- --------------------------------------------------------------------------------
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
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(C) or Rule 14a-12
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)(I) 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:
(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>
DATAMETRICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 1, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Datametrics Corporation, a Delaware corporation (the
"Company"), will be held on March 1, 1999, 10:00 a.m. local time, at The Grand
Summit Hotel, Morris Room, 570 Springfield Avenue, Summit, NJ 07901 (908)
273-3000, for the following purposes:
1. To elect two members to Class II of the Company's Board of
Directors, each to serve a three year term expiring at the Company's
Annual meeting to be held in 2002 or until each such member's successor
has been duly elected and qualified; and
2. To ratify the re-appointment of BDO Seidman, LLP,
independent certified public accountants, as the Company's auditors for
the fiscal year.
3. 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 January 25,
1999 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,
/s/ DANIEL P. GINNS
-----------------------------
DANIEL P. GINNS
Chairman of the Board
Florham Park, New Jersey
January 29, 1999
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>
1999 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 1998 Annual Meeting of
Shareholders of the Company to be held on March 1, 1999, 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
February 1, 1999. Shareholders should review the information provided herein in
conjunction with the Company's Annual Report on Form 10-K for the period ending
October 25, 1998, which accompanies this Proxy Statement. The Company's
principal executive offices are located at 25B Hanover Road, Suite 305, Florham
Park, New Jersey 07932, and its telephone number is (973) 377-3900.
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. The Company's 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 two members to Class II of the Company's Board of
Directors, to serve a three year term expiring at the Company's Annual
meeting to be held in 2002 or until each such member's successor has
been duly elected and qualified; and
2. To ratify the re-appointment of BDO Seidman, LLP,
independent certified public accountants, as the Company's auditors.
<PAGE>
3. 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 specified 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 January 25,
1999 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 17,122,879 shares of Common Stock issued and
outstanding, all of which are entitled to vote 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.
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 and
ratification of appointment of the Company's auditors. 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 date hereof, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
director of the Company, (ii) (A) the Company's Chief Executive Officer, (B) the
three most highly compensated executive officers of the Company at the end of
fiscal 1998, (hereinafter collectively referred to as the "Named Executive
Officers"), (iii) the beneficial owners of more than 5% of the outstanding
Common Stock and (iv) all directors and executive officers of the Company, as a
group.
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
OF
AMOUNT AND NATURE OF OUTSTANDING
NAME AND ADDRESS(1) BENEFICIAL OWNERSHIP SHARES
- ------------------- -------------------- ------
<S> <C> <C>
Douglas S. Friedenberg 1,040,246(2) 6.1
Daniel P. Ginns 779,375(3) 4.5
Adrien A. Maught, Jr. 579,375(4) 3.4
James D. Sturgeon, Jr. 70,363(5) *
Richard J. Love 510,000 3.0
John W. O'Leary 15,000 *
All directors and Executive
Officers as a Group (7 Persons) 2,994,359 17.5
*Less than 1%
</TABLE>
(1) The addresses of all persons listed is c/o Datametrics Corporation 25B
Hanover Road, Suite 305, Florham Park, New Jersey 07932.
(2) Includes 270,004 shares subject to warrants which are presently
exercisable. Of such warrants, 50,000 warrants have an exercise price
of $1.81 and expire on October 26, 2003, 120,004 warrants have an
exercise price of $1.50 and expire on November 25, 2001 and 100,000
warrants have an exercise price of $2.00 and expire on February 5,
2002. Includes 7,500 shares subject to non-qualified stock options that
are presently exercisable pursuant to a grant of 15,000 non-qualified
stock options which have an exercise price of $1.25 and expire on
October 8, 2001. Also included in the amount are 158,125 shares of
common stock which Mr. Friedenberg has sole voting and investment
power. The remaining shares are owned beneficially through various
investment funds.
(3) Includes 750,000 shares subject to warrants which are presently
exercisable. Of such warrants, 50,000 warrants have an exercise price
of $1.81 and expire on October 26, 2003 and 700,000 warrants have an
exercise price of $2.00 and expire on November 13, 2001. Includes 7,500
shares subject to non-qualified stock options that are presently
exercisable pursuant to a grant of 15,000 non-qualified stock options
which have an exercise price of $1.25 and expire on October 8, 2001.
(4) Includes 550,000 shares subject to warrants which are presently
exercisable. Of such warrants, 50,000 warrants have an exercise price
of $1.81 and expire on October 26, 2003, and 500,000 warrants have an
exercise price of $2.00 and expire on November 13, 2001. Includes 7,500
shares subject to non-qualified stock options that are presently
exercisable pursuant to a grant of 15,000 non-qualified stock options
which have an exercise price of $1.25 and expire on October 8, 2001.
(5) Includes 60,375 shares subject to qualified stock options. Of such
options 40,000 options have an exercise price of $1.25 and expire on
March 7, 1999, 10,000 options have an exercise price of $2.8750 and
expire on December 17, 1998, 3,000 options have an exercise price of
$2.125 and expire on February 22, 2000, 5,625 options have an exercise
price of $2.125 and expire on December 14. 2000 and 1,750 options have
an exercise price of $1.50 and expire on March 31, 2002. Excludes 5,375
shares subject to qualified stock options. Of such options, 1,000
options have an exercise price of $2.125 and expire on February 22,
2000 and 4,375 options have an exercise price of $2.125 and expire on
December 14, 2000.
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
<S> <C>
The executive officers of the Company are as follows:
NAME AGE POSITION WITH THE COMPANY
Daniel P. Ginns................................48 Chairman of the Board of Directors,
Chief Executive Officer and Secretary
Adrien A. Maught, Jr...........................49 Chief Operating Officer, President and
Director
William B. Pandos .............................39 Chief Financial Officer and Treasurer
James D. Sturgeon, Jr..........................65 Vice President, Marketing
</TABLE>
Daniel P. Ginns has been the Chairman of the Board of Directors and
Chief Executive Officer of the Company since October, 1996, and Secretary of the
Company since February, 1997. Mr. Ginns is also a Director of StarBase
Corporation, a company whose shares are quoted on The Nasdaq SmallCap(sm)
Market. From 1989 to 1996, Mr. Ginns was President of Belmont Capital, Inc., a
management and financial advisory firm.
Adrien A. Maught, Jr. has served as Chief Operating Officer of the
Company since February, 1998, as President of the Company since January 1997 and
as a Director of the Company since October 1996. Mr. Maught was the Interim
Chief Financial Officer of the Company from October 1996 until April 1997. From
1992 to 1997, Mr. Maught was the President of the Adrien A. Maught Company, an
industrial real-estate and management consultant firm.
William B. Pandos has served as Chief Financial Officer and Treasurer
of the Company since December, 1998. From 1988 to 1998, Mr. Pandos served as
Vice President and Treasurer of Standard Uniform, Inc., headquartered in
Irvington, New Jersey.
James D. Sturgeon, Jr. has served as Vice President, Marketing of the
Company since February, 1998. Mr. Sturgeon served as Chief Operating Officer of
the Company from April 1997 to February 1998, Vice President, Manufacturing
Operations of the Company from April 1992 until April 1997 and Vice President,
Operations of the Company from February 1989 until April 1992.
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
The Company's Certificate of Incorporation provides that the Board
shall be divided into three classes. The Company's Board of Directors presently
consists of five members, with one member in Class I, two members in Class II
and two members in Class III. Each class is elected for a term of three years.
The term of office of the current Class I, II and III directors is scheduled to
expire at the annual meetings
<PAGE>
of shareholders to be held in the years 2001, 1999 and 2000, respectively. At
each annual meeting, directors are elected to succeed those in the class whose
term expires at that annual meeting, such newly elected directors to hold office
until the third succeeding annual meeting and the election and qualification of
their respective successors. Any director elected by the Board to fill the
existing vacancy in the Board will hold office until the next meeting of
shareholders at which the election of directors is in the regular order of
business and until his or her successor has been elected and qualified.
At the Meeting, shareholders will elect two Class II directors to serve
until the 2002 Annual Meeting of Shareholders and until their respective
successors are elected and qualified. The shares represented by the proxies
obtained hereby, unless otherwise specified, will be voted for the election of
Messrs. O'Leary and Friedenberg to Class II of the Company's Board of Directors.
The Board of Directors has no reason to believe that the nominee will refuse or
be unable to accept election. However, if the nominee 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 one nominee
name 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, and each other member of
the Board of Directors. Reference is made to the information set forth above
under "Executive Officers" for a description of the business experience of
Messrs. Ginns and Maught.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
- ---- --- ------------------------- --------------
<S> <C> <C> <C>
Daniel P. Ginns 48 Chairman of the Board of Directors, October 1996
Chief Executive Officer and
Secretary
Adrien A. Maught, Jr. 49 Director, Chief Operating Officer October 1996
and President
Douglas S. Friedenberg 46 Director October 1996
John W. O'Leary 63 Director January 1999
Richard J. Love 66 Director December 1998
</TABLE>
Richard J. Love is currently a principal of RJL Capital Management of
Santa Barbara, California, an investment management firm. From 1973 to 1988, Mr.
Love served as an investment counselor, then senior partner, of Loomis, Sayles &
Co. He has held positions with James Capel Investment Banking of San Francisco
from 1969 to 1973 and with Stein, Roe & Farnham from 1959 to 1969.
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.
<PAGE>
John W. O'Leary is the former President and Chief Executive Officer of
International Imaging Materials, Inc., a subsidiary of Paxar Corporation. Mr.
O'Leary spent 24 years with Burroughs Corporation (now Unisys) where, from 1977
to 1984, he was Corporate Vice President and President of Burroughs Office
Products Group. He is Chairman of the Board of AIM(R) USA and also serves on the
board of directors of Marine Midland Bank, Rochester Region and the United Way
of Rochester.
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 10% 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 10% 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 1998, 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 ten meetings during fiscal 1998. 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. During
Fiscal 1998, the Audit Committee was composed of Mr. Friedenberg and former
directors Stephen R. Gass and James Haber, who resigned from the Board of
Directors in July 1998 and August, 1998, respectively. As of the date of this
proxy statement, the Audit Committee is composed of solely of Mr. Friedenberg,
pending further appointments to fill vacancies resulting from the resignation of
Messrs. Gass and Haber. Each member of the Audit Committee, 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 three times in fiscal 1998.
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
<PAGE>
event that less than 100 days' notice or prior public disclosure of the date of
such meetings 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. During Fiscal 1998, the Nominating Committee was composed of Mr.
Friedenberg and former directors Stephen R. Gass and James Haber, who resigned
from the Board of Directors in July 1998 and August 1998, respectively. As of
the date of this proxy statement, the Nominating Committee is composed of solely
of Mr. Friedenberg, pending further appointments to fill vacancies resulting
from the resignation of Messrs. Gass and Haber. The Nominating Committee did not
meet in fiscal 1998. The Board of Directors performed functions that were
normally performed by the Nominating Committee in fiscal 1998.
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. During Fiscal 1998, the Compensation Committee
was composed of Mr. Friedenberg and former directors Stephen R. Gass and James
Haber, who resigned from the Board of Directors in July 1998 and August 1998,
respectively. As of the date of this proxy statement, the Compensation Committee
is composed of solely of Mr. Friedenberg, pending further appointments to fill
vacancies resulting from the resignation of Messrs. Gass and Haber. Each member
of the Compensation Committee is a "disinterested person" within the meaning of
Rule 16b-3 under the Exchange Act. The Compensation Committee met one time in
fiscal 1998.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed entirely of the three 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 assesses the effectiveness and competitiveness of the
program, as needed. 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 executive
compensation.
COMPENSATION PHILOSOPHY
The Company's executive compensation program is intended to (i) align
executive compensation with shareholder interests: (ii) attract, retain and
motivate a highly competent executive team, (iii) link
<PAGE>
compensation to both individual and Company performance and (iv) achieve a
balance between incentives for short-term and long-term results. The Company
positions base salaries after considering competitive levels; however, an annual
bonus may be to reward exceptional performance in amounts above competitive
levels. The Company also believes in providing incentives 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 utilizes 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 typically set at
a rate slightly below the median level of similar high technology companies.
Salary increases are designed to reflect competitive practices in the industry,
financial performance of the Company and individual performance of the
executive.
Bonuses
The Company did not pay bonuses to any of its officers in fiscal 1998.
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.
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 9 of Section 162(m).
<PAGE>
The following graph compares the cumulative return on investment to
holders of the Company's Common Stock for the five years ending December 31,
1998, with the Standard & Poor's ("S&P") Computer and Office Equipment Index and
S&P 500 Index for the same period. The comparison assumes $100 was invested on
January 1, 1994 in the Company's Common Stock and in each of the comparison
groups, and assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG DATAMETRICS CORP., THE S&P 500 INDEX
AND THE S&P COMPUTER AND OFFICE EQUIPMENT INDEX
<TABLE>
<CAPTION>
October 29, October 31, October 31, October 31, October 31, October 25,
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Datametrics Corp. $100.00 $151.92 $284.62 $ 50.00 $ 65.38 $ 30.77
SIC Code Index 100.00 130.99 189.72 221.18 318.21 436.18
S&P 500 Index 100.00 103.87 131.33 162.98 215.32 262.67
</TABLE>
ASSUMES $100 INVESTED ON OCT. 29, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING OCT. 25, 1998
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended October 27, 1996, October
26, 1997 and October 25, 1998 ("fiscal 1998"), the compensation earned by the
current Chief Executive Officer of the Company and the four most highly
compensated executive officers of the Company at the end of fiscal 1998 (the
foregoing persons are hereinafter referred to as the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
LONG- ALL
OTHER TERM IN- OTHER
ANNUAL RE- SECURITIES CENTIVE COMPEN-
NAME AND COMPEN- STRICTED UNDERLYING PLAN SATION
PRINCIPAL SATION STOCK OPTIONS/ PAYOUTS ($)
POSITIONS YEAR SALARY BONUS(S) ($)(3) AWARD(S) SARs(#) ($)
($)
- --------- ---- ------ ------- ------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Ginns, 1998 252,681 --- 32,000(4) 10,000(5) --- --- ---
Chief Executive 1997 261,035(1) 24,000 27,000(4) 10,000(5) 700,000 --- ---
Officer, 1996 17,500 --- --- --- 15,000 --- ---
Secretary and
Chairman of the
Board of
Directors
Adrien A. 1998 200,891 --- 12,500(4) 10,000(5) --- --- ---
Maught, Jr. 1997 210,901(2) 21,500 7,500(4) 10,000(5) 500,000 --- ---
President and 1996 13,500 --- --- --- 15,000 --- ---
Director
William B. 1998 40,552 --- --- --- --- --- ---
Pandos, Chief 1997 --- --- --- --- --- --- ---
Financial Officer 1996 --- --- --- --- --- --- ---
and Treasurer
James D. 1998 124,905 --- --- --- --- --- ---
Sturgeon, Jr., 1997 123,882 --- --- --- 1,750 --- ---
Chief Operating 1996 118,646 --- --- --- 10,000 --- ---
Officer
- ----------------------------------
</TABLE>
(1) Includes related party payments of $72,250 for fees paid to Belmont
Capital Inc. for consulting services prior to becoming an employee of
the Company.
(2) Includes related party payments of $45,750 for fees paid to Belmont
Capital Inc. for consulting services prior to becoming an employee of
the Company.
(3) Does not include perquisites to each of the Named Executive Officers
that did not exceed the lesser of $50,000 or 10% of the total salary and
bonus for such officer.
(4) Directors fees.
<PAGE>
(5) Restricted stock awarded in lieu of fees for Board and Committee meeting
attendance.
STOCK OPTION GRANTS IN FISCAL 1998
The following table sets forth information regarding the grant of stock
options during fiscal 1998 to the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM($)
----------------- -----------------------------
PERCENT OF
TOTAL
OPTIONS
GRANTED
TO
NUMBER OF EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICES PER EXPIRATION
NAME GRANTED 1998(1) SHARE($) DATE(2) 5% 10%
- ---- ------- -------- --------- -------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Daniel P. 0 --- --- --- --- ---
Ginns
Adrien A. 0 --- --- --- --- ---
Maught, Jr.
James D. 0 --- --- --- --- ---
Sturgeon, Jr.
William B. 0 --- --- --- --- ---
Pandos
- ------------------------------------------
</TABLE>
(1) No stock appreciation rights were granted to any of the Named Executive
Officers or other employees of the Company in fiscal 1998.
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND OCTOBER 25, 1998 OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal 1998 and
unexercised options held at the end of fiscal 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED VALUE OPTIONS AT OCTOBER 25, 1998 MONEY OPTIONS AT OCTOBER
ON REALIZED (#) 25, 1998($)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ---------- -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel P. 0 0 707,500 7,500 0 0
Ginns
Adrien A. 0 0 507,500 7,500 0 0
Maught, Jr.
James D. 0 0 56,250 9,500 0 0
Sturgeon, Jr.
William B. 0 0 13,124 7,751 0 0
Pandos
</TABLE>
DIRECTORS COMPENSATION
Prior to October 1998, the Company's Board of Directors consisted of
the following members: Adrien A. Maught, Jr., Douglas S. Friedenberg, James
Haber, Daniel P. Ginns and Stephen R. Gass. Messrs. Gass and Haber resigned from
the Board of Directors in July and August 1998, respectively. As Chairman of the
Board, Mr. Ginns received an annual retainer fee of $32,000 in fiscal 1998 and
will receive an annual retainer fee of $32,000 in fiscal year 1999. All other
directors received annual retainer fees of $12,500 in fiscal 1998 and will
receive annual retainer fees of $12,500 in fiscal year 1999. In fiscal 1998,
each director was issued 10,000 shares of Common Stock in addition to the above
retainer fees. In fiscal year 1999, the Company will issue to each director
10,000 shares of Common Stock in addition to the above retainer fees for fiscal
year 1999.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
In January 1997, the Company entered into employment agreements with
Mr. Ginns as Chief Executive Officer of the Company, and Mr. Maught as President
of the Company. Each of these agreements currently terminates on December 31,
2002, but automatically renews on July 1 of each year so that the remaining term
of each agreement will not be less than four and one-half years. 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
is adjusted by the greater of 3% or a percentage equal to the percentage change
in the Consumer Price Index 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.
<PAGE>
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 each 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; and the Company shall continue to provide to each such
executive (and each member of his immediate family) all benefits provided by the
employment agreement. In addition, upon termination in connection with a certain
change in control of the Company, Mr. Ginns and Mr. Maught each shall be
entitled to a cash payment equal to the lesser of three years' base salary or
the maximum amount which would not result in any portion of such payment being
subject to the excise tax under Section 4999 of the Internal Revenue Code.
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. All of these warrants are immediately exercisable and have a term of five
years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1998, the Company paid $371,225 and $450,000 for
liability and medical insurance, respectively, to Arthur A. Watson & Co., Inc.,
an entity of which Mr. Gass is an Executive Vice President and stockholder.
These payments did not exceed amounts that a similarly situated computer and
office equipment manufacturing company would reasonably expend for liability and
medical insurance in an arms-length transaction. Mr. Gass resigned from the
Board of Directors of the Company in July 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1998, Mr. Friedenberg and former directors Stephen R.
Gass and James Haber served on the Compensation Committee. No member of the
Compensation Committee was or is an officer or employee of the Company. Mr. Gass
is an Executive Vice President and stockholder of Arthur A. Watson & Co.. Inc.,
a private insurance company. During fiscal 1998, the Company paid $371,225 and
$450,000 to Arthur A. Watson & Co., Inc. for liability and medical insurance,
respectively. Mr. Gass resigned from the Board of Directors of the Company in
July 1998. There were no Compensation Committee interlocks or insider
participation during fiscal 1997.
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 1999 Annual
Meeting of Shareholders. If any other business should properly come before the
Company's 1999 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
Proposals of stockholders of the Company (including director
nominations) intended to be presented at the 2000 Annual Meeting of Stockholders
must be received in writing by the Company's Secretary at the Company's
principal executive offices not later than December 31, 1999 to be included in
the Company's proxy statement and form of proxy relating to the 2000 Annual
Meeting of Stockholders. Nominations and proposals of stockholders may be
submitted to the Company for
<PAGE>
consideration at the 2000 Annual Meeting of Stockholders if certain conditions
set forth in the Company's By-laws are satisfied, although such nominations and
proposals will not be included in the proxy statement and form of proxy relating
to that annual meeting unless submitted in accordance with the time limits and
other requirements set forth above and in the related rules of the Securities
and Exchange Commission.
By Order of the Board of Directors
/s/ DANIEL P. GINNS
---------------------------------
DANIEL P. GINNS
Chairman of the Board
Florham Park, New Jersey
January 29, 1999
<PAGE>
PROXY
DATAMETRICS CORPORATION
25B Hanover Road, Suite 305
Florham Park, New Jersey 07932
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 Grand
Summit Hotel, Morris Room, 570 Springfield Avenue, Summit, New Jersey 07901 on
March 1, 1999 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 [ ]
o Douglas S. Friedenberg
o John W. O'Leary
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
Withheld individual nominee: __________________________________________
2. PROPOSAL TO RATIFY THE RE-APPOINTMENT OF BDO SEIDMAN & CO., LLP as the
independent certified public accountants of the Company for the fiscal
year ending October 25, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. 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 PROPOSAL NO. 2.
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:________________________, 1999 Signature:______________________________
DATED:________________________, 1999 Signature:______________________________
