15,900 $35,100
John J. Van Buren....... 10,000 6.99% $5.75 2/22/00 $15,900 $35,100
- --------
(1) No stock appreciation rights were granted to any of the Named Executive
Officers or other Company employees in fiscal 1995.
(2) The options become exercisable equally over 16 quarters from the date of
grant and expire five years from the date of grant.
(3) The dollar amounts under these columns are the result of calculations at
the assumed compounded market appreciation rates of 5% and 10% as required
by the Securities and Exchange Commission over a five-year term and,
therefore, are not intended to forecast possible future appreciation, if
any, of the stock price.
7
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal 1995 and
unexercised options held as of October 29, 1995.
OPTION EXERCISES IN FISCAL 1995
AND OCTOBER 29, 1995 OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
OCTOBER 29, OPTIONS AT
1995 OCTOBER 29, 1995
NUMBER OF -------------- ------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- ------------- ------------------
Sidney E. Wing...... 0 $ 0 177,500/42,500 $1,358,750/211,250
Carl C. Stella...... 67,800 $526,975 4,387/22,813 $ 22,813/120,277
Harry P. Alteri..... 15,000 $142,500 14,250/24,750 $ 91,164/150,648
Ronald N. Iverson... 7,500 $ 44,094 26,875/50,625 $ 188,164/330,430
John J. Van Buren... 20,000 $ 87,500 67,187/22,813 $ 516,598/120,277
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In November 1994, the Company established a Supplemental Executive
Retirement Plan ("SERP"), a defined benefit pension plan covering Messrs.
Wing, Horwitz, Stella and Van Buren. The SERP provides that upon a
participant's retirement from the Company, the participant will receive an
annual benefit payment for fifteen years. The annual benefit amount is
generally equal to 50% of the participant's average annual compensation for
the five years preceding retirement, reduced by the participant's annual
Social Security benefit. Participants may also elect to receive a lump-sum
payment equal to 90% of the net present value of the aggregate benefit amount.
The SERP also provides for early retirement and death benefit payments under
certain circumstances. Participants vest in their benefits 20% after one year
of credited service and an additional 5% each quarter thereafter, with
benefits being fully vested after five years of credited service. Credited
service is measured from November 1, 1994. Based upon each participant's
fiscal 1995 compensation, and assuming full vesting, the annual benefit
payable under the SERP to Messrs. Wing, Stella, Van Buren and Horwitz upon
retirement would be approximately $86,200, $58,400, $54,100 and $56,300,
respectively.
8
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN OF
THE COMPANY, INDUSTRY GROUP 357-COMPUTER AND
OFFICE EQUIPMENT INDEX AND THE S&P 500 INDEX
PERFORMANCE GRAPH APPEARS HERE
Measurement Period DATAMETRICS INDUSTRY BROAD
(Fiscal Year Covered) CP INDEX MARKET
- ------------------- ---------- --------- ----------
Measurement Pt-12/31/90 $ 100 $100 $100
FYE 12/31/91 $ 285.71 $167.44 $133.51
FYE 12/31/92 $ 242.86 $220.60 $146.83
FYE 12/31/93 $ 742.86 $326.03 $168.78
FYE 12/31/94 $1,128.57 $370.62 $175.31
FYE 12/31/95 $2,114.29 $682.06 $221.67
The above graph compares the performance of Datametrics Corporation Common
Stock with that of the Standard & Poors 500 Index and the Industry Group 357--
Computer and Office Equipment Index, which is a published industry group index.
9
CERTAIN TRANSACTIONS
The Company, through the Compensation and Stock Option Committee of the
Board of Directors, has an agreement with Mr. Wing whereby Mr. Wing will
receive certain salary continuation payments in the event of an acquisition or
merger involving the Company which results in him not being offered by the
acquiring party continued employment at his past compensation level. The
agreement provides that if such an acquisition or merger occurs, Mr. Wing will
retain a six-month salary continuation and option vesting period in the event
of a qualifying acquisition or merger. If Mr. Wing accepts other employment
during any salary continuation period, his compensation in his new position
will reduce salary continuation payments to be made to him under the
agreement.
On October 18, 1989, the Company and Mr. White entered into a Deferred
Compensation Agreement which provides that the Company shall pay Mr. White
deferred compensation benefits of $5,000 per month for five years commencing
May 1, 1990 and $2,500 per month for the following five years.
The Company has entered into a Consulting Agreement with Mr. Angeloff, a
Board Member, pursuant to which Mr. Angeloff provides financial advisory and
consulting services to the Company. The Company paid Mr. Angeloff an aggregate
of $128,000 in consulting fees under such agreement in fiscal 1995. Mr.
Angeloff receives no other fees for his services as a Director of the Company.
For a description of this consulting agreement, see "Election of Directors--
Compensation of Board of Directors" elsewhere in this Proxy Statement.
The Company currently uses the services of a travel agency owned by Mr.
Zeiger, a Board member. The Company believes that it obtains travel services
from this agency of a similar type and on similar terms to that available from
unaffiliated agencies.
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The Company's Restated Certificate of Incorporation currently authorizes it
to issue 15,000,000 shares of Common Stock and 5,000,000 of preferred stock.
As of December 15, 1995, the Company had 12,050,954 shares of Common Stock
issued and outstanding, 1,258,422 shares reserved for issuance upon the
exercise of stock options granted under its various stock option plans, and
200,000 shares reserved for issuance upon the exercise of warrants granted in
connection with the Company's public offering of Common Stock in June 1995. In
light of the Board's adoption, subject to stockholder approval, of the 1995
Stock Option Plan, which requires the Company to reserve 700,000 shares of
Common Stock for issuance under such plan, and the Employee Qualified Stock
Purchase Plan, which requires the Company to reserve 200,000 shares of Common
Stock for issuance under such plan, the Board believes that the Company's
authorized but unissued Common Stock should be increased. As a result, the
Board has approved an amendment to the Company's Restated Certificate of
Incorporation (the "Amendment") that would increase the number of authorized
shares of Common Stock from 15,000,000 to 20,000,000. The Amendment will make
no change in the number of authorized shares of preferred stock.
STOCKHOLDER APPROVAL OF THE AMENDMENT REQUIRES THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK. THE COMPANY'S BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT.
If adopted, the Amendment would cause the first paragraph of the Article
numbered "FOURTH" of the Company's Restated Certificate of Incorporation to
read as follows:
"FOURTH: The Corporation is authorized to issue two classes of shares of
capital stock to be designated respectively, "Preferred Stock" and "Common
Stock." The total number of shares which the Corporation is authorized to
issue is twenty-five million (25,000,000). Five million (5,000,000) shares
shall be Preferred Stock and twenty million (20,000,000) shall be Common
Stock. The Preferred Stock and the Common Stock shall each have a par value
of $.01. The aggregate par value of all shares of Preferred Stock is
$50,000 and the aggregate par value of all shares of Common Stock is
$200,000."
10
The proposed increase in the number of authorized shares of Common Stock
would provide Common Stock for possible future stock splits or stock
dividends, possible future stock option or benefit plans, or for any other
appropriate corporate purpose as the Board of Directors may deem advisable.
The proposed increase in authorized shares of Common Stock also would allow
for prompt issuance of Common Stock in the future in the event attractive
opportunities are presented for the acquisition of other companies. At this
time, the Company has no agreements or understandings to make any such
acquisitions, nor does it contemplate any.
The proposed increase in authorized shares of Common Stock is not the result
of knowledge by management of any specific effort by any person or group to
obtain control of the Company, and the Company has no present intention of
issuing additional shares to discourage any such effort. Nonetheless,
authorized but unissued shares of Common Stock, as well as of preferred stock,
could be issued in the future by the Board of Directors in ways that would
make more difficult a change in control of the Company, for instance, through
a private sale diluting the stock ownership of the person seeking to gain
control of the Company. Any such action could have the effect of deterring an
offer for the Company's outstanding Common Stock at a substantial premium over
the then current stock market price of the securities, even if such an offer
were favored by a majority of the Company's stockholders who were not
affiliates of the Company.
Under the Company's Restated Certificate of Incorporation, no stockholder is
entitled to preemptive rights in respect of any future issuances of capital
stock. In addition, the Company does not presently contemplate seeking
stockholder approval for any future issuances of capital stock unless required
to do so by an obligation imposed by applicable law, a regulatory authority or
a third party, such as its obligation under the terms of the listing of the
Common Stock on The American Stock Exchange to obtain stockholder approval for
certain stock issuances.
THE 1995 STOCK OPTION PLAN
The Company utilizes stock options to provide additional incentives to
selected key employees of the Company and its subsidiaries and to certain
other persons with whom the Company maintains a business relationship. Because
the number of shares then remaining available for options to be granted under
existing stock option plans was insufficient to allow the Company to continue
to make substantial use of options as incentives in order to retain and
attract high caliber employees, the Company's Board of Directors adopted the
1995 Stock Option Plan (the "Plan") and is submitting it to the stockholders
for their approval at the Annual Meeting.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF THE COMPANY'S COMMON
STOCK REPRESENTED AND VOTING AT THE ANNUAL MEETING WILL BE REQUIRED FOR THE
APPROVAL OF THE PLAN. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE PLAN.
The full text of the Plan is set forth as Appendix "I" to this Proxy
Statement. The following summary of the Plan is qualified by this reference to
that text.
The Plan authorizes the granting of incentive stock options and non-
qualified stock options. The Plan is not subject to the provisions of ERISA,
and is not a qualified plan under Section 401(a) of the Code. Proceeds
received by the Company from the sale of Common Stock pursuant to the exercise
of options under the Plan will be used for general corporate purposes.
SECURITIES SUBJECT TO THE PLAN
Seven hundred thousand (700,000) shares of the Company's $.01 par value
Common Stock may be issued upon exercise of options. The number of shares
available for grant under the Plan is subject to adjustment in certain
circumstances, including stock dividends, stock splits, reorganizations,
reclassifications or recapitalizations of Common Stock. If an option expires
or is cancelled without having been fully exercised, the
11
number of shares as to which such option was not exercised prior to its
expiration or cancellation may again be optioned under the Plan.
There is no limit on the number of shares that may be optioned to any
participating employee, except that no employee may be granted an option
intended to qualify for the special federal tax treatment of incentive stock
options described below if the aggregate market value of the shares optioned
to that employee which may by their terms first become exercisable during any
calendar year under all such incentive stock options would, as of the
respective option granting dates, exceed $100,000. The Named Executive
Officers named above under "Executive Compensation" are among those eligible
to participate in the Plan.
ADMINISTRATION OF THE PLAN
Under the Plan, options may be granted to those present and future employees
(including officers) of the Company, of a parent or subsidiary of the Company
or any other person (other than a director) maintaining a business
relationship with the Company selected by the Compensation and Stock Option
Committee of the Board of Directors (the "Committee"). The Committee shall
consist of two or more Directors, appointed by and holding office at the
pleasure of the Board, each of whom must be a "disinterested person" as
defined by Rule 16b-3. The Committee is authorized to interpret the Plan and
the options and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. The Plan provides that the Committee may designate
whether options granted will be incentive stock options or non-qualified stock
options.
The Committee may alter, amend, suspend or terminate the Plan, provided that
no holder of an outstanding option may thereby be deprived of his rights.
Moreover, stockholder approval would be required for any amendment to the Plan
that would increase the total number of shares reserved for purposes of the
Plan (except under the adjustment provisions mentioned above), reduce the
minimum option price, extend the termination date of the Plan, or alter the
class of persons eligible to participate in the Plan.
OPTIONS GRANTED PURSUANT TO THE PLAN
The Committee has granted a total of 441,700 options pursuant to the Plan to
eligible participants at exercise prices of $7.875 and $8.25 per share,
subject to stockholder approval of the Plan. The Committee has granted
100,000, 42,500, 10,000, 47,500, and 37,500 options under the Plan to Messrs.
Wing, Stella, Alteri, Iverson, and Van Buren, respectively. All current
executive officers as a group, including the Named Executive Officers listed
above, have been granted an aggregate of 320,000 options under the Plan. The
Committee has granted an aggregate of 76,700 options under the Plan to other
employees who are not executive officers of the Company. In addition, the
Committee has granted a total of 45,000 options under the Plan to certain non-
employee individuals who maintain a business relationship with the Company. No
options were granted under this Plan to any non-employee director or nominee
for election as director.
EXERCISE OF OPTIONS
The purchase price which must be paid for stock on exercise of an option
granted under the Plan will be fixed by the Committee when the option is
granted, but such price may not be less than 100% of the fair market value of
the stock on the date the option is granted. In the case of an incentive stock
option, the price of shares of Common Stock granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company, any
subsidiary or any parent corporation, must be at least 110% of the fair market
value (as defined in the Plan) of the shares of Common Stock on the date such
option is granted. The closing price of the Company's Common Stock reported by
the American Stock Exchange on December 14, 1995 was $7.875. Payment for stock
upon exercise of an option must be in cash, except that with the consent of
the Committee, payment for optioned shares may be made wholly or partially
with shares of the Company's Common Stock owned by the optionee or shares of
the Company's Common Stock issuable upon exercise of the option, in lieu of
cash, valuing such shares on the basis of market value on the date of exercise
of the option.
12
An option granted under the Plan must be exercised during such term as will
be fixed by the Committee, but not later than five years after the date upon
which the option was granted. Generally, no option will be exercisable during
the first year after such option is granted. The Committee will provide in
each Stock Option Agreement the date on which such option expires and becomes
unexercisable, and the Committee is authorized to provide that the option
expires immediately upon the Termination of Relationship (as defined in the
Plan) between the Company and the individual. No portion of an option that is
unexercisable at termination of employment may thereafter become exercisable.
Options are nontransferable except upon death or pursuant to a qualified
domestic relations order, and can be exercised during the optionee's lifetime
only by him.
The Committee may, on such terms and conditions as it deems appropriate,
provide by the terms of any option that, upon or in connection with the merger
or consolidation of the Company with or into another corporation, the
acquisition by another corporation or person of all or substantially all of
the Company's assets or 80% or more of the Company's then outstanding voting
stock or the liquidation or dissolution of the Company, such option shall be
unexercisable, and if the Committee so provides, it may also provide that, for
some period of time prior to such event, such option shall be exercisable as
to all shares covered thereby.
COMPLIANCE WITH SECURITIES LAWS
Employees, officers and directors who are "affiliates" of the Company within
the meaning of the rules and regulations under the Act may not offer or sell
the shares of Common Stock they acquire upon exercise of options under the
Plan unless such offers and sales are made pursuant to an effective
Registration Statement under the Act or pursuant to an appropriate exemption
from the registration requirements of the Act or, if available to the selling
stockholder, within the limitations and subject to conditions set forth in
Rule 144 promulgated under the Act.
Additionally, under Section 16(b) of the Exchange Act, any person who is a
beneficial owner of more than 10% of any class of equity security of the
Company, any person who is an officer of the Company for purposes of Section
16 of the Exchange Act, any person who is a director of the Company, and any
person performing a similar function, may be liable to the Company for profit
realized from any purchase and sale (or any sale and purchase) of any equity
security of the Company, occurring within a period of less than six months,
irrespective of the intention on the part of such person in entering into the
transaction. The exercise of an option acquired under the Plan is not
considered a purchase under Section 16 of the Exchange Act, provided such
option has been held for a period of at least six months following the date of
grant of such option. In determining whether a person is the beneficial owner
of any class of Common Stock of the Company, such person may be required to
include certain shares of Common Stock issuable upon exercise of options or
warrants or upon conversion of convertible securities. The term "equity
security" may include rights to acquire capital stock upon exercise of
warrants or options or upon conversion of convertible securities, or
otherwise.
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and
rules promulgated by the Securities and Exchange Commission thereunder,
including without limitation, Rule 16b-3. The Plan will be administered, and
options will be granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and options granted thereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and
regulations.
FEDERAL INCOME TAX CONSEQUENCES
The income tax consequences of the Plan under current federal law are
summarized below. The discussion is intended to provide only general
information. State and local income tax consequences are not discussed.
Non-Qualified Stock Options. Holders of non-qualified stock options will not
realize income for federal income tax purposes as a result of the grant of the
option, but normally will realize compensation income upon exercise of the
non-qualified stock option to the extent that the fair market value of the
shares on the date of exercise of the option exceeds the aggregate option
exercise price paid. The Company (or the corporation that is
13
the employer of the optionee) is entitled to a deduction in the same amount at
the time of exercise of the option, provided that the Company (or the
corporation that is the employer of the optionee) reports on a timely basis
the taxes on the ordinary income realized by an optionee upon the exercise of
a non-qualified stock option.
Optionees who are subject to the short-swing profits restrictions of Section
16(b) of the Exchange Act ("Insiders") may be affected by Section 83(c) of the
Code. Section 83(c) provides generally that, unless the Insider otherwise
elects, so long as the sale of securities at a profit could subject an Insider
to suit under Section 16(b), the imposition and calculation of the tax on any
compensation income realized will be deferred until the six-month Section
16(b) period expires. Amendments to the rules under Section 16 of the Exchange
Act, effective May 1, 1991, provide that option exercises will not constitute
"purchases" for Section 16(b) purposes. As a result, Section 83(c) will no
longer apply to option exercises (provided the option has been held for six
months or more) and Insiders will be taxed on the difference between the
option exercise price and the fair market value of the stock at the date of
exercise.
Pursuant to the Plan, a holder of non-qualified stock options may exercise
such options through delivery of shares of the Company's Common Stock already
held by such holder. The tax consequences resulting from the exercise of non-
qualified stock options through the delivery of already-owned shares are not
completely certain. The Internal Revenue Service in a published ruling has
taken the position that the tax consequences of exercising options with shares
of the Company's Common Stock must be determined separately for the number of
shares received upon exercise equal to the number of shares surrendered (as a
tax-free exchange of stock for stock) and the remaining shares received upon
exercise (as compensation income). Specifically, to the extent the number of
shares of the Company's Common Stock acquired upon exercise of the options
equals the number of shares of Common Stock delivered, the optionee will not
recognize gain and the optionee's basis in the Common Stock acquired upon such
exercise will equal the optionee's basis in the surrendered shares of the
Common Stock. Any additional shares of the Common Stock acquired upon such
exercise will result in compensation income to the optionee in an amount equal
to their then fair market value and, accordingly, the basis in such additional
shares of the Common Stock will be their fair market value.
A holder exercising a non-qualified stock option may elect to pay amounts
required to be withheld under Federal, state or local law in connection with
the exercise of the option by having a portion of the shares purchased upon
exercise retained by the Company. The shares of stock retained will be treated
as sold to the Company and the holder generally will not realize a gain on the
sale, unless the option is exercised through the delivery of already-owned
shares. If the option is exercised through the delivery of already-owned
shares, the holder may realize gain on the shares of stock retained by the
Company to the extent the fair market value of the shares retained on the date
of exercise of the option exceeds the holder's basis in such shares.
Also, a holder exercising a non-qualified stock option may elect to pay for
the shares of stock purchased upon exercise and all applicable withholding
taxes by having a portion of the shares of stock purchased upon exercise sold
by the holder's broker and the proceeds of the sale paid to the Company. The
holder will realize additional gain or loss on the sale of the shares of stock
by the holder's broker based on the difference between the fair market value
of the shares of stock on the exercise date and the sale price.
Incentive Stock Options. Holders of incentive stock options will not realize
income for federal income tax purposes upon either the grant of the option or
its exercise. However, the amount by which the fair market value of the shares
purchased upon exercise of the option exceeds the option price will be an
"item of adjustment" for purposes of alternative minimum tax. Upon the sale or
other taxable disposition of the shares purchased upon exercise of the option,
long-term capital gain will normally be recognized in the full amount of the
difference between the amount realized and the option exercise price if no
disposition of the shares has taken place within either (i) two years from the
date of grant of the option or (ii) one year from the date of transfer of the
shares to the optionee upon exercise. If the shares are sold or otherwise
disposed of before the end of such one-year or two-year periods, the
difference between the option price and the fair market value of the shares on
the date on which the option is exercised will be taxed as ordinary income;
the balance of the gain, if any, will be taxed as capital gain. If there is a
disposition of the shares before the expiration of such one-year or two-year
periods and the amount realized is less than the fair market value of the
shares at the date of exercise, the optionee's ordinary
14
income is limited to the amount realized less the option exercise price paid.
The Company (or other employer corporation) will be entitled to a tax
deduction in regard to an incentive stock option only to the extent the
optionee has ordinary income upon sale or other disposition of the shares
received upon exercise of the option.
As with non-qualified stock options, a holder of incentive stock options may
exercise such options through delivery of shares of the Company's Common Stock
already held by such holder. Although the analysis in this paragraph is under
study by the Internal Revenue Service, pursuant to Proposed Treasury
Regulation Section 1.422A-2, the tax consequences of exercising incentive
stock options with shares of the Company's Common Stock must be analyzed
separately for the number of shares received upon exercise equal to the number
of shares surrendered (as a tax-free exchange of stock for stock) and the
remaining shares received upon exercise (as an incentive stock option
transaction). Specifically, the optionee's basis in the Company's Common Stock
acquired upon such exercise, to the extent of the number of shares delivered,
is equal to his or her basis in the surrendered shares. The optionee's basis
in any additional shares of Common Stock acquired upon such exercise is zero.
If an optionee delivers Common Stock acquired by the exercise of incentive
stock options to acquire other Common Stock in connection with the exercise of
incentive stock options, such optionee will recognize compensation income on
the transaction if the delivered Common Stock has not been held for the
required one-year or two-year holding period. In addition, any sale or other
disposition of Common Stock acquired by exercising the incentive stock options
through delivery of the Company's Common Stock, within the one-year or two-
year period, will be viewed first as a disposition of Common Stock with the
zero basis.
A holder exercising an incentive stock option may elect to pay for the
shares of stock purchased upon exercise by having a portion of the shares of
stock purchased upon exercise sold by the holder's broker and the proceeds of
the sale paid to the Company. The sale of the shares of stock by the holder's
broker will be a disposition of the shares before the end of the one-year or
two-year holding period. As a result, the difference between the option price
of the shares of stock sold by the broker and the fair market value of the
shares of stock, determined on the date on which the option is exercised, will
be taxed as ordinary income; the balance of any gain will be taxed as capital
gain. If the amount realized on the sale of the stock sold by the broker is
less than the fair market value of the shares on the date of exercise, the
holder's ordinary income is limited to the amount realized less the option
exercise price paid. The Company (or other employer corporation) will be
entitled to a tax deduction to the extent the holder has ordinary income upon
the sale of the shares of stock sold by the holder's broker.
TERMINATION OF THE PLAN
The Plan will terminate December 14, 2005, after which date no further
options may be granted thereunder.
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
The Board of Directors has adopted, subject to stockholder approval, the
Company's Employee Qualified Stock Purchase Plan (the "Q.S.P. Plan"). The
stockholders are asked to approve the adoption of the Q.S.P. Plan. In general,
the Q.S.P. Plan authorizes employees of the Company and its subsidiaries to
purchase shares of the Company's Common Stock, through certain payroll
deductions, at a purchase price of 85% of the fair market value of such
shares. The Board of Directors believes that it is in the best interests of
the Company and its stockholders to approve the Q.S.P. Plan because the
ability to sell shares of the Company's Common Stock to employees at a
discount from the then current market price and without commissions and other
charges will assist the Company in attracting and retaining experienced and
capable persons who can make significant contributions to the further growth
and success of the Company. Moreover, the Board of Directors believes that
offering the employees of the Company and its subsidiaries the opportunity to
become owners of capital stock of the Company will help to align further their
interests with those of the Company's stockholders generally.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF THE COMPANY'S COMMON
STOCK REPRESENTED AND VOTING AT THE ANNUAL MEETING WILL BE REQUIRED FOR
APPROVAL OF THE Q.S.P. PLAN. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE Q.S.P. PLAN.
15
The following is a description of the material provisions of the Q.S.P.
Plan. A copy of the proposed Q.S.P. Plan is set forth in Appendix "II" to this
Proxy Statement. The summary which follows is not intended to be complete and
reference should be made to the Q.S.P. Plan for a complete statement of its
terms and provisions.
The Q.S.P. Plan authorizes the granting of purchase rights ("Options") to
eligible employees during the period (the "Offer Period") beginning January
29, 1996 (the "Effective Date") and ending December 31, 1997, pursuant to a
plan intended to qualify as an "employee stock purchase plan" under Section
423 of the Internal Revenue Code of 1986, as amended (the "Code"). The Q.S.P.
Plan is not subject to the provisions of ERISA, and is not a qualified plan
under Section 401(a) of the Code. Proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of Options under the Q.S.P. Plan
will be used for general corporate purposes.
SECURITIES SUBJECT TO THE Q.S.P. PURCHASE PLAN
The Q.S.P. Plan provides that an aggregate of 200,000 shares of the
Company's Common Stock may be issued thereunder. The Q.S.P. Plan also provides
for appropriate adjustments in the number and kind of shares subject to the
plan and to outstanding Options in the event of a stock split, stock dividend
or certain other similar changes in the Company's Common Stock and in the
event of a merger, reorganization, consolidation or certain other types of
recapitalizations of the Company. The Company, acting through its Chief
Executive Officer or his or her delegate, shall make appropriate adjustments
to the aggregate number of shares of Common Stock subject to the Q.S.P. Plan,
the number of shares of Common Stock subject to outstanding Options and the
price per share thereof if there is any merger, consolidation, reorganization,
recapitalization, stock dividend (in excess of 2%), stock split or other
change in the corporate structure of the Company. If, however, the Company is
not the surviving corporation in any such merger or reorganization, every
Option under the Q.S.P. Plan shall terminate upon the consummation of such
merger or reorganization, unless the surviving corporation shall issue a new
Option therefor or assume the Option then existing under the Q.S.P. Plan.
Options terminating upon the consummation of a merger or reorganization shall
be exercisable prior to or concurrently with such consummation.
ELIGIBILITY TO PARTICIPATE
Each employee of the Company who has been employed by the Company for not
less than 30 days and who is customarily employed by the Company for more than
20 hours per week is eligible to participate in the Q.S.P. Plan. The Company
presently has approximately 180 employees who are eligible to participate in
the Q.S.P. Plan. Directors who are not employees of the Company are not
eligible to participate in the Q.S.P. Plan. The Named Executive Officers named
above under "Executive Compensation" are among those eligible to participate
in the Q.S.P. Plan.
No Option may be granted under the Q.S.P. Plan to an employee who
immediately after the granting of the Option would own stock (including stock
which the individual may purchase under outstanding options) possessing more
than 5% of the total voting power or value of all classes of stock of the
Company, or any parent or subsidiary corporation. In addition, no employee may
be granted an Option which would permit his rights to purchase stock under all
Code Section 423 employee stock purchase plans of the Company, or any parent
or subsidiary corporation to accrue at a rate which exceeds $25,000 of the
fair market value of such stock (as of the time the Option is granted) for
each calendar year in which such Option is outstanding.
ELECTION TO PARTICIPATE; GRANT AND EXERCISE OF OPTIONS
Each eligible employee participates in the Q.S.P. Plan by means of payroll
deductions. To start the appropriate deductions, an eligible employee submits
a completed and executed Authorization Card to the Company during the three
week period prior to the Effective Date or during the two week period
commencing one month prior to the first day of any of the next three semi-
annual periods ("Semi-Annual Periods of Participation") within the Offer
Period and ending two weeks prior to the first day of the Semi-Annual Period
of Participation. Once an employee indicates his or her interest in
participating in the Q.S.P. Plan, the Company reduces that employee's cash
compensation through payroll deductions expressed as a whole percentage of
such
16
employee's base pay, not to exceed 10% of base pay, as elected by the
employee. Such payroll deductions are contributed to the Company upon the
exercise of an employee's Option. Under no circumstances shall an employee
receive any interest on payroll deductions credited to his or her account
under the Q.S.P. Plan.
Each employee who is an eligible employee on January 29, 1996 is granted an
Option on that date. Each employee who becomes an eligible employee after
January 29, 1996 is granted an Option on the first day of the next following
Semi-Annual Period of Participation. Subject to limitations contained in the
Plan, the date on which an eligible employee is granted an Option is an
eligible employee's Entry Date. Each participating employee's Option will be
exercised in semi-annual installments on the last day of each Semi-Annual
Period of Participation during which the eligible employee is participating in
the Q.S.P. Plan. The number of shares of Common Stock subject to each Option
shall be equal to the quotient of the total payroll deductions made for the
eligible employee during the Semi-Annual Period of Participation divided by
the Option Price, excluding fractional shares of Common Stock; provided,
however, that the number of shares of Common Stock subject to each Option
shall not exceed 10,000 shares.
Exercise of a semi-annual installment of an Option is automatic unless, at
least two weeks prior to the last day of such Semi-Annual Period of
Participation, the employee instructs the Company in writing that such Option
installment is not to be exercised or the employee files a new Authorization
Card reducing his or her percentage of payroll deduction to zero percent (0%).
As soon as practicable after receipt of such notice or such Authorization
Card, the Company shall pay to such eligible employee in cash in one lump sum
the balance of payroll deductions credited to such eligible employee's account
under the Q.S.P. Plan, without the payment of any interest thereon. The
eligible employee will at that time be deemed to have ceased participating in
the Q.S.P. Plan and may only recommence active participation in the Q.S.P.
Plan by making a new election to participate in the Q.S.P. Plan. Upon
cessation of participation, such eligible employee's payroll deductions shall
cease and such eligible employee shall not be eligible to participate in the
Q.S.P. Plan during the Semi-Annual Period of Participation which immediately
follows the Semi-Annual Period of Participation during which such Employee
ceased to participate in the Q.S.P. Plan.
No fractional shares of stock shall be purchased upon exercise of Option
installments, and any funds credited to an employee's account remaining after
purchases of whole shares of stock upon exercise of an Option installment
shall remain credited to such employee's account and carried forward for
purchase of whole shares of stock pursuant to the exercise of an installment
of the Option on the last day of the next following Semi-Annual Period of
Participation.
OPTION PRICE
The per share exercise price of each Option shall be an amount equal to the
lesser of 85% of the fair market value of a share of Common Stock on the first
day of the first Semi-Annual Period of Participation in which the eligible
employee began participating in the Q.S.P. Plan or 85% of the fair market
value of a share of Common Stock on the date of exercise of an installment of
the Option (the "Option Price"). For purposes of the Q.S.P. Plan, the fair
market value of the shares of Common Stock on any date is considered to be the
closing price of a share of Common Stock on the principal exchange on which
shares of the Company's stock are then trading, if any, on such date, or if
shares were not traded on such date, then on the next preceding trading day
during which a sale occurred. The closing price of the Company's Common Stock
reported by the American Stock Exchange on December 14, 1995 was $7.875.
CANCELLATION AND SUBSEQUENT GRANT OF OPTION.
If the fair market value of a share of the Company's Common Stock on the
first day of any Semi-Annual Period of Participation after the Effective Date
is lower than the fair market value of a share of Common Stock on the
participant's Entry Date into the Q.S.P. Plan, the participant's Option shall
be cancelled as of the first day of such Semi-Annual Period of Participation
and the participant's purchase rights with respect to any remaining semi-
annual installments under such Option shall be immediately extinguished
without any further action by the
17
Company, any subsidiary corporation, or the participant. On the first day of
such Semi-Annual Period of Participation in which an Option is cancelled, a
new Option will be granted which may thereafter be exercised in successive
semi-annual installments on the last day of each Semi-Annual Period of
Participation for the duration of the Offer Period. In the event that an
Option is cancelled and a new Option granted in its place, the participant's
Entry Date for purposes of the provisions of the Q.S.P. Plan shall become the
date upon which such new Option is granted. The cancellation and subsequent
grant provision applies only in the case of eligible employees who have
participated in the Q.S.P. Plan for at least one Semi-Annual Period of
Participation.
CESSATION OF PARTICIPATION
An employee shall cease to participate in the Q.S.P. Plan when (i) the
Administrator receives written instructions from the eligible employee to
terminate such employee's participation in the Q.S.P. Plan, (ii) the
Administrator receives written instructions from the eligible employee to
reduce his or her payroll deductions to zero percent (0%), (iii) the
Administrator receives written instructions from the eligible employee not to
exercise his or her Option installment during any Semi-Annual Period of
Participation, (iv) the eligible employee resigns or is discharged from
employment by the Company or any subsidiary corporation, or has a leave of
absence from the Company or any subsidiary corporation, or (v) the employee
dies. As soon as practicable after cessation of participation, all funds
credited to such employee's account under the Q.S.P. Plan will be paid to such
employee in cash in one lump sum, without payment of any interest thereon.
An eligible employee shall not be eligible to participate in the Q.S.P. Plan
during the Semi-Annual Period of Participation which immediately follows the
Semi-Annual Period of Participation during which such employee ceased to
participate in the Q.S.P. Plan.
RESTRICTIONS ON TRANSFER
Options granted under the Q.S.P. Plan are not transferable, other than by
will or the laws of descent and distribution. Each director, executive officer
or any person who beneficially owns 10% or more of the Company's Common Stock
is required under federal securities laws not to sell his or her shares
acquired under the Q.S.P. Plan for at least six months following the date on
which such shares were acquired.
ADMINISTRATION, AMENDMENT AND TERMINATION OF PLAN
The Q.S.P. Plan is administered by the Company, acting through its Chief
Executive Officer, or his or her delegate (the "Administrator"). All costs of
administering the Q.S.P. Plan and of granting and exercising Options under the
Q.S.P. Plan are paid by the Company. The Q.S.P. Plan provides for the
indemnification of the Administrator for liability, loss, costs, damages,
attorneys' fees and other expenses the Administrator may sustain or incur in
connection with the administration of the Q.S.P. Plan, except for liability,
loss, costs, damages, attorneys' fees and other expenses caused by the
negligence of the Administrator or his agent.
Although the Company expects to continue the Q.S.P. Plan until December 31,
1997 or if earlier, until all shares of the Company's Common Stock reserved
for issuance under the Q.S.P. Plan have been so issued, the Company's Board of
Directors may terminate the Q.S.P. Plan at any time with respect to any shares
not then subject to Options under the Q.S.P. Plan and, except as indicated
below, may modify the Q.S.P. Plan from time to time.
The Board of Directors may not, without prior stockholder approval, amend
the Q.S.P. Plan so as to increase the maximum number of shares of Common Stock
subject to the Q.S.P. Plan, change the designation or class of employees
eligible to receive Options under the Q.S.P. Plan, materially increase the
benefits accruing to employees under the Q.S.P. Plan or amend the Q.S.P. Plan
in any manner which would cause the Q.S.P. Plan to cease to be an "employee
stock purchase plan" under Section 423 of the Code.
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FEDERAL INCOME TAX CONSEQUENCES
The income tax consequences of the Q.S.P. Plan under current federal law are
summarized below. The discussion is intended to provide only general
information. State and local income tax consequences are not discussed. The
Q.S.P. Plan is intended to qualify as an "employee stock purchase plan," as
defined in Section 423 of the Code.
If an Option is granted to an employee under the Q.S.P. Plan, no taxable
income will result to such employee on the date the Option is granted or on
any date that a semi-annual installment of the Option is exercised. If the
employee does not dispose of the shares of Common Stock purchased upon any
exercise of the Option within two years after the date on which the Option was
granted or within one year after the transfer of the shares of such Common
Stock to the employee (the "Holding Period"), or the employee dies while
owning the shares, the employee will be taxed in the year in which the shares
are disposed of, or the year closing with the employee's death, as follows:
(a) The employee will be subject to ordinary income tax on an amount
equal to the lesser of (i) the excess, if any, of the fair market value of
the shares on the date on which they were disposed of over the amount paid
for the shares, or (ii) the excess, if any, of the fair market value of the
shares on the date the Option was granted over the Option Price; and
(b) Any further gain realized by the employee on the disposition of the
shares (after increasing the basis of these shares by the amount of
ordinary income realized as described in (a) above) will be taxed as
capital gain.
If the employee disposes of the shares of Common Stock purchased upon
exercise of the Option before the expiration of the Holding Period, the
employee will realize ordinary income, reportable for the year of the
disposition of such shares, to the extent of the excess of the fair market
value of such shares on the date on which the Option was exercised, over the
Option price for such shares. Any additional gain realized will be taxable as
capital gain. If the Common Stock is disposed of before the expiration of the
Holding Period and the amount realized is less than the fair market value of
the Common Stock at the time of exercise, the employee will realize (i)
ordinary income to the extent of the excess of the fair market value of such
Common Stock on the date on which the Option was exercised, over the Option
price for such Common Stock and (ii) capital loss to the extent the fair
market value of such Common Stock on the exercise date exceeds the amount
realized on the sale. If the employee realizes ordinary income as a result of
a disposition before the expiration of the Holding Period, the amount of such
ordinary income would be deductible by the Company for Federal income tax
purposes provided such amount constitutes an ordinary and necessary business
expense.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company's financial statements for the year ended October 29, 1995 have
been examined by Ernst & Young LLP. A representative of Ernst & Young LLP is
expected to be available at the Annual Meeting to respond to appropriate
questions and to make a statement if he or she desires to do so. The Company's
Audit Committee will select independent auditors for the current year sometime
after the Annual Meeting.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder of the Company intended to be presented at the
next Annual Meeting of Stockholders of the Company must be received by the
Secretary of the Company not later than October 9, 1996 to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
19
SECTION 16(a) REPORTING
Under Section 16(a) of the Exchange Act, directors, executive officers and
beneficial owners of 10% or more of the Common Stock ("Reporting Persons") are
required to report to the Securities and Exchange Commission on a timely basis
the initiation of their status as a Reporting Person and any changes with
respect to their beneficial ownership of the Common Stock. Based solely on its
review of such forms received by it, the Company believes that all filing
requirements applicable to its directors, executive officers and beneficial
owners of 10% or more of the Common Stock were complied with during fiscal
1995.
OTHER MATTERS
The Company does not know of any business other than that described herein
which will be presented for consideration or action by the stockholders at the
Annual Meeting. If, however, any other business shall properly come before the
Annual Meeting, shares represented by Proxies will be voted in accordance with
the best judgment of the persons named therein or their substitutes.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders is being mailed with this Proxy
Statement to stockholders on or about February 6, 1996. Upon request the
Company will furnish the Annual Report to any stockholder.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth S. Polak, Secretary
Woodland Hills, California
February 6, 1996
20
APPENDIX I
THE 1995 STOCK OPTION PLAN
OF
DATAMETRICS CORPORATION
Datametrics Corporation, a corporation organized under the laws of the State
of Delaware, hereby adopts The 1995 Stock Option Plan of Datametrics
Corporation. The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain key Employees of the
Company and its subsidiaries who have been or will be given responsibility
for the management or administration of the business affairs of the Company
and its subsidiaries, and to certain other persons with whom the Company
maintains a business relationship, by assisting them to become owners of
the Company's Common Stock and thus to benefit directly from its growth,
development and financial success.
(2) To enable the Company to obtain and retain the services of the type
of professional, technical and managerial employees considered essential to
the long-range success of the Company by providing and offering them an
opportunity to become owners of the Company's Common Stock under options,
including options that are intended to qualify as "incentive stock options"
under Section 422 of the Code.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The masculine pronoun shall include the feminine and neuter and the singular
shall include the plural, where the context so indicates.
SECTION 1.1--Board
"Board" shall mean the Board of Directors of the Company.
SECTION 1.2--Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.3--Committee
"Committee" shall mean the Stock Option Committee of the Board, appointed as
provided in Section 6.1.
SECTION 1.4--Company
"Company" shall mean Datametrics Corporation. In addition, "Company" shall
mean any corporation assuming, or issuing new employee stock options in
substitution for, Incentive Stock Options, outstanding under the Plan, in a
transaction to which Section 424(a) of the Code applies.
SECTION 1.5--Director
"Director" shall mean a member of the Board.
SECTION 1.6--Employee
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any corporation which is then a Parent Corporation
or a Subsidiary, whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.
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SECTION 1.7--Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
SECTION 1.8--Incentive Stock Option
"Incentive Stock Option" shall mean an Option which qualifies under Section
422 of the Code and which is designated as an Incentive Stock Option by the
Committee.
SECTION 1.9--Non-Qualified Option
"Non-Qualified Option" shall mean an Option which is not an Incentive Stock
Option and which is designated as a Non-Qualified Option by the Committee.
SECTION 1.10--Officer
"Officer" shall mean an officer of the Company, as defined in Rule 16a-1(f)
under the Exchange Act, as such Rule may be amended in the future.
SECTION 1.11--Option
"Option" shall mean an option to purchase Common Stock of the Company
granted under the Plan. "Options" includes both Incentive Stock Options and
Non-Qualified Options.
SECTION 1.12--Optionee
"Optionee" shall mean an Employee or other person to whom an Option is
granted under the Plan.
SECTION 1.13--Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than
the Company then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
SECTION 1.14--Plan
"Plan" shall mean The 1995 Stock Option Plan of Datametrics Corporation.
SECTION 1.15--Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
SECTION 1.16--Secretary
"Secretary" shall mean the Secretary of the Company.
SECTION 1.17--Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
SECTION 1.18--Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
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SECTION 1.19--Termination of Relationship
"Termination of Relationship" shall mean the time when the employee-employer
relationship or other business relationship between the Optionee and the
Company, a Parent Corporation or a Subsidiary is terminated for any reason,
with or without cause, including, but not by way of limitation, a termination
by resignation, discharge, death or retirement, but excluding terminations
where there is a simultaneous reemployment by the Company, a Parent
Corporation or a Subsidiary. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to
Termination of Relationship, including, but not by way of limitation, the
question of whether a Termination of Relationship resulted from a discharge
for good cause, and all questions of whether particular leaves of absence
constitute Terminations of Relationship; provided, however, that, with respect
to Incentive Stock Options, a leave of absence shall constitute a Termination
of Relationship if, and to the extent that, such leave of absence interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section.
ARTICLE II
SHARES SUBJECT TO PLAN
SECTION 2.1--Shares Subject to Plan
The shares of stock subject to Options shall be shares of the Company's $.01
par value Common Stock. The aggregate number of such shares which may be
issued upon exercise of Options shall not exceed seven hundred thousand
(700,000).
SECTION 2.2--Unexercised Options
If any Option expires or is cancelled without having been fully exercised,
the number of shares subject to such Option but as to which such Option was
not exercised prior to its expiration or cancellation may again be optioned
hereunder, subject to the limitations of Section 2.1.
SECTION 2.3--Changes in Company's Shares
In the event that the outstanding shares of Common Stock of the Company are
hereafter changed into or exchanged for a different number or kind of shares
or other securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend or combination of shares, appropriate
adjustments shall be made by the Committee in the number and kind of shares
for the purchase of which Options may be granted, including adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares which may
be issued on exercise of Options.
ARTICLE III
GRANTING OF OPTIONS
SECTION 3.1--Eligibility
Any key Employee of the Company or of any corporation which is then a Parent
Corporation or a Subsidiary or any other person (other than a director)
maintaining a business relationship with the Company, a Parent Corporation or
a Subsidiary shall be eligible to be granted Options, except as provided in
Section 3.2.
SECTION 3.2--Qualification of Incentive Stock Options
No Incentive Stock Option shall be granted except to Employees and unless
such Option, when granted, qualifies as an "incentive stock option" under
Section 422 of the Code.
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SECTION 3.3--Granting of Options
(a) The Committee shall from time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and select from among the
key Employees and other eligible persons (including those to whom Options
have been previously granted under the Plan) such of them as in its opinion
should be granted Options; and
(ii) Determine the number of shares to be subject to such Options granted
to such selected key Employees and other eligible persons, and determine
whether such Options as are to be granted to Employees are to be Incentive
Stock Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options, consistent with
the Plan.
(b) Upon the selection of an Employee or other eligible person to be granted
an Option, the Committee shall instruct the Secretary to issue such Option and
may impose such conditions on the grant of such Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee or other
eligible person that the Employee or other eligible person surrender for
cancellation some or all of the unexercised Options which have been previously
granted to him. An Option the grant of which is conditioned upon such
surrender may have an option price lower (or higher) than the option price of
the surrendered Option, may cover the same (or a lesser or greater) number of
shares as the surrendered Option, may contain such other terms as the
Committee deems appropriate and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, option period or any
other term or condition of the surrendered Option.
ARTICLE IV
TERMS OF OPTIONS
SECTION 4.1--Option Agreement
Each Option shall be evidenced by a written Stock Option Agreement, which
shall be executed by the Optionee and an authorized Officer of the Company and
which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as "incentive stock options" under Section
422 of the Code.
SECTION 4.2--Option Price
(a) The price of the shares subject to each Option shall be set by the
Committee; provided, however, that the price per share shall be not less than
100% of the fair market value of such shares on the date such Option is
granted; provided, further, that, in the case of an Incentive Stock Option,
the price per share shall not be less than 110% of the fair market value of
such shares on the date such Option is granted in the case of an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation.
(b) For purposes of the Plan, the fair market value of a share of the
Company's Common Stock as of a given date shall be: (i) the closing price of a
share of the Company's Common Stock on the principal exchange on which shares
of the Company's Common Stock are then trading, if any, on the day previous to
such date, or, if shares were not traded on the day previous to such date,
then on the next preceding trading day during which a sale occurred; or (ii)
if such Common Stock is not traded on an exchange but is quoted on NASDAQ or a
successor quotation system, (1) the last sales price (if the Company's Common
Stock is then listed as a National Market Issue under the NASD National Market
System) or (2) the mean between the closing representative bid and asked
prices (in all other cases) for the Company's Common Stock on the day previous
to such date as reported by NASDAQ or such successor quotation system; or
(iii) if such Common Stock is not publicly traded on an exchange and not
quoted on NASDAQ or a successor quotation system, the mean between the closing
bid
I-4
and asked prices for the Company's Common Stock, on the day previous to such
date, as determined in good faith by the Committee; or (iv) if the Company's
Common Stock is not publicly traded, the fair market value established by the
Committee acting in good faith.
SECTION 4.3--Commencement of Exercisability
(a) Except as the Committee may otherwise provide, no Option may be
exercised in whole or in part during the first year after such Option is
granted.
(b) Subject to the provisions of Sections 4.3(a), 4.3(c), 4.3(d) and 7.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.3(a), 4.3(c), 4.3(d) and
7.3, accelerate the time at which such Option or any portion thereof may be
exercised.
(c) No portion of an Option which is unexercisable at Termination of
Relationship shall thereafter become exercisable.
(d) Notwithstanding any other provision of this Plan, in the case of an
Incentive Stock Option, the aggregate fair market value (determined at the
time the Incentive Stock Option is granted) of the shares of the Company's
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code) are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, any Subsidiary and any Parent Corporation) shall not
exceed $100,000.
SECTION 4.4--Expiration of Options
(a) No Option may be exercised to any extent by anyone after the first to
occur of the following events:
(i) The expiration of five years from the date the Option was granted; or
(ii) Except in the case of any Optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of three months
from the date of the Optionee's Termination of Relationship for any reason
other than such Optionee's death unless the Optionee dies within said
three-month period; or
(iii) In the case of an Optionee who is disabled (within the meaning of
Section 22(e)(3) of the Code), the expiration of one year from the date of
the Optionee's Termination of Relationship for any reason other than such
Optionee's death unless the Optionee dies within said one-year period; or
(iv) The expiration of one year from the date of the Optionee's death.
(b) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Committee may provide in the terms of individual Options that said Options
expire immediately upon a Termination of Relationship for any reason.
SECTION 4.5--Consideration
In consideration of the granting of an Option, the Optionee shall agree, in
the written Stock Option Agreement, to remain in the employ of or in a
business relationship with the Company, a Parent Corporation or a Subsidiary
for a period of at least one year after the Option is granted. Nothing in this
Plan or in any Stock Option Agreement hereunder shall confer upon any Optionee
any right to continue in the employ of or in a business relationship with the
Company, any Parent Corporation or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company, its Parent Corporations and its
Subsidiaries, which are hereby expressly reserved, to remove or discharge any
Optionee at any time for any reason whatsoever, with or without cause.
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SECTION 4.6--Adjustments in Outstanding Options
In the event that the outstanding shares of the stock subject to Options are
changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which all outstanding
Options, or portions thereof then unexercised, shall be exercisable, to the
end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option shall be made without change in the total price applicable
to the Option or the unexercised portion of the Option (except for any change
in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in Option price per
share; provided, however, that, in the case of Incentive Stock Options, each
such adjustment shall be made in such manner as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the Committee shall be final and binding upon all
Optionees, the Company and all other interested persons.
SECTION 4.7--Merger, Consolidation, Acquisition, Liquidation or Dissolution
Notwithstanding the provisions of Section 4.6, in its absolute discretion,
and on such terms and conditions as it deems appropriate, the Committee may
provide by the terms of any Option that such Option cannot be exercised after
the merger or consolidation of the Company with or into another corporation,
the acquisition by another corporation or person of all or substantially all
of the Company's assets or 80% or more of the Company's then outstanding
voting stock or the liquidation or dissolution of the Company; and if the
Committee so provides, it may, in its absolute discretion and on such terms
and conditions as it deems appropriate, also provide, either by the terms of
such Option or by a resolution adopted prior to the occurrence of such merger,
consolidation, acquisition, liquidation or dissolution, that, for some period
of time prior to such event, such Option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in Section 4.3(a),
Section 4.3(b) and/or any installment provisions of such Option.
ARTICLE V
EXERCISE OF OPTIONS
SECTION 5.1--Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise an Option (or any
portion thereof) granted to him. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his personal representative or by any person empowered to do
so under the deceased Optionee's will or under the then applicable laws of
descent and distribution.
SECTION 5.2--Partial Exercise
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof becomes unexercisable under the Plan or
the applicable Stock Option Agreement, such Option or portion thereof may be
exercised in whole or in part; provided, however, that the Company shall not
be required to issue fractional shares and the Committee may, by the terms of
the Option, require any partial exercise to be with respect to a specified
minimum number of shares.
SECTION 5.3--Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or his office of all of the following
prior to the time when such Option or such portion becomes unexercisable under
the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
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(b) (i) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is thereby exercised; or
(ii) With the consent of the Committee, (A) shares of the Company's
Common Stock owned by the Optionee duly endorsed for transfer to the
Company or (B) subject to the timing requirements of Section 5.4,
shares of the Company's Common Stock issuable to the Optionee upon
exercise of the Option, with a fair market value (as determined under
Section 4.2(b)) on the date of Option exercise equal to the aggregate
Option price of the shares with respect to which such Option or portion
is thereby exercised; or
(iii) With the consent of the Committee, any combination of the
consideration provided in the foregoing subsections (i) and (ii); and
(c) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; with the consent of the
Committee, (i) shares of the Company's Common Stock owned by the Optionee
duly endorsed for transfer or (ii) subject to the timing requirements of
Section 5.4, shares of the Company's Common Stock issuable to the Optionee
upon exercise of the Option, valued in accordance with Section 4.2(b) at
the date of Option exercise, may be used to make all or part of such
payment;
(d) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute
discretion, also take whatever additional actions it deems appropriate to
effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(e) In the event that the Option or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Option or portion thereof.
SECTION 5.4--Certain Timing Requirements
Shares of the Company's Common Stock issuable to the Optionee upon exercise
of the Option may be used to satisfy the Option price or the tax withholding
consequences of such exercise only (i) during the period beginning on the
third business day following the date of release of the quarterly or annual
summary statement of sales and earnings of the Company and ending on the
twelfth business day following such date or (ii) pursuant to an irrevocable
written election by the Optionee to use shares of the Company's Common Stock
issuable to the Optionee upon exercise of the Option to pay all or part of the
Option price or the withholding taxes (subject to the approval of the
Committee) made at least six months prior to the payment of such Option price
or withholding taxes.
SECTION 5.5--Conditions to Issuance of Stock Certificates
The shares of stock issuable and deliverable upon the exercise of an Option,
or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall, in its absolute discretion,
deem necessary or advisable; and
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(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may establish from time to time for reasons of
administrative convenience.
SECTION 5.6--Rights as Shareholders
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
SECTION 5.7--Transfer Restrictions
Unless otherwise approved in writing by the Committee, no shares acquired
upon exercise of any Option by any Officer may be sold, assigned, pledged,
encumbered or otherwise transferred until at least six months have elapsed
from (but excluding) the date that such Option was granted. The Committee, in
its absolute discretion, may impose such other restrictions on the
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such other restriction shall be set forth in the
respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the Employee to give the
Company prompt notice of any disposition of shares of stock, acquired by
exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Incentive Stock Option refer to such requirement to
give prompt notice of disposition.
ARTICLE VI
ADMINISTRATION
SECTION 6.1--Stock Option Committee
The Stock Option Committee shall consist of two or more Directors, appointed
by and holding office at the pleasure of the Board, each of whom is a
"disinterested person" as defined by Rule 16b-3. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members
may resign at any time by delivering written notice to the Board. Vacancies in
the Committee shall be filled by the Board.
SECTION 6.2--Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general administration
of the Plan in accordance with its provisions. The Committee shall have the
power to interpret the Plan and the Options and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock
options" within the meaning of Section 422 of the Code. The Board shall have
no right to exercise any of the rights or duties of the Committee under the
Plan.
SECTION 6.3--Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
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SECTION 6.4--Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, appraisers, brokers or other persons. The Committee,
the Company and its Officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall
be final and binding upon all Optionees, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Options, and all members of the Committee shall be fully protected by the
Company in respect to any such action, determination or interpretation.
ARTICLE VII
OTHER PROVISIONS
SECTION 7.1--Options Not Transferable
No Option or interest or right therein or part thereof shall be liable for
the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null
and void and of no effect; provided, however, that nothing in this Section 7.1
shall prevent transfers by will or by the applicable laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined
by the Code or Title I of the Employee Retirement Income Security Act, and the
rules and regulations thereunder).
SECTION 7.2--Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Committee. However,
without approval of the Company's shareholders given within 12 months before
or after the action by the Committee, no action of the Committee may, except
as provided in Section 2.3, increase any limit imposed in Section 2.1 on the
maximum number of shares which may be issued on exercise of Options,
materially modify the eligibility requirements of Section 3.1, reduce the
minimum Option price requirements of Section 4.2(a) or extend the limit
imposed in this Section 7.2 on the period during which Options may be granted
or amend or modify the Plan in a manner requiring shareholder approval under
Rule 16b-3. Neither the amendment, suspension nor termination of the Plan
shall, without the consent of the holder of the Option, impair any rights or
obligations under any Option theretofore granted. No Option may be granted
during any period of suspension nor after termination of the Plan, and in no
event may any Option be granted under this Plan after the first to occur of
the following events:
(a) The expiration of ten years from the date the Plan is adopted by the
Board; or
(b) The expiration of ten years from the date the Plan is approved by the
Company's shareholders under Section 7.3.
SECTION 7.3--Approval of Plan by Shareholders
This Plan will be submitted for the approval of the Company's shareholders
within 12 months after the date of the Board's initial adoption of the Plan.
Options may be granted prior to such shareholder approval; provided, however,
that such Options shall not be exercisable prior to the time when the Plan is
approved by the shareholders; provided, further, that if such approval has not
been obtained at the end of said 12-month period, all Options previously
granted under the Plan shall thereupon be cancelled and become null and void.
The Company shall take such actions with respect to the Plan as may be
necessary to satisfy the requirements of Rule 16b-3(b).
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SECTION 7.4--Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including,
but not by way of limitation, the grant or assumption of options in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise,
of the business, stock or assets of any corporation, firm or association.
SECTION 7.5--Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
SECTION 7.6--Conformity to Securities Laws
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and
rules promulgated by the Securities and Exchange Commission thereunder,
including without limitation Rule 16b-3. Notwithstanding anything herein to
the contrary, the Plan shall be administered, and Options shall be granted and
may be exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and Options
granted hereunder shall be deemed amended to the extent necessary to conform
to such laws, rules and regulations.
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APPENDIX II
DATAMETRICS CORPORATION
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
Datametrics Corporation, a Delaware corporation (the "Company"), hereby
adopts this Employee Qualified Stock Purchase Plan (the "Q.S.P. Plan").
1. PURPOSE. The purpose of the Q.S.P. Plan is to assist employees of the
Company and its Subsidiary Corporations in acquiring stock ownership interests
in the Company, pursuant to a plan which qualifies as an "employee stock
purchase plan" under Code Section 423. The Q.S.P. Plan is intended to help
employees provide for their future security, and to encourage them to remain
in the employ of the Company and its Subsidiary Corporations.
2. DEFINITIONS. Whenever one of the following terms is used in the Q.S.P.
Plan with the first letter or letters capitalized, it shall have the following
meaning, unless the context clearly indicates to the contrary (such
definitions to be equally applicable to the singular and plural forms of the
terms defined):
(a) "Administrator" shall mean the Company, acting through its Chief
Executive Officer or his or her delegate.
(b) "Authorization Card" shall mean the form prescribed by the
Administrator, which shall include a form of stock purchase agreement
pursuant to which an Eligible Employee shall purchase shares of Stock under
the Q.S.P. Plan and a form of payroll deduction authorization pursuant to
which such Eligible Employee shall authorize the Company or a Subsidiary
Corporation to deduct such Eligible Employee's contributions under the
Q.S.P. Plan.
(c) "Base Pay" shall mean gross pay received by an Employee on each
Payday as cash compensation for services to the Company or any Subsidiary
Corporation, excluding overtime payments, incentive compensation, bonuses,
fringe benefits, expense reimbursements, and other special-payments, except
to the extent that the inclusion of any such item is specifically
designated by the Administrator.
(d) "Board of Directors" shall mean the Board of Directors of the
Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Company" shall mean Datametrics Corporation, a Delaware corporation.
(g) "Effective Date" shall mean the first day of the Offer Period which
shall be January 29, 1996.
(h) "Eligible Employee" shall mean any Employee who satisfies the
requirements of Section 4.
(i) "Employee" shall mean any person who renders services to the Company
or any Subsidiary Corporation in the status of an employee within the
meaning of Code Section 3121(d). "Employee" shall not include any director
of the Company or any Subsidiary Corporation who does not render services
to the Company or any Subsidiary Corporation in the status of an employee
within the meaning of Code Section 3121(d).
(j) "Enrollment Period" shall mean, for each Semi-Annual Period of
Participation, the two week period determined in accordance with Section
6(b); provided, however, that pursuant to Section 6(b) the Enrollment
Period for the first Semi-Annual Period of Participation shall be the three
week period immediately preceding the Effective Date.
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(k) "Entry Date" shall mean the date an Eligible Employee is granted an
Option during the Offer Period. The earliest Entry Date under the Q.S.P.
Plan shall be the Effective Date. Subsequent Entry Dates under the Q.S.P.
Plan shall be the first business day of July 1996; the first business day
of January 1997; and the first business day of July 1997. Each Eligible
Employee shall have no more than one (1) Entry Date at any time under the
Q.S.P. Plan.
(l) "Offer Period" shall mean the period beginning on the Effective Date
and ending on December 31, 1997.
(m) "Option" shall mean a right granted to an Eligible Employee to
purchase shares of Stock under Sections 8(a) and 9 of the Q.S.P. Plan.
(n) "Option Price" shall mean the per share exercise price of shares of
Stock to be purchased pursuant to a semi-annual installment of an Option,
as provided in Section 10.
(o) "Parent Corporation" shall mean any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company if,
at the time of the granting of the Option, each of the corporations other
than the Company own stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
(p) "Participant" shall mean an Eligible Employee who elects to
participate in the Q.S.P. Plan and complies with the provisions of Section
6.
(q) "Payday" of an Employee shall mean the regular and recurring
established day for payment of cash compensation to Employees in the same
classification or position.
(r) "Q.S.P. Plan" shall mean the Datametrics Corporation Employee
Qualified Stock Purchase Plan.
(s) "Semi-Annual Period of Participation" shall mean each semi-annual
period for which the Participant actually participates in the Offer Period.
There shall be four (4) semi-annual periods of participation within the
Offer Period. The first such semi-annual period shall begin on January 29,
1996 and end on the last business day in June 1996. The second such semi-
annual period shall begin on the first business day in July 1996 and end on
the last business day in December 1996. The third such semi-annual period
shall begin on the first business day in January 1997 and end on the last
business day in June 1997. The fourth such semi-annual period shall begin
on the first business day in July 1997 and end on the last business day in
December 1997.
(t) "Semi-Annual Purchase Date" shall mean the last business day of June
and December each year during the Offer Period on which shares of Stock are
automatically purchased for Participants under the Q.S.P. Plan.
(u) "Subsidiary Corporation" shall mean any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company
if, at the time of the granting of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(v) "Stock" shall mean the shares of the Company's Common Stock, $.01 par
value.
3. STOCK SUBJECT TO THE Q.S.P. PLAN.
(a) Subject to Section 15, the shares of Stock that may be sold pursuant to
Options granted under the Q.S.P. Plan shall not exceed 200,000 shares.
(b) The maximum aggregate number of shares of Common Stock each Eligible
Employee may purchase over the duration of the Q.S.P. Plan shall not exceed
10,000 shares.
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(c) The Company shall reserve for issuance under the Q.S.P. Plan 200,000
shares of the Company's authorized but unissued Stock.
(d) If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised before its expiration or cancellation may again be
optioned hereunder, subject to the limitations of subsection (a).
(e) Any adjustment to the number of shares of Stock reserved for issuance
under the Q.S.P. Plan shall be made only in accordance with Sections 15
(relating to recapitalization) and 18 (relating to amendments of the Q.S.P.
Plan).
4. ELIGIBILITY. Each Employee of the Company or any Subsidiary Corporation
who on the first day of any Enrollment Period:
(a) has been employed by the Company or any Subsidiary Corporation for
not less than thirty (30) days; and
(b) is customarily employed by the Company or any Subsidiary Corporation
for more than twenty (20) hours per week,
shall become an Eligible Employee on such day. An Employee who is an Eligible
Employee on the Effective Date may elect to begin participating in the Q.S.P.
Plan on any Entry Date on or after the Effective Date. The Effective Date
shall become such Employee's Entry Date for the Offer Period, and on that date
such Employee shall be granted an Option for the Offer Period; provided,
however, that any such Option is subject to cancellation and such Employee's
Entry Date may be changed in accordance with the terms of Section 9. An
Employee who is not an Eligible Employee on the Effective Date may
subsequently elect to participate in the Q.S.P. plan on any Entry Date for
which he or she becomes an Eligible Employee. The first Entry Date on which
such Employee is an Eligible Employee shall become such Employee's Entry Date
for the Offer Period, and on that date such Employee shall be granted an
Option for the Offer Period; provided, however, that any such Option is
subject to cancellation and that such Employee's Entry Date may alter in
accordance with the terms of Section 9.
5. PURCHASE RIGHTS.
(a) Options shall be granted under the Q.S.P. Plan until the earlier of the
maximum number of shares of Stock subject to sale pursuant to Options have
been sold, or the Q.S.P. Plan is terminated.
(b) The Q.S.P. Plan shall be implemented under the Offer Period. Subject to
subsection (c), the Offer Period will begin upon January 29, 1996 and will end
on December 31, 1997. The first day of the Offer Period shall be the first day
of the first Semi-Annual Period of Participation.
(c) Under no circumstances shall any shares of Stock be issued hereunder
until such time as (i) the Q.S.P. Plan shall have been approved by the
Company's stockholders and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933 (as amended), all
applicable listing requirements of any securities exchange on which shares of
the Stock are listed and all other applicable statutory and regulatory
requirements.
(d) Each Eligible Employee shall be granted a separate Option for the Offer
Period. The Option shall be granted on the Entry Date on which such individual
joins the Offer Period and shall be automatically exercised in successive
semi-annual installments on the last day of each Semi-Annual Period of
Participation in which the Eligible Employee participates. Accordingly, each
Option may be exercised up to two (2) times each calendar year it remains
outstanding. An Option granted under the Q.S.P. Plan may be cancelled pursuant
to Section 9. In such event, the date on which a subsequent Option is granted
to each Eligible Employee under the Q.S.P. Plan shall become the Entry Date
for such Eligible Employee and such date shall supersede and replace any
previous Entry Date.
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6. PARTICIPATION IN THE Q.S.P. PLAN.
(a) Each Eligible Employee may elect to participate in the Q.S.P. by
submitting to the Administrator a completed and executed Authorization Card in
accordance with subsection (b). An Eligible Employee who elects to participate
in the Q.S.P. Plan shall elect on such Authorization Card any whole percentage
of Base Pay (such percentage not to exceed ten percent (10%)) to be withheld
by payroll deduction, which upon an exercise of a semi-annual installment of
the Option granted to such Eligible Employee with respect to the Offer Period,
shall be contributed to the Company as payment for shares of Stock purchased
pursuant to such semi-annual installment of the Option. The deduction rate
authorized by any Eligible Employee shall continue in effect for the remainder
of the Offer Period, except to the extent such rate is changed in accordance
with the following:
(i) Each Eligible Employee may, at any one time during each Semi-Annual
Period of Participation at least two weeks prior to the Semi-Annual
Purchase Date, reduce his or her percentage of payroll deduction to any
whole percentage by filing a new completed and executed Authorization Card
with the Administrator (or his or her designate). At any one time during
the two week period commencing one month prior to the Semi-Annual Purchase
Date an Eligible Employee may increase his or her percentage of payroll
deduction (not to exceed ten percent (10%)) by filing a new completed and
executed Authorization Card with the Administrator (or his or her
designate), with such increase to become effective beginning on the first
day of the next Semi-Annual Period of Participation. An Eligible Employee
may not increase or reduce his or her percentage of payroll deduction
during the two week period immediately preceding each Semi-Annual Purchase
Date. Any reduction of an Eligible Employee's percentage of payroll
deduction shall become effective as soon as practicable after the filing of
a new completed and executed Authorization Card with the Administrator (or
his or her designate). If an Eligible Employee reduces his or her
percentage of payroll deduction to zero percent (0%), the Company or
Subsidiary Corporation will as soon as practicable thereafter pay to such
Eligible Employee in cash in one lump sum the balance of payroll deductions
credited to such Eligible Employee's account under the Q.S.P. Plan, without
the payment of any interest thereon. The Eligible Employee will at that
time be deemed to have ceased to participate in the Q.S.P. Plan and may
only recommence active participation in the Q.S.P. Plan by submitting to
the Administrator a new completed and executed Authorization Card in
accordance with subsection (b). Upon cessation of participation, such
Eligible Employee shall not be eligible to participate in the Q.S.P. Plan
during the Semi-Annual Period of Participation which immediately follows
the Semi-Annual Period of Participation during which such Employee ceased
to participate in the Q.S.P. Plan.
(b) An Employee who is an Eligible Employee on the Effective Date must
submit his or her Authorization Card to the Administrator during the three
week period immediately prior to the Effective Date in order to participate in
the first Semi-Annual Period of Participation. An Employee who is an Eligible
Employee on the Effective Date but who does not submit his or her
Authorization Card to the Administrator during such three week period or an
Employee who becomes an Eligible Employee subsequent to the Effective Date
must submit his or her Authorization Card to the Administrator during the two
week period commencing one month prior to such Eligible Employee's Entry Date.
(c) An Eligible Employee's Authorization Card shall include express written
authorization by the Eligible Employee to the Company to issue shares of Stock
purchased under the Q.S.P. Plan to an account in the name of such Eligible
Employee with a brokerage firm to be designated by the Administrator.
7. PAYROLL DEDUCTIONS.
(a) Cash compensation payable to an Eligible Employee who elects to
participate in the Q.S.P. Plan for a Semi-Annual Period of Participation shall
be reduced each Payday during such Semi-Annual Period of Participation through
payroll deductions by an amount equal to the whole percentage of Base Pay
payable on such Payday elected by the Eligible Employee under Section 6.
(b) The amount of each Eligible Employee's payroll deduction shall be held
by the Company or Subsidiary Corporation and credited to an account
established for such Eligible Employee. Neither the Company nor any Subsidiary
Corporation shall pay any interest on the funds credited to an Eligible
Employee's account under the Q.S.P. Plan.
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(c) During a leave of absence from the Company or any Subsidiary Corporation
which is approved by the Company or Subsidiary Corporation and which meets the
requirements of Treasury Regulation Section 1.421-7(h)(2), an Eligible
Employee may continue to participate in the Q.S.P. Plan by making cash
payments to the Company or Subsidiary Corporation on each Payday equal to the
dollar amount of the payroll deduction made for such Eligible Employee for the
Payday next preceding the first day of such Eligible Employee's leave of
absence.
8. GRANT OF OPTIONS; EXERCISE OF OPTIONS.
(a) Each Eligible Employee shall be granted an Option on his or her Entry
Date for the Offer Period. Each Eligible Employee's Option shall be
automatically exercised in semi-annual installments on the last day of each
Semi-Annual Period of Participation during which the Eligible Employee is
participating in the Q.S.P. Plan. The number of shares of Stock subject to
each installment of an Eligible Employee's Option shall be the quotient of the
total payroll deductions made for the Eligible Employee during the Semi-Annual
Period of Participation, divided by the Option Price with respect to such
Semi-Annual Period of Participation, excluding fractional shares of Stock;
provided, however, that the number of shares of Stock subject to each Option
shall not exceed 10,000 shares.
(b) Except as otherwise provided in subsection (d) and Section 6(a)(i), each
Eligible Employee participating in the Q.S.P. Plan shall be deemed to have
exercised a semi-annual installment of his or her Option on the last day of
any Semi-Annual Period of Participation in which the Eligible Employee is
participating in the Q.S.P. Plan, to the extent that the balance of payroll
deductions credited to such Eligible Employee's account under the Q.S.P. Plan
is sufficient to purchase, at the Option Price, whole shares of Stock. No
fractional shares of Stock shall be purchased upon the exercise of a semi-
annual installment of the Option and any funds credited to such Eligible
Employee's account remaining after the purchase of whole shares of Stock upon
exercise of a semi-annual installment of an Option shall remain credited to
such Eligible Employee's account and carried forward for purchase of shares of
Stock pursuant to the exercise of a semi-annual installment of the Option on
the last day of the next following Semi-Annual Period of Participation.
(c) Upon exercise of a semi-annual installment of an Eligible Employee's
Option, the Company shall as soon as practicable thereafter issue to the
Eligible Employee such shares of Stock purchased pursuant to subsection (b).
Such Stock is initially to be held in the brokerage account established by the
Eligible Employee at such brokerage firm as designated by the Administrator
and as authorized by the Eligible Employee upon enrollment in the Q.S.P. Plan.
(d) An Eligible Employee's semi-annual installment shall not be exercised on
the Semi-Annual Purchase Date if such Eligible Employee instructs the
Administrator in writing at least two weeks prior to such Semi-Annual Purchase
Date that such semi-annual installment is not to be exercised. As soon as
practicable after receipt of such instruction, the Company or Subsidiary
Corporation shall pay to such Eligible Employee in cash in one lump sum the
balance of payroll deductions credited to such Eligible Employee's account
under the Q.S.P. Plan, without the payment of any interest thereon. The
Eligible Employee shall at that time be deemed to have ceased to participate
in the Q.S.P. Plan and may only recommence active participation in the Q.S.P.
Plan by submitting a new Authorization Card in accordance with the terms of
Section 6 above. Upon cessation of participation, such Eligible Employee shall
not be eligible to participate in the Q.S.P. Plan during the Semi-Annual
Period of Participation which immediately follows the Semi-Annual Period of
Participation during which such Employee ceased to participate in the Q.S.P.
Plan.
(e) If the total number of shares of Stock for which Options are to be
exercised on any date exceeds the number of shares remaining unsold under the
Q.S.P. Plan (after deduction of all shares for which Options have theretofore
been exercised), the Administrator shall make a pro rata allocation of the
available remaining shares in as nearly a uniform manner as shall be
practicable and any balance of payroll deductions credited to the accounts of
Eligible Employees which have not been applied to the purchase of shares of
Stock shall be paid to such Eligible Employees by the Company or Subsidiary
Corporation in cash in one lump sum as soon as practicable, without payment of
any interest thereon.
II-5
(f) Notwithstanding any provision in the Q.S.P. Plan to the contrary, an
Eligible Employee shall not be granted an Option:
(i) if, immediately after the Option is granted, such Employee would own
stock possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company, any Parent Corporation or any
Subsidiary Corporations. For purposes of determining stock ownership under
this paragraph, the rules of Code Section 424(d) shall apply and Stock
which an Eligible Employee may purchase under outstanding options held by
such Eligible Employee shall be treated as stock owned by such Eligible
Employee; or
(ii) which permits such Eligible Employee's rights to purchase stock
under the Q.S.P. Plan and all other employee stock purchase plans of the
Company, any Parent Corporation, or any Subsidiary Corporations, which
qualify under Code Section 423, to accrue at a rate which exceeds $25,000
of the fair market value of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at
any time. For purpose of the limitations imposed by this paragraph, the
right to purchase stock under an option accrues when the option (or any
portion thereof) first becomes exercisable during the calendar year, the
right to purchase stock under an option accrues at the rate provided in the
option (but in no case may such rate exceed $25,000 of fair market value of
such stock determined at the time such option is granted for any one
calendar year), and a right to purchase stock which has accrued under the
option may not be carried over to any other option.
(g) Any Employee who is an officer subject to Section 16(b) under the
Securities Exchange Act of 1934, as amended, shall not sell, transfer, or
otherwise dispose of any shares of Stock received upon the exercise of the
Option granted hereunder for a period of six months after the purchase of such
shares.
9. CANCELLATION AND SUBSEQUENT GRANT OF OPTION. If the fair market value of
a share of Stock on the first day of any Semi-Annual Period of Participation
after the Effective Date is lower than the fair market value of a share of
Stock on the Eligible Employee's Entry Date into the Q.S.P. Plan, the Eligible
Employee's Option shall be cancelled as of the first day of such Semi-Annual
Period of Participation and the Eligible Employee's purchase rights with
respect to any remaining semi-annual installments under such Option shall be
immediately extinguished without any further action by the Company, any
Subsidiary Corporation, or the Eligible Employee. Upon such cancellation, a
new Option shall be granted to such Eligible Employee which may thereafter be
exercised in successive semi-annual installments on the last day of such Semi-
Annual Period of Participation and each subsequent Semi-Annual Period of
Participation; provided, however, that such Option may also subsequently be
cancelled in accordance with the terms of this Section. In the event that an
Option is cancelled and a new Option granted under this Section, the Eligible
Employee's Entry Date for purposes of the provisions of the Q.S.P. Plan shall
become the date upon which such new Option is granted.
10. OPTION PRICE.
(a) The per share exercise price of each Option (the "Option Price") shall
be an amount equal to the lesser of:
(i) 85% of the fair market value of a share of Stock on the Participant's
Entry Date into the Q.S.P. Plan; or
(ii) 85% of the fair market value of a share of Stock on the Semi-Annual
Purchase Date corresponding to the Semi-Annual Period of Participation for
which a Participant exercises a semi-annual installment of his or her
Option.
(b) For purposes of subsection (a) and Section 9, the fair market value of a
share of Stock as of a given date shall be the closing price of a share of
Stock on the principal exchange on which shares of Stock are then trading, if
any, on such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred.
II-6
11. ISSUANCE OF CERTIFICATES.
(a) In the event the Administrator is required to obtain authority to issue
certificates for any shares of Stock purchased by an Eligible Employee under
the Q.S.P. Plan from any commissioner or agency, the Administrator shall seek
to obtain such authority. If the Administrator is unable, after reasonable
efforts, to obtain such authority, the Administrator, the Company, and any
Subsidiary Corporations shall be relieved from all liability and shall pay to
each such Eligible Employee the balance of payroll deductions credited to each
such Eligible Employee's account under the Q.S.P. Plan in cash in one lump sum
as soon as practicable, without the payment of any interest thereon.
12. CESSATION OF PARTICIPATION.
(a) Except as otherwise provided in Subsection 7(c), an Eligible Employee
shall cease to participate in the Q.S.P. Plan in the event that:
(i) the Eligible Employee reduces his or her percentage of payroll
deduction to zero percent (0%) pursuant to Section 6(a)(i);
(ii) the Administrator receives written instructions from the Eligible
Employee that a semi-annual installment is not to be exercised pursuant to
Section 8(d);
(iii) the Administrator receives written instructions from the Eligible
Employee to terminate such Eligible Employee's participation in the Q.S.P.
Plan;
(iv) the Eligible Employee resigns, is discharged from employment or has
a leave of absence from the Company or any Subsidiary Corporation; or
(v) the Employee dies.
(b) Upon cessation of participation by an Eligible Employee, such Eligible
Employee's payroll deductions shall cease. If such cessation of participation
occurs during the last two weeks of a Semi-Annual Period of Participation,
such Eligible Employee's Option installment shall be exercised on the Semi-
Annual Purchase Date in accordance with Section 8(b). Upon cessation of
participation at any other time, any balance of payroll deductions credited to
such Eligible Employee's account under the Q.S.P. Plan shall be paid to the
Employee in cash in one lump sum as soon as practicable after cessation of
participation, without payment of any interest thereon.
(c) An Eligible Employee shall not be eligible to participate in the Q.S.P.
Plan during the Semi-Annual Period of Participation which immediately follows
the Semi-Annual Period of Participation during which such Employee terminates
participation in the Q.S.P. Plan under paragraph (a).
13. TRANSFER OF OPTION. Options granted pursuant to the Q.S.P. Plan shall
not be transferable by an Eligible Employee, other than by will or the laws of
descent and distribution, and shall be exercisable during the Eligible
Employee's lifetime only by such Eligible Employee.
14. BENEFICIARY.
(a) Each Eligible Employee shall designate on his or her Authorization Card
a beneficiary or beneficiaries and may, without such beneficiaries' consent,
change such designation. Any designation shall be effective only after it is
received by the Administrator and shall be controlling over any disposition by
will or otherwise. Upon the death of an Eligible Employee, except as provided
in Section 12(b) the balance of payroll deductions credited to such Eligible
Employee's account shall be paid or distributed to the designated beneficiary
or beneficiaries, or in the absence of such designation, to the executor or
administrator of the Eligible Employee's estate, and in either event the
Administrator, the Company, and any Subsidiary Corporations shall not be under
any further liability to anyone.
II-7
15. RECAPITALIZATION. If there shall be any change in the Stock subject to
the Q.S.P. Plan or the Stock subject to any Option, through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend (in excess of 2% of the fair market value of the Stock) or
other change in the corporate structure of the Company, appropriate
adjustments shall be made by the Administrator to the aggregate number of
shares subject to the Q.S.P. Plan and the number of shares and the price per
share subject to outstanding Options in order to preserve, but not to
increase, the benefits of the Eligible Employees hereunder; provided, however,
that subject to any required action by the stockholders, if the Company shall
not be the surviving corporation in any such merger, consolidation or
reorganization, every Option outstanding shall terminate, unless the surviving
corporation shall (subject to applicable provisions of the Code) issue a new
Option therefor or assume (with appropriate changes) the existing Option. If
the Option shall terminate by reason of such merger, consolidation, or
reorganization, then any provision herein to the contrary notwithstanding, any
Option held by an Eligible Employee may be exercised, in whole or in part, by
such Eligible Employee at any time prior to or concurrently with consummation
of such merger, consolidation, or reorganization.
16. RIGHTS AS A STOCKHOLDER. An Eligible Employee shall have no rights as a
stockholder with respect to any shares of Stock covered by Options until the
date of the issuance of a certificate for such shares of Stock. No adjustments
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such certificate is issued, except as
otherwise expressly provided herein.
17. COSTS; INDEMNIFICATIONS.
(a) The Company shall pay all costs and expenses incurred in administering
the Q.S.P. Plan.
(b) In addition to such other rights of indemnification as the Administrator
may have as a director or officer of the Company, the Company shall indemnify
and hold the Administrator harmless against any and all liability, loss,
costs, damages, attorneys' fees and other expenses the Administrator may
sustain or incur in connection with administration of the Q.S.P. Plan, except
for liability, loss, costs, damages, attorneys' fees and other expenses caused
by the negligence of the Administrator or his agent; provided, that within 60
days after the institution of any action, suit or proceeding the Administrator
shall in writing offer the Company the opportunity to handle, prosecute or
defend the same, at the Company's own expense. The Administrator shall have
the right, but not the obligation, to adjust, settle, or compromise any claim,
obligation, debt, demand, suit or judgment against the Administrator, and if
such settlement is approved by independent legal counsel selected by the
Company then the Company shall reimburse the Administrator for all sums of
money the Administrator may pay or become liable to pay against which the
Administrator is indemnified hereunder.
18. AMENDMENT OR TERMINATION OF THE Q.S.P. PLAN. The Board of Directors may
at any time, with respect to any shares of Stock not then subject to Options,
suspend or terminate the Q.S.P. Plan, and may amend the Q.S.P. Plan from time
to time as the Board of Directors may deem advisable; provided, however, that
except as provided in Section 15 hereof, the Board of Directors shall not
amend the Q.S.P. Plan in the following respects without the affirmative vote
of approval by a majority of the outstanding shares of Stock of the Company:
(a) To increase the maximum number of shares of Stock subject to the
Q.S.P. Plan;
(b) To change the designation or class of employees eligible to receive
Options under the Q.S.P. Plan;
(c) To materially increase the benefits accruing to Employees under the
Q.S.P. Plan; or
(d) In any manner which would cause the Q.S.P. Plan to no longer be an
employee stock purchase plan under Code Section 423.
19. APPLICATION OF FUNDS. The proceeds received by the Company from the sale
of Stock pursuant to the exercise of Options shall be deposited in the account
of the general corporate funds of the Company.
II-8
20. APPROVAL OF STOCKHOLDERS. The Q.S.P. Plan shall become effective on the
Effective Date subject to the affirmative vote by a majority of the
outstanding shares of Stock of the Company approving the Q.S.P. Plan (which
approval must occur within twelve (12) months before or after the date the
Q.S.P. Plan is adopted by the Board of Directors).
21. NO RIGHTS AS AN EMPLOYEE. Nothing in the Q.S.P. Plan shall be construed
to give any person the right to remain in the employ of the Company or any
Subsidiary Corporation or to affect the Company or any Subsidiary
Corporation's right to terminate the employment of any person at any time with
or without cause.
22. TITLES. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Q.S.P. Plan.
23. CONFORMITY TO SECURITIES LAWS. The Plan is intended to conform to the
extent necessary with all provisions of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and Options shall be
granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Q.S.P. Plan and Options granted hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
II-9
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DATAMETRICS CORPORATION
PROXY 21135 ERWIN STREET, WOODLAND HILLS, CA 91367 PROXY
The undersigned Stockholder(s) of DATAMETRICS CORPORATION (the "Company")
hereby constitutes and appoints Sidney E. Wing and John J. Van Buren, and each
of them, attorneys and proxies of the undersigned, each with power of
substitution, to attend, vote and act for the undersigned at the Annual
Meeting of Stockholders of the Company to be held on March 19, 1996, and at
any adjournment or postponement thereof, according to the number of shares of
Common Stock of the Company which the undersigned may be entitled to vote, and
with all the powers which the undersigned would possess if personally present,
as follows:
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COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
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Please mark
[X] your votes
as indicated
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE FOUR PROPOSALS DESCRIBED BELOW.
1. Election of Directors: Dann V.
Angeloff, Richard A. Foster, Burton L.
Kaplan, Richard W. Muchmore,
Garland S. White, Sidney E. Wing,
Kenneth Zeiger
FOR WITHHELD
FOR ALL
[_] [_]
WITHHELD FOR: (Write that nominee's name in the space provided below).
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2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
15,000,000 to 20,000,000 shares.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To approve the Company's 1995 Stock Option Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To approve the Company's Employee Qualified Stock Purchase Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
5. In their discretion, the Proxies are authorized to transact such other
business as may properly come before the Meeting.
I PLAN TO ATTEND MEETING [_]
COMMENTS/ADDRESS CHANGE
Please mark this box if you
have written comments/address
change on the reverse side. [_]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature(s) ___________________________ Dated _______________________ , 1996
NOTE: Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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FOLD AND DETACH HERE