<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
OPTICAL DATA SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
1101 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
(972) 234-6400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1997
To the Stockholders of
Optical Data Systems, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Meeting") of Optical Data Systems, Inc. (the "Company") will be held at the
Holiday Inn Richardson Select, 1655 N. Central Expressway, Richardson, Texas, at
10:00 A.M., local time, on Thursday, April 24, 1997, for the following purposes:
(1) To elect five (5) directors to serve until the next Annual Meeting
of Stockholders and until their respective successors are duly elected and
qualified;
(2) To approve an amendment to the Company's Certificate of
Incorporation to change the formal name of the Company to ODS NETWORKS,
INC.;
(3) To approve the Optical Data Systems, Inc. 1997 Employee Stock
Purchase Plan for the benefit of selected eligible employees of the Company
or its subsidiaries, as more particularly described in the accompanying
Proxy Statement and set forth in Exhibit A thereto;.
(4) To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997; and
(5) To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The record date for determining those
stockholders who will be entitled to notice of, and to vote at, the Meeting and
at any adjournment thereof is March 3, 1997. A list of stockholders entitled to
vote at the Meeting will be available for inspection at the offices of the
Company.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE. YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR
TO THE MEETING. IF YOU DECIDE TO ATTEND THE MEETING AND WISH TO CHANGE YOUR
PROXY VOTE, YOU MAY DO SO BY VOTING IN PERSON AT THE MEETING.
By Order of the Board of Directors
MICHAEL L. PAXTON
SECRETARY
Richardson, Texas
March 21, 1997
<PAGE>
OPTICAL DATA SYSTEMS, INC.
1101 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1997
------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy (the "Proxy") is being solicited on behalf of the Board
of Directors of Optical Data Systems, Inc. (the "Company") for use at the Annual
Meeting of Stockholders (the "Meeting") to be held at the Holiday Inn Richardson
Select, 1655 N. Central Expressway, Richardson, Texas, at 10:00 A.M., local
time, on Thursday, April 24, 1997, or at such other time and place to which the
Meeting may be adjourned. Proxies, together with copies of this Proxy Statement,
are being mailed to stockholders of the Company on or about March 21, 1997.
Execution and return of the enclosed Proxy will not affect a stockholder's
right to attend the Meeting and to vote in person. Any stockholder executing a
Proxy retains the right to revoke it at any time prior to exercise at the
Meeting. A Proxy may be revoked by delivery of written notice of revocation to
the Secretary of the Company, by execution and delivery of a later Proxy or by
voting the shares in person at the Meeting. A Proxy, when executed and not
revoked, will be voted in accordance with the instructions thereon. In the
absence of specific instructions, Proxies will be voted by those named in the
Proxy "FOR" the election as directors of those nominees named in the Proxy
Statement, "FOR" the approval of an amendment to the Company's Certificate of
Incorporation to change the formal name of the Company to ODS NETWORKS, INC.,
"FOR" the proposal to approve the Optical Data Systems, Inc. 1997 Employee Stock
Purchase Plan, "FOR" the proposal to ratify the appointment of Ernst & Young LLP
as independent auditors for the Company, and in accordance with their best
judgment on all other matters that may properly come before the Meeting.
The enclosed form of Proxy provides a method for stockholders to withhold
authority to vote for any one or more of the nominees for director while
granting authority to vote for the remaining nominees. The names of all nominees
are listed on the Proxy. If you wish to grant authority to vote for all
nominees, check the box marked "FOR." If you wish to withhold authority to vote
for all nominees, check the box marked "WITHHOLD." If you wish your shares to be
voted for some nominees and not for one or more of the others, check the box
marked "FOR" and indicate the name(s) of the nominee(s) for whom you are
withholding the authority to vote by writing the name(s) of such nominee(s) on
the Proxy in the space provided.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 3, 1997, will be
entitled to notice of and to vote at the Meeting. On March 3, 1997, the Company
had issued and outstanding 16,377,447 shares of Common Stock, $.01 par value
(the "Common Stock"), which is the only class of its capital stock outstanding.
QUORUM AND VOTING
The presence at the Meeting, in person or by Proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock is necessary to
constitute a quorum. Each holder of Common Stock
<PAGE>
is entitled to one vote for each share held on each matter, including the
election of directors, to be voted on at the Meeting. Assuming the presence of a
quorum, the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting, present in person or by
Proxy, is required for the approval of each matter submitted to the Meeting,
except that in the election of directors, the five nominees receiving the
greatest number of votes shall be deemed elected even though receiving the
affirmative vote of less than a majority of the outstanding shares entitled to
be voted at the Meeting. Additionally, in the election of directors, cumulative
voting is prohibited and Proxies cannot be voted for more than five nominees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of March 3, 1997, unless
otherwise indicated, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii)
each director and nominee as a director of the Company, (iii) the Company's
Chief Executive Officer, (iv) each of the Company's six other most highly
compensated executive officers for fiscal 1996 and (v) the directors, nominees
and executive officers of the Company as a group. The persons and entities named
in the table have sole voting and investment power with respect to all such
shares owned by them, unless otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER OR GROUP(1) BENEFICIAL OWNERSHIP CLASS
- ---------------------------------------------------------------- -------------------- -------------
<S> <C> <C>
G. Ward Paxton (2).............................................. 1,370,630 8.2%
T. Joe Head (3)................................................. 2,380,560 14.2
Franklin Resources, Inc. (4).................................... 980,152 6.0
Michael L. Paxton (5)........................................... 928,500 5.5
Mark A. Paxton (6).............................................. 884,600 5.4
Julie Paxton Puckett (7)........................................ 877,800 5.4
Donald M. Johnston (8).......................................... 37,427 *
Robert Anderson (9)............................................. 46,000 *
J. Fred Bucy (10)............................................... 36,000 *
Eric H. Gore (11)............................................... 35,800 *
Garry L. Hemphill (12).......................................... 108,841 *
Joseph V. Howard (13)........................................... 31,900 *
Timothy W. Kinnear.............................................. 0 --
Joe W. Tucker, Jr. (14)......................................... 25,200 *
All directors and executive officers as a group (18 persons)
(15).......................................................... 5,414,426 32.3
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) The addresses of the persons or entities shown in the foregoing table who
are beneficial owners of more than 5% of the Common Stock are as follows: G.
Ward Paxton, T. Joe Head and Michael L. Paxton, 1101 East Arapaho Road,
Richardson, Texas 75081; Franklin Resources, Inc., 777 Mariners Island
Blvd., P.O. Box 7777, San Mateo, California 94403; Mark A. Paxton, P.O. Box
437, Allen, Texas 75013, and Julie Paxton Puckett, P.O. Box 439, Allen,
Texas 75013.
(2) Includes 9,900 shares which G. Ward Paxton may effectively acquire upon the
exercise of options within 60 days of March 3, 1997.
2
<PAGE>
(3) Includes 8,000 shares which Mr. Head may effectively acquire upon the
exercise of options within 60 days of March 3, 1997.
(4) Shares beneficially held at December 31, 1996, by Franklin Resources, Inc.,
a parent holding company, through its subsidiaries, Templeton Investment
Counsel, Inc., Templeton Investment Management Limited, Templeton Investment
Management (Australia) Limited, and Templeton Global Advisors Limited,
investment advisors pursuant to the Investment Advisors Act, reflected by a
report on Schedule 13G dated February 12, 1997, filed with the Securities
and Exchange Commission. Voting and investment powers as to these shares are
shared among these entities.
(5) Includes 56,600 shares which Michael L. Paxton may effectively acquire upon
the exercise of options within 60 days of March 3, 1997. Also includes
24,400 shares held by Mr. Paxton as trustee for the benefit of his minor
children as to which beneficial ownership is disclaimed by Mr. Paxton.
(6) Includes 8,000 shares deemed to be beneficially owned by Mark A. Paxton and
36,600 shares held by Mr. Paxton as trustee for the benefit of his minor
children, the beneficial ownership of which shares Mr. Paxton disclaims.
(7) Includes 48,800 shares held by Julie Paxton Puckett as trustee for the
benefit of her minor children as to which beneficial ownership is disclaimed
by Mrs. Puckett.
(8) Includes 12,000 shares which Mr. Johnston may acquire upon the exercise of
options within 60 days of March 3, 1997, 20,324 shares owned beneficially
and directly, and an additional 5,103 shares of Common Stock which Mr.
Johnston may be deemed to own beneficially. Such additional shares underlie
certain warrants to purchase Common Stock owned by Mr. Johnston, which
warrants may be exercised at any time prior to May 21, 1997.
(9) Represents shares which Mr. Anderson may acquire upon the exercise of
options within 60 days of March 3, 1997.
(10) Includes 22,000 shares which Mr. Bucy may acquire upon the exercise of
options within 60 days of March 3, 1997.
(11) Represents shares which Mr. Gore may effectively acquire upon the exercise
of options within 60 days of March 3, 1997.
(12) Includes 26,800 shares which Mr. Hemphill may effectively acquire upon the
exercise of options within 60 days of March 3, 1997.
(13) Includes 31,300 shares which Mr. Howard may effectively acquire upon the
exercise of options within 60 days of March 3, 1997.
(14) Represents shares which Mr. Tucker may effectively acquire upon the
exercise of options within 60 days of March 3, 1997.
(15) Includes an aggregate of 406,223 shares which may be effectively acquired
upon the exercise of options and warrants within 60 days of March 3, 1997.
Also, includes 6,200 shares deemed beneficially owned by an officer whose
spouse may acquire such shares upon exercise of options within 60 days of
March 3, 1997, the beneficial ownership of which shares such officer
disclaims.
3
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors for the ensuing year will consist of five
directors who are each to be elected at the Meeting for a term of office
expiring at the next Annual Meeting of Stockholders or until their respective
successors have been elected and qualified. It is intended that the persons
named in the following table will be nominated as directors of the Company and
that the persons named in the accompanying Proxy, unless otherwise directed,
will vote for the election of such nominees at the Meeting. Each of the nominees
has indicated his willingness to serve as a member of the Board of Directors, if
elected; however, in the event any nominee shall become unavailable for election
to the Board of Directors for any reason not presently known or contemplated,
the Proxy holders will be vested with discretionary authority in such instance
to vote the enclosed Proxy for such substitute as the Board of Directors shall
designate.
The following slate of five nominees has been nominated by the Board of
Directors:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) SINCE
- ------------------------------------ --- ------------------------------------------- -----------
<S> <C> <C> <C>
G. Ward Paxton...................... 61 Chairman of the Board, President, Chief 1983
Executive Officer and Director
Robert Anderson (1)(2).............. 76 Director 1988
J. Fred Bucy (1)(2)................. 68 Director 1993
T. Joe Head......................... 40 Senior Vice President and Director 1983
Donald M. Johnston (1)(2)........... 47 Director 1983
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
G. WARD PAXTON is co-founder of the Company and has served as Chairman of
the Board, President, Chief Executive Officer and a director since the Company's
inception in September 1983 and served as Chief Financial Officer from 1983
until 1994. Prior to founding the Company, Mr. Paxton was Vice President of
Honeywell Optoelectronics, a division of Honeywell, Inc., from 1978 to 1983.
From 1969 to 1978, Mr. Paxton was Chairman of the Board, President, Chief
Executive Officer and founder of Spectronics, Inc., which was acquired by
Honeywell, Inc. in 1978. Prior to founding Spectronics, Inc., Mr. Paxton held
various managerial and technical positions at Texas Instruments Incorporated
from 1959 to 1969. Mr. Paxton holds Ph.D., M.S. and B.S. degrees in Physics from
the University of Oklahoma. Mr. Paxton holds no other directorships.
ROBERT ANDERSON has served as a director of the Company since 1988. Mr.
Anderson is currently Chairman Emeritus of Rockwell International Corp.
("Rockwell"). He was Chairman of the Board of Rockwell from 1979 to 1988, its
Chief Executive Officer from 1974 to 1988, and a director until February 1993.
Prior to joining Rockwell, Mr. Anderson served 22 years with Chrysler
Corporation, becoming Vice President and General Manager of the
Chrysler-Plymouth Division in 1965. Mr. Anderson currently is a director of
Timken Corporation (industrial manufacturing) and Gulfstream Aerospace.
J. FRED BUCY has served as a director of the Company since 1993. Mr. Bucy
was employed in various technical and managerial capacities by Texas Instruments
Incorporated ("TI") from 1953 through his retirement in 1985. At the time of his
retirement, Mr. Bucy was President, Chief Executive Officer and a director of
TI. Among other activities, Mr. Bucy is a director of Thomas Group, Inc.
(consulting services); a member of the Coordinating Board Advisory Committee on
Research of the Texas College and University System; a Trustee of Southwest
Research Institute; a former member of the Board of Regents of Texas Tech
University and Texas Tech University Health Sciences Center from 1973 to 1991,
including four years as its Chairman; and currently (re-appointed by Governor
George W. Bush in 1995) Chairman of the Texas National Research Laboratory
Commission (the Texas Superconducting Super Collider Agency). Mr. Bucy has been
accorded Distinguished Alumnus and Distinguished Engineer Awards by
4
<PAGE>
Texas Tech University, is a fellow of the Institute of Electrical and
Electronics Engineers, a member of National Academy of Engineers, and is a life
member of the Navy League. Mr. Bucy was awarded an honorary Doctor of Science
degree from Texas Tech University in 1994.
T. JOE HEAD is co-founder of the Company and has served as Senior Vice
President and a director since its inception in September 1983. Prior to
co-founding the Company, Mr. Head held the posistions of Product Marketing
Manager and Marketing Engineer of Honeywell Optoelectronics from 1980 to 1983.
Mr. Head holds a B.S. degree in Electrical Engineering from Texas A & M
University. Mr. Head holds no other directorships.
DONALD M. JOHNSTON has served as a director of the Company since November
1983. Mr. Johnston is President and Chief Executive Officer of Massey Burch
Capital Corp., a venture capital firm focusing on investments in the South. He
served as President of Massey Burch Investment Group, Inc., a venture capital
firm ("Massey Burch"), from 1990 until December 1993, and he has been a
principal of that firm since 1982. Prior to joining Massey Burch, Mr. Johnston
was the President of InterFirst Venture Corporation, a venture capital
subsidiary of Interfirst Bancshares, Inc., and the Executive Director of First
Dallas, Ltd., a corporate finance group in London, England. Mr. Johnston holds a
B.A. degree from Vanderbilt University and an M.B.A. degree from Southern
Methodist University. Mr. Johnston is not a director of any other publicly-held
company.
All directors of the Company hold office until the next ensuing annual
meeting of stockholders and until their respective successors are duly elected
and qualified. All officers of the Company are elected annually by the Board of
Directors and serve at the discretion of the Board. G. Ward Paxton is the father
of Michael L. Paxton, who serves as an executive officer of the Company in the
capacity of Vice President and Secretary. There are no other family
relationships between any director or officer of the Company and any other such
person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF SUCH
NOMINEES.
5
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The business affairs of the Company are managed under the direction of the
Board of Directors. The Board meets on a regularly scheduled basis during the
fiscal year of the Company to review significant developments affecting the
Company and to act on matters requiring Board approval. It also holds special
meetings as required from time to time when important matters arise requiring
Board action between scheduled meetings. The Board of Directors or its
authorized committees met nineteen times during the 1996 fiscal year. During
fiscal year 1996, each incumbent director participated in at least 75% or more
of the aggregate of (i) the total number of meetings of the Board of Directors
(held during the period for which he was a director) and (ii) the total number
of meetings of all committees of the Board on which he served (during the period
that he served). For the Board of Directors as a whole, attendance was 100%
during the 1996 fiscal year.
The Board of Directors has established Audit and Compensation Committees to
devote attention to specific subjects and to assist it in the discharge of its
responsibilities. The functions of these committees, their current members and
the number of meetings held during fiscal year 1996 are described below.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of Directors
the appointment of the firm selected to be independent auditors for the Company
and monitors the performance and independence of such firm; reviews and approves
the scope of the annual audit and quarterly reviews and evaluates with the
independent auditors the Company's annual audit and annual consolidated
financial statements; reviews with management the status and effectiveness of
internal accounting controls; and evaluates all public financial reporting
documents of the Company. Donald M. Johnston (Chairman), Robert Anderson and J.
Fred Bucy are members of the Audit Committee. The Audit Committee met six times
during the 1996 fiscal year.
COMPENSATION COMMITTEE. The Compensation Committee is empowered to review
and advise management and make recommendations to the Board of Directors with
respect to the compensation and other employment benefits of executive officers
and key employees of the Company. The Compensation Committee also administers
the Company's Incentive Stock Option Plans (the "Stock Option Plans") for
officers and key employees and the Company's incentive bonus programs for
executive officers and salaried non-sales employees. The Compensation Committee
is authorized, among other powers, to determine from time to time the
individuals to whom options shall be granted, the number of shares to be covered
by each option and the time or times at which options shall be granted pursuant
to the Stock Option Plans. The Compensation Committee is currently comprised of
Messrs. Anderson (Chairman), Bucy and Johnston. The Compensation Committee met
six times during the 1996 fiscal year.
The Company does not have a nominating committee. The functions customarily
attributable to a nominating committee are performed by the Board of Directors
as a whole.
PROPOSAL TO CHANGE THE NAME
OF THE COMPANY
At the Meeting, stockholders will be asked to vote upon a proposal to
approve an amendment to the Company's Certificate of Incorporation (the
"Certificate") to change the formal name of the Company to ODS NETWORKS, INC.
The Board of Directors has unanimously approved the proposed amendment to the
Certificate.
Since its founding in 1983, the Company has evolved from a manufacturer of
modems, multiplexers, and fiber optic links into a designer and manufacturer of
broad lines of computer networking and internetworking products, including,
among others, intelligent switching hubs, switches and sophisticated network
management modules, that support multiple types of transmission media and
incorporate increasingly sophisticated network management and control software.
Accordingly, the change of name is proposed to adopt a more universally
appropriate name which the Board of Directors believes will more
6
<PAGE>
accurately depict the corporate image of the Company and the diversified nature
of its product lines and current business endeavors.
The following resolution relative to the proposed amendment to the
Certificate will be submitted at the Meeting for the consideration and vote of
the stockholders entitled to vote thereon:
RESOLVED, that Article One of the Company's Certificate of Incorporation
be, and it is hereby, amended to read in its entirety as follows:
"ARTICLE ONE
Name
The name of the corporation is ODS NETWORKS, INC. (the 'Corporation')."
Approval of the proposal requires the affirmative vote of the holders of a
majority of the issued and outstanding shares of Common Stock entitled to vote
thereon and represented in person or by Proxy at the Meeting or any adjournments
thereof. Members of the Board of Directors and other executive officers of the
Company, who beneficially own in the aggregate approximately 30.6% of the issued
and outstanding shares of Common Stock, currently intend to vote their shares in
favor of the proposed amendment to the Certificate to change the name of the
Company to ODS NETWORKS, INC. See "Security Ownership of Certain Beneficial
Owners and Management." The enclosed Proxy will be voted as specified, but if no
specification is made with respect to this proposal, it will be voted in favor
of the proposed amendment to the Certificate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
7
<PAGE>
PROPOSAL TO APPROVE THE EMPLOYEE STOCK
PURCHASE PLAN
GENERAL
The Board of Directors has determined that it is in the best interest of the
Company and its stockholders to adopt the Optical Data Systems, Inc. 1997
Employee Stock Purchase Plan (the "Purchase Plan" or "Plan"). The Company in the
past has utilized stock options for attracting, retaining and motivating key
employees and directors, by providing them incentives to enhance the growth and
profitability of the Company. The Purchase Plan continues the objectives
embodied in the plans previously adopted by the Company, but on a broader scale
to all eligible employees; namely, to provide incentives to persons with
experience and ability to remain in the employ of the Company or its
subsidiaries, to attract new employees whose services are considered valuable to
the Company or its subsidiaries and to encourage a proprietary interest by such
persons in the development and financial success of the Company. The Plan is
designed to provide these incentives and a method for eligible employees of the
Company or its subsidiaries to acquire a proprietary interest in the Company
through the regular and systematic purchase of shares of Common Stock from the
Company, at a price per share below fair market value, by means of voluntary
payroll deductions.
The Purchase Plan was adopted and approved by the Board of Directors on
January 23, 1997, subject to approval by the stockholders of the Company. The
Plan provides for the grant to eligible employees of the Company or its
subsidiaries who elect to participate in the Plan of options to purchase shares
of Common Stock. The options granted under the Plan are intended to qualify as
options issued pursuant to an "employee stock purchase plan" within the meaning
of Section 423(b) of the Internal Revenue Code of 1986, as amended ("the Code").
Approval of the Purchase Plan requires the affirmative vote of the holders
of a majority of the issued and outstanding shares of Common Stock entitled to
vote thereon and represented in person or by Proxy at the Meeting or any
adjournments thereof. Members of the Board of Directors and other executive
officers of the Company, who beneficially own in the aggregate approximately
30.6% of the issued and outstanding shares of Common Stock, currently intend to
vote their shares in favor of the proposed Purchase Plan. See "Security
Ownership of Certain Beneficial Owners and Management." The enclosed Proxy will
be voted as specified, but if no specification is made with respect to the
proposed Plan, it will be voted in favor of the proposal to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
DESCRIPTION OF THE PURCHASE PLAN
The following summary of the Purchase Plan does not purport to be complete
and is subject in all respects to, and qualified by, the provisions of the full
text of the Plan contained in Exhibit A to this Proxy Statement to which
reference should be made.
PLAN PROVISIONS. The Purchase Plan reserves and otherwise provides for the
grant of options to purchase a maximum of 500,000 shares of the Company's Common
Stock, subject to certain adjustments to reflect changes in the Company's
capitalization such as stock splits, stock dividends and similar events. The
Plan will become effective on the date the Company's stockholders approve the
adoption of the Plan and will continue for a term of ten years thereafter,
unless earlier terminated by the Board of Directors.
The Plan is implemented by an offering during each six-month period ending
January 31 and July 31, respectively, and is administered by the Compensation
Committee of the Board of Directors. Employees who have worked for the Company
or a subsidiary of the Company for at least 90 days before the beginning of an
offering period are eligible to participate in the Plan if they are customarily
employed by the Company or a subsidiary of the Company, as defined in the Plan.
8
<PAGE>
The Purchase Plan permits eligible employees to purchase Common Stock
through payroll deductions, which may not exceed 10% of an employee's
compensation. Each participating employee will be granted at the start of a
period options to purchase shares of Common Stock exercisable at the end of the
period.
The number of shares subject to an option will be that number of full shares
that can be purchased with the total amount of payroll deductions for such
employee during the period at the exercise price equal to 85% of the lower of
(i) the closing selling price of Common Stock on the first day of the purchase
period or (ii) the closing selling price on the last day of the purchase period.
Not more than 60,000 shares, plus any unissued shares available from prior
offerings under the Purchase Plan, may be issued each purchase period.
No participating employee will be granted an option under the Purchase Plan
if such employee, immediately after the option is granted, would own, directly
or indirectly, stock (including the stock to be acquired upon exercise of the
option) representing 5% or more of the total combined voting power of all
classes of capital stock of the Company. No participating employee will be
granted an option under the Purchase Plan that would permit the purchase of
shares of Common Stock at a rate exceeding $25,000 of fair market value of stock
(determined at the time the option is granted) for each calendar year in which
the option is outstanding. No participating employee may purchase more than 250
shares per purchase period.
TAX CONSEQUENCES. The Purchase Plan is intended to qualify under Section
423 of the Code. Under these provisions, no income will be taxable to a
participant until the shares purchased are sold or otherwise disposed of. Upon
sale or other disposition of the shares, the participant will generally be
subject to tax and the amount of the tax will depend upon the holding period. If
the shares are sold or otherwise disposed of more than two years from the date
of grant, the participant will recognize ordinary income measured as the lesser
of (a) the excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price or (b) an amount equal to 15% of the
fair market value of the shares as of the date of grant. Any additional gain
will be treated as a long-term capital gain. If the shares are sold or otherwise
disposed of before the expiration of this holding period, the participant will
recognize ordinary income generally measured as the excess of the fair market
value of the shares on the date the shares are purchased over the purchase
price. Any additional gain or loss on such sale or disposition, will be long-
term or short-term capital gain or loss, depending on the holding period. The
Company generally is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant, except to the extent of ordinary income
recognized by participants upon a sale or disposition of shares prior to the
expiration of the holding period(s) described above and subject to the
limitation on deductibility set forth in Section 162(m) of the Omnibus Budget
Reconciliation Act of 1993. The Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended, and is not
qualified under Section 401(a) of the Code.
9
<PAGE>
PROPOSAL TO RATIFY THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent public
accountants, to serve as independent auditors of the Company and to audit its
consolidated financial statements for fiscal year 1997, subject to approval by
stockholders at the Meeting. Ernst & Young LLP, has served as the Company's
independent auditors since the Company's inception and is, therefore, familiar
with its affairs and financial procedures. To the knowledge of management of the
Company, neither such firm nor any of its members has any direct or material
indirect financial interest in the Company, nor any connection with the Company
in any capacity other than as independent auditors.
Although stockholder ratification and approval of this appointment is not
required by law or otherwise, in keeping with the Company's policy that its
stockholders should be entitled to a voice in this regard and as a matter of
good corporate practice, the Board of Directors is seeking ratification of this
appointment. If the appointment is not ratified, the Board of Directors must
then determine whether to appoint other auditors prior to the end of the current
fiscal year, and in such case, the opinions of stockholders will be taken into
consideration.
The following resolution concerning the ratification of the appointment of
independent auditors will be submitted to the Meeting:
"RESOLVED, that the appointment by the Board of Directors of the Company
of Ernst & Young LLP, independent auditors, to audit the consolidated
financial statements and related books, records, and accounts of the
Company and its subsidiaries for the fiscal year ending December 31,
1997, is hereby ratified."
A representative of Ernst & Young LLP, the Company's independent auditors
for fiscal year 1996, is expected to be in attendance at the Meeting and will be
afforded the opportunity to make a statement. The representative will also be
available to respond to appropriate questions.
The enclosed Proxy will be voted as specified, but if no specification is
made, it will be voted in favor of the adoption of the resolution of
ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
10
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
The following table sets forth certain information regarding all cash
compensation paid or to be paid by the Company or any of its subsidiaries, as
well as other compensation paid or accrued, during the fiscal years indicated,
to the Company's Chief Executive Officer and each of the Company's six other
most highly compensated executive officers for such respective periods in all
capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------- ---------------------------- PAYOUTS
OTHER RESTRICTED SECURITIES -----------
ANNUAL STOCK UNDERLYING LTIP
BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) ($) (#)(3) ($)
- ------------------------------ --------- ----------- --------- ------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
G. Ward Paxton,
Chairman of the Board, 1996 $ 325,000 -- -- -- 17,500
President and Chief Executive 1995 250,000 $ 165,400 -- -- 16,000 --
Officer...................... 1994 190,000 69,255 -- -- -- --
T. Joe Head, 1996 245,000 -- -- -- 14,000 --
Senior Vice President........ 1995 190,000 125,742 -- -- 13,000 --
1994 150,000 54,675 -- -- -- --
Eric H. Gore, 1996 80,000 136,658 -- -- 16,000 --
Vice President--Strategic 1995 75,000 199,686 -- -- 8,000 --
Business Development......... 1994 75,000 126,813 -- -- 10,000 --
Garry L. Hemphill, 1996 195,000 -- -- -- 10,000 --
Vice President-- 1995 160,000 84,704 -- -- 10,000 --
Operations................... 1994 130,000 47,385 -- -- 16,000 --
Joseph V. Howard, 1996 90,000 237,338 -- -- 18,000 --
Vice President-- 1995 80,000 123,688 -- -- 8,000 --
North American Sales......... 1994 72,000 80,166 -- -- 10,000 --
Timothy W. Kinnear, 1996 195,000 -- -- -- 20,000 --
Vice President and Chief 1995 -- -- -- -- -- --
Financial Officer(5)......... 1994 -- -- -- -- -- --
Joe W. Tucker, Jr., 1996 195,000 -- -- -- 18,000 --
Vice President-- 1995 160,000 84,704 -- -- 10,000 --
International Sales.......... 1994 130,000 47,385 -- -- 8,000 --
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(4)
- ------------------------------ ---------------
<S> <C>
G. Ward Paxton,
Chairman of the Board, $ 1,500
President and Chief Executive 1,080
Officer...................... 1,500
T. Joe Head, 1,500
Senior Vice President........ 1,080
1,442
Eric H. Gore, 1,500
Vice President--Strategic 1,080
Business Development......... 1,500
Garry L. Hemphill, 1,500
Vice President-- 1,080
Operations................... 1,222
Joseph V. Howard, 1,500
Vice President-- 1,065
North American Sales......... 1,410
Timothy W. Kinnear, --
Vice President and Chief --
Financial Officer(5)......... --
Joe W. Tucker, Jr., --
Vice President-- --
International Sales.......... --
</TABLE>
- ------------------------
(1) Includes incentive bonus payments earned for services rendered to the
Company in the year indicated that were paid in the following year, except
as to Mr. Gore and Mr. Howard whose bonus compensation was paid in
substantial part in the year indicated.
(2) Excludes certain incidental perquisites, the total of which did not exceed
the lesser of $50,000 or 10% of cash compensation for any named individual.
(3) Incentive stock options to acquire shares of Common Stock issued pursuant to
the Company's Stock Option Plans.
(4) This amount consists of the annual employer matching payments to the
Company's qualified 401(k) Savings Plan.
(5) Information included in the Summary Compensation Table as to Mr. Kinnear's
1996 salary compensation reflects the annualized amount of such compensation
as if he had been employed in such capacity for the entire 1996 fiscal year.
Mr. Kinnear actually earned and was paid $56,875 in salary from his date of
initial employment, September 16, 1996, until the end of the 1996 fiscal
year.
11
<PAGE>
OPTION GRANTS DURING FISCAL YEAR 1996
The following table provides information related to options to acquire
shares of Common Stock granted to the named executive officers of the Company
during fiscal year 1996. The Company does not have any outstanding stock
appreciation rights ("SARs").
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ------------------------------------------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (1)
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE EXPIRATION --------------------
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE 5%($) 10%($)
- ------------------------------ -------------- ------------------ ---------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
G. Ward Paxton................ 17,500(2) 4.06% $ 25.57(4) 1/23/01 $ 71,812 $ 207,801
T. Joe Head................... 14,000(2) 3.25 25.57(4) 1/23/01 57,450 166,241
Eric H. Gore.................. 8,000(3) 1.85 23.25(5) 1/23/06 116,974 296,436
.............................. 8,000(3) 1.85 21.00(5) 8/27/06 105,654 267,749
Garry L. Hemphill............. 10,000(3) 2.32 23.25(5) 1/23/06 146,218 370,545
Joseph V. Howard.............. 8,000(3) 1.85 23.25(5) 1/23/06 116,974 296,436
.............................. 10,000(3) 2.32 21.00(5) 8/27/06 132,068 334,686
Timothy W. Kinnear............ 20,000(3) 4.64 18.38(5) 9/16/06 231,119 585,700
Joe W. Tucker Jr.............. 10,000(3) 2.32 23.25(5) 1/23/06 146,218 370,545
.............................. 8,000(3) 1.85 21.00(5) 8/27/06 105,654 267,749
</TABLE>
- --------------------------
(1) The potential realizable value illustrates the value that may be realized
upon exercise of the options immediately prior to the expiration of their
respective terms, assuming the specified compounded rates of appreciation of
the Company's Common Stock over the term of each option. These values do not
take into account provisions of each option providing for termination of the
option following cessation of employment, nontransferability or effective
vesting over five years.
(2) Incentive stock options to acquire shares of Common Stock granted pursuant
to the Company's Stock Option Plans, each for a term of five years from date
of grant. Each option effectively vests and is exercisable with respect to
20% of the shares covered thereby on each anniversary date thereof in 1997
through 2001, is nontransferable and is subject to termination under certain
conditions upon cessation of employment of the optionee.
(3) Incentive stock options to acquire shares of Common Stock granted pursuant
to the Company's Stock Option Plans, each for a term of ten years from date
of grant. Each option effectively vests and is exercisable with respect to
20% of the shares covered thereby on each anniversary date thereof in 1997
through 2001, is nontransferable and is subject to termination under certain
conditions upon cessation of employment of the optionee.
(4) The exercise price per share of each option was equal to 110% of the fair
market value of the Common Stock per share on the date of grant.
(5) The exercise price per share of each option was equal to 100% of the fair
market value of the Common Stock per share on the date of grant.
12
<PAGE>
OPTION EXERCISES AND FISCAL YEAR END HOLDINGS
The following table sets forth information with respect to options exercised
by the named executives of the Company during fiscal year 1996 and the number
and value of options held at fiscal year end.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY-END(#) SARS AT FY-END($)(*)
SHARES ACQUIRED VALUE ------------------------------ --------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------------- ----------- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. Ward Paxton.............. -- -- 3,200 30,300 -- --
T. Joe Head................. -- -- 2,600 24,400 -- --
Eric H. Gore................ -- -- 29,400 29,600 $ 234,560 $ 33,840
Garry L. Hemphill........... 41,600 $ 558,808 12,400 38,000 67,008 112,624
Joseph V. Howard............ 5,500 121,000 24,500 32,000 188,160 37,240
Timothy W. Kinnear.......... -- -- -- 20,000 -- --
Joe W. Tucker, Jr........... -- -- 14,800 45,200 55,392 89,792
</TABLE>
- ------------------------------
* The closing price for the Company's Common Stock as reported by The Nasdaq
Stock Market (National Market System) on December 31, 1996, was $12.00 per
share. The indicated value is calculated on the basis of the difference
between the option exercise price per share and $12.00, multiplied by the
number of shares of Common Stock underlying each "in-the-money" option.
COMPENSATION OF DIRECTORS
Each non-employee director receives an annual cash retainer fee of $12,000,
plus a fee of $1,500 for each meeting of the Board of Directors attended
(exclusive of telephonic meetings) and for each meeting of a committee of the
Board of Directors attended (exclusive of committee meetings held on the same
day as Board meetings). Each non-employee director is also reimbursed for all
reasonable expenses incurred in attending such meetings. No director who is an
employee of the Company receives any fees for service as a director or member of
any committee of the Board.
Each of the Company's non-employee directors is eligible to receive stock
options under the 1995 Non-Employee Directors Stock Option Plan for 20,000
shares of Common Stock on the fifth anniversary following the date of the most
recent grant under such plan, assuming such non-employee director is then in
office. Initial grants of stock options under this plan were awarded on April
27, 1995, to Messrs. Anderson, Bucy and Johnston, current non-employee directors
of the Company. Options granted pursuant to the Plan provide for an exercise
price per share equal to 100% of the fair market value per share on the date of
the grant, have a term of ten years, and are subject to a five-year vesting
schedule and certain other conditions.
EMPLOYMENT AGREEMENTS
Neither the Company nor its subsidiaries has any employment agreements with
any of its executives.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL. The Compensation Committee of the Board of Directors sets the
compensation for the Chief Executive Officer, reviews the design, administration
and effectiveness of the compensation programs for other key executives, and
approves stock option grants for all executive officers. The Compensation
Committee is currently composed of three independent, non-employee directors who
have no
13
<PAGE>
interlocking relationships. The data and information included in the various
compensation tables appearing elsewhere in this Proxy Statement should be read
in conjunction with and deemed to be a part of this report.
NAMED EXECUTIVES. This report includes disclosure of the required
compensation information for the Company's Chief Executive Officer and its six
other most highly compensated officers (collectively, the "Named Executives").
Three of the Named Executives received the same compensation in 1996; hence, the
group of Named Executives consists of seven rather than five individuals.
COMPENSATION OBJECTIVES. The Company operates in the highly competitive and
rapidly changing high technology industry. The Compensation Committee believes
that the compensation programs for executive officers of the Company should be
designed to attract, motivate and retain talented executives who contribute to
the success of the Company and should be determined within a competitive
framework based on the achievement of overall business objectives and financial
performance and individual contributions. Within this framework, the Committee's
objectives are to:
- Provide a total compensation program competitive with the compensation
practices of organizations in the high technology industry of comparable
size to the Company.
- Provide annual variable incentive awards based on the Company's overall
financial performance relative to corporate objectives.
- Align the financial interests of executive officers with those of
stockholders by providing equity-based incentives.
BASE SALARY. The salaries of the executive officers, including the Chief
Executive Officer, are determined annually by the Committee with reference to
(i) salaries paid to executives with similar
responsibilities at comparable companies, primarily in the high technology
industry, (ii) each officer's performance and (iii) the Company's overall
financial results, without specific weighting being attributed to any of these
factors. The Compensation Committee believes that the Company must offer
salaries within a competitive market range to attract and retain talented
executives. However, the Compensation Committee manages salaries for the
executive group as a whole in a conservative fashion in order to place more
emphasis on incentive compensation. For 1996, the Compensation Committee
established the base salaries for each of the Named Executives as indicated in
the tables accompanying this report.
INCENTIVE BONUS PLAN. To reinforce the attainment of corporate objectives,
the Compensation Committee believes that a substantial portion of the potential
annual compensation of each executive officer should be in the form of variable
incentive pay. The incentive cash bonus program for executives is established
annually by the Compensation Committee based upon the Company's achievement of
sales and net income targets established at the beginning of the fiscal year.
The incentive plan for executives, other than certain executives in the
Company's sales organization, requires a threshold level of Company financial
performance before any incentives are awarded. Once the threshold objective for
net income of a fiscal year is reached, specific formulas are in place to
calculate the actual incentive payment for each executive for such year. In
fiscal 1996, the Company did not achieve its threshold level of profitability;
thus, non-sales executives, including the Chief Executive Officer and three of
the other Named Executives, did not receive any incentive bonus awards. Certain
executives in the sales organization, including two of the Named Executives,
received incentive sales commission awards in fiscal 1996 based upon the degree
of achievement of targeted sales objectives established at the beginning of the
fiscal year.
EQUITY-BASED INCENTIVES. The goal of the Company's equity-based incentive
awards is to align the interests of executive officers with stockholders. The
Committee determines the value allocated to equity-based incentives according to
each executive's position within the Company, individual performance,
contributions to achievement of corporate objectives and related factors, and
awards stock options to create a meaningful opportunity for stock ownership.
14
<PAGE>
The Company has previously adopted three Stock Option Plans (collectively,
the "Plans"), including the 1983 Incentive Stock Option Plan, the 1987 Incentive
Stock Option Plan and the 1995 Stock Option Plan, to provide long-term incentive
compensation for eligible participants. Generally, executive officers and other
key employees of the Company and its subsidiaries are eligible to participate in
the Plans; however, non-employee directors of the Company are not eligible to
participate in these Plans. Stock option grants under the Plans provide the
right to purchase shares of the Company's Common Stock at fair market value on
the date of grant, or in the case of an optionee who at the time of the grant
holds more than 10% of the total combined voting securities of the Company, 110%
of the fair market value on the date of grant. Stock options generally vest
within a five year period and provide terms of five or ten years, as applicable.
In 1996, the Compensation Committee and the Board of Directors approved the
grant of stock options pursuant to the Plans to the Named Executives indicated
in the tables accompanying this report.
CEO COMPENSATION. The annual base salary for G. Ward Paxton for fiscal 1996
was established by the Compensation Committee based on Mr. Paxton's personal
performance of his duties and on salary levels paid to chief executive officers
of comparable companies. Mr. Paxton did not receive an incentive bonus award for
1996 because the Company did not achieve its threshold level of profitability
established at the beginning of the year. The option grant made to Mr. Paxton in
fiscal 1996 was based upon his performance and leadership with the Company.
Respectfully submitted,
COMPENSATION COMMITTEE
of the Board of Directors
Robert Anderson, CHAIRMAN
Donald M. Johnston
J. Fred Bucy
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member or nominee for election as a member of the Board of Directors or
any committees of the Board has an interlocking relationship with the board (or
member of such board) or any committee (or member of such committee) of a board
of any other company.
15
<PAGE>
STOCK PERFORMANCE INFORMATION
The following chart illustrates the percentage of change in the cumulative
total stockholder return on the Company's Common Stock for the applicable
portion of the fiscal year ended December 31, 1992 (since the Company's initial
public offering of Common Stock) and each of the four fiscal years in the four-
year period ended December 31, 1996, compared with the cumulative total return
on the Center for Research in Securities Prices ("CRSP") Total Return Index for
The Nasdaq Stock Market and the CRSP Total Return Index for Nasdaq Computer
Manufacturing Stocks, respectively, for the same periods.
STOCK PERFORMANCE*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CRSP TOTAL RTN. CRSP TOTAL RTN.
<S> <C> <C> <C>
Index for The Index for Nasdaq
Optical Data Systems,
Inc. Nasdaq Stock Market Computer Mfg. Stocks
5/21/1992 $100.00 $100.00 $100.00
12/31/1992 $194.44 $117.51 $125.29
12/31/1993 $152.78 $134.26 $118.34
12/31/1994 $323.61 $131.34 $130.16
12/31/1995 $561.11 $190.04 $204.83
12/31/1996 $266.66 $233.92 $272.62
</TABLE>
- ------------------------
* The comparison assumes (i) $100 was invested on May 21, 1992 (the effective
date of the Company's initial public offering of Common Stock) in the
Company's Common Stock and in each of the foregoing indices and (ii) that
any dividends paid by companies included in the comparative indices were
reinvested in additional shares of the same class of equity securities of
such companies at the frequency with which dividends were paid during the
applicable periods depicted.
The stock performance information depicted in the foregoing chart is not
necessarily indicative of future stock performance. The chart shall not be
deemed to be incorporated by reference in any filing by the Company under the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that
the Company specifically incorporates such information by reference.
16
<PAGE>
CERTAIN TRANSACTIONS
COMMON STOCK PURCHASE WARRANTS
In connection with the Company's private placement of Common Stock (the
"Private Placement") made in November 1983, the Company issued certain common
stock purchase warrants (the "Warrants") to First Nashville Corporation ("FNC"),
the placement agent in the Private Placement and an affiliate of Massey Burch,
and InterFirst Venture Corporation ("InterFirst"). In February 1989, FNC was
dissolved and incidental to such dissolution its Warrant was distributed to its
officers, directors and stockholders who are affiliates of Massey Burch.
O'Donnell & Masur, L.P. has acquired ownership of the Warrant originally issued
to InterFirst.
As of December 31, 1996, the Warrants entitle the owners thereof to purchase
an aggregate of 82,653 shares of Common Stock at the exercise price of $4.50 per
share, subject to adjustments under certain circumstances, at any time prior to
May 21, 1997. Pursuant to the Warrants, affiliates of Massey Burch are entitled
to purchase a total of 25,515 shares of Common Stock. Under the terms of the
Warrants, the Company, subject to certain limitations, has granted the holders
thereof unlimited incidental or "piggyback" registration rights to include the
shares of Common Stock underlying such Warrants in certain registration
statements subsequently filed by the Company under the Securities Act and
applicable state securities laws.
OTHER MATTERS
The Company has entered into indemnification agreements with each of its
directors and executive officers to provide them with the maximum
indemnification allowed pursuant to its certificate of incorporation, bylaws and
applicable law.
COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Such persons are required by SEC regulation promulgated pursuant to the Exchange
Act to furnish the Company with copies of all Section 16(a) report forms they
file with the SEC.
Based solely on its review of the copies of such report forms received by it
with respect to fiscal year 1996, the Company believes that all filing
requirements applicable to its directors, officers and persons who own more than
10% of a registered class of the Company's equity securities have been timely
complied with in accordance with Section 16(a) of the Exchange Act.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Exchange Act. For such proposals to be considered for
inclusion in the Proxy Statement and Proxy relating to the 1998 Annual Meeting
of Stockholders, such proposals must be received by the Company not later than
November 21, 1997. Such proposals should be directed to Optical Data Systems,
Inc., 1101 East Arapaho Road, Richardson, Texas 75081, Attention: Secretary
(telephone: (972) 234-6400; telecopy: (972) 234-1467).
EXPENSES OF SOLICITATION
All costs incurred in the solicitation of Proxies for the Meeting will be
borne by the Company. In addition to the solicitation by mail, officers and
employees of the Company may solicit Proxies by telephone, telefax, or
personally, without additional compensation. The Company may also make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of
17
<PAGE>
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, and the Company may reimburse such brokerage houses
and other custodians, nominees and fiduciaries for their out-of-pocket expenses
incurred in connection therewith. In addition, ChaseMellon Shareholder Services
L.L.C. has been retained by the Company to aid in the solicitation of Proxies
and will solicit Proxies by mail, telephone, telefax and personal interview and
may request brokerage houses and nominees to forward soliciting material to
beneficial owners of Common Stock. For these services, ChaseMellon Shareholder
Services L.L.C. will be paid fees not to exceed $4,000, plus expenses.
ADDITIONAL INFORMATION AVAILABLE
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL FURNISH,
WITHOUT CHARGE, A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ON FORM 10-K, AS
FILED WITH THE SEC, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO.
THE REQUEST SHOULD BE DIRECTED TO THE SECRETARY AT THE COMPANY'S OFFICES
INDICATED ABOVE.
The Company's 1996 Annual Report to Stockholders accompanies this Proxy
Statement. The Annual Report, which includes financial statements, does not form
and is not to be deemed part of this Proxy Statement.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors and
management are not aware of any other matter, other than those described herein,
which will be presented for consideration at the Meeting. Should any other
matter requiring a vote of the stockholders properly come before the Meeting or
any adjournment thereof, the enclosed Proxy confers upon the persons named in
and entitled to vote the shares represented by such Proxy discretionary
authority to vote the shares represented by such Proxy in accordance with their
best judgment in the interest of the Company on such matters. The persons named
in the enclosed Proxy also may, if it is deemed advisable, vote such Proxy to
adjourn the Meeting from time to time.
PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Board of Directors
MICHAEL L. PAXTON
SECRETARY
Richardson, Texas
March 21, 1997
18
<PAGE>
EXHIBIT A
OPTICAL DATA SYSTEMS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE:
The Optical Data Systems, Inc. 1997 Employee Stock Purchase Plan (the
"Plan") is intended to provide a method whereby employees of Optical Data
Systems, Inc., a Delaware corporation (the "Company"), and its subsidiaries will
have an opportunity to acquire an equity interest in the Company through the
purchase of shares of the Common Stock of the Company. It is the intention of
the Company that the rights to purchase Common Stock of the Company granted
under the Plan be considered options issued under an "employee stock purchase
plan" as that term is defined in Section 423(b) of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall be construed so
as to extend and limit participation in a manner consistent with the
requirements of Section 423(b) of the Code.
2. DEFINITIONS:
(a) "Compensation" shall mean cash compensation including straight-time
earnings, commissions, payments for overtime, shift premium, bonuses and
other incentive payments, but excluding relocation allowances and non-cash
compensation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall refer to the class of stock which, as of the
effective date of this Plan, is designated as common stock of the Company.
(d) "Committee" shall mean the Compensation Committee appointed by the
Board of Directors in accordance with Section 3 of the Plan.
(e) "Employee" shall mean any person who is customarily employed on a
full-time or part-time basis by the Company or a subsidiary of the Company,
and is regularly scheduled to work 20 hours or more per week and five months
or more per calendar year.
(f) "Market Value" of the Company's Common Stock shall be determined by
the lower of the closing price per share of the Common Stock on the Offering
Commencement Date or Offering Termination Date for each Offering on which
trading occurred on the NASDAQ National Market System (or other quotation
system or stock exchange on which the Common Stock then trades), or, if on
either of such dates no closing price was reported, on the last preceding
date on which a closing price of the Common Stock was reported. In the event
the Common Stock is not publicly traded on an Offering Commencement Date or
Offering Termination Date, the determination of its Market Value shall be
made by the Committee in such manner as it deems appropriate.
(g) "Offering" shall have the meaning as described in Section 4 of the
Plan.
(h) "Offering Commencement Date" shall mean the date on which each
Offering under the Plan commences.
(i) "Offering Termination Date" shall mean each July 31 and January 31
on which each Offering terminates.
(j) "Option" shall mean an option to purchase Common Stock granted under
the Plan.
(k) "Participant" shall refer to an eligible Employee who participates
in the Plan in accordance with the provisions contained herein.
A-1
<PAGE>
(l) "Stock Administrator" shall mean an Employee or Employees designated
by the Committee to perform certain day-to-day administrative functions to
implement the Plan.
3. ADMINISTRATION:
The Plan shall be administered by the Compensation Committee (the Committee)
of the Company appointed by the Board of Directors of the Company (the "Board of
Directors"). Members of the Committee shall not be full-time or part-time
employees of the Company. Accordingly, no member of the Committee shall be
eligible to purchase Common Stock under the Plan. Subject to the express
provisions of the Plan, the Committee shall have plenary authority in its
discretion to interpret and construe any and all provisions of the Plan, to
adopt rules and regulations for administering the Plan, and to make all other
determinations deemed necessary or advisable for administering the Plan. The
Committee's determination on the foregoing matters shall be conclusive. Any
member of the Committee may resign by submitting a letter of resignation to the
Board of Directors. Further, the Board of Directors may from time to time
appoint members of the Committee in substitution for, or in addition to, members
previously appointed and may fill vacancies in the Committee. The Committee may
correct any defect or omission or reconcile any inconsistency in the Plan, in
the manner and to the extent it shall deem desirable. Any decision or
determination reduced to writing and signed by a majority of the members of the
Committee shall be effective as if it had been made by a majority vote at a
meeting of the Committee duly called and held.
The Committee may designate an Employee or Employees to serve as Stock
Administrator to implement the provisions of, and interpretations by the
Committee, of the Plan. In absence of the designation by the Committee of a
Stock Administrator, any reference herein to the Stock Administrator shall be
deemed to be a reference to the Committee.
4. OFFERINGS:
The Plan will be implemented by two six-month offerings per year commencing
each February 1 and August 1 (each, an "Offering"). The first Offering under the
Plan shall begin on August 1, 1997 and will terminate January 31, 1998.
Subsequent Offerings will begin on each successive February 1 and August 1,
terminating on the next following July 31 and January 31 thereafter,
respectively.
5. SHARES SUBJECT TO THE PLAN:
The maximum number of shares of Common Stock issuable under the Plan shall
be 500,000, subject to adjustment in accordance with Section 13 hereof. The
maximum number of shares of Common Stock issuable in each Offering shall be
60,000 plus all unissued shares from prior Offerings, not to exceed 500,000,
subject to adjustment in accordance with Section 13 hereof. If the total number
of shares of Common Stock for which Options are exercised on any Offering
Termination Date exceeds the maximum number of shares for the applicable
Offering, the Committee shall make a pro rata allocation of the shares available
for delivery and distribution in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable, and the balance of
payroll deductions credited to the account of each Participant under the Plan
shall be held in each such Participant's account for the purchase of shares
under the next Offering under the Plan unless a Participant elects to withdraw
from the Plan.
6. TERM OF PLAN:
The Plan shall become effective on the date on which the Company's
stockholders approve the adoption of the Plan. Unless earlier terminated
pursuant to the provisions of Section 12 hereof, the Plan shall continue in
effect for a term of ten (10) years from the date of adoption of the Plan by the
Company's stockholders; provided, however, that the termination of this Plan
shall not affect any shares of Common Stock issued or any outstanding and
unexpired option granted under this Plan.
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7. ELIGIBILITY AND PARTICIPATION:
INITIAL ELIGIBILITY: Any Employee who shall have completed ninety (90) days
employment with the Company or a subsidiary of the Company shall be eligible to
participate in Offerings under the Plan which commence on or after such ninety
day period of employment has concluded, provided Employee is still employed with
the Company. Directors who are not full-time or part-time officers or Employees
are not eligible to participate in the Plan.
LEAVE OF ABSENCE: For purposes of participation in the Plan, a person on leave
of absence shall be deemed to be an Employee for the first 90 days of such leave
of absence and such Employee's employment shall be deemed to have terminated at
the close of business on the 90th day of such leave of absence unless such
Employee shall have returned to regular full-time or part-time employment prior
to close of business on the 90th day. Termination by the Company of any
Employee's leave of absence other than by such Employee's return to full-time,
or part-time employment, shall terminate an Employee's employment for all
purposes of the Plan and shall terminate such Employee's participation in the
Plan and right to exercise any Options.
RESTRICTIONS ON PARTICIPATION: Notwithstanding any provisions of the Plan to the
contrary, no Employee shall be permitted to purchase Common Stock under the
Plan:
(a) if, immediately after the grant, such Employee would own stock
and/or hold outstanding options or other rights to purchase capital stock of
the Company possessing 5% or more of the total combined voting power or fair
market value (as determined by the Committee) of all outstanding shares of
capital stock of the Company (for purposes of this paragraph, the rules of
Section 424(d) of the Code shall apply in determining stock ownership of any
employee), or
(b) which permits such Employee's rights to purchase capital stock under
all employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the capital stock of the Company
(determined at the time such option or right is granted) for each calendar
year in which such option or right is outstanding.
PARTICIPATION: An eligible Employee may become a Participant by completing an
authorization form (an "Authorization") for payroll deduction and providing the
Authorization to the Company within the time specified in the Offering in such
form as the Stock Administrator provides. Payroll deduction for a Participant
shall commence on the applicable Offering Commencement Date when the
authorization for a payroll deduction becomes effective. Once a Participant is
enrolled, he will automatically be enrolled as a Participant in all Offerings
unless the Participant terminates enrollment, becomes ineligible, or the Plan is
terminated.
8. PAYROLL DEDUCTIONS:
AMOUNT OF DEDUCTION: An eligible Employee may become a Participant in an
Offering by delivering a completed Authorization to the Stock Administrator
within the time period specified which shall authorize payroll deductions of up
to 10% (in increments of 1%) of such Participant's Compensation during the
Offering, not to exceed the maximum number of shares that each Participant can
purchase in each Offering (250 shares of Common Stock).
PARTICIPANT'S ACCOUNT: All payroll deductions made for a Participant shall be
credited to his account under the Plan and applied toward the exercise of the
Option and the purchase price of the underlying shares of Common Stock allocable
to such Participant for each Offering Period on each applicable Offering
Termination Date. At any time during an Offering period, a Participant may
terminate his payroll deduction. A Participant may not make any separate cash
payment into such account except when on leave of absence and then only as
provided in this Section 8. Other than discontinuing participation, a
Participant may not otherwise change the terms of his participation in an
Offering. No interest shall accrue
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to any balance of money credited to the account of a Participant under the Plan.
Specifically, a Participant may not change his payroll deduction percentage for
such Offering.
LEAVE OF ABSENCE: If a Participant takes a leave of absence, such Participant
shall have the right to elect: (i) to withdraw the balance of the Participant's
account, (ii) to discontinue contributions to the Plan but remain a Participant
in the Plan during the first 90 days of such leave of absence, or (iii) to
remain a Participant in the Plan during the first 90 days of such leave of
absence, authorizing deductions to be made from payment by the Company to the
Participant during such leave of absence. If the Participant agrees to remain a
Participant in the Plan during such leave of absence, the Participant agrees to
make cash payments to the Plan at the end of each payroll period to the extent
that amounts payable by the Company to such Participant are insufficient to meet
such Participant's authorized payroll deduction.
PARTICIPANTS SUBJECT TO SECTION 16 OF THE EXCHANGE ACT: Notwithstanding the
other provisions of this Plan, except the provisions set forth in Section 7, any
Participant subject to the requirements of Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules promulgated
thereunder, shall not have the opportunity to withdraw or discontinue payroll
deductions with respect to an Offering after such Participant completes an
Authorization and the Offering period has commenced, provided that such
Participant remains an Employee and subject to such requirements.
9. GRANT OF OPTION:
On the Offering Commencement Date, a participating Employee shall be deemed
to have been granted an Option (each, an "Option") to purchase a maximum number
of shares of Common Stock equal to an amount determined as follows: an amount
equal to (i) that percentage of the Employee's Compensation which he has elected
to have withheld up to 10% multiplied by (ii) the Participant's Compensation
during the period of the Offering (iii) divided by 85% of the Market Value of
the Common Stock. Notwithstanding any provision herein to the contrary, the
maximum number of shares of Common Stock that each Participant can purchase in
each Offering is 250, subject to adjustment pursuant to the provisions of
Section 13 hereof.
10. EXERCISE OF OPTION:
AUTOMATIC EXERCISE: On each Offering Termination Date, each Participant's
accumulated payroll deduction (without any increase for interest) will be
applied to the purchase of whole shares of Common Stock in accordance with the
formula in Section 9, up to a maximum of 250 shares of Common Stock per
employee. No fractional shares shall be issued upon the exercise of Options
granted under the Plan. The amount, if any, of accumulated payroll deductions
remaining in each Participant's account after the purchase of whole shares of
Common Stock will be held in each such Participant's account for the purchase of
shares under the next Offering under the Plan unless a Participant elects to
withdraw from the Plan.
NON-TRANSFERABILITY OF OPTION: During a Participant's lifetime, Options held by
such Participant under the Plan shall be exercisable only by that Participant.
DELIVERY OF STOCK: As promptly as is practicable after the Offering Termination
Date of each Offering, the Company will deliver to each Participant, as
appropriate, the Common Stock purchased upon exercise of Participant's option.
11. WITHDRAWAL:
GENERAL: A Participant may withdraw payroll deductions credited to his account
under the Plan at any time by giving written notice to the Stock Administrator
of the Company. All of the Participant's payroll deductions credited to the
account will be paid promptly after receipt of the notice of withdrawal and no
further payroll deductions will be made from the Participant's pay during such
Offering. The Company
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may treat any attempt to borrow by an Employee on the security of accumulated
payroll deductions as an election to withdraw such payroll deductions.
EFFECT ON SUBSEQUENT PARTICIPATION: A Participant's withdrawal from any Offering
will not have any effect upon his eligibility to participate in any succeeding
Offering or in any similar plan which may hereafter be adopted by the Company.
TERMINATION OF EMPLOYMENT: Upon termination of the Participant's employment for
any reason, including retirement (but excluding death while in the employ of the
Company or continuation of a leave of absence for a period beyond 90 days), the
payroll deductions credited to the participant's account will be returned to the
Participant or, in the case of death subsequent to termination of employment, to
the person or persons entitled to receive such payroll deductions as determined
in accordance with the provisions of Section 14 hereof.
TERMINATION OF EMPLOYMENT DUE TO DEATH: Upon termination of the Participant's
employment because of death, the Participant's beneficiary shall have the right
to elect, by written notice given to the Stock Administrator prior to the
earlier of the Offering Termination Date or the expiration of a period of sixty
(60) days commencing with the date of the death of the Participant, either:
(a) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan, or
(b) to exercise the Participant's option for the purchase of Common
Stock on the Offering Termination Date next following the date of the
Participant's death for the purchase of the number of whole shares of Common
Stock which the accumulated payroll deductions in the Participant's account
at the date of the Participant's death will purchase in accordance with the
formula set forth in Section 9 hereof, and any excess in such account will
be returned to said beneficiary, without interest.
In the event that no such written notice of election shall be duly received
by the Stock Administrator of the Company, the beneficiary shall automatically
be deemed to have elected, pursuant to paragraph (b), to exercise the
participant's option.
LEAVE OF ABSENCE: A Participant on leave of absence shall continue to be a
Participant in the Plan so long as such Participant is on continuous leave of
absence; provided, however, any Participant who has been on leave of absence for
more than 90 days and who is therefore not an Employee for the purpose of the
Plan shall not be entitled to participate in any Offering commencing after the
90th day of such leave of absence. Notwithstanding any other provisions of the
Plan, unless a Participant on leave of absence returns to regular full-time or
part-time employment with the Company or subsidiary of the Company, as
applicable, at the earlier of (a) the termination of such leave of absence or
(b) the 90th day of such leave of absence, such Participant's participation in
the Plan shall terminate on whichever of such dates first occurs, and the
payroll deductions credited to the Participant's account will be returned to the
Participant without interest.
12. AMENDMENT AND TERMINATION:
The Board of Directors shall have complete power and authority to terminate
or amend the Plan at any time; provided, however, that the Board of Directors
shall not, without the approval of the stockholders of the Company, (i)
materially increase the benefits accruing to Participants under the Plan, (ii)
increase the maximum number of shares of Common Stock which may be issued under
the Plan, (iii) materially modify requirements as to the class of Employees
eligible to participate in the Plan, or (iv) permit the members of the Committee
to participate in the Plan. No termination, modification, or amendment of the
Plan may adversely affect the rights of a Participant having an outstanding
Option under the Plan without the consent of such Participant.
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13. RECAPITALIZATION OR REORGANIZATION:
If, at any time while any Options are outstanding, the outstanding shares of
Common Stock have increased, decreased, changed into, or been exchanged for a
different number or kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the number and/or kind
of shares which are subject to purchase under outstanding Options and the
exercise price or prices applicable to such outstanding Options.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each Option then outstanding under the Plan
shall thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such Options for each share as to which such Option shall
be exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transaction as it shall deem necessary
to assure that all Participants shall receive the cash, securities and/or
property as to which they may thereafter be entitled.
14. MISCELLANEOUS:
HOLDING PERIOD: An Employee must notify the Company promptly if the Employee
disposes of Common Stock acquired under the Plan within two years of the date
Options were granted hereunder to purchase such Common Stock.
RESTRICTIONS ON EXERCISE: Common Stock shall not be issued pursuant to the
exercise of an Option, unless the exercise of such Option and the issuance and
delivery of such shares of Common Stock pursuant thereto shall comply with all
relevant provisions of law, including, without limitations, the Securities Act
of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or quotation system upon
which the Common Stock may then be traded, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
Participant to represent and warrant at the time of such exercise that such
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
REGISTRATION OF STOCK: Common Stock to be delivered to a Participant under the
Plan will be registered in the name of the Participant, or, if the Participant
so directs by written notice to the Stock Administrator of the Company prior to
the Offering Termination Date, in the names of the Participant and one such
other person as may be designated by the Participant as joint tenants with
rights of survivorship or as tenants by the entireties, to the extent permitted
by applicable law.
DESIGNATION OF BENEFICIARY: A Participant may file a written designation of
beneficiary who is to receive any Common Stock and/or payroll deductions
remaining in such Participant's account. Such designation of beneficiary may be
changed by the Participant at any time by written notice to the Stock
Administrator. Upon the death of a Participant and upon receipt by the Stock
Administrator of proof of identity and existence at the Participant's death of a
beneficiary validly designated by him under the Plan, the Company shall deliver
Common Stock and/or payroll deductions remaining in such Participant's account
to such beneficiary. In the event of death of a Participant and in the absence
of a beneficiary designated under the Plan who is living at the time of such
Participant's death, the Stock Administrator shall deliver such Common Stock
and/or remaining payroll deductions to the executor or administrator of the
estate of the Participant, or if no such executor or administrator has been
appointed to the knowledge of the Stock
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Administrator, the Stock Administrator may deliver such Common Stock and/or
remaining payroll deductions to the spouse or to any one or more dependents of
the Participant as the Committee may designate. No beneficiary shall, prior to
death of the Participant, acquire any interest in the stock or payroll
deductions credited to the Participant's account.
TRANSFERABILITY: Neither payroll deductions credited to a Participant's account
nor any rights to exercise an Option or to receive Common Stock under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way by a
Participant other than by will or the laws of descent and distribution. Any such
attempted assignment, transfer, pledge or other disposition shall be without
effect, except that the Committee may treat such act as an election by a
Participant to withdraw his from an Offering or from the Plan.
PARTICIPANT'S INTEREST IN OPTION STOCK: Each Participant shall not have any
rights or interest in the shares of Common Stock exercisable under an Option
until such Option has been exercised in accordance with the provisions of the
Plan.
USE OF FUNDS: All payroll deductions received or held by the Company under this
Plan may be used by the Company for any corporate purpose and the Company shall
not be obligated to segregate such payroll deductions from other Company assets.
NO EMPLOYMENT RIGHTS: The Plan does not, directly or indirectly, create any
right for the benefit of any Employee or class of Employees to purchase any
shares under the Plan, or create in any Employee or class of Employees any right
with respect to continuation of employment by the Company or any subsidiary of
the Company, and it shall not be deemed to interfere in any way with the
Company's right to terminate, or otherwise modify, an Employee's employment at
any time.
STOCKHOLDER RIGHTS: The holder of an option under this Plan shall have no rights
as a stockholder with respect to the shares of Common Stock covered by such
option until the due exercise of such option and the date of issuance of one or
more certificates registered in the name of such option holder evidencing such
shares.
SECURITIES LAWS: With respect to persons subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Board of Directors or the Committee
fails to so comply, it shall be deemed null and void to the extent permitted by
law and deemed advisable by the Committee.
GOVERNING LAW: The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, this Plan is executed by the undersigned Officers of Optical
Data Systems, Inc., each being hereunto duly empowered and authorized, on this
23rd day of January, 1997, effective, however, as of the date specified in
Section 6 hereof.
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<S> <C>
ATTEST: OPTICAL DATA SYSTEMS, INC.
/s/ MICHAEL L. PAXTON /s/ G. WARD PAXTON
- ------------------------------------------- -------------------------------------------
Michael L. Paxton, G. Ward Paxton,
SECRETARY CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
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P OPTICAL DATA SYSTEMS, INC.
1101 East Arapaho Road
R Richardson, Texas 75081
O ANNUAL MEETING OF STOCKHOLDERS -- APRIL 24, 1997
X
THIS PROXY IS SOLICITED
Y BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned stockholder(s) of Optical Data Systems, Inc., a Delaware
corporation (the "Company"), hereby appoints G. Ward Paxton and T. Joe Head,
and each of them, attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to represent and to vote all shares of common stock of
the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held at the Holiday Inn Richardson Select, 1655 N.
Central Expressway, Richardson, Texas 75080, at 10:00 A.M., local time, on
Thursday, April 24, 1997, and at any adjournment thereof.
(Continued on reverse side)
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<S> <C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED. PLEASE MARK
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" YOUR VOTES AS
PROPOSALS 1, 2, 3 AND 4. INDICATED IN /X/
THIS EXAMPLE
----------------------------
Common
1. Election of Directors Names of Nominees: 2. Approval of the adoption of
FOR all nominees WITHHOLD G. Ward Paxton, Robert Anderson, an amendment to the Company's
listed (except AUTHORITY J. Fred Bucy, T. Joe Head, and Certificate of Incorporation
as marked to vote for Donald M. Johnston changing the name of the
to the right) all nominees listed Company to ODS Networks, Inc.
INSTRUCTION: To withhold authority
/ / / / to vote for any individual nominee, / / FOR / / AGAINST / / ABSTAIN
write that nominee's name in the
space provided below.
----------------------------------
3. Approval of the Optical Data Systems, 4. Ratification of the appointment of In their discretion, such
Inc. 1997 Employee Stock Purchase Ernst & Young LLP as independent auditors attorneys-in-fact and proxies
Plan. of the Company for the fiscal year ending are authorized to vote upon such
December 31, 1997. other business as properly may
/ / FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN come before the meeting.
I will will not be attending the meeting.
/ / / /
YOU ARE REQUESTED TO COMPLETE, DATE, SIGN, AND RETURN
THIS PROXY PROMPTLY. ALL JOINT OWNERS MUST SIGN. PERSONS
SIGNING AS EXECUTORS, ADMINISTRATORS, TRUSTEES, CORPORATE
OFFICERS, OR IN OTHER REPRESENTATIVE CAPACITIES SHOULD
SO INDICATE.
Date: , 1997
-----------------------------------------------
Signature:
------------------------------------------------
Signature:
------------------------------------------------
</TABLE>
