<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Datametrics Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
DATAMETRICS CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Datametrics Corporation, a Delaware corporation (the "Company"),
will be held at the Hilton and Towers at Warner Center, 6360 Canoga Avenue,
Woodland Hills, California 91367, on May 20, 1997, at 10:00 a.m. local time, for
the following purposes:
1. To elect five members to the Company's Board of Directors, to serve
until their respective successors have been duly elected and qualified;
2. To consider and vote upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to create three classes of the
Company's Board of Directors, consisting of Class I, to be comprised of one
director, to serve for an initial term of one year and thereafter for a
term of three years; Class II, to be comprised of two directors, each to
serve for an initial term of two years and thereafter for a term of three
years; and Class III, to be comprised of two directors, each to serve for a
term of three years; or, in each case, until their respective successors
have been duly elected and qualified;
3. To consider and vote upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock, par value $.01 per share, from 20,000,000 shares to
40,000,000 shares;
4. To ratify the reappointment of Ernst & Young LLP, independent
certified public accountants, as the Company's auditors for the fiscal year
ending October 26, 1997; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on March 21, 1997 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
DANIEL P. GINNS
Chairman of the Board
Woodland Hills, California
April 24, 1997
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE> 3
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
DATAMETRICS CORPORATION
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Datametrics Corporation, a Delaware corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), for use at the 1997 Annual Meeting of
Shareholders of the Company to be held on Tuesday, May 20, 1997, or at any
adjournment(s) thereof (the "Annual Meeting"), pursuant to the attached Notice
of Annual Meeting. The approximate date that this Proxy Statement and the
enclosed form of proxy are first being sent to holders of Common Stock is April
24, 1997. Shareholders should review the information provided herein in
conjunction with the Company's 1996 Annual Report to Shareholders which
accompanies this Proxy Statement. The Company's principal executive offices are
located at 21135 Erwin Street, Woodland Hills, California 91367, and its
telephone number is (818) 598-6200.
INFORMATION CONCERNING PROXY
The enclosed form of proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person, at the Annual Meeting or by filing with the Company's
Secretary at the Company's principal executive offices a written revocation or
duly executed proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the Company at
or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone, and the Company is using the
services of a proxy solicitation firm at a cost of up to $6,500. The Company's
employees will receive no compensation for soliciting proxies other than their
regular salaries. The Company may request banks, brokers and other custodians,
nominees and fiduciaries to forward copies of the proxy material to their
principals and to request authority for the execution of proxies. The Company
may reimburse such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will be asked to consider
and vote upon the following matters:
1. To elect five members to the Company's Board of Directors, to serve
until their respective successors have been duly elected and qualified;
2. To consider and vote upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to create three classes of the
Company's Board of Directors, consisting of Class I, to be comprised of one
director, to serve for an initial term of one year and thereafter for a
term of three years; Class II, to be comprised of two directors, each to
serve for an initial term of two years and thereafter for a term of three
years; and Class III, to be comprised of two directors, each to serve for a
term of three years; or, in each case, until their respective successors
have been duly elected and qualified;
<PAGE> 4
3. To consider and vote upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock, from 20,000,000 shares to 40,000,000 shares;
4. To ratify the reappointment of Ernst & Young LLP, independent
certified public accountants, as the Company's auditors for the fiscal year
ending October 26, 1997; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted in favor for all proposals described in the Notice of Annual
Meeting. In the event a shareholder specifies a different choice by means of the
enclosed proxy, his shares will be voted in accordance with the specification so
made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on March 21, 1997 as
the record date (the "Record Date") for determining shareholders of the Company
entitled to notice of, and to vote at, the Annual Meeting. As of the Record
Date, there were 13,150,179 shares of Common Stock issued and outstanding, all
of which are entitled to be voted at the Annual Meeting. Each share of Common
Stock is entitled to one vote on all matters to be acted upon at the Annual
Meeting, and neither the Company's Certificate of Incorporation nor Bylaws
provides for cumulative voting rights.
The attendance, in person or by proxy, of the holders of a majority of the
shares of Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum. The affirmative vote of a majority of the shares of Common
Stock present in person or by proxy at the Annual Meeting is required for the
approval of each matter that is submitted to shareholders for approval. An
independent inspector shall count the votes and ballots. Abstentions are
considered as shares present and entitled to vote but are not counted as votes
cast in the affirmative on a given matter. A broker or nominee holding shares
registered in its name, or in the names of its nominee, which are beneficially
owned by another person and for which it has not received instructions as to
voting from the beneficial owner, has the discretion to vote the beneficial
owner's shares with respect to the election of directors. If a matter had been
included in the proxy to which a broker or nominee would not have discretionary
voting power under applicable rules of the American Stock Exchange, any broker
or nominee "non-votes" would not be considered as shares entitled to vote on
that subject matter and therefore would not be considered by the inspector when
counting votes cast on the matter, although such shares would be considered for
purposes of determining whether a quorum is present at the Annual Meeting. If
less than a majority of the outstanding shares of Common Stock are represented
at the Annual Meeting, a majority of the shares so represented may adjourn the
Annual Meeting from time to time without further notice.
SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
director of the Company (each of whom constitute nominees for election as
directors at the Annual Meeting), (ii) (A) the Company's Chief Executive
Officer, (B) the person who formerly served as Chief Executive Officer of the
Company during the fiscal year ended October 27, 1996 ("fiscal 1996"), (C) the
four most highly compensated executive officers of the Company at the end of
fiscal 1996 and (D) the two individuals who would have been among the four most
highly compensated executive officers of the Company during fiscal 1996, but for
the fact that such individuals were not serving as executive officers of the
Company at the end of fiscal 1996 (the persons referred to in (ii) (A) - (D) are
hereinafter collectively referred to as the "Named Executive Officers"), (iii)
the beneficial owners of
2
<PAGE> 5
more than 5% of the outstanding Common Stock and (iv) all directors and
executive officers of the Company, as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
NATURE OF OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS(1) OWNERSHIP SHARES
------------------- ---------- -----------
<S> <C> <C>
James Haber................................................. 1,338,042(2) 9.9%
Douglas S. Friedenberg...................................... 965,532(3) 7.2%
Daniel P. Ginns............................................. 710,000(4) 5.1%
Adrien A. Maught, Jr........................................ 510,000(5) 3.7%
Stephen R. Gass............................................. 10,000(6) *
Roger De Bruno.............................................. 25,021 *
James Sturgeon.............................................. 60,347 *
Carl Stella................................................. 32,572 *
Sidney Wing................................................. 28,495 *
Ronald Iversen.............................................. 0 *
William J. Foti............................................. 64,311 *
All Directors and Executive Officers as a Group (11
persons).................................................. 3,744,320 24.6%
</TABLE>
- ---------------
* Less than 1%.
(1) The addresses of all persons listed is c/o the Company, 21135 Erwin Street,
Woodland Hills, California 91367.
(2) Includes 416,673 shares subject to warrants which are presently exercisable.
Of such warrants 316,673 have an exercise price of $1.50 and expire on
November 25, 2001 and 100,000 have an exercise price of $2.00 and expire on
January 31, 2002. Excludes 15,000 shares subject to non-qualified stock
options not presently exercisable. The options have an exercise price of
$1.25 and expire on October 8, 2001.
(3) Includes 266,671 shares subject to warrants which are presently exercisable.
Of such warrants 166,671 have an exercise price of $1.50 and expire on
November 25, 2001 and 100,000 have an exercise price of $2.00 and expire on
January 31, 2002. Excludes 15,000 non-qualified options not presently
exercisable. The options have an exercise price of $1.25 and expire on
October 8, 2001.
(4) Includes 700,000 shares subject to warrants which are presently exercisable.
The warrants have an exercise price of $2.00 and expire on January 3, 2002.
Excludes 15,000 shares subject to non-qualified stock options not presently
exercisable. The options have an exercise price of $1.25 and expire on
October 8, 2001.
(5) Includes 500,000 shares subject to warrants. The warrants are exercisable at
$2.00 and expire on January 3, 2002. Excludes 15,000 shares subject to
non-qualified stock options not presently exercisable. The options have an
exercise price of $1.25 and expire on October 8, 2001.
(6) Excludes 15,000 non-qualified stock options not currently exercisable. The
options have an exercise price of $1.4375 and expire on January 31, 2002.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Daniel P. Ginns........................... 47 Chairman of the Board of Directors and
Chief Executive Officer
Adrien A. Maught, Jr...................... 47 President and Director
</TABLE>
Daniel P. Ginns has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since October 1996. Mr. Ginns has also been the
President of Belmont Capital, Inc., a financial and management advisory firm,
for more than the past five years. Mr. Ginns is also a Director of Starbase
Corporation, a company whose shares are quoted on The Nasdaq SmallCap(SM)
Market.
3
<PAGE> 6
Adrien A. Maught, Jr. has served as President of the Company since January
1997 and as a Director and Chief Operating Officer and Interim Chief Financial
Officer of the Company from October 1996 until April 1997. Mr. Maught has been
the President of the Adrien A. Maught Company, an industrial real-estate and
management consultant firm, for more than the past five years.
Executive officers serve at the pleasure of the Board of Directors, except
as otherwise provided below. See "Executive Compensation -- Employment Contracts
and Termination of Employment Arrangements."
PROPOSAL FOR THE ELECTION OF DIRECTORS
At the Annual Meeting, the shares represented by the proxies obtained
hereby, unless otherwise specified, will be voted for the election as directors
of the five nominees hereinafter named. If the Proposal with respect to the
classification of the Board of Directors, described on pages 12-14, is adopted,
it is intended that the proxies solicited by the Board of Directors will be
voted for the election of Mr. Gass to Class I of the Company's Board of
Directors for an initial term expiring at the 1998 Annual Meeting of
Shareholders; the election of Messrs. Friedenberg and Haber to Class II of the
Company's Board of Directors for initial terms expiring at the 1999 Annual
Meeting of Shareholders; and the election of Messrs. Ginns and Maught to Class
III of the Company's Board of Directors for initial terms expiring at the 2000
Annual Meeting of Shareholders. If such Proposal is not adopted, it is intended
that the proxies solicited by the Board of Directors will be voted for the
election of the five nominees herein named, each to serve until the next Annual
Meeting of Shareholders and until their respective successors have been duly
elected and qualified. The Board of Directors has no reason to believe that any
nominee will refuse or be unable to accept election. However, if any one or more
of the nominees herein named should not be available for election, the proxies
will be voted for such substitute nominee(s), if any, as the Board of Directors
may propose. Proxies cannot be voted at the Annual Meeting for a greater number
of persons than the five nominees named in this Proxy Statement, although
persons in addition to those nominees may be nominated by the shareholders at
the Annual Meeting.
The following information is set forth with respect to each person
nominated for election as a director of the Company. Daniel P. Ginns and Adrien
A. Maught, Jr., executive officers and directors of the Company, are also
nominees for director at the Annual Meeting. Reference is made to the
information set forth above under "Executive Officers" for a description of the
business experience of such individuals.
The following table sets forth certain information regarding each director
and nominee for director:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
- ---- --- ------------------------- --------------
<S> <C> <C> <C>
Daniel P. Ginns...................... 47 Chairman of the Board of Directors October 1996
and Chief Executive Officer
Adrien A. Maught, Jr................. 47 Director and President October 1996
Douglas S. Friedenberg............... 45 Director October 1996
James Haber.......................... 33 Director October 1996
Stephen R. Gass...................... 48 Director January 1997
</TABLE>
Douglas S. Friedenberg has been President of Firebird Capital Management, a
manager of hedge funds, since 1993. From July 1991 through March 1993, Mr.
Friedenberg was the President of Unicorn Capital Management, a hedge fund
manager. For more than the past five years prior thereto, Mr. Friedenberg
managed investor portfolios for Morgan Stanley. Mr. Friedenberg is a Director of
Stratford Acquisition Corp., a company whose shares are listed on the OTC
Bulletin Board.
James Haber has been the sole general partner of Infiniti Investment Fund
L.P., an investment fund, since May 1991. Mr. Haber has also served as the
trading manager of Tendencia Overseas Fund, since August 1993.
Stephen R. Gass has been employed by Arthur A. Watson & Co. Inc., a private
insurance company, for more than the past five years, most recently as its
Senior Vice President.
4
<PAGE> 7
There are no family relationships among any of the Company's directors and
officers.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than ten
percent shareholders are required by regulations promulgated by the Securities
and Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file.
With reference to transactions during fiscal 1996, to the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company and written representations, no other reports were required to be filed.
All Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent shareholders were complied with.
The Board of Directors held 15 meetings during fiscal 1996. All of the
Company's directors attended more than 75% of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board of Directors on which such person
served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit, Nominating and
Compensation Committee. The members of each committee have been appointed by the
Board of Directors to serve until their respective successors are elected and
qualified.
Audit Committee. The Audit Committee reviews the scope and results of the
audit of the financial statements of the Company and reviews the internal
accounting, financial and operating control procedures of the Company. The Audit
Committee is composed of Messrs. Friedenberg, Haber and Gass, each of whom, in
accordance with the rules of the American Stock Exchange, is independent of
management and free from any relationship that, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment as a
committee member. The Audit Committee met one time in fiscal 1996.
Nominating Committee. The Nominating Committee considers nominees for
membership on the Board of Directors who are recommended by the Company's
shareholders. Any nomination by a shareholder of a person to serve as a director
of the Company may be made pursuant to notice in writing to the Secretary of the
Company delivered to or mailed and received at the principal executive offices
of the Company not less than 90 days prior to the meeting at which directors are
to be elected; provided, however, that in the event that less than 100 days'
notice or prior public disclosure of the date of such meeting is given or made
to shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of such meeting was mailed or such public disclosure was
made. Such shareholder's notice to the Secretary must set forth (a) as to each
person whom the shareholder proposes to nominate for election as a director (i)
the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
any shares of the Company or any subsidiary of the Company which are
beneficially owned by such person, (iv) any lawsuits to which such person is a
party, (v) the involvement of such person in or with any business which may be
competitive with the Company and (vi) any other information relating to such
person that is required to be disclosed in solicitations for proxies for
election of directors or in a Schedule 13-D pursuant to any then existing rule
or regulation promulgated under the Exchange Act; and (b) as to the shareholder
giving the notice (i) the name and record address of such shareholder and (ii)
the class and number of shares of the Company which are beneficially owned by
such shareholder. The Company may require any proposed nominee to furnish such
other information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee as a director. The Nominating Committee is
composed of Messrs. Friedenberg, Haber and Gass and did not meet in fiscal 1996.
The Board of Directors performed functions that were normally performed by the
Nominating Committee in fiscal 1996.
5
<PAGE> 8
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee (the "Compensation Committee") determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers. The
Compensation Committee is also responsible for the administration and award of
stock options under the Company's stock option plans as well as the award of
non-qualified stock options and warrants issued pursuant to individual stock
option and warrant agreements. The Compensation Committee is composed of Douglas
S. Friedenberg, James Haber and Stephen R. Gass, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act.
The Compensation Committee met one time in fiscal 1996.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed entirely of independent outside
members of the Company's Board of Directors. The Compensation 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 Compensation 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 Company's executive compensation program has been designed to (i) align
executive compensation with shareholder interests; (ii) attract, retain and
motivate a highly competent executive team, (iii) link compensation to
individual and Company performance and (iv) achieve a balance between incentives
for short-term and long-term results. The Company positions base salaries at
competitive levels; however, an annual bonus has historically been paid to
reward exceptional performance in amounts above competitive levels. The Company
also believes in providing rewards for the creation of stockholder value through
the use of stock options. The Company and the Compensation Committee believe
that this philosophy will motivate the Company's executives and, thereby,
reinforce the accomplishment of the Company's strategic and financial goals. The
Compensation Committee retained the consulting services of Compensation Resource
Group, Inc. to assist in determining competitive compensation in the industry in
which the Company operates 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. Salary increases are designed to reflect competitive practices in the
industry, financial performance of the Company and individual performance of the
executive.
Bonuses
No bonuses were paid to any of the Company's officers in fiscal 1996.
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 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 consider such factors as awards to officers of companies within the
Company's peer group, the executive's tenure, responsibilities and current stock
and option holdings.
6
<PAGE> 9
CEO Compensation
The Compensation 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.
Section 162(m) Compliance
The Company does not presently anticipate that the compensation of any of
the Named Executive Officers will exceed the $1,000,000 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 intention to bring the
Company's 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).
DOUGLAS S. FRIEDENBERG
JAMES HABER
STEPHEN R. GASS
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DATAMETRICS INDUSTRY INDEX* S&P 500
(FISCAL YEAR COVERED) CORPORATION
<S> <C> <C> <C>
1991 100 100 100
1992 85 131.75 109.97
1993 260 194.72 126.42
1994 395 221.35 131.31
1995 740 407.36 166.03
1996 130 481.40 206.04
</TABLE>
- ---------------
* Industry Group 357 -- Computer and Office Equipment Index
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
The following table shows, for fiscal years 1994, 1995 and 1996, the
compensation earned by the Named Executive Officers:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
PAYOUTS
ANNUAL COMPENSATION ---------
------------------------------ AWARDS LONG-TERM
OTHER ---------------------- INCENTIVE
ANNUAL RESTRICTED NUMBER OF PLAN ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR $ $ ($)(1) AWARDS($) SARS(#) ($) ($)(1)
- ------------------------------ ---- ------- ----- ------------ ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Ginns............... 1996 17,500 -- -- -- 15,000 -- --
Chairman of the Board 1995 -- -- -- -- -- -- --
and CEO 1994 -- -- -- -- -- -- --
Effective as of October 23,
1996
Sidney E. Wing................ 1996 213,121 -- -- -- 100,000 -- --
Former President and 1995 178,240 2,454 -- -- 20,000 -- --
Chief Executive 1994 163,846 -- -- -- -- -- --
Officer
Carl C. Stella................ 1996 143,017 -- -- -- 42,500 -- --
Former Senior Vice 1995 127,011 1,816 -- -- 10,000 -- --
President 1994 119,811 -- -- -- 25,000 -- --
Ronald N. Iversen............. 1996 143,835 -- -- -- 47,000 -- --
Former Vice President 1995 124,516 1,761 -- -- 10,000 -- --
1994 117,420 -- -- -- 35,000 -- --
Roger De Bruno................ 1996 104,381 -- -- -- 10,000 -- --
Vice President 1995 98,224 1,390 -- -- 4,000 -- --
1994 91,407 -- -- -- 30,000 -- --
James Sturgeon................ 1996 118,646 -- -- -- 10,000 -- --
Vice President of 1995 111,911 1,583 -- -- 4,000 -- --
Operations 1994 104,080 -- -- -- 10,000 -- --
William J. Foti............... 1996 89,383 -- 67,772 -- 10,000 -- --
Vice President 1995 86,244 1,221 50,270 -- 4,000 -- --
1994 80,870 -- 44,895 -- -- -- --
</TABLE>
- ---------------
(1) Perquisites to each officer did not exceed the lesser of $50,000 or 10% of
the total salary and bonus for such officer.
8
<PAGE> 11
STOCK OPTION GRANTS IN FISCAL 1996
The following table sets forth information regarding the grant of stock
options during fiscal 1996 to the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR
NUMBER OF GRANTED TO EXERCISE OPTION TERM($)(3)
OPTIONS EMPLOYEES IN PRICES EXPIRATION --------------------
NAME GRANTED FISCAL 1996(1) PER SHARE($) DATE(2) 5% 10%
---- --------- -------------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Daniel P. Ginns............ 15,000 2.28% 1.25 10/8/01 5,181 11,447
Sidney E. Wing............. 100,000 15.22% 7.875 12/14/00 217,570 480,780
Carl C. Stella............. 42,500 6.47% 7.875 12/14/00 92,467 204,332
Ronald N. Iversen.......... 47,500 7.23% 7.875 12/14/00 103,346 228,371
Roger DeBruno.............. 10,000 1.52% 7.875 12/14/00 21,757 48,078
James Sturgeon............. 10,000 1.52% 7.875 12/14/00 21,757 48,078
William J. Foti............ 10,000 1.52% 7.875 12/14/00 21,757 48,078
</TABLE>
- ---------------
(1) No stock appreciation rights were granted to any of the Named Executive
Officers or other Company employees in fiscal 1996.
(2) The options become exercisable equally over 16 quarters from the date of
grant and expire five years from the date of grant.
(3) The dollar amounts under these columns are the result of calculations at the
assumed compounded market appreciation rates of 5% and 10% as required by
the Securities and Exchange Commission over a five-year term and, therefore,
are not intended to forecast possible future appreciation, if any, of the
price of the Company's Common Stock.
OPTION EXERCISES IN FISCAL 1996 AND
OPTION VALUES AT THE END OF FISCAL 1996
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal 1996 and
unexercised options held as of the end of fiscal 1996.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISABLE
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
OCTOBER 27, OCTOBER 27,
NUMBER OF 1996 1996($)
SHARES ------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Daniel P. Ginns............................ -- -- --/15,000 --/25,313
Sidney E. Wing............................. 50,000 381,250 --/-- --/--
Carl C. Stella............................. -- -- --/-- --/--
Ronald N. Iversen.......................... -- -- 57,031/67,969 37,969/16,875
Roger DeBruno.............................. -- -- 22,750/21,250 --/--
James Sturgeon............................. -- -- 50,250/13,750 67,500/--
William J. Foti............................ -- -- 33,375/20,625 50,625/16,875
</TABLE>
DIRECTOR COMPENSATION
Prior to October 8, 1996, the Company's Board of Directors consisted of:
Dann V. Angeloff, Richard A. Foster, Bernard F. Girma, David A. Hahn, Burton
Kaplan, Richard W. Muchmore, W. Allen Surber, Garland S. White, Sidney E. Wing,
and Kenneth Zeiger. Mr. White received a quarterly retainer of $3,750 plus a
monthly retainer fee of $1,000 for services as Chairman of the Board of
Directors. He received no other fees for Board or Committee meetings. Mr.
Angeloff received a monthly retainer of $6,000 and $50,000 ($10,000 per month
for five months) for providing certain financial advisory and consulting
services to the Company. Mr. Angeloff received no other fees for Board or
Committee meetings. Mr. Surber, in addition to the following, received $57,800
for engineering consulting fees. All other directors received a quarterly
retainer fee
9
<PAGE> 12
of $1,875 and $800 for each Board and Committee meeting attended, and
reimbursement of related out-of-pocket expenses. The Committee Chairmen are
entitled to receive $1,600 per in-person Committee meeting.
On October 8, 1996, the members of the Board of Directors listed above were
replaced by the following individuals: Adrien A. Maught, Jr., Douglas S.
Friedenberg, James Haber, and Daniel P. Ginns. Stephen R. Gass became a director
in January 1997. Mr. Ginns is entitled to receive a quarterly retainer of $3,750
plus a monthly retainer fee of $1,000 for services as Chairman of the Board. All
other directors are entitled to receive quarterly retainer fees of $1,875 and
$800 for each meeting attended, and reimbursement of related out-of-pocket
expenses. The Committee Chairmen are entitled to received $1,600 per in-person
Committee meeting.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
In January 1997, the Company entered into employment agreements with Mr.
Ginns, the Chief Executive Officer of the Company, and Mr. Maught, the President
of the Company. Each of these agreements terminate December 31, 2001. Under
these agreements Mr. Ginns and Mr. Maught are paid an initial annual base salary
of $240,000 and $215,000 respectively. For each calendar year commencing with
the calendar year beginning January 1, 1998, the base salary under these
agreements will be adjusted by a percentage equal to the percentage change in
the Consumer Price Index ("CPI") for the year then ended from the prior calendar
year. In addition to the base salary, the Compensation Committee of the Board of
Directors may, in its sole discretion, pay a performance-based bonus to Mr.
Ginns or Mr. Maught in any year during the term of their respective agreements.
The Company has the right to terminate Mr. Ginns' or Mr. Maught's
employment without cause at any time; provided, however, that Mr. Ginns and Mr.
Maught shall be entitled to payment of his base salary for a period equal to the
greater of one year from the date of termination or the remainder of the
employment agreement.
In connection with these employment agreements, the Company granted Mr.
Ginns and Mr. Maught warrants to purchase up to 700,000 and 500,000 shares,
respectively, of the Company's common stock at a purchase price of $2.00 per
share, which exercise price will be reduced to $1.25 per share in the event of a
change in control of the Company (as defined in such warrants) at any time
during the one-year period from the date of issuance of the warrants. All of
these warrants are immediately exercisable and have a term of five years.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee consists of Douglas S. Friedenberg, James Haber and
Stephen R. Gass, none of whom are employed by the Company. Each member of the
Compensation Committee is a "disinterested person" within the meaning of Rule
16b-3 under the Exchange Act. On January 15, 1997, a company controlled by Mr.
Friedenberg and a company controlled by Mr. Haber jointly agreed to raise up to
$3 million for the Company through a private placement of equity and/or debt
securities of the Company, in consideration of which the Company granted to Mr.
Friedenberg and Mr. Haber warrants to purchase an aggregate of 100,000 shares of
Common Stock at a purchase price of $2.00 per share, which exercise price will
be reduced to $1.25 per share in the event of a change in control of the Company
(as defined in such warrants) at any time during the one-year period from the
date of issuance of the warrants.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has approved an amendment (the "Capital Amendment")
to the Company's Certificate of Incorporation (the "Certificate") to increase
the number of authorized shares of Common Stock of the Company from 20,000,000
shares to 40,000,000 shares, subject to approval by the Company's shareholders.
The Board of Directors has directed that the Capital Amendment be submitted to
shareholders for their consideration and approval at the Annual Meeting.
The Certificate currently authorizes the issuance of up to 5,000,000 shares
of preferred stock, none of which are issued or outstanding.
10
<PAGE> 13
The Board of Directors believes it is desirable to increase the number of
authorized shares of Common Stock. The increase will provide the Company with
flexibility in the future by assuring the availability of sufficient authorized
but unissued Common Stock for valid corporate purposes such as financings, stock
dividends, mergers and acquisitions. The newly authorized Common Stock would be
available for issuance without further action by shareholders except as required
by law or applicable stock exchange requirements. For example, the current rules
of the American Stock Exchange would require approval by the Company's
shareholders if the number of shares of Common Stock to be issued equaled or
exceeded 20% of the number of shares of Common Stock outstanding immediately
prior to such issuance and such shares were issued at a price which is less that
the greater of the book or market value of the Common Stock.
The Company has no current plan or commitment to issue shares of Common
Stock, including any plan or intention to issue such shares as a takeover
defense. Nevertheless, the additional authorized shares could be used to
discourage persons from attempting to gain control of the Company or make more
difficult the removal of management. For example, additional shares could be
used to dilute the voting power of shares then outstanding or issued to persons
who would support the Board of Directors of the Company in opposing a takeover
bid or a solicitation opposed by management. Management is not currently aware
of any specific effort to obtain control of the Company by means of a merger,
tender offer, solicitation in opposition to management, or otherwise.
The Company's By-Laws and Delaware law contain the following provisions
that may also have the effect of delaying, deterring, or preventing a change in
control of the Company.
By-Laws. The Company's By-Laws (i) authorize the Board, without further
shareholder approval, except with respect to Series A Participating Convertible
Preferred Stock, none of which is currently issued or outstanding, to issue
shares of preferred stock in one or more series and to fix the terms and
provisions of each series; (ii) eliminate the ability of shareholders to take
action by written consent; (iii) require the affirmative vote of 75% of the
outstanding shares of voting stock of the Company to call a special meeting of
shareholders; (iv) permit directors to be removed with or without "cause"; (v)
grant exclusive authority to the Board to fill vacancies on the Board; (vi)
establish minimum notice and informational requirements for shareholder
nomination of directors and submission of other business at shareholder
meetings; and (vii) in certain instances, require the affirmative vote of at
least 75% of the outstanding shares of voting stock of the Company to amend or
terminate the foregoing provisions of the By-Laws.
Delaware Business Combination Law. Section 203 ("Section 203") of the
Delaware General Corporation Law generally prohibits a Delaware corporation,
including the Company, from engaging in a "Business Combination" (including, for
example, mergers, asset sales, issuance of stock and other transactions
resulting in a financial benefit to an Interested Stockholder) with an
"Interested Stockholder" (in general, a person that is the beneficial owner of
15% or more of a corporation's outstanding voting stock) for a period of three
years following the date that such person became an Interested Stockholder,
unless (a) prior to the date such person became an Interested Stockholder, the
board of directors of the corporation approved either the Business Combination
or the transaction that resulted in the stockholder becoming an Interested
Stockholder, (b) upon consummation of the transaction that resulted in the
stockholder's becoming an Interested Stockholder, the Interested Stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding shares held by directors who are also
officers of the corporation and certain employee stock ownership plans), or (c)
on or subsequent to the date such person became an Interested Stockholder, the
Business Combination is approved by the board of directors of the corporation
and authorized at a meeting of stockholders, and not by written consent, by the
affirmative vote of the holders of at least 66 2/3% of the outstanding voting
stock of the corporation not owned by the Interested Stockholder.
The full text of the Certificate reflecting the proposed amendments is
attached to this Proxy Statement as Exhibit A. The following description of the
amendments is qualified in its entirety by reference to Exhibit A.
11
<PAGE> 14
Approval of the Charter Amendment will require the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 20,000,000 SHARES TO 40,000,000 SHARES.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO PROVIDE FOR CLASSIFICATION OF THE BOARD OF DIRECTORS
GENERAL
The Board of Directors has approved an amendment to Article "SIXTH" the
Company's Certificate (the "Board Amendment") to classify the Company's Board of
Directors into three classes of directors serving staggered three-year terms;
and to make technical amendments to the Certificate to (i) adjust certain of the
Company's corporate governance procedures to accommodate the existence of a
classified board and staggered three-year terms for directors; (ii) increase the
shareholder vote necessary to increase or decrease the number of directors to
75% of the voting power of the Company with respect to the election of
directors; and (iii) increase the shareholder vote necessary to 75% of the
voting power of the Company to amend or repeal those sections of the Certificate
which will contain these amendments.
DESCRIPTION OF PROPOSED AMENDMENTS
The Certificate currently provides for a single class of directors. The
Board Amendment would classify the Board of Directors into three classes of
directors serving staggered terms and provide that the number of directors may
be increased or decreased from time to time only by the affirmative vote of at
least 75% of the outstanding shares of voting stock of the Company or by Board
action, provided that in no event may the number of directors be fewer than five
nor more than nine. The Board Amendment, provides that in the event of any
increase in the number of directors, the directors then in office may select the
class or classes to which the additional directors shall be assigned, provided
that the directors shall be distributed among the three classes as nearly
equally as possible.
The Certificate currently provides that the term of office for each
director is one year. If the Board Amendment is approved, the slate of five
directors proposed for election at the 1997 Annual Meeting would be elected to
three separate classes with assigned terms of from one to three years, as
follows: the director in Class I, consisting of one director, would be elected
for a one year term expiring at the 1998 Annual Meeting; directors in Class II,
consisting of two directors, would be elected for two year terms expiring at the
1999 Annual Meeting; and directors in Class III, consisting of two directors,
would be elected for three year terms expiring at the 2000 Annual Meeting.
Beginning with the 1998 Annual Meeting, only one class of directors would be
elected at each Annual Meeting, the directors so elected would succeed the
directors of the class whose term was then expiring and each newly elected
director would serve for a three-year term. If the Board Amendment is not
approved, the five nominees named herein will be nominated to serve for a one
year term ending at the 1998 Annual Meeting of Shareholders and until their
respective successors have been duly elected and qualified. See "Proposal for
the Election of Directors" on page 4 for information regarding the individual
nominees for director.
Reference should be made to the description of certain provisions of the
Company's By-Laws described under "Proposal to Amend Certificate of
Incorporation to Increase Authorized Common Stock -- By-Laws" on page 11 of this
Proxy Statement.
The Certificate currently provides that the number of directors of the
Company, currently five, shall be as specified in the Company's By-laws, which
provide that the number of directors shall not more than nine or less than five.
The Board Amendment provides that any subsequent increase or decrease in the
number of directors would require the affirmative vote of at least 75% of the
outstanding shares of voting stock of the Company or Board action, and in no
case could the number of directors be more than nine or less than five.
12
<PAGE> 15
The Certificate currently provides that the Certificate may be amended or
repealed by the Company in the manner now or hereafter prescribed by statute,
and that all rights conferred upon shareholders in the Certificate shall be
subject to such reservation. The Board Amendment, provides that the affirmative
vote of at least of 75% of the outstanding shares of voting stock will be
required to amend or repeal Article "SIXTH" (as described above) of the
Certificate. Other provisions of the Certificate would continue to be subject to
amendment or repeal by a simple majority vote of shareholders. The Board
believes that this is necessary to preserve the protections afforded by those
provisions, since, absence such amendment, an acquirer who possesses a simple
majority of the Company's voting power could use its voting power to
unilaterally amend the Certificate and eliminate these provisions.
REASONS FOR AND EFFECTS OF PROPOSED AMENDMENTS
Classified Board. The Board of Directors believes that a classified board
would serve the best interests of the Company and its shareholders by promoting
the continuity and stability of the Company and its business.
The Board also believes that a classified board would better enable the
Board to protect the interests of shareholders in the event that another entity
seeks to accumulate a substantial amount of the Company's Common Stock in order
to gain control of the Company or replace its management. A corporate raider may
accumulate a substantial equity position in a public company as a prelude to
proposing a takeover, a restructuring or a sale of all or part of the company or
other similar extraordinary corporate action. Such actions are often undertaken
without advance notice to or consultation with the target company's board of
directors or management. The purchaser may have its own agenda and little or no
concern for the interests of other shareholders. In many cases, the purchaser
seeks representation on the target company's board in order to increase the
likelihood that any such transaction will be consummated. If the target company
resists these efforts to obtain board representation, the purchaser may initiate
a proxy contest to have itself or its nominees elected to the board in place of
certain directors or the entire board.
The Board believes that if such a purchaser acquired a significant or
controlling interest in the Company's Common Stock, the purchaser's ability to
promptly remove and replace the Board without the Board's consent would severely
curtail the directors' ability to negotiate effectively with the purchaser. The
threat of imminent removal also would deprive the Board of the time and
opportunity necessary to evaluate appropriately any takeover proposal, to obtain
and study alternative proposals and to help ensure that the best price would be
obtained in any transaction involving the Company. The Board believes that such
a sudden change in its membership could also be harmful to the continuity of the
Company's operations, deprive shareholders of maximum value for their shares and
jeopardize the rights of the minority shareholders.
Under a three-class structure, at least two annual shareholder meetings,
instead of one, would generally be required for such an acquirer to obtain
control of the Board of Directors by electing a majority of its representatives
to the Board. The amendments are designed to make it more time-consuming to
obtain majority control of the Board without its consent, and thus reduce the
vulnerability of the Company to an unsolicited takeover proposal or to an
unsolicited proposal for the restructuring or sale of all or part of the Company
or to enter into any other extraordinary transaction. The Board believes that
the Board Amendment will serve to encourage any person intending to attempt such
a takeover or other transaction to negotiate with the Board, and that the Board
therefore will be better able to protect the interests of all of the Company's
shareholders.
Number of Directors. The number of directors, currently five, currently
can be changed by a majority vote of the Company's shareholders. The Board
Amendment provides that any subsequent increase or decrease in the number of
directors would require the affirmative vote of at least 75% of the outstanding
shares of voting stock of the Company or Board Action, and in no case could the
number of directors be more than nine or fewer than five.
The reason for requiring a supermajority vote to change the number of
directors is to defend against possible efforts to subvert the protections
afforded by the creation of a classified board. Absent a supermajority vote
requirement, instead of waiting for the normal cycle of two or more annual
meetings to gain control of the
13
<PAGE> 16
Board, an acquirer with a majority or other substantial share ownership could
quickly seize control of the Board by exercising its voting power to increase
the size of the Board and by filling the vacancies created thereby with its own
nominees. The Board Amendment would prevent this tactic and thus help preserve
the protections afforded by the classified board.
Amendment or Repeal of Certificate. The Certificate currently provides
that the Certificate may be amended or repealed by the Company in the manner now
or hereafter prescribed by statute, and that all rights conferred upon
shareholders in the Certificate shall be subject to such reservation. The Board
Amendment provides that the affirmative vote of 75% of the voting power would be
necessary to amend or repeal Article "SIXTH" creating a classified Board. The
requirement for an increased shareholder vote on any proposal to amend or repeal
Article "SIXTH" will give minority shareholders a veto power over any such
proposal, even if a majority of the shareholders favor such proposal. Moreover,
the requirement will prevent a shareholder with a mere majority of the voting
power of the Company from avoiding the requirements of the above-described
Certificate by simply repealing them.
Overall. These amendments are intended to encourage persons seeking to
acquire control of the Company to initiate such transaction through arms-length
negotiations with the Company's Board of Directors. The Board is charged with
protecting the interests of the Company and its shareholders. The Board
Amendment can help prevent the bidder's use of coercive tactics, which can
deprive the Board of the opportunity to review and evaluate a take-over
proposal, seek alternative transactions, help protect the interests of the
Company as an on-going enterprise and, if the Company is to be acquired, obtain
the most beneficial terms for all shareholders. These provisions will better
ensure that neither the Board nor shareholders are coerced into a transaction
that is of primary benefit only to the acquirer. They are also intended to help
ensure that the Board will be given ample time to review and evaluate any
acquisition proposal, and, if appropriate, to seek alternative proposals, and to
arrive at a result which is in the best interests of the Company, its
shareholders and employees.
The Board Amendment may render more difficult or discourage the removal of
incumbent directors and management and may therefore discourage an attempt by
another person or entity to acquire control of the Company through an
unsolicited tender offer or other transaction that is not approved by the
incumbent Board. On balance, however, the Board of Directors believes that these
amendments are in the best interests of the Company and its shareholders and
will help ensure that the Company's shareholders are treated fairly in
transactions that significantly affect their interests and that shareholders
benefit from a measure of continuity and stability in Company's management
policy and direction. The amendments are not being recommended in response to
any specific effort of which the Company is aware to accumulate securities of
the Company or acquire control of the Company or the Board.
The full text of the Certificate reflecting the proposed amendments is
attached to this Proxy Statement as Exhibit A. The following description of the
amendments is qualified in its entirety by reference to Exhibit A.
Approval of the Board Amendment will require the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE TO PROVIDE FOR THE CLASSIFICATION OF THE BOARD OF
DIRECTORS AND TO ADOPT RELATED PROVISIONS.
RATIFICATION OF THE REAPPOINTMENT
OF THE COMPANY'S AUDITORS
The Board of Directors recommends that the appointment of Ernst & Young
LLP, independent certified public accountants, as the Company's auditors for the
fiscal year ending October 26, 1997, be ratified by the Company's shareholders.
Ernst & Young LLP has audited the books and records of the Company since 1984.
Although the appointment of Ernst & Young LLP as independent auditors of the
Company does not require ratification, the Board of Directors considers it
appropriate to obtain such ratification. Accordingly, the vote of shareholders
on this matter is advisory in nature and has no binding effect upon the Board of
Directors'
14
<PAGE> 17
appointment of Ernst & Young LLP. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting to make a statement, if he desires
to do so, and to respond to appropriate questions.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business to be presented at the Company's 1997 Annual
Meeting of Shareholders. If any other business should properly come before the
Company's 1997 Annual Meeting of Shareholders, the persons named in the
accompanying proxy will vote thereon as in their discretion they may deem
appropriate, unless they are directed by a proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, proposals of shareholders intended to be presented at the Company's
1998 Annual Meeting of Shareholders must be received in writing by the Company's
Secretary at the Company's principal executive offices not later than January
28, 1998 in order to be included in the Company's Proxy Statement and form of
Proxy relating to that Annual Meeting.
By Order of the Board of Directors
DANIEL P. GINNS
Chairman of the Board
Woodland Hills, California
April 24, 1997
15
<PAGE> 18
EXHIBIT A
AMENDMENT NO. 2
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
DATAMETRICS CORPORATION
DATAMETRICS CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
Does Hereby Certify:
First: That at a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment to the Restated
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and recommended for approval by the stockholders of the Corporation at
a meeting of the stockholders of the Corporation. The resolution setting forth
the proposed amendment is as follows:
RESOLVED, that the Restated Certificate of Incorporation of the
Corporation be amended by changing the first paragraph of the Article
thereof numbered FOURTH and the Article thereof numbered SIXTH, so that, as
amended, the first paragraph of Article FOURTH and Article SIXTH shall be
and read in their entirety 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 forty-five million (45,000,000). Five million
(5,000,000) shares shall be Preferred Stock and forty million
(40,000,000) shares 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 $400,000.
Sixth: (a) The number of directors which shall constitute the
whole Board of Directors of the Corporation shall be as specified in the
By-Laws of the Corporation.
(b) The Board of Directors of the Corporation shall be divided into
three classes as nearly equal in number as possible, hereby designated
Class I, Class II and Class III. The term of office of the initial Class
I directors shall expire at the next succeeding annual meeting of the
stockholders of the Corporation, the term of office of the initial Class
II directors shall expire at the second succeeding annual meeting of the
stockholders of the Corporation and the term of office of the initial
Class III directors shall expire at the third succeeding annual meeting
of the stockholders of the Corporation. For the purposes hereof, the
initial Class I, Class II and Class III directors shall be those
directors elected at the 1997 annual meeting of the stockholders of the
Corporation and designated as members of such Class. At each annual
meeting of the stockholders of the Corporation after the 1997 annual
meeting, directors to replace those of a Class whose terms expire at
such annual meeting shall be elected to hold office until the third
succeeding annual meeting and until their respective successors shall
have been duly elected and shall qualify. If the number of directors is
hereafter increased, the directors then in office shall select the class
or classes to which the newly created directorships shall be assigned so
as to make all classes as nearly equal in number as possible.
(c) Notwithstanding anything to the contrary contained in this
Restated Certificate of Incorporation of the Corporation, the number of
directors may be increased or decreased from time to time only by the
affirmative vote of the holders of at least seventy-five percent (75%)
of the outstanding shares of voting stock of the Corporation or with the
approval of a majority of directors of the Corporation then in office,
provided that in no event may the number of directors be fewer than five
nor more than nine.
A-1
<PAGE> 19
(d) Notwithstanding anything to the contrary contained in this
Restated Certificate of Incorporation of the Corporation, the
affirmative vote of the holders of at least seventy-five percent (75%)
of the outstanding shares of voting stock of the Corporation shall be
required to alter, amend, repeal or adopt any provision inconsistent
with this Article SIXTH."
Second: That pursuant to and in accordance with Section 211 of the General
Corporation Law of the State of Delaware, the proposed amendment was duly
approved by the vote of the holders of a majority of the outstanding shares of
Common Stock of the Corporation.
Third: That the foregoing amendment has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, Datametrics Corporation has caused this certificate to
be signed by Daniel P. Ginns, its Chairman of the Board and Chief Executive
Officer, and attested to by Kenneth S. Polak, its Assistant Secretary, this day
of , 1997.
By:
--------------------------------------
Daniel P. Ginns
Chairman of the Board
and Chief Executive Officer
ATTEST:
- --------------------------------------
Kenneth S. Polak
Assistant Secretary
A-2
<PAGE> 20
Exhibit B
PROXY
DATAMETRICS CORPORATION
21135 Erwin Street
Woodland Hills, California 91367
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DATAMETRICS CORPORATION.
The undersigned hereby appoints Daniel P. Ginns and Adrien A. Maught,
Jr., and each of them, as proxies, each with full power of substitution, to vote
as directed below all of the shares of Common Stock of the Company held or owned
by the undersigned at the Annual Meeting of Shareholders to be held at the
Hilton and Towers at Warner Center, 6360 Canooga Avenue, Woodland Hills,
California 91367, on May 20, 1997 at 10:00 a.m., local time, and any
adjournments thereof, hereby revoking any proxies heretofore given.
1. ELECTION OF DIRECTORS: FOR all nominees listed below [ ]
(except as set forth to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
Daniel P. Ginns, Adrien A. Maught, Jr., Douglas S. Friedenberg,
James Haber and Stephen R. Gass
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
----------------------------------------------------------------------
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK, PAR VALUE $.01 PER SHARE, FROM 20,000,000 SHARES TO 40,000,000
SHARES.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO PROVIDE FOR THE BOARD OF DIRECTORS TO BE DIVIDED INTO
THREE CLASSES AND TO ADOPT RELATED PROVISIONS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP as the
independent certified public accountants of the Company for the fiscal
year ending October 26, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, the proxies are authorized to vote upon any other
business which properly comes before the Annual Meeting and any
adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREBY
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF ALL NOMINEES AND FOR PROPOSALS NO. 2, 3 AND 4.
Please sign exactly as your name appears on your proxy card. 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 the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THE CARD IN
THE ENCLOSED ENVELOPE.
DATED: , 1997 Signature:
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DATED: , 1997 Signature:
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