<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES\
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998 .
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------- ---------------
Commission file no. 0-6272
DATUM INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-2512237
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.
9975 TOLEDO WAY, IRVINE, CA 92618-1819 (Address of
principal executive offices) (Zip code)
(949) 598-7500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. YES X NO
---- ----
The registrant had 5,432,865 shares of common stock outstanding as of August 10,
1998.
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.................................................. 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................... 12
Signatures........................................................... 13
Exhibit Index........................................................ 14
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 9,182 $ 5,819
Accounts receivable 13,920 15,043
Inventories
Purchased parts 9,045 10,523
Work-in-process 14,463 12,833
Finished products 7,447 7,863
------- -------
30,955 31,219
Prepaid expenses 409 363
Deferred income taxes 2,648 2,648
Income tax refund receivable 1,270 1,321
------- -------
Total current assets 58,384 56,413
Plant and equipment
Land 2,040 2,040
Buildings 4,577 4,564
Equipment 20,072 19,306
Leasehold improvements 1,067 1,013
------- -------
27,756 26,923
Less accumulated depreciation and amortization 11,494 10,132
------- -------
16,262 16,791
------- -------
Excess of purchase price over net assets acquired 11,679 12,126
Other assets 358 416
------- -------
$86,683 $85,746
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE> 4
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,679 $ 3,343
Accrued salaries and wages 2,394 3,298
Accrued warranty 1,272 990
Other accrued expenses 1,456 1,277
Current portion of long-term debt 1,513 23
-------- --------
Total current liabilities 11,314 8,931
-------- --------
Long-term debt 15,986 17,418
-------- --------
Postretirement benefits 710 602
-------- --------
Other long-term liabilities 110 128
-------- --------
Deferred income taxes 1,823 1,823
-------- --------
Stockholders' equity
Preferred stock, par value $.25 per share
Authorized - 1,000,000 shares
Issued - none -- --
Common stock, par value $.25 per share
Authorized - 10,000,000 shares
Issued - 5,429,527 shares in 1998
5,332,860 shares in 1997 1,357 1,333
Additional paid-in capital 44,294 43,231
Retained earnings
Beginning of period 12,785 7,956
Net income (loss) (769) 4,829
-------- --------
End of period 12,016 12,785
Unamortized value of restricted stock (398) --
Cumulative translation adjustment (529) (505)
-------- --------
Total stockholders' equity 56,740 56,844
-------- --------
$ 86,683 $ 85,746
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE> 5
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 26,150 $ 33,051 $ 51,528 $ 61,775
-------- -------- -------- --------
Costs and expenses
Cost of goods sold 16,260 19,616 33,425 37,010
Selling 4,053 4,459 8,011 8,269
Product development 3,044 2,555 5,842 4,921
General and administrative 2,307 2,695 4,677 5,288
Interest expense 523 510 1,036 1,054
Interest (income) (108) (117) (192) (123)
-------- -------- -------- --------
26,079 29,718 52,799 56,419
-------- -------- -------- --------
Income (loss) before income taxes 71 3,333 (1,271) 5,356
Income tax provision (benefit) 28 1,367 (502) 2,196
-------- -------- -------- --------
Net income (loss) $ 43 $ 1,966 $ (769) $ 3,160
======== ======== ======== ========
Net income (loss) per share:
Basic $ .01 $ .38 $ (.14) $ .68
======== ======== ======== ========
Diluted $ .01 $ .36 $ (.14) $ .62
======== ======== ======== ========
Shares used in per share calculation:
Basic 5,402 5,167 5,371 4,643
======== ======== ======== ========
Diluted 5,655 5,601 5,371 5,061
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE> 6
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------
June 30, June 30,
1998 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (769) $ 3,160
-------- --------
Adjustments to reconcile income (loss) to net
cash provided by (used in)
operating activities:
Depreciation and amortization 1,759 1,565
Amortization of goodwill 447 447
Contribution of shares of common stock to
the Company's 401(k) plan 367 299
Amortization of unvested restricted stock 15 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 1,123 (706)
(Increase) decrease in income tax refund receivable 51 (119)
(Increase) decrease in inventories 264 (7,916)
(Increase) decrease in prepaid expenses (46) 53
Increase in other assets -- (27)
Increase (decrease) in accounts payable 1,336 (592)
Decrease in accrued expenses (444) (12)
Decrease in income taxes payable -- (1,049)
Increase in postretirement benefits 108 78
Decrease in other long-term liabilities (18) (15)
-------- --------
Total reconciling items 4,962 (7,994)
-------- --------
Net cash provided by (used in) operating activities 4,193 (4,834)
-------- --------
Cash flows from investing activities:
Book value of equipment disposals 4 15
Capital expenditures (1,107) (1,967)
Payment for acquisition, net of cash acquired -- (1,270)
Other (23) (238)
-------- --------
Net cash used in investing activities (1,126) (3,460)
-------- --------
Cash flows from financing activities:
Reductions to long-term debt (11) (45)
Proceeds from issuance of common stock -- 14,159
Proceeds from exercise of stock options 158 695
Proceeds from ESP plan 149 --
-------- --------
Net cash provided by financing activities 296 14,809
-------- --------
Net increase in cash and cash equivalents 3,363 6,515
Cash and cash equivalents at beginning of period 5,819 1,389
-------- --------
Cash and cash equivalents at end of period $ 9,182 $ 7,904
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
6
<PAGE> 7
DATUM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the requirements of Form 10-Q and, therefore, do not
include all information and footnotes which would be presented were such
financial statements prepared in accordance with generally accepted accounting
principles, and should be read in conjunction with the audited financial
statements presented in the Company's 1997 Annual Report to Stockholders. In the
opinion of management, the accompanying financial statements reflect all
adjustments which are necessary for a fair presentation of the results for the
interim period presented. The results of operations for such interim period are
not necessarily indicative of results to be expected for the full year.
NOTE B - EARNINGS PER SHARE
Effective in the fourth quarter of 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128). FAS 128
requires dual presentation of net income per share-basic and -diluted. Net
income per share-Basic excludes dilution and is computed by dividing net income
by the weighted average number of common shares outstanding during the reporting
period. Net income per share-Diluted reflects the potential dilution that could
occur if stock options and warrants were exercised. Prior period net income per
share data has been restated to conform with the provisions of this Statement.
7
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
presented in the Company's 1997 Annual Report to Stockholders.
INTRODUCTORY NOTE
All statements other than statements of historical fact included in this
Report on Form 10-Q are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 and Datum Inc. ("Datum" or the "Company") intends that such
forward-looking statements be subject to the safe harbors created thereby.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable at this time, it can give no assurance
that such expectations will prove to have been correct. The Company makes no
undertaking to correct or update any such statements in the future. Important
factors that could cause actual results to differ materially from the Company's
expectations ("Cautionary Statements") are set forth in "Management's Discussion
and Analysis of Financial Condition or Results of Operations' as well as in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
Overview
Datum designs, manufactures and markets a wide variety of high
performance time and frequency products used to synchronize the flow of
information in telecommunications networks. The Company is also a leading
supplier of precise timing products for enterprise computing networks and a wide
variety of space, scientific and industrial test and measurement applications.
The Company was formed in 1959 and has grown its operations through
acquisitions and internal product development. In 1983, the Company acquired its
cesium standards operation and, in the process, commenced its evolution from a
company primarily supplying timing equipment for military applications to a
manufacturer of a broad range of time and frequency products for
telecommunications and other applications. In 1986, the Company acquired the
business that is now enterprise computing and in 1988, it acquired its current
wireline business. In March 1995, the Company acquired Efratom Time and
Frequency Products, Inc. and Efratom Elektronik GmbH (collectively "Efratom"),
the inventor and leading manufacturer of rubidium oscillators used in cellular
and Personal Communications Services ("PCS") networks. In April 1997, the
Company acquired the assets of Sigma Tau Standards Corporation, a leading
manufacturer of hydrogen masers, which provide an extremely stable frequency
source over short periods of time in controlled environments. The Company
manufactures each class of time and frequency products in wide-spread commercial
use: hydrogen masers, cesium standards, rubidium oscillators, quartz oscillators
and GPS timing receivers.
The Company serves the markets for high-precision time and frequency
devices in the telecommunications industry which is rapidly expanding as a
result of the conversion of analog to digital systems. The Company also provides
extremely stable cesium standards and GPS receivers that generate and capture
time and frequency for use in wireline telecommunications networks. In addition
to providing time and frequency standards for telecommunications applications,
the Company is a growing supplier of timing products used to ensure the
integrity of information transmitted through enterprise computing networks. The
Company also manufactures frequency sources for satellites, including GPS
satellites that utilize the Company's cesium clocks to provide highly accurate
timing and navigation information throughout the world. Finally, the Company
provides time and frequency products and systems for a wide range of scientific
and industrial test and measurement applications, including missile guidance,
geographic mapping and electric utility operations.
A small number of customers account for a substantial portion of the
Company's net sales and the Company expects that a limited number of customers
will continue to represent a substantial portion of the Company's net sales for
the foreseeable future. There can be no assurance that a major customer will not
reduce, delay or eliminate its purchases from the Company. Any such reduction,
delay or loss in orders could have a material adverse effect on the Company's
business, financial condition and results of operations.
8
<PAGE> 9
Results of Operations
The following table sets forth, for the fiscal periods indicated,
certain income and expense items expressed as a percentage of the Company's net
sales:
<TABLE>
<CAPTION>
Percentage of Net Sales
--------------------------------------------------
Three Months Ended Year Ended
June 30, December 31,
------------------ ----------------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------ ------
Costs and expenses
Cost of goods sold 62.2% 59.4% 59.8% 61.3% 59.5%
Selling 15.5% 13.5% 13.9% 13.3% 14.6%
Product development 11.6% 7.7% 9.3% 8.3% 10.5%
General and administrative 8.8% 8.2% 8.3% 11.0% 12.6%
Interest, net 1.6% 1.2% 1.5% 2.5% 2.5%
---- ---- ---- ---- ----
Income before income taxes 0.3% 10.1% 7.2% 3.6% 0.3%
Income tax provision 0.1% 4.1% 2.9% 1.5% 0.2%
---- ---- ---- ---- ----
Net income 0.2% 5.9% 4.2% 2.1% 0.1%
==== ==== ==== ==== ====
</TABLE>
Net Sales. The Company's net sales are derived primarily from the sale
of time and frequency products for use in telecommunications networks,
enterprise computing networks, satellites and in a variety of other test and
measurement applications. The Company's net sales decreased 20.9% to $26.2
million for the quarter ended June 30, 1998 from the record $33.1 million for
the corresponding quarter in 1997. For the six months ended June 30, 1998, net
sales decreased 16.6% to $51.5 million from $61.8 million for the corresponding
1997 period. Sales were affected by decreased product usage by the Company's
larger customers. The future success of the Company depends to a considerable
extent upon the continued growth and increased availability of cellular and
other wireless communications services in the United States and internationally.
There can be no assurance of such growth or increased availability or that such
factors will create demand for the Company's products.
Gross Margin. Gross Margin is derived from net sales minus cost of goods
sold, which costs consist primarily of raw materials, labor, overhead and
warranty costs. Gross margin decreased to 37.8% for the quarter ended June 30,
1998 from 40.6% for the corresponding quarter in 1997. For the six months ended
June 30, 1998, gross margin decreased to 35.1% from 40.1% for the corresponding
quarter in 1997. Although gross margins in the wireline and satellite businesses
improved, gross margin in the wireless business declined due to reduced sales
levels. Gross margin can be adversely affected by a number of other factors,
including pricing pressure from the Company's customers and the difficulty of
reducing fixed expenses in connection with the rescheduling of customers'
orders.
Selling Expense. Selling expense consists primarily of sales commissions
paid to the Company's third-party representatives and distributors and salaries
and other expenses for its sales and marketing personnel. Selling expense also
includes expenses related to advertising and trade shows. Selling expense
decreased by 9.1% to $4.1 million for the quarter ended June 30, 1998, from $4.5
million for the corresponding quarter in 1997. For the six months ended June 30,
1998, selling expense decreased 3.1% to $8.0 million from $8.3 million for the
six months ended June 30, 1997. The reduction was due to lower commission
expense due to decreased sales levels. As a percentage of net sales, selling
expense increased to 15.5% for the quarter ended June 30, 1998 from 13.5% for
the corresponding quarter in 1997. For the six months ended June 30, 1998,
selling expense as a percentage of net sales increased to 15.5% from 13.4% for
the corresponding 1997 period. The increase is due to a smaller sales base in
the 1998 period.
Product Development. Product development expense consists primarily of
salary, applied overhead, materials and third-party design services. Product
development expense increased by 19.1% to $3.0 million for the quarter ended
June 30, 1998 from $2.6 million for the corresponding quarter in 1997. For the
six months ended June 30, 1998, product development expense increased by 18.7%
to $5.8 million from $4.9 million for the corresponding 1997 period. The
increase was primarily due to increased telecommunications-related development,
including a program specifically designed to reduce manufacturing costs. As a
percentage of net sales, product development expenses
9
<PAGE> 10
increased to 11.6% for the quarter ended June 30, 1998 from 7.7% for the
corresponding quarter in 1997. For the six months ended June 30, 1998, product
development expense, as a percentage of net sales, increased to 11.3% from 8.0%
for the corresponding 1997 period. Failure to develop, or introduce on a timely
basis, new products or product enhancements that achieve market acceptance could
materially adversely affect the Company's business, financial condition and
results of operations.
General and Administrative. General and administrative expense consists
primarily of salaries and other expenses for management, finance, accounting and
human resources, as well as amortization of goodwill and depreciation charges.
General and administrative expense decreased 14.4% to $2.3 million for the
quarter ended June 30, 1998, from $2.7 million for the corresponding quarter in
1997. For the six months ended June 30, 1998, general and administrative expense
decreased 11.6% to $4.7 million from $5.3 million for the corresponding 1997
period. The decrease was primarily the result of increased incentive
compensation expense in 1997, due to higher earnings. As a percentage of net
sales, general and administrative expense increased to 8.8% for the quarter
ended June 30, 1998, from 8.2% for the corresponding quarter in 1997. For the
six months ended June 30, 1998, general and administrative expense, as a
percentage of net sales, increased to 9.1% from 8.6% for the corresponding 1997
period. The increase was due to a smaller sales base.
Interest, Net. Interest expense increased by $22,000 to $415,000 for the
quarter ended June 30, 1998 from $393,000 for the corresponding quarter in 1997.
For the six months ended June 30, 1998, interest expense decreased $87,000 to
$844,000 from $931,000 for the corresponding 1997 period. The decrease is the
result of increased interest earned on the Company's higher cash balances and
the reduction of the Company's debt levels.
Weighted Average Number of Shares Outstanding. Shares outstanding
increased for the quarter ended June 30, 1998, as a result of shares issued
through the Company's equity plans. For the six months ended June 30, 1998,
shares outstanding increased from the corresponding 1997 period, primarily as a
result of the Company's follow-on public offering of 1,035,000 shares of its
common stock completed April 11, 1997.
Liquidity and Capital Resources
The Company finances its operations primarily through a combination of
cash provided from operations, a commercial bank line of credit and long-term
debt. In addition, on April 11, 1997, the Company completed a follow-on public
offering of 1,035,000 shares of its common stock, raising net proceeds of
approximately $14.2 million.
Cash provided by operations was approximately $4.2 million for the six
months ended June 30, 1998, compared to cash used in operating activities of
$4.8 million for the corresponding 1997 period. Cash flows were adversely
effected in the first half of 1997 by greater working capital needs in
connection with increased production levels associated with building inventories
for sales into the cellular and PCS markets.
Cash used in investing activities was approximately $1.1 million for the
six months ended June 30, 1998, compared to $3.5 million for the corresponding
1997 period. Cash used in the first half of 1997 included the final payment of
$1.3 million in connection with the acquisition of Efratom. The Company
currently anticipates that capital expenditures for fiscal 1998 will be less
than $4 million.
Cash provided by financing activities was approximately $296,000 for the
six months ended June 30, 1998, compared to $14.8 million for the corresponding
1997 period. The Company completed a follow-on public offering during the first
six months of 1997, providing approximately $14.2 million in cash.
Accounts receivable decreased $1.1 million to $13.9 million at June 30,
1998, from $15.0 million at December 31, 1997, due to accelerated payments in
the quarter ended June 30, 1998.
Inventories decreased $264,000 to $31.0 million at June 30, 1998, from
$31.2 million at December 31, 1997. The Company continues efforts to reduce
inventories to more appropriate levels.
10
<PAGE> 11
Accounts payable increased $1.3 million to $4.7 million at June 30,
1998, from $3.3 million at December 31, 1997, a result of increased inventory
purchases to support increased sales volume during the quarter ended June 30,
1998, as compared to the quarter ended December 31, 1997.
At June 30, 1998, the Company had working capital of $47.1 million and a
current ratio of 5.2:1, compared to working capital of $47.5 million and a
current ratio of 6.3:1 at December 31, 1997. The decrease is due to the
reclassification of $1.5 million of long-term debt to current liabilities for
payment on March 27, 1999. The Company's long-term debt is provided by The
Prudential Insurance Company of America ("Prudential"). This credit facility
consists of: (i) $6.0 million of Series A Senior Secured Promissory Notes,
maturing September 27, 2000, bearing interest at 9.07% on unpaid principal,
payable quarterly, with the principal to be re-paid in installments of $1.5
million on March 27 and September 27 of each year, commencing March 27, 1999 and
(ii) $12.0 million of Series B Senior Secured Promissory Notes, maturing
September 27, 2003, bearing interest at 10.25% on unpaid principal, payable
quarterly, with the principal to be re-paid in installments of $2.0 million on
March 27 and September 27 of each year, commencing March 27, 2001. In connection
with entering into this facility, the Company issued to Prudential warrants to
purchase 175,000 shares of common stock at an exercise price per share of
$11.50. As of June 30, 1998, none of the warrants had been exercised.
The Company's line of credit with Wells Fargo Bank, is a two-year, $12.0
million revolving line of credit, expiring November 1, 1998, bearing interest at
the Bank's prime rate or at LIBOR plus 2.25%. The Company is not currently
utilizing the Wells Fargo credit line, but expects to renew the line of credit
for an additional two-year period.
The Wells Fargo credit facility and the Prudential credit facility
provide the Company with the aggregate borrowing capacity of $30 million.
Under both agreements, the Company is required to maintain certain
financial ratios, limit other indebtedness and may not pay dividends. Other
restrictions include limitations on the amount of leases and capital
expenditures that may be incurred. The Company currently is in compliance with
all such covenants and restrictions.
The Company has taken actions to understand the nature and extent of the
work required to make its systems products and infrastructure Year 2000
compliant. In 1997, the Company began to prepare its products and review its
computer-based systems for the Year 2000, including replacing or updating
existing systems. The Company continues to evaluate the estimated costs
associated with these efforts based on actual experience. While these efforts
will involve additional costs, the Company believes, based on available
information, that it will be able to manage its total Year 2000 transition
without any material adverse effect on its business operations, products or
financial condition.
Information Regarding Potential Fluctuations in Quarterly Operating Results
The Company has experienced, and expects to continue to experience,
fluctuations in sales and operating results from quarter to quarter. As a
result, the Company believes that period-to-period comparisons of its operating
results are not necessarily meaningful, and that such comparisons cannot be
relied upon as indicators of future performance. A significant component of the
fluctuations results from rescheduling of orders by the Company's major
customers, in some cases due in part to the customers' attempts to minimize
inventories. Other factors that could cause the Company's sales and operating
results to vary significantly from period to period include: contractual price
reductions on products sold to certain major customers; the timing, availability
and sale of new products; changes in the mix of products with differing gross
margins; variations in manufacturing capacities, efficiencies and costs; the
availability and cost of components; warranty expenses; and variations in
product development and other operating expenses. In addition, the sales cycles
for many of the Company's products are often lengthy and unpredictable, and can
take up to 36 months. Further, there can be no assurance that the Company will
be successful in closing large transactions on a timely basis or at all. The
timing of these transactions could cause additional variability in the Company's
operating results. The Company's quarterly results of operations are also
influenced by competitive factors, including pricing and availability of the
Company's and competing companies' time and frequency products. A large portion
of the Company's expenses are fixed and difficult to reduce in a short period of
time. If net sales do not meet the Company's expectations, the Company's fixed
expenses would exacerbate the effect of such net sales shortfall. Furthermore,
announcements by the Company or its competitors regarding new products and
technologies could cause customers to defer purchases of the Company's products.
Order deferrals by the Company's customers, purchase policy changes, delays in
the Company's introduction of new products and longer than anticipated sales
cycles for the Company's products have in the past materially adversely affected
the Company's quarterly results of operations. Due to the foregoing factors, as
well as other unanticipated factors, it is likely that in some future quarter
the Company's operating results will be below the expectations of public market
analysts or investors. In such event, the price of the Company's common stock
would be materially adversely affected.
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<PAGE> 12
PART II. OTHER INFORMATION
Items 1 through 3 and Item 5 have been omitted because the related
information is either inapplicable or has been previously reported.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on June 4, 1998
(b) (i) Set forth below is the name of each Class II director
elected at the meeting to serve until the 2001 Annual Meeting of
Stockholders and the number of votes cast for their election and
the number of votes withheld;
Number of Number of
Name Votes "For" Votes "Withheld"
---- ----------- ----------------
Erik H. van der Kaay 4,708,925 265,884
Louis B. Horwitz 4,697,411 277,398
Dan L. McGurk 4,698,565 276,244
(ii) The terms of the following directors of the company
continued after the meeting: G.Tilton Gardner, R. David Hoover ,
Michael M. Mann, and Edward A. Money
(c) (i) Set forth below are the results of the voting at the meeting
with respect to the proposal to adopt an amendment to the
Company's 1994 Stock Incentive Plan to increase the number of
shares issuable thereunder by 200,000 shares;
<TABLE>
<CAPTION>
Number of Number of Number of Number of
Votes "For" Votes "Against" "Abstentions" Broker "Non-Votes"
----------- --------------- ------------- ------------------
<S> <C> <C> <C>
1,505,430 804,479 44,083 2,620,817
</TABLE>
(ii) Set forth below are the results of the voting at the
meeting with respect to the proposal to adopt an amendment to
the Company's 1994 Stock Incentive Plan to increase the maximum
number of shares issuable thereunder by an amount, each year,
equal to 2% of the number of shares of common stock outstanding
as of the Company's fiscal year end;
<TABLE>
<CAPTION>
Number of Number of Number of Number of
Votes "For" Votes "Against" "Abstentions" Broker "Non-Votes"
----------- --------------- ------------- ------------------
<S> <C> <C> <C>
1,445,429 872,291 36,168 2,620,921
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
10.43 Nonqualified stock option agreement dated April 6,
1998 with Erik van der Kaay
10.44 Restricted stock grant agreement dated April 6,
1998 with Erik van der Kaay
27.2 Financial Data Schedule
(b) No current reports on Form 8-K were filed during the quarter
covered by this report.
12
<PAGE> 13
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATUM INC.
/s/ Erik H. van der Kaay Date: August 13, 1998
- -------------------------------------------
Erik H. van der Kaay, President and
Chief Executive Officer
/s/ David A. Young Date: August 13, 1998
- -------------------------------------------
David A. Young, Chief Financial and
Chief Accounting Officer
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- ------------
<S> <C> <C>
10.43 Nonqualified stock option agreement dated April 6, 1998
with Erik van der Kaay
10.44 Restricted stock grant agreement dated April 6, 1998
with Erik van der Kaay
27.2 Financial Data Schedule
</TABLE>
14
<PAGE> 1
EXHIBIT 10.43
DATUM INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
This Nonqualified Stock Option Agreement (the "Agreement") is entered
into as of April 6, 1998, by and between Datum Inc., a Delaware corporation (the
"Company") and Erik van der Kaay (the "Optionee") pursuant to the Company's 1994
Stock Incentive Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of One Hundred Twenty
Thousand (120,000) shares (the "Shares") of the Common Stock of the Company at a
purchase price of Thirteen Dollars & Seventy-Five Cents ($13.75) per share (the
"Exercise Price"), subject to the terms and conditions set forth herein and the
provisions of the Plan. This Option is not intended to qualify as an "incentive
stock option" as defined in Section 422 of the Internal Revenue Code of l986, as
amended (the "Code").
2. VESTING OF OPTION. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any vested installment, as follows:
<TABLE>
<CAPTION>
This Option shall be
On or After: Exercisable as to:
------------ ------------------
<C> <S> <C>
(i) April 6, 1999: 30,000 shares
(ii) April 6, 2000: an additional 30,000 shares
(iii) April 6, 2001: an additional 30,000 shares
(iv) April 6, 2002: an additional 30,000 shares
</TABLE>
No additional shares shall vest after the date of termination of
Optionee's "Continuous Service" (as defined in Section 3 below), but this Option
shall continue to be exercisable in accordance with Section 3 hereof with
respect to that number of shares that have vested as of the date of termination
of Optionee's Continuous Service.
3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the first to occur of the following:
(a) the expiration of ten (10) years from the date of this
Agreement;
(b) the expiration of three (3) months from the date of
termination of Optionee's Continuous Service if such termination occurs for any
reason other than permanent disability or death; provided, however, that if
Optionee dies during such three-month period, the provisions of Section 3(d)
below shall apply;
-1-
<PAGE> 2
(c) the expiration of one (1) year from the date of termination
of Optionee's Continuous Service if such termination is due to permanent
disability of the Optionee (as defined in Section 22(e)(3) of the Code); or
(d) the expiration of one (1) year from the date of termination
of Optionee's Continuous Service if such termination is due to Optionee's death
or if death occurs during the three-month period following termination of
Optionee's Continuous Service pursuant to Section 3(b) above.
As used herein, the term "Continuous Service" means employment by either
the Company or any parent or subsidiary corporation of the Company, or by a
corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable.
4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Section 2 above, and until termination of this Option
in accordance with Section 3 above, the portion of this Option which has vested
may be exercised in whole or in part by the Optionee (or, after his or her
death, by the person designated in Section 5 below) upon delivery of the
following to the Company at its principal executive offices:
(a) a written notice of exercise which identifies this Agreement
and states the number of Shares then being purchased (but no fractional Shares
may be purchased);
(b) a check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 6(a)
of the Plan); and
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any, recognized
by the Optionee in connection with the exercise of this Option (unless the
Company and Optionee shall have made other arrangements (i) for deductions or
withholding from Optionee's wages, bonus or other compensation payable to
Optionee, or (ii) the withholding of Shares issuable upon exercise of this
Option, or (iii) the delivery of Shares owned by the Optionee in accordance with
Section 14 of the Plan, provided such arrangements satisfy the requirements of
applicable tax, securities and other laws).
5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under
this Agreement may not be assigned or transferred except by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a
-2-
<PAGE> 3
"Successor") shall succeed to the Optionee's rights and obligations under this
Agreement. After the death of the Optionee, only a Successor may exercise this
Option.
6. RECEIPT OF PLAN. Optionee acknowledges receipt of a copy of the Plan
and understands that all rights and obligations connected with this Option are
set forth in this Agreement and in the Plan.
7. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which he or she resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may deem necessary or advisable.
8. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. The Company agrees
to use its reasonable best efforts to obtain from any applicable regulatory
agency such authority or approval as may be required in order to issue and sell
the Shares to the Optionee pursuant to this Option. Inability of the Company to
obtain, from any such regulatory agency, authority or approval deemed by the
Company's counsel to be necessary for the lawful issuance and sale of the Shares
hereunder and under the Plan shall relieve the Company of any liability in
respect of the nonissuance or sale of such shares as to which such requisite
authority or approval shall not have been obtained.
9. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company, then appropriate adjustment shall be made by
the Administrator to the number of Shares subject to the unexercised portion of
this Option and to the Exercise Price per share, in order to preserve, as nearly
as practical, but not to increase, the benefits of the Optionee under this
Option, in accordance with the provisions of Section 9 of the Plan.
10. MERGER, REORGANIZATIONS, ETC. In the event that the Company at any
time proposes to sell substantially all of its assets, merge into, consolidate
with or to enter into any other reorganization in which the Company is not the
surviving corporation, or if the Company is the surviving corporation and the
ownership of the outstanding capital stock of the Company following the
transaction changes by 50% or more as a result of such transaction, this Option
shall terminate upon the effective date of such transaction unless provision is
made in writing in connection with such transaction for (a) the assumption of
this Option or the substitution for this Option of a new option of comparable
value covering shares of a successor corporation, with appropriate adjustments
as to the number and kind of shares and the Exercise Price, in which event this
Option or the new option substituted therefor shall continue in the manner and
under the terms so provided, or (b) the substitution for this Option of a
program or plan to provide rights to Optionee to receive, on exercise of such
rights, the type and amount of consideration Optionee would have received had he
or she exercised this Option prior to such transaction and less the aggregate
Exercise Price therefor. If such provision is not made in such transaction, then
the Administrator shall cause written notice of the proposed transaction to be
given to Optionee not less than thirty (30) days prior to the anticipated
effective date of the proposed transaction, and all of the then unvested portion
of this Option shall
-3-
<PAGE> 4
vest and concurrent with the effective date of the proposed transaction Optionee
shall have the right to exercise any or all of the then unexercised portion of
this Option.
11. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option
nor the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.
12. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.
13. INTERPRETATION. This Option is granted pursuant to the terms of the
Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee of
the Board of Directors of the Company appointed to administer the Plan, and if
no such committee has been appointed, the term Administrator shall mean the
Board of Directors.
14. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment, stock or other records of the Company.
15. GOVERNING LAW. The validity, construction, interpretation, and
effect of this Option shall be governed by and determined in accordance with the
laws of the State of California.
16. SEVERABILITY. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
18. MODIFICATION. Optionee's rights under this Agreement are subject to
modification in certain events as provided in Section 10 of the Plan.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DATUM INC. "OPTIONEE"
By: /s/ Louis B. Horwitz /s/ Erik van der Kaay
--------------------------------------- -------------------------------
Louis B. Horwitz, Chairman of the Board Erik van der Kaay
-5-
<PAGE> 1
EXHIBIT 10.44
DATUM INC.
RESTRICTED STOCK GRANT AGREEMENT
--------------------------------
This Restricted Stock Grant Agreement (the "Agreement") is entered into
as of April 6, 1998, by and between Datum Inc., a Delaware corporation (the
"Company"), and Erik van der Kaay (the "Grantee") pursuant to the Company's 1994
Stock Incentive Plan (the "Plan").
R E C I T A L S:
A. Grantee is an executive officer of the Company and is eligible to
receive shares of the Company's Common Stock under the Plan.
B. The Company desires to grant to Grantee, and Grantee desires to
accept from the Company, shares of the Company's Common Stock under the Plan on
the terms, provisions and conditions, and subject to restrictions and
agreements, hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. GRANT OF SHARES.
(a) The Company hereby grants to Grantee, and Grantee hereby
accepts, 30,000 shares of the Company's Common Stock (the "Shares")
(b) The certificates representing the Shares hereunder shall be
held in escrow by the Secretary of the Company as provided in Section 7 hereof.
2. STOCKHOLDER RIGHTS. Until such time as all or any part of the Shares
are forfeited to the Company under this Agreement, if ever, Grantee (or any
successor in interest) shall have the rights of a stockholder (including voting
rights) with respect to the Shares, including the Shares held in escrow under
Section 7, subject, however, to the transfer restrictions of Section 3.
3. VESTING OF SHARES. The Shares shall be restricted and subject to
forfeiture pursuant to Section 4 until vested pursuant to this Section 3 or
Section 6(b). The Shares shall vest, and no longer be subject to forfeiture,
(such Shares becoming "Vested Shares") as follows:
(a) NORMAL VESTING: Four Thousand Two Hundred Eighty-Six (4,286)
shares (1/7th of the total) shall vest on each anniversary of the April 6, 1998,
so that such shares shall be fully vested on the seventh anniversary of the
April 6, 1998.
(b) SPECIAL VESTING: Three Thousand (3,000) shares shall vest at
such time as the closing price of the Company's Common Stock on the Nasdaq
National Market, or such other principal exchange or system on which the
Company's Common Stock is traded or reported,
-1-
<PAGE> 2
averaged over ninety (90) consecutive calendar days, (the "Average Closing
Price") has equaled or exceeded $20.00. Additional increments of Three Thousand
(3,000) shares shall vest when the Average Closing Price equals or exceeds
$25.00, $30.00, $35.00 and $40.00, respectively.
Three Thousand (3,000) shares shall vest at such time as
the Company's net income per share (as reported in the Company's Annual Reports
on Form 10-K and quarterly reports on Form 10-Q) cumulated over four (4)
consecutive quarters (the "Cumulative Annual Net Income") equals or exceeds
$1.00 per share. An additional Three Thousand (3,000) shares shall vest at such
time as such Cumulative Annual Net Income equals or exceeds $1.25, $1.50, $1.75
and $2.00 per share, respectively.
One or more vesting events may occur simultaneously, or in
close proximity and each shall be given effect. Notwithstanding the foregoing,
however, in no event shall the foregoing special vesting provisions in this
Section 3(b) apply to more than fifty percent (50%) of the shares of Common
Stock issued pursuant to this Agreement.
All Shares which have not become Vested Shares are hereinafter
sometimes referred to as "Nonvested Shares."
(c) The Executive acknowledges that the vesting of the foregoing
Shares may create significant income tax liability to the Executive.
(d) Nonvested Shares may not be sold, transferred, assigned,
pledged, or otherwise disposed of, directly or indirectly.
4. FORFEITURE OF NONVESTED SHARES. At such time as Grantee's Continuous
Service ceases for any reason, including death (hereinafter an "Event of
Forfeiture"), then, in such event, any Nonvested Shares shall be automatically
forfeited to the Company.
As used herein, the term "Continuous Service" means employment by
either the Company or any parent or subsidiary corporation of the Company, or by
a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable.
5. LEGEND. All stock certificates evidencing the Nonvested Shares shall
be imprinted with a legend substantially as follows:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS AGAINST TRANSFER AND FORFEITURE, AS SET FORTH IN
A STOCK GRANT AGREEMENT DATED APRIL 6, 1998. TRANSFER OF THESE
SHARES MAY BE MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY."
-2-
<PAGE> 3
6. RECAPITALIZATIONS, EXCHANGES, MERGERS, ETC.
(a) The provisions of this Agreement shall apply to the full
extent set forth herein with respect to any and all shares of capital stock of
the Company or successor of the Company which may be issued in respect of, in
exchange for, or in substitution for the Shares by reason of any stock dividend,
split, reverse split, combination, recapitalization, reclassification, merger,
consolidation or otherwise which does not terminate this Agreement. Except as
otherwise provided herein, this Agreement is not intended to confer upon any
other person except the parties hereto any rights or remedies hereunder.
(b) In the event that the Company sells substantially all of its
assets, merge into, consolidate with or to enter into any other reorganization
in which the Company is not the surviving corporation, or if the Company is the
surviving corporation and the ownership of the outstanding capital stock of the
Company following the transaction changes by 50% or more as a result of such
transaction, all Nonvested Shares shall vest, unless provision is made in
writing in connection with such transaction for the continuance of the Plan and
this Agreement and/or the substitution for the Shares of new restricted shares
of a successor corporation, with appropriate adjustments as to number and kind
of shares, in which event this Agreement shall continue in the manner and under
the terms so provided, concurrent with the effective date of the proposed
transaction.
7. ESCROW FOR THE SHARES.
(a) Upon issuance, the certificates for the Shares shall be
deposited in escrow with the Company to be held in accordance with the
provisions of this Section 7. Each deposited certificate shall be accompanied by
a duly executed stock transfer power executed in blank. The deposited
certificates, together with any other assets or securities from time to time
deposited with the Company pursuant to the requirements of this Agreement, shall
remain in escrow until such time or times as the certificates (or other assets
and securities) are to be released or otherwise surrendered for cancellation in
accordance with Section 7(c) below.
(b) Any cash dividends on the Shares (or other securities at the
time held in escrow) shall be held in escrow. In the event of any stock
dividend, stock split, recapitalization, or other change affecting the Company's
outstanding Common Stock as a class effected without receipt of consideration,
any new, substituted, or additional securities or other property which is by
reason of such event distributed with respect to the Shares shall be immediately
delivered to the Company to be held in escrow under this Section 7, but only to
the extent the Shares are at the time subject to the escrow requirements of
Section 7(a).
(c) The Shares, together with any other assets or securities held
in escrow hereunder, shall be subject to the following terms and conditions
relating to their release from escrow or their surrender to the Company for
cancellation:
(i) Should any Shares be forfeited to the Company, then
the escrowed certificates for such Shares (together with any other assets or
securities issued with respect thereto) shall be delivered to the Company for
cancellation, and Grantee shall cease to have any further rights or claims with
respect to such Shares (or other assets or securities).
-3-
<PAGE> 4
(ii) Prior to the interest of Grantee in the Shares (or
any other assets or securities issued with respect thereto) vesting in
accordance with the provisions of Section 3 or 6(b), the certificates for such
Nonvested Shares (as well as all other assets and securities) shall remain in
escrow.
(iii) Subsequent to such vesting, the certificates for
such Vested Shares (as well as all other vested assets and securities) shall be
released from escrow and delivered to the Grantee upon the request of Grantee.
8. NO EMPLOYMENT CONTRACT CREATED. The issuance of the Shares shall not
be construed as granting to Grantee any right with respect to continuance of
employment by the Company or any of its subsidiaries. The right of the Company
or any of its subsidiaries to terminate at will Grantee's employment at any time
(whether by dismissal, discharge or otherwise), with or without cause, is
specifically reserved, subject to any other written employment agreement to
which the Company and Grantee may be a party.
9. SECTION 83(B) ELECTION. Purchaser understands that under Section 83
of the Internal Revenue Code of 1986, as amended (the "Code"), the excess of the
fair market value of the Shares on the date any forfeiture restrictions
applicable to such Shares lapse over the purchase price paid for such Shares
will be reportable as ordinary income at that time. Purchaser understands,
however, that Purchaser may elect to be taxed at the time the Shares are
acquired hereunder, rather than when and as such Shares cease to be subject to
such forfeiture restrictions, by filing an election under Section 83(b) of the
Code with the Internal Revenue Service within thirty (30) days after the date of
this Agreement. GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE'S SOLE RESPONSIBILITY,
AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF
GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS
BEHALF.
10. TAX WITHHOLDING. The Company shall be entitled to withhold from
Grantee's compensation any amounts necessary to satisfy applicable tax
withholding with respect to the grant and vesting of the Shares.
11. INTERPRETATION. The Shares are being issued pursuant to the terms of
the Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Agreement and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and Grantee. As used in
this Agreement, the term "Administrator" shall refer to the committee of the
Board appointed to administer the Plan, and if no such committee has been
appointed, the term Administrator shall mean the Board.
12. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three days after being deposited in the United States
mail, as certified or registered mail, with postage prepaid, and addressed, if
to the Company, at its principal place of business, Attention: the Chief
Financial Officer, and if to Grantee, at the most recent address as shown in the
employment or stock records of the Company.
-4-
<PAGE> 5
13. SEVERABILITY. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
15. BINDING AGREEMENT. Upon acceptance of this Agreement, this Agreement
shall become a Stock Purchase Agreement, within the meaning of the Plan, and
binding on Grantee and the Company. This Agreement shall inure to and be binding
on the heirs, successors and assigns of both Grantee and the Company.
DATUM INC.
By: /s/ Louis B. Horwitz
--------------------------------------
Louis B. Horwitz
Chairman, Board of Directors
I hereby accept the foregoing offer and accept 30,000 shares of Common
Stock of Datum Inc. on all of the terms and conditions set forth hereinabove. My
address of records is
, and my Social Security No. is .
"GRANTEE"
/s/ Erik van der Kaay
--------------------------------------------
Erik van der Kaay
-5-
<PAGE> 6
SPOUSE'S CONSENT TO AGREEMENT
I acknowledge that I have read the Restricted Stock Grant Agreement (the
"Agreement") by and between Datum Inc. (the "Company") and Erik van der Kaay
concerning the Common Stock of the Company, and that I know its contents. I am
aware that my spouse has agreed therein to the imposition of certain forfeiture
provisions and restrictions on transferability with respect to the Shares the
subject of the Agreement, including with respect to my community interest
therein, if any, on the occurrence of certain events described in the Agreement.
I hereby consent to and approve of the provisions of the Agreement, and agree
that I will abide by the Agreement and bequeath any interest in the Shares which
represents a community interest of mine to my spouse or to a trust subject to my
spouse's control or for my spouse's benefit or the benefit of our children if I
predecease him.
Dated: April 6, 1998 /s/ M. J. van der Kaay
-------------- ----------------------------------
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 9,182
<SECURITIES> 0
<RECEIVABLES> 13,920
<ALLOWANCES> 93
<INVENTORY> 30,955
<CURRENT-ASSETS> 58,384
<PP&E> 27,756
<DEPRECIATION> 11,494
<TOTAL-ASSETS> 86,683
<CURRENT-LIABILITIES> 11,314
<BONDS> 17,499
0
0
<COMMON> 1,357
<OTHER-SE> 55,383
<TOTAL-LIABILITY-AND-EQUITY> 86,683
<SALES> 51,528
<TOTAL-REVENUES> 51,528
<CGS> 33,425
<TOTAL-COSTS> 51,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 844
<INCOME-PRETAX> (1,271)
<INCOME-TAX> (502)
<INCOME-CONTINUING> (769)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (769)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
