AYDIN CORPORATION
700 Dresher Road
Horsham, PA 19044
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 29, 1994
---------------------
TO THE STOCKHOLDERS OF AYDIN CORPORATION:
The Annual Meeting of Stockholders of AYDIN CORPORATION, a Delaware
corporation (the "Company"), will be held on Friday, April 29, 1994, at 3:00
p.m. local time at the Company's Corporate Offices, 700 Dresher Road, Horsham,
Pennsylvania, for the following purposes:
1. To elect four Directors, each to hold office for a term of one
year and until his successor has been duly elected; and
2. To approve the 1994 Incentive Stock Option Plan; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on March 1,
1994, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting.
A copy of the Company's Annual Report for its fiscal year ended
December 31, 1993, is being transmitted herewith.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY IN THE
ENVELOPE PROVIDED.
By Order of the Board of Directors,
Robert A. Clancy
Secretary
March 18, 1994
<PAGE>
AYDIN CORPORATION
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement and the accompanying form of Proxy, which are first
being mailed to stockholders on March 18, 1994, are furnished in connection
with the solicitation by the Board of Directors of Aydin Corporation
(hereinafter called the "Company") of proxies to be voted at the Annual
Meeting of Stockholders to be held Friday, April 29, 1994, at 3:00 p.m. local
time, and at any adjournment thereof (hereinafter the "Annual Meeting"). The
Company's principal executive offices are located at
700 Dresher Road, Horsham, Pennsylvania 19044.
Shares represented by proxies in the accompanying form, if properly
signed and returned, will be voted in accordance with the specifications made
thereon by stockholders. Nominees for Directors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the Annual Meeting and entitled to vote on the election of Directors. Any
proxy not specifying to the contrary will be voted for the election of the
nominees for Directors named below and for the approval of the Company's 1994
Incentive Stock Option Plan (the "1994 Plan"). A stockholder who signs and
returns a proxy in the accompanying form may revoke it at any time before it
is voted by giving written notice thereof to the Secretary of the Company.
The cost of solicitation of proxies in the accompanying form will be
borne by the Company, including expenses in connection with preparing and
mailing this Proxy Statement. Such solicitation will be made by mail and may
also be made on behalf of the Company by the Company's regular officers and
employees, without additional remuneration, personally or by telephone or
telegram. The Company will also, upon request, reimburse brokers or persons
holding shares in their name or in the names of nominees for their reasonable
expenses in sending proxies and proxy material to beneficial owners.
As of the close of business on March 1, 1994, the Company had
outstanding 4,981,554 shares of Common Stock, $1.00 par value, each of which
is entitled to one vote. A majority of the outstanding shares will constitute
a quorum at the Annual Meeting. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. Only holders of Common Stock of record at the close
of business on March 1, 1994, will be entitled to notice of and to vote at the
Annual Meeting. Cumulative voting rights do not exist with respect to the
election of Directors.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on the proposal to approve
the 1994 Plan (but not on the election of directors) and will be counted as
present for purposes of the item on which abstention is noted. Since the
approval of the 1994 Plan requires the approval of the holders of a majority
of the outstanding shares represented in person or by proxy and entitled to
vote at the Annual Meeting, abstentions will have the effect of a negative
vote. Under the rules of the New York Stock Exchange, Inc., brokers who hold
shares in street name for customers have the authority to vote on certain
items when they have not received instructions from beneficial owners.
Brokers that do not receive instructions are entitled to vote on the election
of directors and the 1994 Plan. Under applicable Delaware law, a broker
non-vote will have the same effect as a vote against the proposed 1994 Plan
but will have no effect on the outcome of the election of directors.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of the dates indicated, the name and
address of each person known by the Company to be the beneficial owner of more
than 5% of the Company's outstanding voting securities and the percentage of
the shares so owned:
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership(1) of Class
<S> <C> <C> <C>
Common Stock, Ayhan Hakimoglu 623,053(2)(3) 12.5%
$1.00 par 700 Dresher Road
value Horsham, PA 19044
Common Stock, Victor Posner 334,500(4) 6.7%
$1.00 par 6917 Collins Avenue
value Miami Beach, FL 33141
Common Stock, College Retirement 323,750(5)(6) 6.5%
$1.00 par Equities Fund
value 730 Third Avenue
New York, NY 10017
Common Stock, Dimensional Fund 251,300(5)(6) 5.04%
$1.00 par Advisors Inc.
value 1299 Ocean Avenue
Santa Monica, CA 90401
Common Stock, National Commerce 391,540(5)(7) 7.9%
$1.00 par Bancorporation
value One Commerce Square
Memphis, TN 38150
<FN>
______________
(1) Based on information furnished by the stockholder.
(2) As of March 1, 1994. Sole voting and investment power.
(3) Includes 2,500 shares which Mr. Hakimoglu may acquire upon the exercise of
options currently exercisable or that will become exercisable within 60
days.
(4) As of December 29, 1993. Sole voting and investment power.
(5) As of December 31, 1993.
(6) Sole voting and investment power.
(7) Sole voting power. Sole investment power as to 370,550 shares and shared
investment power as to the remaining 20,990 shares.
</TABLE>
BENEFICIAL OWNERSHIP BY MANAGEMENT
The following table sets forth, as of March 1, 1994, the amount and
percentage of the Company's outstanding Common Stock, $1.00 par value,
beneficially owned by each Director, the chief executive officer and the four
other most highly compensated executive officers and all Directors and
Executive Officers as a group:
<TABLE>
CAPTION>
Title of Name of Amount and Nature Percent
Class Beneficial Owner of Ownership (1)(2) of Class
<S> <C> <C> <C>
Common Dr. Frederick G. Allen. 4,500 (4)
Stock Dr. Nev A. Gokcen. . . 16,500 (4)
Ayhan Hakimoglu. . . . 623,053 (3) 12.5%
Harry D. Train, II . . 1,500 (4)
James S. Walsh . . . . 25,000 (4)
John F. Vanderslice. . 9,778 (4)
Gary T. Boswell. . . . 0 -
Demirhan Hakimoglu . . 7,921 (4)
All of the above and
other executive
officers as a Group
(Includes 11 persons). 699,906 14.05%
<FN>
_____________________________
(1) Based on information furnished by the respective directors and officers.
Each person has sole voting and investment power with respect to the
shares listed, except the shares of Directors Allen and Gokcen are held
jointly with their respective spouses.
(2) Includes shares which may be acquired upon the exercise of options
currently exercisable or that will become exercisable within 60 days as
follows: 1,000, 1,500, 2,500, 1,500, 25,000, 9,750, 3,250, and 11,625
shares for Messrs. Allen, Gokcen, A. Hakimoglu, Train, Walsh,
Vanderslice, D. Hakimoglu and the Group, respectively.
(3) See footnote "2" to Beneficial Ownership of Common Stock table above.
(4) Less than 1%.
</TABLE>
ELECTION OF DIRECTORS
Four Directors of the Company are to be elected at the Annual Meeting.
Each Director will serve one year and until his successor has been duly
elected. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the election of the nominees listed below, all of whom
are currently Directors of the Company. If any nominee should become
unavailable for any reason, it is intended that votes will be cast for a
substitute nominee designated by the Board of Directors. The Board of
Directors has no reason to believe that the nominees named will be unable to
serve if elected. Any vacancy occurring on the Board of Directors for any
reason may be filled by a majority of the Directors then in office until the
next annual meeting of stockholders.
The names of the nominees for Director, all of whom are currently
Directors of the Company, and certain information regarding them are as
follows:
<TABLE>
<CAPTION>
Name Age Principal Occupation Director
for Past Five Years Since
<S> <C> <C> <C>
Dr. Frederick.. 71 Consultant and retired professor and 1972
G. Allen Chairman of the Electrical
Engineering Department, University
of California at Los Angeles.
Dr. Nev A. Gokcen.. 72 Thermodynamicist with the Department 1972
of the Interior, Bureau of Mines,
Albany, Oregon, which conducts minerals
research and environmental preservation.
Ayhan Hakimoglu(1). 66 Chairman of the Board of Directors. 1967
President of the Company through
February, 1992, and from March, 1994.
Harry D. Train, II. 66 General Manager and former President 1984
of Strategic Research and Management
Services (defense studies and analysis
firm--now a division of SAIC), Norfolk,
Virginia, since October, 1986.
<FN>
________________________
(1) Mr. Hakimoglu may be deemed to be a control person of the Company. For
information regarding his stock ownership, see Beneficial Ownership of
Common Stock table, page 2.
</TABLE>
The Company has had an Audit Committee since September 1, 1978; and
Directors Allen, Gokcen, and Train are members. Its powers and duties include
the following: (1) sole authority to retain and dismiss both internal and
independent auditors; (2) approval before dissemination of any report which
contains financial data; and (3) consultation with the independent auditors
quarterly and before the Company decides any material accounting policy. This
Committee met four times in 1993.
The Company established an Oversight Committee April 10, 1992, comprised
of its outside Directors, Allen, Gokcen and Train. Its powers and duties
include the review of the Company's policies and procedures and
recommendations to the Board of Directors of those measures they feel
necessary to strengthen and ensure the effectiveness of Company policies
relating to (a) Division and Corporate Officer awareness of federal laws and
regulations affecting Government contracts; (b) compliance of outside
consultants and sales representatives with national and international
regulations involving the sale of Company products; and (c) compliance with
federal laws and regulations applicable to government contract procurement and
performance. This committee met four times in 1993.
There are no nominating or compensation committees of the Board of
Directors. The Board of Directors met five times in 1993.
During the year ended December 31, 1993, all directors attended at least
75 percent of the aggregate of the number of meetings of the Board of
Directors and Committees on which they served.
Each Director who is not also an employee of the Company receives an
annual director's fee of $6,500, plus $600 for each meeting which he
personally attends ($200 for each meeting in which he participates by means of
conference telephone). Directors Allen, Gokcen and Train receive no additional
fees for serving on the Audit and Oversight Committees. Directors Allen,
Gokcen and Train were each granted an Individual Non-Qualified Stock Option on
October 26, 1990, to purchase up to 2,000 shares of the Company's Common Stock
at $10.50 per share (the fair market value the date of the grant) exercisable
25% on October 26, 1991, and 25% each year thereafter on a cumulative basis
until the option expires five years from the date of grant.
COMPENSATION OF EXECUTIVE OFFICERS
The following tabulation sets forth certain information with respect to
compensation paid or earned for services in all capacities to the Company and
its subsidiaries for its fiscal years ended December 31, 1993, 1992 and 1991,
of those persons who were, at December 31, 1993, (i) the chief executive
officer; (ii) the four most highly compensated executive officers of the
Company; and (iii) one other officer who was not serving as an executive
officer at year end (the "Named Executive Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards
Stock Options
Name and Principal Position Year Salary(1) Bonus (Shares)
<S> <C> <C> <C> <C>
Ayhan Hakimoglu 1993 $ 174,446 $ -- - 0 -
Chairman of the Board 1992 173,269 -- 10,000
and Chief Executive Officer 1991 163,846 15,000 - 0 -
James S. Walsh 1993 179,747 -- - 0 -
President of the Corporation 1992 155,689 -- 100,000(2)
1991 -- -- - 0 -
John F. Vanderslice 1993 123,011 24,552 - 0 -
Senior Vice President and 1992 126,521 2,057 - 0 -
President, Vector Division 1991 122,995 27,391 - 0 -
Gary T. Boswell 1993 115,302 -- - 0 -
Vice President and President, 1992 117,418 -- - 0 -
Computer & Monitor Division 1991 115,199 26,300 - 0 -
Demirhan Hakimoglu 1993 127,505 3,131 1,000
Vice President and Chief 1992 127,135 27,490 - 0 -
Executive Officer, 1991 121,705 22,993 2,000
Aydin-Yazilim, A.S.
Palle S. Christensen 1993 143,000 3,427 - 0 -
Executive Vice President, 1992 151,866 9,375 - 0 -
Corporate Marketing 1991 149,000 6,878 - 0 -
<FN>
________________________
(1) Includes any sums deferred for the individual under the Company's 401(k)
plan.
(2) Net stock options granted after 100,000 option shares were cancelled by
Mr. Walsh on May 20, 1993.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is further information on grants of stock options pursuant
to the Company's 1981 and 1983 Incentive Plans, the 1984 Non-Qualified Plan or
an Individual Non-Qualified Stock Option during the year ended
December 31, 1993, to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Potential Realizable Value
Securities Options Value at Assumed
Underlying Granted to Annual Rates of Stock
Options EmployeesExercise Price Appreciation
Granted in Price Expiration for Option Term
Name (#)(1) 1993 ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Ayhan Hakimoglu 7,000 14.8% $ 17.94 8-2-98 $34,695 $ 76,668
3,000 6.3% $ 16.31 8-2-98 13,518 $ 29,872
James S. Walsh -0- -- -- -- -- --
John F. Vanderslice -0- -- -- -- -- --
Gary T. Boswell -0- -- -- -- -- --
Demirhan Hakimoglu 1,000 2.1% $ 16.31 8-2-98 4,506 9,957
Palle S. Christensen -0- -- -- -- -- --
<FN>
________________________
(1) All options expire five years from date of grant. Twenty-five percent of
the option shares become exercisable one year from date of grant and an
additional 25% each year thereafter on a cumulative basis. All options
were granted at fair market value the date of the grant.
</TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
Shown below is information with respect to the options exercised during
1993 and the year-end value of unexercised options to purchase the Company's
Common Stock granted in prior years under the Company's 1981 or 1983 Incentive
Plans, the 1984 Non-Qualified Plan or an Individual Non-Qualified Stock Option
to the Named Executive Officers and held by them at December 31, 1993.
<TABLE>
<CAPTION>
Name Shares Value Number of Unexercised Options Value
of Unexercised
Acquired Realized(1) Held at December 31, 1993
In-The-Money Options At
on ($) December 31,
1993
Exercise(#) Execrisable (#)
Unexercisable (#) Exercisable($) Unexercisable($)
<S> <C> <C> <C> <C> <C>
<C>
Ayhan Hakimoglu....... - 0 - -- 2,500 5,500 $ 1,125
$ 1,125
James S. Walsh........ - 0 - -- 25,000 75,000 - 0 -
- 0 -
John F. Vanderslice... - 0 - -- 9,750 4,875 14,130
7,065
Gary T. Boswell....... 11,250 $61,200 - 0 - 5,625 - 0 -
8,100
Demirhan Hakimoglu.... - 0 - -- 4,000 2,876 4,680
2,341
Palle S. Christensen.. 6,375 44,243 9,375 15,375 9,180
9,180
<FN>
________________________
(1) The difference between the closing price of the securities the date
the option was exercised and exercise price of the option.
(2) Based on the closing price on the New York Stock Exchange of $12.00
per share.
</TABLE>
TEN-YEAR OPTION REPRICING
On August 2, 1993, the Board of Directors offered to all employees of
the Company then holding stock options granted by the Company having an
exercise price that exceeded the mean price ($16.31) of the Company Stock on
the New York Stock Exchange on that date by more than $1.00 the election to
cancel those options and receive a new stock option, for the same number of
shares, at the exercise price of $16.31. The Board stated that the original
purpose for granting the options, i.e., as an inducement for the employee to
remain with the Company and as an incentive for increased effort during their
employment, was lost when the stock options become valueless. Two of the
Named Executive Officers, as shown in the table below, elected to cancel their
prior options and receive new ones at the current price.
The foregoing report has been furnished by Messrs. Hakimoglu, Allen,
Christensen, Gokcen, Train and Walsh.
Shown below is information with respect to stock options cancelled and
new options granted for the same number of shares at the new exercise price
during the last ten years to an executive officer of the Company.
<TABLE>
<CAPTION>
Name Date Number of Market Price of Exercise Price
New Length of Original
Securities Stock at Time of At Time
of Exercise Option Term
Underlying Repricing or Repricing
or Price ($) Remaining at
Options Amendment ($) Amendment($)
Date of Repricing
Repriced or
or Amendment
Amended(#)
<S> <C> <C> <C> <C> <C>
<C>
Ayhan Hakimoglu 8-2-93 7,000 $ 16.31 $ 28.05 $ 17.94
3 years-6 months
Chairman and Chief 8-2-93 3,000 $ 16.31 25.50 16.31
3 years-6 months
Executive Officer
Demirhan Hakimoglu 8-2-93 1,000 16.31 22.69 16.31
2 years-11 months
Vice President and CEO
of Aydin-Yazilim, A. S.
Palle S. Christensen 11-2-90 25,500 10.56 13.42 10.56
2 years-9 months
Executive Vice
President and President,
Aydin Corporation (West)
John F. Vanderslice 11-2-90 12,000 10.56 14.50 10.56
2 years-1 month
Vice President and 11-2-90 1,500 10.56 14.46 10.56
4 months
President, Vector 11-2-90 3,000 10.56 13.33 10.56
2 years-7 months
Division 5-22-85 2,000 18.56 34.31 18.56
2 years-5 months
Alfred M. Vara 11-2-90 2,000 10.56 15.44 10.56
3 years-2 months
Vice President and 11-2-90 5,000 10.56 14.88 10.56
4 years-5 months
President, Controls 11-2-90 1,200 10.56 14.25 10.56
3 years-7 months
Division
Gary T. Boswell 11-2-90 16,500 10.56 17.50 10.56
1 year-2 months
Vice President and 11-2-90 6,000 10.56 14.50 10.56
President, Computer
and Monitor Division
Herbert Welber 11-2-90 1,500 10.56 14.50 10.56
2 years-11 months
Controller and 11-2-90 3,000 10.56 13.96 10.56
7 months
Assistant Treasurer
Donald O. Wennerstrom 1-27-88 2,000 24.00 31.81 24.00
4 years-3 months
General Manager, Radar
& EW Division
Gerald S. Mersten 1-27-88 8,000 24.00 34.13 24.00
4 years-8 months
Vice President and
President, Computer
Division
</TABLE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has furnished the following report on executive
compensation dated February 25, 1994:
Under the supervision of the Chairman of the Board of Directors, the
Corporation has developed and implemented compensation policies which seek to
enhance the profitability of the Corporation, and thus stockowner value, by
aligning closely the financial interests of the Corporation's senior managers
with those of its stockowners. In furtherance of these goals, annual base
salaries are generally set somewhat below competitive levels so that the
Corporation relies to a large degree on annual bonus arrangements and stock
options to attract and retain corporate officers and other key employees and
to motivate them to perform to the full extent of their abilities. The bonus
arrangements are variable and tied to corporate and division performance in a
manner that encourages a sharp and continuing focus on building profitability
and stockowner value.
The Company has bonus arrangements based on operating results with
substantially all of its key employees, including three of the individuals
specifically noted above. For division and major subsidiary presidents (i.e.,
Messrs. Vanderslice, Boswell and D. Hakimoglu and the presidents of the other
five divisions) those bonuses are principally based on the profitability of
their respective division. The specific bonus formulae varies with each
division, depending upon its size and the characteristics of its operations,
but generally involves a percentage (e.g., 0.75% to 7%) of the net profits
after deduction of a threshold figure (e.g., from $0 to $2,000,000), and a
percentage (e.g., 0.20% to 0.25%) of the increase in sales volume from the
previous year if certain net profit margins are attained (e.g., 0% to 10.0%).
The bonus for the Chairman is established by the Board of Directors without
reference to any pre-set formula. Directors who are not also employees of the
Company receive no bonuses. The bonus of the President is set forth in his
Employment Agreement at 1% of the net profit of the Company, after taxes, over
the first $10 million of profit.
In the early part of each fiscal year, the President prepares and
reviews with the Chairman of the Board an annual salary and bonus arrangement
for the Corporation's senior executives (other than the Chairman and the
President). This salary and bonus arrangement is developed based on
performance judgments as to the past and expected future contributions of the
individual senior executives. The Board reviews and fixes the base salary and
bonus of the Chief Executive Officer and the President based on similar data
and the Board's assessment of their past performance and its expectation as to
their future contributions in leading the Corporation and its businesses.
This practice is subjective and not subject to specific criteria.
In evaluating the performance and setting the compensation of the
Corporation's senior management, the Chairman, in making his recommendations
to the Board, also takes into account management's commitment to the long-term
success of the Corporation and has taken particular note of management's
success in restructuring the Corporation's businesses to adjust for the
decline in its defense business and in effectively directing the Corporation's
operations under the difficult economic conditions in the Corporation's served
markets over the last two years. The new $1 million compensation deduction
cap under Section 162(m) of the Internal Revenue Code was not discussed
because the Company's compensation levels are far below the cap.
At the beginning of each year goals are established for each Division
based on its sales growth and operating earnings potential. Financial goals
include sales growth, operating earnings and cash flow; while strategic goals
focus on such factors as new product development and new business initiates.
On August 2, 1993, the Board of Directors offered to all employees of
the Company presently holding stock options granted by the Company at an
exercise price that exceeds $17.31 per share the election to cancel those
options and receive a new stock option, for the same number of shares, at the
exercise price of $16.31, the mean price the Company stock traded on the New
York Stock Exchange that date.
The foregoing report has been furnished by Messrs. Hakimoglu, Allen,
Christensen, Gokcen, Train and Walsh.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
On February 28, 1992, Mr. Walsh entered into an employment agreement
with the Company which terminated March 2, 1994. The agreement provided for
an initial salary of $175,000 per year and was increased to $182,000 effective
August 30, 1993 by the Board of Directors. In addition, Mr. Walsh will
receive an incentive bonus of 1% of the net profit of the Company, after
taxes, over the first $10 million of profit. The agreement provides for the
grant of a stock option for 100,000 shares, exercisable 25% at the end of each
year employment, with option expiring in five years. The agreement provides
further that in the event employment is terminated by the Company at any time
during the term of the agreement for any reason other than disobedience,
dishonesty, disloyalty or insubordination against the Company or its Board,
the Company will (i) pay Mr. Walsh a lump sum equal to his average annual
salary times the number of years and fraction of years remaining under the
agreement; (ii) pay any incentive bonus earned but not paid prior to such
termination; (iii) provide the same health and other benefits for the
remaining term of the agreement it was providing before the date of
termination; and (iv) permit Mr. Walsh to exercise all options granted to him
within 30 days of his termination. Mr. Walsh tendered his resignation as a
Director and President of the Company effective March 2, 1994.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the S&P 500 Stock Index and the S&P High Technology Composite Index
for the period of five fiscal years commencing January 1, 1989, and ended
December 31, 1993.
Comparison of Five-Year Cumulative Total Return*
Aydin Common, S&P 500 Stock & S&P High Technology Composite Indices
[PERFORMANCE GRAPH GOES HERE]
* Assumes $100 invested in Aydin Common Stock and each index on
January 1, 1989, and that all dividends were reinvested.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Hakimoglu, Walsh and Christensen, members of the Board of
Directors voting on the compensation recommendations for other executive
officers of the Company were, during the fiscal year, officers and employees
of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of the copies of the reports furnished to the
Company, the Company believes that during fiscal 1993 all such filing
requirements applicable to executive officers and directors have been complied
with with the exception of one transaction that was filed late. Mr. Demirhan
Hakimoglu failed to include one transaction on a Form 4 that was filed on a
timely basis, necessitating the filing of an amended Form 4.
APPROVAL AND RATIFICATION OF THE 1994 INCENTIVE STOCK OPTION PLAN
The Board of Directors unanimously adopted the 1994 Incentive Stock
Option Plan (the "1994 Plan"), effective as of January 3, 1994, and expiring
on December 31, 2003, providing for the grant to officers and key employees of
the Company of incentive stock options to purchase a maximum of 100,000 shares
of the Company's Common Stock, $1.00 par value, at option prices not less than
the fair market value of the stock on the day the option is granted. On
March 7, 1994, the closing price of the Company's Common Stock on the New York
Stock Exchange was $12.75. No option is exercisable prior to one year nor
after five years from the date on which the option is granted (the "Option
Period"). Pursuant to the 1994 Plan, unless the Option Agreement provides
otherwise, 25% of each option is exercisable one year from the date of grant,
and an additional 25% becomes exercisable each year thereafter during the
Option Period on a cumulative basis.
If the employment of any optionee is terminated, options are exercisable
only to the following extent: (i) if the employment is terminated for cause
or if the optionee voluntarily quits, the optionee shall have the right at
anytime within thirty (30) days thereafter, but in no event after the
expiration of the Option Period, to exercise the option with respect to all or
any part of the number of shares which the optionee could have purchased on
the date of the termination of employment; (ii) if the employment is
terminated otherwise than for cause, disability, death, or the optionee
voluntarily quits, the optionee shall have the right at anytime within three
months thereafter, but in no event after the expiration of the Option Period,
to exercise the option with respect to all or any part of the number of shares
which the optionee could have purchased on the date of the termination of
employment; (iii) if the employment is terminated by death of the optionee
(while employed), or within the three month period referred to in subsection
(ii) above or within the twelve month period referred to in subsection (iv)
below, the person or persons to whom the optionee's rights under the option
granted shall pass by will or by the applicable laws of descent and
distribution shall have the right at any time within three months after the
optionee's death, but in no event after the expiration of the Option Period,
to exercise the option with respect to all or any part of the number of shares
which the optionee could have purchased on the date of death; (iv) if the
employment is terminated by the disability of the optionee, the optionee shall
have the right at anytime within twelve months thereafter, but in no event
after the expiration of the Option Period, to exercise the option with respect
to all or any part of the number of shares which the optionee could have
purchased on the date of termination of employment.
The optionee may pay for the purchase of the shares under an option
granted pursuant to the 1994 Plan by cash, or by delivering already owned
Company Stock, or by a combination of cash and Stock. The optionee may not
use already owned Company Stock to purchase shares under an option granted
pursuant to the 1994 Plan if such Stock was acquired by the optionee pursuant
to the exercise of any "Incentive Stock Option" and the stock so acquired has
not been held by the optionee for two years from the date the option was
granted and one year from the date of receipt of the stock upon exercise of
the option.
If shares are purchased under an option granted pursuant to the 1994
Plan, and no disposition of the shares is made by the optionee within two
years from the date the option was granted nor within one year after receipt
of the shares upon exercise of the option, there is no income recognized by
the optionee or deduction by the Company in the year in which the option is
granted or exercised. If the optionee disposes of shares within two years of
the date an option was granted or within one year of receipt of the shares
pursuant to the 1994 Plan, the optionee will recognize ordinary income, and
the Company will be entitled to a deduction, in an amount equal to the excess
of the fair market value of the shares on the date of the exercise over the
option price. The excess, if any, of the amount realized upon disposition of
such shares over the fair market value of the shares on the date of exercise
will be long or short term capital gain, depending upon the holding period of
the shares, providing the optionee holds the shares as a capital asset at the
time of disposition. If such disposition of the shares by the optionee within
two years of the date of grant of the option is a sale or exchange with
respect to which a loss (if sustained) would be recognized by the optionee,
then the amount which is includable in the gross income of the optionee, and
the amount which the Company would be entitled to as a deduction, shall not
exceed the excess (if any) of the amount realized on the sale or exchange over
the adjusted basis of such shares. If the above mentioned holding periods are
met and the optionee later sells the shares, assuming they constitute a
capital asset in his or her hands, any amount by which the sale proceeds
exceed the option price on the date of exercise will constitute the capital
gain, and any amount by which the sale proceeds are less than the option price
on the date of exercise will constitute capital loss. At the present time,
the shares must be held for one year to constitute capital assets.
The Board of Directors is authorized to interpret the 1994 Plan, to
define the terms used therein, to prescribe, amend, and rescind rules and
regulations for the administration thereof, and to take such other action in
the administration of the 1994 Plan as it shall deem proper, provided such
interpretation shall be in accordance with Section 422 of the Internal Revenue
Code and that the options granted under the 1994 Plan constitute "Incentive
Stock Options" within the meaning of that Section. Only the Special Committee
of the Board, composed of the three non-employee Directors, may grant options
to officers of the Company who are also Directors. No Director is permitted
to participate in any determination or action in which such Director may have
a personal interest. To date options totaling 55,650 shares have been granted
to 114 employees, leaving options for 44,350 shares available for grant in the
future. At the date the 1994 Plan was adopted, approximately 250 employees
were eligible to participate.
Shown below is information on the stock options granted to date under
the 1994 Plan to (i) Named Executive Officers; (ii) all current executive
officers as a group ("Executive Group"); (iii) all current Directors who are
not executive officers as a group ("Non-Executive Directors Group"); and
(iv) all employees, including all current officers who are not executive
officers ("Non-Executive Officer Employee Group").
NEW PLAN BENEFITS
1994 Incentive Stock Option Plan
<TABLE>
<CAPTION>
Name and Position Option Shares Granted
<S> <C>
Ayhan Hakimoglu . . . . . . . . . . . 5,000
Chairman of the Board and
Chief Executive Officer
James S. Walsh. . . . . . . . . . . . - 0 -
President of the Corporation
John F. Vanderslice . . . . . . . . . - 0 -
Senior Vice President and
President, Vector Division
Gary T. Boswell . . . . . . . . . . . 1,000
Vice President and President,
Computer & Monitor Division
Demirhan Hakimoglu. . . . . . . . . . - 0 -
Vice President and Chief Executive
Officer, Aydin-Yazilim, A. S.
Palle S. Christensen. . . . . . . . . - 0 -
Executive Vice President, Corporate
Marketing Executive Group . . . . . . 7,000
Non-Executive Director Group. . . . . - 0 -
Non-Executive Officer Employee Group. 48,650
</TABLE>
Approval of this proposal will require the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock represented
in person or by proxy at the Annual Meeting and is a prerequisite to the
registration of the shares with the Securities and Exchange Commission and the
listing on the New York Stock Exchange of the shares issuable upon the
exercise of the options granted pursuant to the 1994 Plan. If the 1994 Plan
is not ratified and approved by the stockholders, it will be terminated.
The Board of Directors believes that it is in the best interest of the
Company to grant incentive stock options to officers and other key employees
and recommends approval and ratification of the 1994 Plan.
INDEPENDENT AUDITORS
On June 3, 1991, the Audit Committee of the Board of Directors engaged
the services of KPMG Peat Marwick as the Company's independent auditors
through March 31, 1994. A representative of KPMG Peat Marwick will attend the
Annual Meeting and will be given an opportunity to make a statement if he so
desires and will be available to respond to appropriate questions.
THE SUBMISSION OF STOCKHOLDER PROPOSALS
FOR CONSIDERATION AT THE 1995 ANNUAL MEETING
Any stockholder who desires to submit a proposal for consideration at
the 1995 Annual Meeting and who desires that the proposal be included in the
Proxy Statement issued by the Board of Directors in connection with such
Annual Meeting may request that inclusion by submitting such proposal in
writing to the Secretary of the Company on or before November 18, 1994, in
accordance with Rule 14a-8 of the Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration, other than the matters described in the Notice of Annual
Meeting. However, if other matters are properly presented, it is the
intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their judgment.
By Order of the Board of Directors,
AYHAN HAKIMOGLU
Chairman
March 18, 1994
<PAGE>
(FORM OF PROXY - SIDE 1)
Aydin Corporation AYDIN CORPORATION
700 Dresher Road PROXY FOR
Horsham, PA 19044 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1994
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated March 18, 1994, hereby constitutes and appoints Ayhan
Hakimoglu and Robert A. Clancy, and each of them acting individually, as the
undersigned's proxies, each with the power to appoint his substitute and
authorizes them to represent the undersigned and to vote all the shares of
common stock of AYDIN CORPORATION held on record by the undersigned on March
1, 1994, at the Annual Meeting of Stockholders to be held on April 29, 1994,
or any adjournment or postponement thereof, on the matters set forth on the
reverse side hereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS RECOMMENDED
BY THE BOARD OF DIRECTORS, FOR PROPOSAL 2, AND IN THE DISCRETION OF THE
PROXIES ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
(Continued and to be signed on the reverse side)
<PAGE>
(FORM OF PROXY - SIDE 2)
To Vote for To Withhold authority 1. Board of Directors recommends
all nominees to vote for and will vote FOR the election
check this all nominees of the following as Directors
box check this box unless otherwise directed:
FOR WITHHOLD F. G. Allen, N.A. Gokcen,
A. Hakimoglu and H.D. Train, II.
( ) ( )
To withhold authority to vote for
any individual nominee while voting
for the remainder, write this
nominee's name in the space below:
________________________________
2. To approve the 1994 INCENTIVE STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
( ) ( ) ( )
3. Subject to the limitation described Dated: ____________, 1994
in the Proxy Statement relating to Joint owners should each sign.
the Annual Meeting of Stockholders, When signing as attorney,
in their discretion, the proxies or executor, administrator,
their substitutes are authorized to trustee or guardian, please give
vote upon such other matters as may full title as such. If a
properly come before the annual corporate name by the president or
meeting or any adjournment or other authorized officer. If a
postponement thereof. The Board of partnership, please sign partnership
Directors is not presently aware of name by an authorized person.
any such other matters.
PLEASE SIGN EXACTLY
AS NAME APPEARS BELOW. __________________________
Signature
__________________________
Signature If held jointly
PLEASE MARK, SIGN, DATE AND PROMPTLY
RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE
