<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MICRODYNE 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
MICRODYNE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Microdyne Corporation will be held
Tuesday, March 21, 1996, at 10:00 a.m. at the Embassy Suites Hotel, 1900
Diagonal Road, Alexandria, Virginia, for the following purposes:
1. To elect directors for the ensuing year;
2. To consider and act upon a proposal to approve an increase in the
number of shares reserved for issuance under the amended and
restated Microdyne Corporation 1991 Key Employee Stock Option Plan
from 1,008,175 to 2,008,175;
3. To consider and act upon a proposal to approve an amendment to the
Microdyne Corporation 1993 Non-Employee Directors Stock Option Plan
to provide for the additional automatic grant of non-statutory stock
options, extend the expiration date of the plan, and extend the
period within which options may be exercised; and
4. To act upon such other matters as may properly come before the
meeting, or any adjournment thereof.
Holders of common shares of record at the close of business on February
15, 1996, will be entitled to vote at the meeting.
By Order of the Board of Directors,
Neal H. Sanders
Vice President and Corporate Secretary
3601 Eisenhower Avenue
Alexandria, Virginia 22304
February 26, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY.
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PROXY STATEMENT
INTRODUCTION
This proxy statement and the accompanying proxy card are being mailed on
or about February 26, 1996, to holders of common shares in connection with the
solicitation of proxies by the Board of Directors for the Annual Meeting of
Stockholders of Microdyne Corporation ("Microdyne" or the "Company") to be
held on March 21, 1996. Proxies are solicited to give all stockholders of
record at the close of business on February 15, 1996, an opportunity to vote
on matters that come before the meeting. This procedure is necessary because
stockholders live in many different locations and many will find it difficult
to attend. Shares can be voted only if the stockholder is present in person or
is represented by proxy.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the enclosed proxy card. If your proxy
card is signed and returned without specifying choices, the shares will be
voted as recommended by the Board of Directors. You may revoke your proxy at
any time before it is voted at the meeting by delivering to the Secretary of
the Company a written notice stating that the proxy is revoked, by executing a
proxy bearing a later date or by attending the meeting and voting in person.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN AND
RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. If you do attend, you may vote by ballot at the meeting, thereby
canceling any proxy previously given.
Comments from stockholders about the proxy material or about other
aspects of the Company's business are welcome and are very helpful to the
Company's management in assessing stockholder sentiment. Comments should be
addressed in writing to the Vice President and Corporate Secretary of the
Company at 3601 Eisenhower Avenue, Alexandria, Virginia 22304.
On December 31, 1995, there were 12,800,306 shares of common stock
outstanding. Each share of common stock is entitled to one vote on each matter
properly brought before the meeting. Only holders of the Company's common
stock of record at the close of business on February 15, 1996 will be entitled
to vote at the meeting.
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Directors will be elected by a plurality of all the votes cast at the
meeting, so long as a majority of the shares outstanding is present. The
proposals to approve an increase in the number of shares available for issuance
pursuant to the amended and restated Microdyne Corporation 1991 Key Employee
Stock Option Plan from 1,008,175 to 2,008,175 and to approve the amendment to
the Microdyne Corporation 1993 Non-Employee Directors Stock Option Plan to
provide for the additional automatic grant of non-statutory stock options,
extend the expiration date of the plan, and extend the period within which
options may be exercised will be decided by a majority of all votes cast, so
long as a majority of the shares outstanding are represented at the meeting.
A stockholder who abstains from a vote by registering an abstention vote
will be deemed present at the meeting for quorum purposes but will not be
deemed to have voted on the particular matter. Similarly, in the event a
nominee holding shares for beneficial owners votes on certain matters pursuant
to discretionary authority or instructions from beneficial owners, but with
respect to one or more other matters does not receive instructions from
beneficial owners and does not exercise discretionary authority (a so-called
"non-vote"), the shares held by the nominee will be deemed present at the
meeting for quorum purposes but will not be deemed to have voted on such other
matters.
As of December 31, 1995, Philip T. Cunningham was the only person known
by the Company to own beneficially more than 5% of the Company's common stock.
Mr. Cunningham beneficially owns 6,299,946 shares, or 49.2% of the common
stock outstanding on December 31, 1995.
---------------------
THE BOARD OF DIRECTORS
The Board of Directors of the Company consists of two members who are
executive officers of the Company (Mr. Cunningham and Christopher M.
Maginniss) and three non-employee members (Curtis M. Coward, Gregory W.
Fazakerley, and H. Brian Thompson).
During the period commencing October 1, 1994 and ending October 1, 1995
(fiscal 1995), there were seven meetings of the Board of Directors of the
Company (including four regular and three special meetings). During such
period, each of the incumbent Directors attended all of the Board meetings
held while
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he was a Director and Committee meetings held while he served on such
Committees.
Messrs. Fazakerley (Chairman), Coward, and Thompson serve as members of
the Audit Committee of the Board of Directors of the Company. The Audit
Committee held one meeting during fiscal 1995. The Audit Committee is
responsible for recommending and selecting the appointment of outside
auditors, reviewing financial reports of the Company and performing such other
functions as directed from time to time by the Board.
Messrs. Thompson (Chairman), Coward, and Fazakerley serve as members of
the Compensation Committee of the Company. The Compensation Committee held one
meeting during fiscal 1995. The Compensation Committee is responsible for
considering compensation of officers of the Company.
The Board of Directors currently does not have a standing nominating
committee or a committee performing similar functions. The Board will, as a
matter of policy, give consideration to nominees recommended by stockholders.
A stockholder who wishes to recommend a future nominee should direct his
recommendation in writing to the Company's Board of Directors.
--------------------
ELECTION OF DIRECTORS
(ITEM 1. ON THE PROXY CARD)
The Board of Directors intends to vote for the election as directors five
individuals, all of whom currently serve as directors: Messrs. Cunningham,
Maginniss, Coward, Fazakerley, and Thompson. If you do not wish your shares to
be voted for particular nominees, please identify the exceptions in the
appropriate space provided on the proxy card.
If at the time of the meeting, one or more of the nominees have become
unavailable to serve, shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by
the Board of Directors or, if none, the size of the Board will be reduced. The
Board of Directors knows of no reason why any of the nominees will be
unavailable or unable to serve.
Directors elected at the meeting will hold office until the next annual
meeting or until their successors have been elected and qualified.
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The following table sets forth, for each nominee, the nominee's age,
position held with the Company, and the date such nominee became a director of
the Company. Following the table is a brief description of each nominee's
principal occupation for at least the past five years.
<TABLE>
<CAPTION>
Position with Director
Name Age the Company Since
- ------------- --- ---------------- ---------
<S> <C> <C> <C>
Philip T. 58 Chairman of the June 1991
Cunningham Board, President
and Chief
Executive Officer
Christopher M. 59 Treasurer, June 1991
Maginniss Executive Vice
President and
Director
Curtis M. 49 Director Oct. 1995
Coward
Gregory W. 47 Director June 1991
Fazakerley
H. Brian 56 Director June 1991
Thompson
</TABLE>
Philip T. Cunningham assumed the offices of Chairman of the Board,
President and Chief Executive Officer of the Company in June 1991 upon the
merger of Federal Technology Corporation (FTC) and the Company ("the Merger").
Prior to the Merger, he had served as President and Chairman of the Board of
FTC since its inception in 1984. Mr. Cunningham holds an M.B.A. degree from
Harvard Business School and a B.S. from Holy Cross College.
Christopher M. Maginniss has served as Treasurer and Executive Vice
President since the Merger. He had served as Executive Vice President of FTC
from June 1987 until the Merger. He holds an M.S. degree from the U.S. Naval
Post Graduate School and a B.A. from Colby College.
Curtis M. Coward has been a Partner in the law firm of McGuire, Woods,
Battle & Boothe L.L.P., McLean, Virginia since 1986. He is also special
counsel to the Republic of Kazakstan. Previously, Mr. Coward was President
and Chief Executive Officer of Air Virginia/AVAIR from 1982 to 1986 and was
Chairman of the
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Board of Directors of the Regional Airline Association in 1985. He is a
Director of the Atlantic Council of the United States and trustee of the U.S.
Naval Academy Foundation. Mr. Coward holds a J.D. from the College of William
and Mary and a B.A. from Denison University.
Gregory W. Fazakerley is Chairman and Chief Executive Officer of
Development Resources, Inc., a Washington, D.C.-based real estate development
firm. Mr. Fazakerley is the managing general partner of C/G Investments, a
real estate partnership; President of the District of Columbia Building
Industry
Association; and a member of the Board of Directors of the YMCA of the
Greater Metropolitan Washington area. Mr. Fazakerley is a graduate of the
American University in Washington, D.C.
H. Brian Thompson is Chairman of the Board and Chief Executive Officer of
LCI International, a world-wide long distance telecommunications company with
corporate headquarters in McLean, Virginia. Previously, Mr. Thompson served as
Executive Vice President at MCI Communications Corporation, was the President
of Subscription Television of America, and spent nine years with McKinsey and
Company, an international management consulting firm. He is a director of
Comcast UK Cable Partners and is a trustee of Capitol College. Mr. Thompson
holds an M.B.A. from Harvard Business School and a B.S. from the University of
Massachusetts.
--------------------
APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES RESERVED
FOR ISSUANCE UNDER THE AMENDED AND RESTATED MICRODYNE CORPORATION
1991 KEY EMPLOYEE STOCK OPTION PLAN
(ITEM 2. ON THE PROXY CARD)
INTRODUCTION
The amended and restated Microdyne Corporation 1991 Key Employee Stock
Option Plan (the "1991 Plan") is intended to provide a means for selected key
management employees of the Company to increase their personal financial
interest in the Company, thereby stimulating the efforts of these employees
and strengthening their desire to remain with the Company (references to the
"Company" in this section include any parent and subsidiary corporation).
As originally adopted and subsequently amended, the 1991 Plan provided
for a maximum authorization of 1,008,175 shares of common stock that could be
issued with respect to options and awards.
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Since the original adoption of and subsequent amendments to the 1991
Plan, options for 653,199 shares have been granted under the plan, leaving
354,976 shares available for future issuance as of December 31, 1995.
On January 26, 1996, the Board again determined that additional shares
under the 1991 Plan would be appropriate in order to fully implement the
objectives for which the 1991 Plan was adopted. On that date, the Board
adopted, subject to stockholder approval, an amendment to the 1991 Plan which
increased the number of shares available under the 1991 Plan by 1,000,000
shares. The issuance of 1,000,000 shares pursuant to the exercise of such
options would result in an approximate 7% dilution of the percentage ownership
interest of existing stockholders.
The principal features of the 1991 Plan are summarized below. This
summary is qualified by reference to the complete text of the 1991 Plan.
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GENERAL
The 1991 Plan as amended authorizes the reservation of 2,008,175 shares
of common stock for issuance pursuant to incentive awards. Such incentive
awards may be only in the form of stock options. Unless sooner terminated by
the Board of Directors, the 1991 Plan will terminate on February 4, 2001. No
incentive awards may be made under the 1991 Plan after termination.
If an incentive award is cancelled, terminates or lapses unexercised, any
unissued shares allocable to such incentive award may be subjected again to an
incentive award.
Adjustments will be made in the number of shares which may be issued
under the 1991 Plan in the event of a future stock dividend, stock split or
similar pro rata change in the number of outstanding shares of common stock or
the future creation or issuance to stockholders generally of rights, options
or warrants for the purchase of common stock or preferred stock.
ELIGIBILITY
All present and future employees of the Company who hold positions with
management responsibilities are eligible to receive incentive awards under the
1991 Plan. The Company estimates that it has approximately 60 such employees
(eight of whom are executive officers).
ADMINISTRATION
The 1991 Plan is administered by the Compensation Committee, none of the
members of which is eligible to participate in the 1991 Plan. The committee
has the power and complete discretion to determine when to grant incentive
awards, which eligible employees will receive incentive awards, and the number
of shares to be allocated to each incentive award. The committee may impose
conditions on the exercise of options and may impose such other restrictions
and requirements as it may deem appropriate, including reserving the right for
the Company to reacquire shares issued pursuant to an incentive award.
STOCK OPTIONS
Options to purchase shares of common stock granted under the 1991 Plan
may be incentive stock options or nonstatutory stock options. Incentive stock
options qualify for favorable income tax
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treatment under Section 422 of the Code, while nonstatutory stock options do
not. The option price of common stock covered by a stock option may not be
less than 100% (or, in the case of an incentive stop option granted to a 10%
stockholder, 110%) of the fair market value of the common stock on the date of
the option grant.
The value of incentive stock options, based on the exercise price, that
can be exercisable for the first time in any calendar year under the 1991 Plan
or any other similar plan maintained by the Company is limited to $100,000.
Options may only be exercised at such times as may be specified by the
committee; provided, however, that an option may not be exercised after the
first to occur of (i) ten years (or, in the case of an incentive stock option
granted to a 10% stockholder, five years) from the date on which the incentive
stock option was granted, (ii) the expiration of 90 days after the optionee's
termination of employment with the Company for reasons other than cause (as
defined in the 1991 Plan), death or disability, or (iii) one year from the
optionee's termination of employment on account of death or disability. No
option granted under the 1991 Plan may be exercised within the first six
months from the date it is granted.
If the option so provides, an optionee exercising an option may pay the
purchase price in cash; by delivering or causing to be withheld from the
option shares, shares of common stock; by delivering a promissory note; or by
delivering an exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
from the option shares to pay the exercise price.
CHANGE IN CONTROL
The 1991 Plan provides that, notwithstanding any provisions to the
contrary in the option agreement, options would become immediately and fully
exercisable upon a Change in Control. For purposes of the 1991 Plan, a
"Change in Control" occurs (i) when a person (or group of persons acting in
concert) acquires 20% or more of the common stock, (ii) when there is a change
in the composition of two-thirds of the Board of Directors when compared with
those who are currently serving and any new members whose nomination or
election is approved by a majority of the current Board or (iii) when the
stockholders of the Company approve a reorganization, merger, consolidation or
other transaction which results in the stockholders of the Company prior to
such transaction owning less
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than 40% of the corporation resulting from the transaction. Exceptions are
made to the first change of control definition when (i) the acquiror obtains
its shares directly from the Company, (ii) the acquiror is the Company, a
Company subsidiary or a Company employee benefit plan or (iii) the acquiror is
a corporation which immediately after such acquisition is owned by persons who
were formerly the stockholders of the Company and such persons hold shares in
the acquiror in substantially the same proportion as they previously held in
the Company.
TRANSFERABILITY OF INCENTIVE AWARDS
No option may be sold, transferred, pledged, or otherwise disposed of,
other than by will or by the laws of decent and distribution. All rights
granted to a participant under the 1991 Plan shall be exercisable during his
lifetime only by such participant, or his guardians or legal representatives.
Upon the death of a participant, his personal representative or beneficiary
may exercise his rights under the 1991 Plan.
AMENDMENT OF THE 1991 PLAN AND INCENTIVE AWARDS
The Board may amend the 1991 Plan in such respects as it deems advisable;
provided that the stockholders of the Company must approve any amendment that
would (i) materially increase the benefits accruing to participants under the
1991 Plan, (ii) materially increase the number of shares of common stock that
may be issued under the 1991 Plan, or (iii) materially modify the requirements
of eligibility for participation in the 1991 Plan. Incentive awards granted
under the 1991 Plan may be amended with the consent of the recipient so long
as the amended award is consistent with the terms of the 1991 Plan.
FEDERAL INCOME TAX CONSEQUENCES
An employee will not incur Federal income tax when he is granted a
nonstatutory stock option or an incentive stock option.
Upon exercise of a nonstatutory stock option, an employee generally will
recognize compensation income, which is subject to income tax withholding by
the Company, equal to the difference between the fair market value of the
common stock on the date of the exercise and the option price. The committee
has authority under the 1991 Plan to include provisions in an option allowing
the employee to elect to have a portion of the shares he would otherwise
acquire upon exercise of an option withheld to cover his tax liabilities if
permissible under Rule 16b-3. The election will
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be effective only if approved by the committee and made in compliance with
other requirements set forth in the 1991 Plan. When an employee exercises an
incentive stock option, he generally will not recognize income, unless he is
subject to the alternative minimum tax.
An employee may deliver shares of common stock instead of cash to acquire
shares under an incentive stock option or nonstatutory stock option, without
having to recognize taxable gain (except in some cases with respect to
"statutory option stock") on any appreciation in value of the shares
delivered. However, if an employee delivers shares of "statutory option
stock" in satisfaction of all, or any part, of the exercise price under an
incentive stock option, and if the applicable holding periods of the
"statutory option stock" have not been met, he will be considered to have made
a taxable disposition of the "statutory option stock." "Statutory option
stock" is stock acquired upon the exercise of incentive stock options.
The Company usually will be entitled to a business expense deduction at
the time and in the amount that the recipient of an incentive award recognizes
ordinary compensation income in connection therewith. As stated above, this
usually occurs upon exercise of nonstatutory options. In some cases, such as
the exercise of a nonstatutory option, the Company's deduction is contingent
upon the Company's meeting withholding tax requirements. No deduction is
allowed in connection with an incentive stock option, unless the employee
disposes of common stock received upon exercise in violation of the holding
period requirements.
This summary of Federal income tax consequences of nonstatutory stock
options and incentive stock options does not purport to be complete, and is
based upon interpretations of the existing laws, regulations and rulings which
could be materially altered with enactment of any new tax legislation. There
may also be state and local income taxes applicable to these transactions.
Holders of incentive awards should consult their own advisors with respect to
the application of the laws to them and to understand other tax consequences
of the awards including possible income deferral for insiders, alternative
minimum tax rules, taxes on parachute payments and the tax consequences of the
sale of shares acquired under the 1991 Plan.
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THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE INCREASE IN THE
NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE AMENDED AND RESTATED
MICRODYNE CORPORATION 1991 KEY EMPLOYEE STOCK OPTION PLAN IS IN THE BEST
INTEREST OF ALL STOCKHOLDERS AND RECOMMENDS A VOTE "FOR " THE INCREASE.
---------------------
APPROVAL OF AN AMENDMENT TO THE MICRODYNE
CORPORATION 1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(ITEM 3. ON THE PROXY CARD)
INTRODUCTION
The Board of Directors of the Company is submitting to the Stockholders
for their approval and for adoption an amendment (the "Amendment") to the 1993
Non-Employee Directors Stock Option Plan (the "Directors Plan") which was
approved by the Board of Directors by unanimous written consent effective
February 8, 1996. The adoption of the Amendment is subject to and contingent
on the approval by the affirmative vote of a majority of all votes cast at the
Annual Meeting. If the Stockholders do not approve and adopt the Amendment,
the Directors Plan will remain in force in its present form.
THE AMENDMENT
The Directors Plan in its current form provides for the automatic one
time grant to each non-employee director of an option to acquire 30,000 shares
of the Company's common stock, which option is not fully exercisable until two
years after the date such option is granted. The Amendment as adopted by the
Board provides for additional automatic annual grants of options to acquire
10,000 shares of the Company's common stock (the "Annual Options") to each
non-employee director whose original 30,000 share grant under the Directors
Plan has become fully exercisable. Such option shall be automatically granted
on the date each year that the Company's Annual Meeting of the Stockholders is
held at which the respective non-employee director is elected by the
Stockholders as a director for the ensuing year, beginning with the Annual
Meeting scheduled for March 21, 1996. Two of the Company's three current
non-employee directors are eligible to receive an automatic grant this year
upon approval of the Amendment.
The Amendment provides that the Annual Options shall be granted with an
exercise price equal to 100% of the fair market value of the underlying common
stock on the date of grant. The
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Amendment also provides that the Annual Options shall become fully exercisable
in the same manner as the original options granted under the plan, that is
one-third upon date of grant, one-third one year later and the remaining
one-third two years after the date of grant.
The Amendment also extends the expiration date of the Directors Plan from
January 21, 1999 to January 21, 2004, subject to earlier termination (as the
plan presently provides) by the Board of Directors. In addition, the Amendment
extends, from four to ten years, the period within which options under the
Directors Plan, including those outstanding, may be exercised.
In all other respects, the Directors Plan would not be changed.
DESCRIPTION OF PLAN
General
The Directors Plan, adopted by the stockholders at the annual meeting in 1993,
is designed to encourage ownership in the Company by non-employee members of
the Board of Directors in order to promote long-term stockholder value and to
provide non-employee members of the Board of Directors with an incentive to
continue as directors of the Company. The Directors Plan currently authorizes
the grant to each eligible member of the Company's Board of Directors of a
non-statutory stock option to purchase 30,000 shares of the Company's common
stock, successive thirds of which are exercisable on the date of grant, and
one and two years after the grant date, respectively. As amended, the
Directors Plan will provide for the additional automatic annual grant of
non-statutory stock options to acquire 10,000 shares of the Company's common
stock to non-employee directors whose original options under the Directors
Plan have become fully exercisable which pursuant to the Directors Plan will
take at least two years.
The Directors Plan currently will terminate upon the earlier of (i) the
adoption of a resolution of the Board terminating the plan, or (ii) January
21, 1999. If approved, the Amendment to the Directors Plan will extend the
termination date, subject to earlier Board termination, to January 21, 2004.
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Options with respect to an aggregate of 300,000 shares of the Company's
Common Stock may be granted pursuant to the Directors Plan. To date, options
to purchase 120,000 shares of the Company's common stock have been granted
under the Directors Plan, 30,000 each to four non-employee directors, three
of whom currently serve on the Board. None of the options to purchase 90,000
shares of common stock held by the current non-employee directors have been
exercised, although options to purchase 70,000 of such shares are currently
exercisable. Presently no additional options may be granted to the
non-employee directors under the Directors Plan
Eligibility
A director is eligible to receive an option under the Directors Plan if
the director: (i) at any relevant time under the Directors Plan, does not own
or control, directly or indirectly, more than 5% of the outstanding shares of
the Company's common stock, and (ii) is not otherwise an employee of the
Company or any subsidiary for a period of at least one year before the date of
grant of an option under the Directors Plan. Each eligible director of the
Company on the effective date of the Directors Plan (January 21, 1993), of
which there were three, automatically received an option to purchase 30,000
shares of the Company's common stock. Thereafter, each eligible director newly
elected to the Company's Board, of which there has been one, automatically
receives upon the date of his or her election an option to purchase 30,000
shares of the Company's common stock. No single director is currently entitled
to receive options for more than 30,000 shares of the Company's common stock
pursuant to the Directors Plan. If an any time there are not sufficient shares
available under the Directors Plan to fully permit the automatic option grants
described herein, the option grant will be reduced pro rata (to zero if
necessary) so as not to exceed the number of shares available.
Options granted under the Directors Plan may be exercisable as to
one-third of the number of shares on the date of grant, and as to an
additional one-third of the number of shares on each succeeding anniversary of
the date of grant until fully exercisable. Annual Options granted pursuant to
the Directors Plan, as amended, will vest in the same fashion. Presently, no
option granted under the Directors Plan may be exercised (i) after the
expiration of four years from the date the option is granted and (ii) unless
such optionee is a director of the Company or ceased to be a director of the
company no more than twelve months prior to the exercise date. If approved,
the
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Amendment will extend to ten years from the grant date the period during which
options under the Directors Plan may be exercised. The Amendment will not
change the requirement that an optionee must either be a director or have been
a director within the last twelve months to exercise an option granted under
the Directors Plan.
The Directors Plan requires that the exercise price of options granted
thereunder be 100% of the fair market value of the shares on the date the
option is granted.
Administration
The Directors Plan is administered by the Board. Grants of options under
the Directors Plan are automatic, however, the Board has certain powers vested
in it by the terms of the Directors Plan including, without limitation, the
authority (within the limitations described therein) to prescribe the form of
the agreement embodying the awards of options under the Directors Plan, to
construe the plan, to determine all questions arising under the plan, and to
adopt and amend rules and regulations for administration of the plan as the
Board may deem desirable. Decisions of the Board in administering the
Directors Plan are to be final and conclusive. The Board may act only by a
majority of its members in office, except members thereof may authorize any
one or more of their number or any officer of the Company to execute and
deliver documents on behalf of the Board.
Transferability of Options
The rights of an optionee under the Directors Plan may not be assigned or
transferred other than by will or the laws of descent and distribution.
Amendment of the Directors Plan
The Board may suspend or discontinue the Directors Plan or revise or
amend the Plan in any respect, provided, however, that without approval of the
Company's stockholders no revision or amendment may increase the number of
shares subject to the Directors Plan or materially increase the benefits
accruing to participants under the plan.
Federal Tax Consequences of the Directors Plan
The Directors Plan provides for the granting of non-statutory options
which do not qualify as incentive stock options under section 422 of the
Internal Revenue Code of 1986, as
15
<PAGE> 17
amended (the "Code"). A director who receives an option under the Directors
Plan will not be deemed to have received any income at the time the option is
granted; however, the director will recognize ordinary income in the year any
part of the option is exercised in an amount equal to the difference between
the exercise price of the shares purchased and the fair market value of such
shares on the exercise date. The Company will be entitled to a tax deduction
in an amount equal to the amount of ordinary income recognized by the
optionee. Special rules may apply if an optionee pays part or all of the
exercise price of an non-statutory option by tendering shares of the Company's
common stock.
The summary of Federal income tax consequences of non-statutory stock
options does not purport to be complete, and is based upon interpretations of
existing laws, regulations and rulings which could be materially altered with
enactment of new tax legislation. There may also be state and local taxes
applicable to these transactions.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE ADOPTION OF THE
AMENDMENT TO THE MICRODYNE CORPORATION 1993 NON-EMPLOYEE DIRECTORS STOCK
OPTION PLAN IS IN THE BEST INTERESTS OF ALL STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" THE AMENDMENT.
--------------------
EXECUTIVE OFFICERS
The current executive officers of the Company are: Philip T. Cunningham,
Chairman of the Board, President, and Chief Executive Officer; Christopher M.
Maginniss, Executive Vice President and Treasurer; R. Dale D'Alessio, Senior
Vice President of Sales and Marketing; A. Ralph Mason, Senior Vice President
of Business Development; David Laposata, Vice President of Operations; Neal H.
Sanders, Vice President and Corporate Secretary; Marshall Ellison, Controller
and Assistant Treasurer; Christian J. Spitz, Vice President of Aerospace
Telemetry; and Michael Van Patten, Vice President - Product Marketing and
Engineering.
There are no family relationships among any of the executive officers,
directors, or persons nominated to become directors of the Company. The
executive officers are chosen annually at the first meeting of the Board of
Directors following the annual meeting of stockholders and serve for one year
and until their successors are chosen and qualify.
16
<PAGE> 18
The previous identification of directors sets forth the age and business
experience of, and certain other information regarding, Mr. Cunningham and Mr.
Maginniss.
R. Dale D'Alessio, 42, is currently Senior Vice President of Sales and
Marketing. He joined FTC in 1985 as Director of Corporate Planning and
Development. He became Vice President in 1987 and assumed the same offices
with the Company at the time of the Merger. He was appointed Secretary in 1991
(a position held until November 1994) and Senior Vice President of Sales and
Marketing in 1992. Mr. D'Alessio graduated from Monmouth College in 1976 and
holds a J.D. degree from George Mason University.
A. Ralph Mason, 53, is currently Senior Vice President of Business
Development. He joined FTC in 1986 as Director of Sales. He served as Vice
President of Sales from 1988 to 1991, when he was promoted to Senior Vice
President. Mr. Mason graduated in 1978 from Southwest Louisiana Tech.
David G. Laposata, 31, is currently Vice President of Operations. He
joined FTC in 1987 as a pricing analyst. From 1990 to 1991 he was Assistant
Vice President in the Company's Systems Integration and Services division. He
was appointed Vice President and Assistant to the President in 1992. He
assumed his present position in 1993. Mr. Laposata graduated from Indiana
University of Pennsylvania in 1986.
Neal H. Sanders, 46, is currently Vice President and Corporate Secretary.
He joined Microdyne in 1992 as Vice President - Corporate Communications. Mr.
Sanders was appointed Secretary in November 1994. Prior to joining the
Company, he was Director of Investor Relations for Occidental Petroleum from
1990 to 1991, and Director of Corporate Communications for Bolt Beranek and
Newman, Inc. from 1982 to 1990. Mr. Sanders received his B.S. from the
University of Florida in 1971.
Marshall Ellison, 40, is currently Controller and Assistant Treasurer. He
joined FTC in 1990 as its Controller and assumed that office with the Company
at the time of the Merger. Mr. Ellison was appointed Assistant Treasurer in
1991. He served as Vice President of Finance for Intercap Graphics Systems
from 1988 to 1989. Mr. Ellison received his B.A. from the University of
Virginia in 1977 and his MBA from the University of Pennsylvania's Wharton
School in 1981.
Christian J. Spitz, 43, has served as Vice President of Aerospace
Telemetry since 1993. Previously, he was Vice
17
<PAGE> 19
President of Finance at Development Resources, Inc. from 1986 to 1993. Mr.
Spitz holds a B.A. from the University of Dayton and is a Certified Public
Accountant.
Michael Van Patten, 42, has served as Microdyne's Vice President -
Product Marketing and Engineering since 1994. He has over 20 years of
experience in sales, marketing and technical management positions. Prior to
joining Microdyne, he held several senior level sales and marketing positions
at Xircom Corporation from 1991 to 1994. Mr. Van Patten holds a B.S. and an
M.B.A. from George Mason University.
--------------------
18
<PAGE> 20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1995, the number of
shares and percentage of the Company's common stock owned by all persons known
by the Company to own beneficially more than 5% of the Company's common stock,
by each director, by each executive officer named in the Summary Compensation
Table, and by all directors and executive officers as a group. This
information has been obtained in part from such persons and in part from the
Company's records. Each person has sole voting and investment power with
respect to the shares indicated except for shares which may be acquired upon
exercise of options and as otherwise noted.
<TABLE>
<CAPTION>
Common
Shares % of
Name Owned(1) Class
- ----------------------- ---------- -----
<S> <C> <C>
Philip T. Cunningham 6,299,946(2) 49.2%
Christopher M. Maginniss 143,701 1.1%
Curtis M. Coward 10,000 *
Gregory W. Fazakerley 33,000(3) *
H. Brian Thompson 39,000(4) *
R. Dale D'Alessio 33,536 *
A. Ralph Mason 3,378 *
David G. Laposata 27,313 *
All Directors and 6,612,406 50.5%
Executive Officers as
a Group (12 persons)
</TABLE>
- --------------------
* Less than 1%.
(1) Includes shares that would be issued pursuant to the exercise of stock
options that are able to be exercised within 60 days, as follows: Mr.
Maginniss, 143,701 shares; Mr. Coward, 10,000 shares; Mr. Fazakerley, 30,000
shares; Mr. Thompson, 30,000 shares; Mr. D'Alessio, 33,536 shares; Mr. Mason,
3,378 shares; and Mr. Laposata, 26,313 shares.
19
<PAGE> 21
(2) Includes 894,763 shares held in a trust of which Mr. Cunningham is
trustee.
(3) Includes 3,000 shares beneficially owned by a trust for Mr. Fazakerley's
son of which Mr. Fazakerley is a co-trustee (Mr. Fazakerley shares voting and
dispositive power with respect to such shares).
(4) Includes 5,000 shares directly owned by Mr. Thompson, 2,000 shares
beneficially owned by Mr. Thompson's spouse as trustee for Mr. Thompson's son,
and 2,000 shares beneficially owned by Mr. Thompson's spouse as trustee for
Mr. Thompson's daughter. Mr. Thompson disclaims beneficial ownership of the
shares held in trust for his son and daughter.
--------------------
20
<PAGE> 22
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below sets forth individual compensation
information for the Chief Executive Officer and the four other most highly
paid executive officers at October 1, 1995, for services rendered in all
capacities during the fiscal years ended October 1, 1995, September 30, 1994,
and September 30, 1993.
<TABLE>
<CAPTION>
Long-
term
Compen-
Annual Compensation sation
--------------------------------------------- ------
Name and Other Options
Principal Annual Awarded
Position Year Salary($) Bonus($) Comp.($)(1) (Shares)
- ---------- ---- ------------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Philip T. 1995 251,250 250,000 200,000(2)
Cunningham 1994 222,500 230,000 200,000(2)
(CEO) 1993 200,000 75,000 200,000(2)
Christopher 1995 209,625 175,000 25,000
M. Maginniss 1994 186,729 165,000 46,000
(EVP) 1993 162,000 40,625
R. Dale 1995 185,000 96,022 30,000
D'Alessio 1994 175,625 13,535 30,000
(Sr. VP) 1993 147,500 0
A. Ralph 1995 175,000 99,206
Mason 1994 175,000 68,890 10,000
(Sr. VP) 1993 150,000 0
David G. 1995 150,000 27,459
Laposata 1994 130,000 15,652 75,000
(VP) 1993 110,000 0
</TABLE>
(1) Does not include compensation associated with perquisites because such
amounts do not exceed the lesser of either $50,000 or 10% of total salary and
bonus disclosed.
(2) Compensation pursuant to Mr. Cunningham's Noncompetition Agreement.
21
<PAGE> 23
OPTION TABLES
The following table provides information concerning each grant of options
to purchase the Company's common stock during fiscal year 1995 to persons
named in the Summary Compensation Table. There were no stock appreciation
rights (SARs) granted.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Rates of
% of Total Stock Price
Options Apprec. for
Granted to Option Term
Number Employees Exer. ------------
of Options in Fiscal Price Expir.
Name Granted(1) Year ($/sh.) Date 5%($) 10%($)
---------- ----------- --------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Philip T. None
Cunningham
Christopher 25,000 9.3 4.25 10/01/99 66,750 169,335
M. Maginniss
R. Dale 30,000 11.2 8.69 11/22/99 164,100 415,000
D'Alessio
A. Ralph None
Mason
David G. None
Laposata
</TABLE>
(1) All are exercisable from date of grant as follows: one-third after one
year, two-thirds after two years, and 100% after three years.
22
<PAGE> 24
The following table depicts option exercise activity in the last fiscal
year and fiscal year-end option values with respect to each of the executive
officers named in the Summary Compensation Table. The value of unexercised
in-the-money options at October 1, 1995 equals the market value of the
underlying common stock at October 1, 1995 minus the exercise price. The fair
market value of Microdyne common stock at October 1, 1995 was $25.375.
Aggregated Option Exercises in the Fiscal Year Ended October 1,
1995 and October 1, 1995 Option Values
<TABLE>
<CAPTION>
Value of
Shares Unexercised In-the-Money
Acquired Value Options Options
Name on Exercise Realized at 10/01/95 at 10/01/95
---------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Philip T. None None None None
Cunningham
Christopher M. 75,000 1,268,498 140,368 E $3,146,454 E
Maginniss 47,334 U 1,005,140 U
R. Dale 178,999 2,202,529 30,203 E $ 504,990 E
D'Alessio 20,000 U 423,750 U
A. Ralph 178,300 2,385,800 45 E $ 925 E
Mason 6,667 U 137,090 U
David G. 48,000 574,459 9,647 E $ 197,657 E
Laposata 58,333 U 1,074,791 U
</TABLE>
E = Exercisable U = Unexercisable
--------------------
23
<PAGE> 25
DIRECTOR COMPENSATION
Directors of the Company who are not also officers receive $1,000 per
meeting, whether regularly scheduled or special; $500 for telephone meetings;
and reimbursement of reasonable expenses incurred in attending meetings.
Directors who are not also executive officers receive, in addition to the
foregoing fees and expense reimbursements, a quarterly fee of $4,000.
--------------------
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
EMPLOYMENT AGREEMENT
Effective June 21, 1991, the date of the merger between the Company and
Federal Technology Corporation, the Company entered into an Executive
Employment Agreement with Mr. Cunningham. Under the terms of the Executive
Employment Agreement, Mr. Cunningham became the Company's Chairman of the
Board, President and Chief Executive Officer. The employment agreement had a
term of three years with an initial base annual salary of $200,000. On
October 24, 1995, the Company entered into a new Executive Employment
Agreement with Mr. Cunningham with respect to the same positions at an initial
base salary of $275,000, which may be adjusted upward by the Board of
Directors. The agreement also provides, among other things, that Mr.
Cunningham was eligible to participate in discretionary bonuses authorized and
declared by the Board of Directors. Mr. Cunningham's employment could be
terminable (i) upon his death or (ii) by the Company in the event he became
permanently disabled, in which case Mr. Cunningham would be entitled to
certain salary continuation rights. The agreement expires in 1999.
NONCOMPETITION AGREEMENT
On June 21, 1991, Mr. Cunningham entered into a Noncompetition Agreement
with the Company pursuant to which he agreed that, during the term of the
agreement, he would not, among other things, participate in any manner
described in the agreement in any business which competes with the Company's.
This Noncompetition Agreement was extended on June 21, 1995 for an additional
term of four years. The Noncompetition Agreement also generally prohibits Mr.
Cunningham from soliciting business from certain customers and suppliers of
the Company and from disclosing certain information about the Company. The
24
<PAGE> 26
Noncompetition Agreement provides for the payment to Mr. Cunningham of
$200,000 per year commencing June 21, 1995 and continuing for four years
thereafter, unless Mr. Cunningham fails to comply with certain of the
covenants set forth in the agreement. Mr. Cunningham is entitled to continue
to receive the payments under the Noncompetition Agreement notwithstanding
termination of his employment for any reason.
--------------------
BOARD COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The members of the Committee
are Messrs. Fazakerley, Coward and Thompson, none of whom is a past or present
employee of the Company. There are four primary elements to the executive
compensation program: salary, annual bonuses, long-term incentive
compensation, and fringe benefits.
This program is designed to provide a direct relationship between
executive compensation and corporate performance. The intent is to enhance
shareholder value by means of an executive program that attracts, retains, and
rewards executive officers who contribute to the Company's success. The
primary quantitative measures of corporate performance are revenues, margins,
and earnings per share. The Committee may consider significant qualitative
factors such as the achievement of corporate goals and the general business
environment.
Salary
The Compensation Committee establishes the salary for the top five highly
compensated executives. The Chief Executive Officer sets salary levels for all
other executives based on the guidelines set by the Compensation Committee. In
all cases, the levels set will be based on the responsibilities and duties of
the position, comparative industry salary structure for similar positions, and
individual performance. Compensation for specific functional roles such as
sales, business development, operations, and finance is based on the Company's
overall performance as well as the executive's direct contribution to the
corporation. Examples of the factors to be evaluated include divisional sales
and contribution goals, development or acquisition of new business or product
lines, significant cost reductions resulting
25
<PAGE> 27
in improved profitability, or other similar actions that enhance shareholder
value.
Performance Bonuses
The Compensation Committee sets the bonuses for the top five highly
compensated executives. The Chief Executive Officer sets bonus levels for all
other executives consistent with individual performance each year. The
Company's bonus system is designed to be flexible to meet changes in the
Company's needs and the corporate environment. The payment of bonuses is used
to motivate employees to produce favorable short-term results. The same
business factors that are used to establish salary are also used for setting
bonuses, but different weight may be applied to various factors in setting
bonuses. The Compensation Committee's responsibility is to review annually the
measures by which corporate bonuses will be granted.
Long-Term Incentive Compensation
Long-term incentives for executives are provided by grants under the
Microdyne Key Employee Stock Option Plan. Stock options and stock ownership
serve to align the financial interests of management with those of the
shareholders. Stock options provide executives with an incentive to increase
the long-term profitability of the Company and the value of its stock. Such
options generally will become exercisable over a period of years from the date
of grant. The number of options to be granted to any employee is determined by
the Compensation Committee based on recommendations from the Chief Executive
Officer.
Fringe Benefits and Perquisites
To provide competitive compensation and to enhance executive performance,
the Company provides fringe benefits and perquisites to executives. The fringe
benefits are evaluated as part of an executive's overall compensation package,
and include those items deemed appropriate for the Company's size and those
benefits that are common in the community. In addition to the normal fringe
benefits, the Compensation Committee has specifically authorized the following
fringe benefits.
Loans to executives may be made from time to time. In general, loans are
limited to short-term bridge loans or to amounts consistent with appropriate
executive compensation levels. The loan must provide for reasonable interest
and repayment terms. Loans may be authorized by the Chief Executive
26
<PAGE> 28
Officer up to 125% of the executive's salary. Larger loans must be approved by
the Compensation Committee.
Life insurance for executives may be provided on a group or individual
basis. Life insurance programs may include key man, group insurance,
individual life insurance for estate planning, and split-dollar life
insurance. Any life insurance program that involves a substantial expenditure
of corporate funds must be approved by the Compensation Committee.
Chief Executive Officer Compensation
Compensation decisions for all executives, including Mr. Cunningham, are
generally based on the criteria described in the above sections. The Committee
also considers pertinent industry data on the level of compensation paid to
executive officers in other companies, including those of comparable size and
which are direct competitors, and of companies that are larger in size but
whose markets are the Company's targets for growth. After a general review of
the performance of those companies compared to the Company, the Committee
concluded that additional compensation for Mr. Cunningham was justified.
In setting Mr. Cunningham's compensation for fiscal 1995, the Committee
gave considerable weight to the objectives Mr. Cunningham had outlined in the
Company's 1994 Annual Report. They were to:
- Search out acquisitions that provide both growth and a high
potential for return on investment;
- Grow the Company's share of its served markets through internal
growth and significantly expand our presence in those served markets
offering the highest growth;
- Improve gross margins by aggressively reducing product costs;
and
- Continue to cap operating expenses, so as to bring gross margin
improvement to the pre-tax line.
Each of these objectives was achieved by the Company during the fiscal
year. First and foremost, under Mr. Cunningham's leadership, the Company's
operating results improved dramatically in fiscal 1995. Sales rose 68% and net
earnings rose by 174%.
27
<PAGE> 29
Mr. Cunningham was instrumental in improving the Company's profitability
ratios. Key to that success was meeting the goal of lowering SG&A expense in
fiscal 1995 as a percentage of sales, which in turn boosted both pretax and
after-tax profitability ratios.
He led the Company towards its goal of broadened distribution channels.
The Company added new, important distributors while increasing sales to its
existing distribution base.
In recognition of his contribution, the Committee increased Mr.
Cunningham's annual salary from $222,500 in fiscal 1994 to $251,250 in fiscal
1995, and awarded him a $250,000 bonus. This salary adjustment and bonus also
reflected that Mr. Cunningham did not participate in the Company's stock
option program for executives.
The Internal Revenue Code currently limits the deductibility for federal
income tax purposes of compensation paid to the Company's chief executive
officer and to each of the other four most highly compensated executive
officers. The Company may deduct certain types of compensation paid to any of
these individuals only to the extent that during any fiscal year such
compensation does not exceed one million dollars. The Compensation Committee
believes that such limitation will not apply to the compensation to be paid by
the Company to its executive officers for the foreseeable future and no
modifications have been made in the Company's compensation programs due to
these limits.
H. Brian Thompson, Chairman
Curtis M. Coward
Gregory W. Fazakerley
--------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Curtis M. Coward, a Director of the Company and a member of the
Compensation Committee, is a partner of the law firm McGuire, Woods, Battle &
Boothe, L.L.P., outside corporate counsel to the Company.
--------------------
28
<PAGE> 30
PERFORMANCE GRAPH
The table below compares the performance over a five-year period of the
Company's common stock to that of the Russell 2000, a broad market index, and
the Russell Technology Group. It assumes that $100 is invested in the
Company's common stock, the Russell 2000, and the Russell Technology Group on
September 30, 1990, and that all dividends were reinvested. In aggregate, the
Company's stock has increased 712% since September 30, 1990. The Russell 2000
index, compiled by the Frank Russell Company of Tacoma, Washington, shows the
total return (share price plus reinvested dividends) of 2,000 publicly-traded
small- and mid-capitalization companies. The Russell 2000 has increased 127%
over the five-year period ended October 1, 1995. The Russell Technology Group,
also compiled by the Frank Russell Company, is a subset of approximately 285
companies within the Russell 2000, and is also a total return index. From
September 30, 1990 to October 1, 1995, the Russell Technology Group increased
334%. The Company is a component of both indices.
<TABLE>
<CAPTION>
As of
As of September 30 October 1
---------------------------------------- ---------
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Microdyne 100.00 300.00 196.00 148.00 152.00 812.00
Russell 2000 100.00 145.08 158.05 210.46 216.09 226.57
Russell Technology Group 100.00 157.42 169.61 247.07 267.74 433.96
</TABLE>
Notes:
- - Microdyne has not paid dividends during the past five years. Microdyne
Corporation data represent the closing prices of the Company's common
stock on September 30, 1990 ($3.125, which has been established as 100
on the index) and for each succeeding September 30 through 1994 and
October 1, 1995. Those prices and the respective index points are: 1991:
$9.375 (300.0); 1992: $6.125 (196.0); 1993: $4.625 (148.0); 1994: $4.75
(152.0); and 1995 $25.375 (812.0). Microdyne data courtesy of NASDAQ.
- - The Russell 2000 index points are as follows: September 30, 1990: 100.0;
September 30, 1991: 145.08; September 30, 1992: 158.05; September 30,
1993: 210.46; September 30, 1994: 216.09; and October 1, 1995: 266.57.
Russell 2000 data courtesy of Frank Russell Co.
- - The Russell Technology Group index points are as follows: September 30,
1990: 100; September 30, 1991: 157.42; September 30, 1992: 169.61;
September 30, 1993: 247.07; September 30, 1994: 267.74; and October 1,
1995: 433.96. Russell Technology Group data courtesy of Frank Russell
Co.
29
<PAGE> 31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1995, Philip T. Cunningham, Chairman and Chief Executive
Officer of the Company, was indebted to the Company for advances made to
finance certain educational costs. Mr. Cunningham's largest outstanding loan
balance during fiscal 1995, as well as the balance at October 1, 1995, was
$77,000. Mr. Cunningham's borrowings, which carry a stated interest rate of
8%, will be repaid in fiscal year 1996. A. Ralph Mason, Senior Vice President
- - Business Development, was indebted to the Company for advances made to
finance a real estate purchase. Mr. Mason's largest outstanding loan balance
during fiscal 1995 and balance at October 1, 1995 were $150,000 and $91,000,
respectively. Mr. Mason's borrowings will be repaid according to a payment
schedule which will be completed at the end of calendar year 1996.
--------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers and directors and persons who own more than ten
percent of the Company's common stock file initial reports of ownership of
common stock and reports of changes of ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Executive officers, directors, and stockholders are required to furnish
the Company with copies of all Section 16(a) forms they file. Based on a
review of such copies and other records available to the Company, all such
forms were timely filed during the fiscal year ended October 1, 1995.
--------------------
30
<PAGE> 32
OTHER MATTERS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be an address by
the Chairman and a general discussion period during which stockholders will
have an opportunity to ask questions about the business of the Company.
If any matter not described in this proxy statement should come before
the meeting, the Board of Directors will vote the shares represented by it in
accordance with its best judgment. At the time this proxy statement went to
press, the Board of Directors knew of no other matters which might be
presented for stockholder action at the meeting.
-----------------------------------
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals intended for inclusion in next year's proxy statement should be
sent to the General Counsel of the Company at 3601 Eisenhower Avenue,
Alexandria, Virginia 22304, and must be received by September 22, 1996.
-----------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP serves as the independent public accountant of
the Company. Representatives of Grant Thornton are expected to be present at
the meeting, will have the opportunity to make a statement if they desire, and
are expected to be available to respond to appropriate questions,
-----------------------------------
OTHER INFORMATION
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to solicitations by mail, directors, officers, and
regular employees of the Company may solicit proxies in person or by
telephone. No additional compensation will be paid to directors, officers, or
regular employees for such services. Arrangements will be made with banks,
brokerage houses, and other custodians, nominees, and fiduciaries to forward
solicitation material to the beneficial owners of stock held of record by such
persons or firms, and the Company will reimburse such persons of firms for
reasonable out-of-pocket expenses incurred by them in so doing. The Company
also
31
<PAGE> 33
has retained Beacon Hill Partners to aid in the solicitation of proxies, at an
estimated cost of $3,000 plus reimbursement of reasonable out-of-pocket
expenses.
--------------------
The above notice and Proxy Statement are sent by order of the Board of
Directors.
Neal H. Sanders
Vice President and Corporate
Secretary
February 26, 1996
32
<PAGE> 34
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MICRODYNE CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 21, 1996
The undersigned appoints Christopher M. Maginniss or Neal H. Sanders, or
either of them, with full power of substitution, to attend the Annual Meeting of
Stockholders of Microdyne Corporation on March 21, 1996, and at any adjournments
thereof, and to vote all shares which the undersigned would be entitled to vote
if personally present upon the following matters set forth in the Notice of
Annual Meeting and Proxy Statement.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
/ / FOR the FIVE nominees lited below / / WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for the FIVE nominees listed below
</TABLE>
Philip T. Cunningham, Christopher M. Maginniss, Curtis M. Coward,
Gregory W. Fazakerley, and H. Brian Thompson
INSTRUCTION: To withhold authority for any individual nominee, write that
nominee's name in the space provided below:
- ------------------------------------------------------------------------------
2. Proposal to approve an amendment of the amended and restated Microdyne
Corporation 1991 Key Employee Stock Option Plan.
/ / FOR this proposal / / AGAINST this proposal / / ABSTAIN
3. Proposal to approve an amendment to the Microdyne Corporation 1993
Non-Employee Directors Stock Option Plan.
/ / FOR this proposal / / AGAINST this proposal / / ABSTAIN
4. In their discretion, upon such other business as may properly come before
the meeting and any adjournments thereof.
PLEASE DATE, SIGN, AND RETURN PROXY
PROMPTLY. Receipt of Notice of Annual
Meeting and Proxy Statement is hereby
acknowledged
--------------------------------------
Shareholder's signature
--------------------------------------
Joint Holder's Signature
(If applicable)
Date:_________________________________
When properly executed, this proxy will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR proposals 2. and 3. and
FOR the election of the nominees of the Board of Directors in the election of
directors and in accordance with the judgment of the person(s) voting the proxy
upon such other matters properly coming before the meeting and any adjournments
thereof. Please sign exactly as name(s) appear above.
