AYDIN CORPORATION
Telephone 700 Dresher
Road
(215) 657-7510 P.O. Box
349
FAX Horsham, PA
19044
(215) 657-3830
U.S.A.
November 12, 1996
SECURITIES & EXCHANGE COMMISSION
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
Attn: Filing Desk, Stop 1-4
RE: Form 10-Q Third Quarter 1996
File No. 1-7203
Gentlemen:
We are enclosing for filing Aydin Corporation's Form 10-Q for the
Third Quarter ending September 28, 1996.
Sincerely,
/s/ Robert A. Clancy
Robert A. Clancy
Secretary and
Corporate Counsel
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ________September 28, 1996______
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________to________________
Commission file number ____1-7203_____
AYDIN CORPORATION
- ----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-1686808
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 DRESHER ROAD, HORSHAM, PA 19044
- ----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 657-7510
- ----------------------------------------------------------------
(Registrant's telephone number, including area code)
- ----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES___X___ NO________
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Shares of common stock, $1.00 par value, outstanding as of
November 8, 1996
_____5,133,400_____
<PAGE>
AYDIN CORPORATION
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein by reference are the Condensed Consolidated
Financial Statements of Aydin Corporation and the related Notes
to Financial Statements as set forth on pages 3 through 6 of the
1996 Third Quarter Report to Stockholders. These condensed
consolidated financial statements for the three and nine month
periods ended September 28, 1996 have been subjected to a
limited review by Grant Thornton LLP, the Registrant s
independent accountants, whose report, set forth on page 7 of
the 1996 Third Quarter Report to Stockholders, is incorporated
herein by reference.
Earnings per share are based on the weighted average number of
common shares outstanding plus shares issuable upon the assumed
exercise of dilutive common stock options. The number of shares
used in the computation of earnings per share for the three
months ended September 28, 1996 and September 30, 1995 were
5,125,900 and 5,152,238 respectively, and for the nine-month
periods then ended 5,121,081 and 5,094,763 respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(1) Material Changes in Financial Condition (9/28/96 versus
12/31/95)
Accounts receivable decreased by $20.9 million mostly because of
the excess collections versus billings during the year on the
TMRC contract with the Government of Turkey. Approximately $13
million of these collections occurred in the first quarter when
acceptance was achieved against the software on this contract.
This acceptance had been delayed in excess of one year as of
12/31/95 because of delays by the software subcontractor.
Approximately $6.5 million was collected in the 3rd quarter
reflecting a protocol signed with the customer which resolved
certain open payment and performance issues. The 9/28/96
receivable balance reflects $3.1 million representing the
proceeds (received in October) from the sale of the High Power
Amplifier product line.
Unbilled revenue (net of advance payments and contract billings
in excess of recognized revenue) decreased by $3.9 million as a
result of billings rendered in excess of revenue recognized
primarily on the TMRC and RIS (NATO) contracts.
Net inventories decreased by $5.4 million primarily as a result
of: (1) inventories disposed of as part of the sale (in October
1996) of the high power amplifier product line and; (2)
inventory write-offs as part of the discontinuance of certain
product lines. These disposals and write-offs have been
included in the 3rd quarter restructuring charge.
Accounts payable decreased by $10.9 million primarily because of
payment of approximately $8 million to the TMRC software
subcontractor.
Current accrued and deferred income taxes decreased by $9.6
million primarily because of $6.8 million of payments made to
the IRS and the income tax benefit resulting from the first nine
months pre-tax losses.
Long-term debt (including current maturities) consisting of
mortgages of $1.1 million was paid off during the first quarter.
With the leins released, these properties were used as
collateral against a line of credit. As of 9/28/96, $3.0
million of this line was used for cash borrowings and $600,000
was available for cash borrowings. The Company is currently in
negotiations to put in place additional borrowing facilities.
The $6.6 million of restricted cash at 9/28/96 was being held as
collateral by a bank against the TMRC contract letter of credit.
Although the Company s liquidity and financial flexibility have
improved since year-end, they continue to be adversely affected
until we receive further collections against unbilled revenue or
get new borrowing facilities secured, which the Company
anticipates happening around year-end 1996.
Based on the present backlog and projected cash flows, the
Company anticipates financing its capital needs from internal
sources and additional borrowings.
(2) Material Changes in Operations (Third Quarter and Nine
Months 1996 versus 1995)
Net sales for the quarter decreased to $25.2 million from $32.9
million a year ago, a 23% decline. Net sales for the nine
months decreased to $88.2 million from $105.0 million a year
ago, a decline of 16%. The lower sales reflects the decline in
backlog from $116 million a year ago to $90 million at 9/28/96
in addition to sales reductions caused by a 2nd quarter cost
overrun on a major contract and a contract value reduction
because of delays in completing the TMRC contract. Although
significant additional cost overruns and contract value
reductions are not expected on current contracts, the reduced
sales level is anticipated for the next two or three quarters as
new management strives to rebuild the backlog.
Cost of sales for the quarter as a percentage of sales increased
to 80.9% from 72.9% primarily because of certain program delays
and higher costs on a commercial product line. Cost of sales
for the nine months as a percentage of sales increased to 80.4%
from 73.0%, because of the aforementioned cost overrun and
contract value reductions in addition to provisions for
inventory obsolescence and write downs of inventory to net
realizable value.
Selling, general and administrative expenses increased by $603
thousand (10%) in the third quarter and $3.2 million (17%) in
the nine months. The 3rd quarter increase resulted primarily
from higher proposal costs expended on a vehicle tracking
system. The nine months increase resulted primarily from the
proposal costs plus increased bad debts provisions and higher
Argentine S,G&A expenses. These higher costs are not expected to
continue.
Research and development costs increased by $576 thousand (32%)
in the quarter and $1.9 million (38%) in the nine months because
of increased new product development in telecommunications and
telemetry product lines.
During the 3rd quarter, the Company announced a plan to
consolidate and restructure its domestic operations. The
Company recorded a charge of $3.7 million in the 3rd quarter for
the restructuring. The major charges consisted of: severance
benefits for 150 terminated employees ($600,000); loss on sale
of a product line ($500,000); inventory write-offs ($1,000,000)
and capital equipment ($300,000) write-offs in connection with
the cutback of product lines; and write-off of goodwill in
connection with the sale of a product line ($400,000). The
restructuring is expected to be completed during the 2nd quarter
of 1997. The Company anticipates annual cash saving of
approximately $4.3 million as a result of lower labor and
facility costs.
The effective income tax rates for the nine months were a
benefit of 25.8% for 1996 and a 33.4% income tax rate for 1995.
The lower rates for 1996 are primarily the result of foreign
income (taxed at a higher rate than US income) being a smaller
portion of 1996 pretax results than in 1995.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3, "Legal Proceedings," in
Registrant's Annual Report on Form 10-K, Part 1, for the year
ended December 31, 1995, regarding the arbitration cross claims
of Loral Defense Systems-Eagan ("Loral") and Registrant, and to
Item 1, "Legal Proceedings", in Registrant's Quarterly Report on
Form 10-Q, Part II, for the quarter ended June 29, 1996,
regarding the amended cross claims filed by the parties. The
parties have completed the process of selecting a panel of
arbitrators but a hearing date has not been set. The parties
are completing the exchange of documents and depositions are
scheduled to start in latter part of November 1996. Registrant
continues to believe that it has meritorious defenses and
counterclaims to Loral's claim.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following is a list of Exhibits filed as part of
this report:
Exhibit 2 - None
Exhibit 3(i) - Certificate of Incorporation (filed
as Exhibit 3(i) to Registrant's
Annual Report on Form 10-K for the
year ended December 31, 1995 and
incorporated herein by reference).
Exhibit 3(ii) - By-Laws
Exhibit 4 - None
Exhibit 10.1 - Employment Agreement, I. Gary Bard
Exhibit 10.2 - Employment Agreement, Klaus D. Oebel
Exhibit 10.3 - Employment Agreement, H. Barry Maser
Exhibit 10.4 - Employment Agreement, James R.
Henderson
Exhibit 10.5 - The 1994 Incentive Stock Option
Plan, as amended
Exhibit 10.6 - The 1996 Equity Incentive Plan, as
amended
Exhibit 11 - None
Exhibit 15 - Letter re unaudited interim
financial information
Exhibit 18 - None
Exhibit 19 - "1996 THIRD QUARTER REPORT" to
Stockholders
Exhibit 22 - None
Exhibit 23 - None
Exhibit 24 - None
Exhibit 27 - Financial Data Schedule (electronic
filing only)
Exhibit 99 - None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the Third
Quarter of 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AYDIN CORPORATION
DATE November 11, 1996 /s/ James R. Henderson
James R. Henderson, Treasurer and
Vice President, Finance
Chief Financial Officer
DATE November 11, 1996 /s/ Robert A. Clancy
Robert A. Clancy, Secretary
<PAGE>
EXHIBIT
3(ii)
AYDIN CORPORATION
BY-LAWS
(Last Amended October 8, 1996)
*******
ARTICLE I
OFFICERS
Section 1. The registered office shall be in the City
of Dover, County of Kent, State of Delaware.
Section 2. The corporation may also have offices at
such other places both within and without the State of Delaware
as the Board of Directors may from time to time determine or
the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the
election of Directors shall be held in the City of Fort
Washington, State of Pennsylvania, at such place as may be
fixed from time to time by the Board of Directors, or at such
other place either within or without the State of Delaware as
shall be designed from time to time by the Board of Directors
and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be
stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be
held on the third Thursday of April if not a legal holiday, and
if a legal holiday, then on the next secular day following at
3:00 P.M. or at such other date and time as shall be designated
from time to time by the Board of Directors and stated in the
notice of the meeting, at which they shall elect by a plurality
vote a board of Directors, and transact such other business as
may properly be brought before this meeting.
Section 3. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given
to each stockholder entitled to vote at such meeting not less
than ten nor more than fifty days before the date of the
meeting.
Section 4. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where
the meeting is to be held, whid, at the place where the meeting
is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute
or by the certificate of incorporation, may be called by the
Chairman of the Board and shall be called by the Chairman of
the Board or Secretary at the request in writing of a majority
of the Board of Directors, or at the request in writing of
stockholders owning a majority in amount of the entire capital
stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating
the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not
less than ten nor more than fifty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting
of stockholders shall be limited to the purposes stated in the
notice.
Section 8. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at
all meeting of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate
of incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholder, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or
represented any business may be transaction which might have
been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting,
the vote of the holder of a majority of the stock having voting
power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question
is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required
in which case such express provision shall govern and control
the decision of such question.
Section 10. Each stockholder shall at every meeting of
the stockholders be entitled to one vote in person or by proxy
for each share of the capital stock having voting power held by
such stockholder, but no proxy shall be voted on after three
years from its date, unless the proxy provides for a longer
period.
Section 11. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for e
meeting and vote of stockholders may be dispensed with if all
of the stockholder who would have been entitled to vote upon
the action if such meeting were held shall consent in writing
to such corporate action being taken; or if the certificate of
incorporation authorizes the action to be taken with the
written consent of the holders of less than all of the stock
who would have been entitled to vote upon the action if a
meeting were held, then on the written consent of the
stockholders having not less than such percentage of the total
number of votes as may be authorized in the certificate of
incorporation; provided that in no case shall the written
consent be by the holders of stock having less than the minimum
percentage of the total vote required by statute for the
proposed corporate action, and provided that prompt notice must
be given to all stockholders of the taking of corporate action
without a meeting and by less than unanimous written consent.
ARTICLE III
DIRECTORS
Section 1. The number of Directors which shall
constitute the whole Board shall be five (5). The Directors
shall be elected at the annual meeting of the stockholders,
except as provided in Section 2 of this Article, and each
Director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships
resulting from any increase in the authorized number of
Directors may be filled by a majority of the Directors then in
office, though less than a quorum, or by a sole remaining
director, and the Directors so chosen shall held office until
the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced. If their
are no Directors in office, then an election of Directors may
be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the
Directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any
such increase), the Court of Chancery may, upon application of
any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having
the right to vote for such Directors, summarily order an
election to be held to fill any such vacancies or newly created
directorships, or to replace the Directors chosen by the
Directors then in office.
Section 3. The business of the corporation shall be
managed by its Board of Directors which may exercise all such
powers of the corporation and do all such lawful acts and
things as are not by statute or by the Certificate of
Incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETING OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation
may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 5. The first meeting of each newly elected
Board of Directors shall be held at such time and place as
shall be fixed by the vote of the stockholders at the annual
meeting and no notice of such meeting shall be necessary to the
newly elected Directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of
the failure of the stockholders to fix the time or place of
such first meeting of the newly elected Board of Directors, or
in the event such meeting is not held at the time and place so
fixed by the stockholders, the meeting may be held at such time
and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a written waiver signed
by all of the Directors.
Section 6. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as
shall from time to time be determined by the Board.
Section 7. Special meetings of the Board may be called
by the Chairman of the Board on one day's notice to each
director, either personally, by telephone, by mail or by
telegram; special meetings shall be called by the Chairman of
the Board or Secretary in like manner and on like notice on the
written request of two directors.
Section 8. At all meetings of the Board, a majority of
the directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically
provided by statute or by the certificate of incorporation. If
a quorum shall not be present at any meeting of the Board of
Directors the directors present thereat may adjourn the meeting
from time to sent.
Section 9. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or
committee.
COMMITTEES OF DIRECTORS
Section 10. The Board of Directors may, by resolution
passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the
directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the
resolution, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of
the corporation, and may authorize the seal of the corporation
to be affixed to all papers which may require it; provided,
however, that in the absence or disqualification of any member
of such committee or committees, the member of members thereof
present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by
the Board of Directors.
Section 11. Each committee shall keep regular minutes
of its meetings and report the same to the Board of Directors
when required.
COMPENSATION OF DIRECTORS
Section 12. The Directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of
the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the
corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the
statutes or of the Certificate of Incorporation or of these by-
laws, notice is required to be given to any Director or
stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to
such Director or stockholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice
to Directors may also be given by telegram, or by telephone.
Section 2. Whenever any notice is required to be given
under the provisions of the statutes or of the Certificate of
Incorporation or of these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be
chosen by the Board of Directors and shall be a Chairman of the
Board, a President, an Executive Vice President, a Secretary
and a Treasurer. The Board of Directors may also choose
additional Vice Presidents, and one or more Assistant
Secretaries and Assistant Treasurers. Any number of offices
may be held by the same person, unless the certificate of
incorporation of these by-laws otherwise provide.
Section 2. The Board of Directors at its first meeting
after each annual meeting of stockholders shall choose a
Chairman of the Board, a President, an Executive Vice
President, a Secretary and a Treasurer, and may choose
additional Vice Presidents, and one or more Assistant
Secretaries and Assistant Treasurers.
Section 3. The Board of Directors may appoint such
other officers and agents as it shall deem necessary who shall
hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time
to time by the Board.
Section 4. The salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold
office until their successors are chosen and qualified. Any
officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of
the corporation shall be filled by the Board of Directors.
CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall be the
chief executive officer of the corporation and, subject to the
control of the Board of Directors, shall have the general
direction and supervision over the business and affairs of the
corporation. He shall preside at all meetings of the
stockholders and of the Board of Directors and shall be an ex
officio member of all committees and shall see that all orders
and resolutions of the Board of Directors are carried into
effect. He shall participate in determining the policies to be
followed by the corporation and shall perform such other duties
as the Board of Directors shall from time to time request.
THE PRESIDENT
Section 7. The President shall undertake such duties
as may be delegated to him by the Chairman of the Board and
shall also have such other powers and duties as the Board of
Directors may from time to time determine. In the absence of
the Chairman of the Board or in the event of his inability or
refusal to act, the President shall perform the duties of the
Chairman of the Board, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the
Chairman of the Board.
THE VICE PRESIDENTS
Section 8. In the absence of the President or in the
event of his inability or refusal to act, the Executive Vice
President, (or in the event of the absence or inability of or
refusal to act by the Executive Vice President and in the
further event there be more than one Vice President, the Vice
Presidents in the order designated, or in the absence of any
designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the
President. Such powers of and restrictions upon the President
shall include the performance of the duties of the Chairman of
the Board in the further event that the Chairman is absent or
is unable or refuses to act. Vice Presidents shall perform
such other duties and have such other powers as the Board or
Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and
record all the proceedings of the meetings of the corporation
and of the Board of Directors in a book to be kept for that
purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings
of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or Chairman of
the Board, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an
Assistant Secretary, shall have authority to affix the same to
any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority
to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
Section 10. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order
determined by the Board of Directors (or if there is no such
determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his inability
or refusal to act, perform the duties and exercise the powers
of the Secretary and shall perform such other duties and have
such other powers as the Board of Directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and
accurate accounts if receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the
Board of Directors.
Section 12. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the
Chairman of the Board and the Board of Directors, at its
regular meetings, or when the Board of Directors so requires,
an account of all his transactions as Treasurer and of the
financial conditions of the corporation.
Section 13. If required by the Board of Directors, he
shall give the corporation a bond (which shall be renewed every
six years) in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death,
resignation, retirement or removal form office, of all books,
papers, vouchers, money and other property of whatever kind in
his possession or under his control belonging to the
corporation.
Section 14. The Assistant Treasurer, or if there shall
be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (or if there be no such
determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of his inability
or refusal to act, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties and have
such other powers as the Board of Directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the
name of the corporation by, the Chairman or Vice Chairman of
the Board of Directors, the President or a Vice President and
the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the corporation, certifying the number
of shares owned by him in the corporation.
Section 2. Where a certificate is countersigned (1) by
a transfer agent other than the corporation or its employee,
or, (2) by a registrar other than the corporation or its
employee, the signatures of the officers of the corporation may
be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the
same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or
destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of
the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine
the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date
for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to
recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote
as such owner, and to hold liable for calls and assessments a
person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of
Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for
dividends such sum or sums as the Directors from time to time,
in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation,
or for such other purpose as the Directors shall think
conducive to the interest of the corporation, and the Directors
may notify or abolish any such reserve in the manner in which
it was created.
ANNUAL REPORT
Section 3. (a) The Board of Directors shall
present at each annual meeting, and at any special meeting of
the stockholders when called for by vote of the stockholders, a
full and clear statement of the business and condition of the
corporation.
(b) On or before 120 days from the close of each
fiscal year, the Board of Directors shall cause to be delivered
to each stockholder of record an audited statement of financial
condition of the corporation as at the close of such fiscal
year, together with a statement of operations, including profit
and loss for such fiscal year. For the purposes of subsection
(b), it will be sufficient if such report is mailed in the
ordinary course of business to those shareholder of record as
at the date on which the record of shareholders has been taken
for the purpose of the annual meeting, pursuant to Section 5 of
ARTICLE VI of these by-laws.
CHECKS
Section 4. All checks or demands for money and notes
of the corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may
from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
SEAL
Section 6. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware."
The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. (a) Directors, Officers and Employees
of the Corporation. Every person now or hereafter serving as a
Director, Officer or Employee of the Corporation shall be
indemnified and held harmless by the corporation from and
against any and all loss, cost, liability and expense that may
be imposed upon or incurred by him in connection with or
resulting from any claim, action, suit, or proceeding, civil or
criminal, in which he may become involved, as a party or
otherwise, by reason of his being or having been a director,
officer or employee of the corporation, whether or not he
continues to be such at the time such loss, cost, liability or
expense shall have been imposed or incurred. As used herein,
the term "loss, cost, liability and expense" shall include, but
shall not be limited to, counsel fees and disbursements and
amounts of judgments, fines or penalties against, and amounts
paid in settlement by, any such director, officer or employee;
provided, however that no such director, officer or employee
shall be entitled to claim such indemnity: (1) with respect to
any matter as to which there shall have been a final
adjudication that he has committed or allowed some act or
omission, (a) otherwise than in good faith in what he considers
to be the best interests of the corporation, and (b) without
reasonable cause to believe that such act or omission was
proper and legal; or (2) in the event of a settlement of such
claim, action, suit, or proceeding unless (a) the court having
jurisdiction thereof shall have approved of such settlement
with knowledge of the indemnity provided herein, or (b) a
written opinion of independent legal counsel, selected by or in
manner determined by the Board of Directors, shall have been
rendered substantially concurrently with such settlement, to
the effect that it was not probable that the matter as to which
indemnification is being made would have resulted in a final
adjudication as specified in clause (1) above and that the said
l be borne by the corporation. A conviction or judgment
(whether based on a plea of guilty or nolo contendere or its
equivalent, or after trial) in a criminal action, suit or
proceeding shall not be deemed an adjudication that such
director, officer or employee has committed or allowed some act
or omission as hereinabove provided if independent legal
counsel, selected as hereinabove set forth, shall substantially
concurrently with such conviction or judgement give to the
corporation a written opinion that such director, officer or
employee was acting in good faith in what he considered to be
the best interests of the corporation or was not without
reasonable cause to believe that such act or omission was
proper and legal.
(b) Directors, Officers and Employees of
Subsidiaries. Every person (including a director, officer or
employee of the corporation) who at the request of the
corporation acts as a director, officer or employee of any
other corporation in which the corporation owns shares of stock
or of which it is a creditor shall be indemnified to the same
extent and subject to the same conditions that the directors,
officers, and employees of the corporation are indemnified
under the preceding paragraph, except that the amount of such
loss, cost, liability or expense paid to any such director,
officer or employee shall be reduced by and to the extent of
any amounts which may be collected by him from such other
corporation.
(c) Miscellaneous. The provisions of this
section shall cover claims, actions, suits and proceedings,
civil or criminal, whether now pending or hereafter commenced
and shall be retroactive to cover acts or omissions or alleged
acts or omissions which heretofore have taken place. In the
event of death of any person having a right of indemnification
under the provisions of this section, such right shall inure to
the benefit of his heirs, executors, administrators and
personal representatives. If any part of thi, the validity and
effect of the remaining provisions shall not be affected.
(d) Indemnification Not Exclusive. The foregoing
right of indemnification shall not be deemed exclusive of any
other right to which those indemnified may be entitled, and the
corporation may provide additional indemnity and rights to its
directors, officers or employees.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at
any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of
the Board of Directors if notice of such alteration or repeal
be contained in the notice of such special meeting.
<PAGE>
EXHIBIT
10.1
EMPLOYMENT AGREEMENT
AGREEMENT dated as of May 6, 1996 between AYDIN
CORPORATION, a Delaware corporation having its principal office
at 700 Dresher Road, Horsham, Pennsylvania 19044 (the
"Company"), and I. GARY BARD, residing at 118 Spruce Street,
Philadelphia, Pennsylvania 19106 (the "Executive").
The parties are entering into this Agreement to set forth
and confirm their respective rights and obligations with
respect to the Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto mutually agree as follows:
1. Employment and Term. (a) The Company hereby
employs the Executive as Chairman of the Board and Chief
Executive Officer of the Company (the "Position"). The
Executive agrees to serve in the employ of the Company in the
Position for a term (the "Initial Term") which commenced on May
6, 1996, and, subject to paragraphs 1(b) and 1(c) hereof, shall
terminate on the fifth anniversary thereof.
(b) Unless written notice terminating the term of
employment is given by either the Company or the Executive not
less than 180 days in advance of the termination date of this
Agreement, this Agreement shall be automatically extended, on
all of the terms and conditions hereof, for additional periods
of one year.
(c) The Company shall have the right to terminate
the Executive's employment hereunder prior to the fifth
anniversary of the date hereof, but only for Cause. For
purposes of this Agreement, "Cause" means (i) the Executive's
willful and continued failure substantially to perform his
duties with the Company, (ii) fraud, misappropriation or
intentional material damage to the property or business of the
Company by the Executive or (iii) the Executive's admission or
conviction of, or plea of nolo contendere to, any felony that,
in the judgement of the Board of Directors of the Company (the
"Board"), adversely affects the Company's reputation or the
Executive's ability to carry out his obligations under this
Agreement. The Executive shall not be entitled to any
compensation under this Agreement for any period after such
termination pursuant to this paragraph 1(c) except to the
extent the Executive is entitled to receive benefits under the
Plans (as defined herein) following such termination.
(d) The Executive shall have the right to terminate
his employment hereunder at any time prior to the fifth
anniversary of the date hereof for Good Reason or in the event
a Change in Control occurs. For purposes of this Agreement,
"Good Reason" means the Executive's Position or the scope of
the Executive's responsibilities are materially modified
without the Executive's written consent, it being understood
that any such modification would constitute a material breach
of this Agreement. For purposes of this Agreement, "Change of
Control" means (i) any merger or consolidation of the Company
with or into any other corporation, (ii) any corporate
reorganization involving the Company, (iii) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets
of the Company or (iv) any sale or other disposition of shares
of capital stock of the Company, if, immediately following such
merger, consolidation, reorganization, sale, lease, exchange or
other disposition, any person or group (as such terms are used
in Sections 13(d) (3) and 14(d) (2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") shall be the
beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of more than 50% of the Company's outstanding
capital stock, provided, however, that any merger or
consolidation of the Company with or into Electronics
Associates, Inc. or a subsidiary thereof or any acquisition by
Electronics Associates, Inc. or an affiliate thereof of more
than 50% of the outstanding capital stock of the Company shall
not constitute a Change in Control. A transaction constituting
a Change in Control shall be deemed to have occurred upon the
closing of the transaction.
2. Duties. (a) Subject to the ultimate control and
discretion of the Board, the Executive shall serve in the
Position and perform all duties and services commensurate with
the Position as Chairman of the Board and Chief Executive
Officer. Except for travel normally incidental and reasonably
necessary to the business of the Company and the duties of the
Executive hereunder, the duties of the Executive shall be
performed in the greater Philadelphia, Pennsylvania
metropolitan area.
(b) The Executive shall devote all of the
Executive's time and attention during regular business hours to
the performance of the Executive's duties hereunder and, during
the term of his employment hereunder, shall not engage in any
other business enterprise which requires the Executive's
personal time or attention, unless granted the prior permission
of the Board. The foregoing provision shall not prevent the
Executive's purchase, ownership or sale of any interest in, or
the Executive's engaging (but not to exceed an average of five
hours per week) in, any business which does not compete with
the business of the Company or any subsidiary of the Company or
the Executive's involvement in charitable or community
activities, provided, that the time and attention which the
Executive devotes to such business and activities does not
materially interfere with the performance of his duties
hereunder.
(c) The Executive shall be entitled to such personal
vacations with full compensation, and to be taken at such time
or times, as the Executive and the Company shall mutually
determine. Such vacation time shall be for a period not less
than the vacation time made available to other executive
officers of the Company.
3. Compensation. For all services to be rendered by
the Executive hereunder:
(a) The Company shall pay the Executive an annual
base salary at a rate of not less than Two Hundred Ninety
Thousand Dollars ($290,000) per year, plus such other
compensation as may, from time to time, be determined by the
Company. Such salary and other compensation shall be payable
in accordance with the Company's normal payroll practices as in
effect from time to time. At the end of each fiscal year, the
Company shall review the Executive's annual base salary level,
and shall increase such level for the following year to such
amount as the Board may determine.
(b) The Company shall pay the Executive a bonus upon
and in consideration of the Executive's execution of this
Agreement consisting of (i) the issuance to the Executive
without consideration of 20,000 shares of the Company's Common
Stock and (ii) the loan by the Company to the Executive of that
amount as is sufficient to pay all income taxes payable by the
Executive in respect of the issuance of such 20,000 shares of
the Company's Common Stock and such cash payment to the
Executive. The principal amount of the loan, together with
interest thereon at the lesser of 10% or prime rate of
CoreStates Bank, N.A. as publicly announced from time to time,
shall be repaid by the Executive to the Company on the fifth
anniversary of the date hereof, and the repayment of such
amounts shall be secured by a pledge to the Company of such
20,000 shares of Common Stock.
(c) In consideration of the Executive's execution of
this Agreement, immediately following the adoption of and
pursuant to the Company's 1996 Stock Option Plan, the Company
shall grant the Executive options, which shall be incentive
stock options to the extent permitted under the Internal
Revenue Code of 1986, as amended, to purchase an aggregate of
150,000 shares of the Company's Common Stock exercisable at the
closing price thereof on the New York Stock Exchange on the
date hereof. Such options shall be exercisable for a period of
five years from the date hereof in installments as follows:
(i) 25% on and after the first anniversary of the date hereof;
(ii) 50% on and after the second anniversary of the date
hereof; (iii) 75% on and after the third anniversary of the
date hereof and (iv) 100% on and after the fourth anniversary
of the date hereof, provided, however, that in the event of a
Change of Control all of such options shall become immediately
exercisable. Payment of the exercise price of such options may
be made in cash, in Common Stock of the Company at the fair
market value thereof on the date of exercise or by a
combination of cash and shares of Common Stock. In addition,
the cashless exercise of such options shall be permitted.
(d) (i) The Company agrees that the Executive shall
be eligible to participate in a bonus plan to be established by
the Company in consultation with an independent compensation
consulting firm of national reputation commencing with the
Company's 1996 fiscal year, in which each participating officer
would have the opportunity to receive a bonus equal to a
percentage of his annual base salary to be specified in the
bonus plan upon satisfaction of Board-approved objectives and
an additional bonus equal to a percentage of his annual base
salary to be specified in the bonus plan in the event the
Board-approved objectives are exceeded. The bonuses under such
plan shall be payable in cash or in Common Stock of the Company
provided that any bonus payable in Common Stock of the Company
shall be accompanied by a cash payment sufficient to pay all
income taxes payable in respect of the receipt of such stock
and such cash payment.
(ii) Pending the adoption of a bonus plan as
provided in clause (i) hereof, the Company agrees that the
Executive shall receive an annual bonus of up to 80% of his
annual base salary upon satisfaction of Board-approved
objectives to be established not later than the execution of
this Agreement and in excess of 80% of his annual base salary
in the event the Board-approved objectives are exceeded. Such
bonus shall be payable in cash or in Common Stock of the
Company provided that any bonus payable in Common Stock of the
Company shall be accompanied by a cash payment sufficient to
pay all income taxes payable in respect of the receipt of such
stock and such cash payment. Upon the adoption of a bonus plan
as provided in clause (i) hereof, any right of the Executive to
receive a bonus as provided in this clause (ii) shall terminate
and the only right of the Executive to receive a bonus shall be
as provided in such plan.
(iii) If the Company (i) terminates the
Executive's employment hereunder, other than in accordance with
paragraph 1(c) hereof, or (ii) if the Executive terminates his
employment hereunder within one year after (A) a change in the
Position that constitutes Good Reason or (B) a Change in
Control, the Executive shall be entitled to receive that
portion of the bonus payable pursuant to clause (i) or clause
(ii) hereof for the year in which such termination occurs as is
determined by multiplying the full amount of such bonus for
such year by a fraction the numerator of which is the number of
calendar days elapsed in that year to the date of termination
and the denominator of which is 365.
(e) The Company shall, at its expense, provide the
Executive with an insurance policy on his life as provided
under the Plans. The Executive shall have the right to
designate the beneficiary of such insurance policy.
(f) The compensation provided for in this paragraph
3 shall be in addition to such rights as the Executive may
have, during the Executive's employment hereunder or
thereafter, to participate in and receive benefits from or
under any bonus, stock option, pension, profit-sharing,
insurance or other employee benefit plan or plans of the
Company which may exist now or hereafter (collectively, the
"Plans").
(g) If the Company (i) terminates the Executive's
employment hereunder, other than in accordance with paragraph
1(c) hereof, or (ii) if the Executive terminates his employment
hereunder within one year after (A) a change in the Position or
the Executive's responsibilities that constitutes Good Reason
or (B) a Change in Control, the Company shall, for a period
equal to the lesser of (a) three years from the date of such
termination or (b) until the end of the Initial Term, continue
to pay the Executive a salary in an amount equal to the greater
of (y) the salary provided in paragraph 3(a) hereof or (z) the
Executive's actual compensation from the Company for the year
preceding the year in which such termination occurred, in
accordance with the Company's normal payroll practices in
effect from time to time, and provide the Executive and his
eligible dependents with life and health insurance coverage and
disability insurance coverage comparable to coverage while he
was an employee hereunder or, at the Company's option,
reimburse the Executive in an amount equal to not more than
125% of the cost to the Company thereof while the Executive was
an employee during the previous year; and the Executive shall
have no further or other rights, and the Company no further or
other liabilities or obligations, under this Agreement with
respect to compensation of the Executive.
(h) During any period in which the Company is
obligated to pay salary to the Executive under this paragraph
3, the Company shall provide the Executive with an automobile
or, at the Company's option, an automobile allowance of $750.00
per month plus, in each case, gas, repairs, maintenance and
other operating expenses, in accordance with the Company's
policies in effect from time to time.
4. Expenses. The Company shall promptly reimburse the
Executive for all reasonable expenses paid or incurred by the
Executive in connection with the performance of the Executive's
duties and responsibilities hereunder, upon presentation of
expense vouchers or other appropriate documentation therefor.
5. Death of the Executive. In the event of the death
of the Executive while having been continuously employed by the
Company since the date of this Agreement, the Company shall
have no further obligations or liability to the Executive
hereunder except to pay to the Executive's estate, or as
otherwise designated in a writing delivered by the Executive to
the Secretary of the Company within 60 days of the date of the
Executive's death, the then accrued and unpaid portion of the
Executive's compensation pursuant to paragraph 3(a) hereof and
bonus pursuant to paragraph 3(d) hereof to the date of the
Executive's death.
6. Total Disability of the Executive. In the event of
the Total Disability (as defined herein) of the Executive for a
period of 180 days while having been continuously employed by
the Company since the date of this Agreement, the Company shall
have no further obligations or liability to the Executive
hereunder except to pay to the Executive the following amounts:
(a) on the Disability Date (as defined herein) the then accrued
and unpaid portion of the compensation payable to the Executive
pursuant to paragraph 3(a) hereof and bonus pursuant to
paragraph 3(d) hereof through the period ending on the 180th
day of such Total Disability (the "Disability Date") and (b)
that amount as is equal to one-half of the Executive's then
annual base salary as provided in paragraph 3(a) hereof. For
as long as the Executive is entitled to receive payments
pursuant to this paragraph 6, the Company shall provide
continuing coverage under all Plans, or pay for equivalent
coverage, for the Executive and his eligible dependents, and
shall continue the life insurance coverage provided for in
paragraph 3(e) hereof. The disability payments provided for
herein shall be reduced to the extend of payments received by
the Executive from any disability benefit program maintained
and paid for by the Company. The term "Total Disability" as
used herein shall mean the inability of the Executive to
perform his duties under this Agreement by reason of disability
or incapacity resulting from a mental or physical illness or
injury as certified by a licensed physician.
7. Indemnification. The Company shall indemnify the
Executive, to the fullest extent permitted by law, for any and
all liabilities to which the Executive may be subject as a
result of, in connection with or arising out of his employment
by the Company hereunder, as well as the costs and expenses
(including attorneys' fees) of any legal action brought or
threatened to be brought against him or the Company as a result
of, in connection with or arising out of such employment. The
Company will advance legal expenses to the Executive in
connection with any such legal action, provided the Executive
delivers to the Company his undertaking to repay any expenses
so advanced in the event it is ultimately determined that the
Executive is not entitled to indemnification against such
expenses. Expenses reasonably incurred by the Executive in
successfully establishing the right to indemnification or
advancement of expenses, in whole or in part, pursuant to this
paragraph 7, shall also be indemnified by the Company. The
Executive shall be entitled to the full protection of any
insurance policies which the Company may elect to maintain
generally for the benefit of its directors and officers.
8. Confidentiality and Non-competition. (a) The
Executive shall not use or disclose at any time during the
Executive's employment with the Company, or at any time
thereafter, any trade secret or proprietary or confidential
information of the Company or any of its affiliates.
(b) During the Executive's employment with the
Company and during the period the Company continues to make
payments under paragraph 3(g) hereof, the Executive shall not
be engaged as an officer, director or employee of, or in any
way be associated in a management or ownership capacity with,
any corporation, partnership or other enterprise or venture
which conducts a business which is in competition wit the
business of the Company as of the time of such termination or
expiration, provided, however, that the Executive may own not
more than 3% of the outstanding securities, or equivalent
equity interests, of any class of any corporation or firm which
is in competition with the business of the Company, which
securities are listed on a national securities exchange or
traded in the over-the-counter market.
9. Representation and Warranty of the Executive. The
Executive represents and warrants that he is not under any
obligation, contractual or otherwise, to any other firm or
corporation, which would prevent his entry into the employ of
the Company or his performance of the terms of this Agreement.
10. Entire Agreement; Amendment. This Agreement
contains the entire agreement between the Company and the
Executive with respect to the subject matter hereof, and may
not be amended, waived, changed, modified or discharged except
by an instrument in writing executed by parties hereto.
11. Assignability. The services of the Executive
hereunder are personal in nature, and neither this Agreement
nor the rights or obligations of the Company hereunder may be
assigned by the Company, whether by operation of law or
otherwise, without the Executive's prior written consent. This
Agreement shall be binding upon, and inure to the benefit of,
the Company and its permitted successors and assigns hereunder.
This Agreement shall not be assignable by the Executive, but
shall inure to the benefit of the Executive's heirs, executors,
administrators and legal representatives.
12. Notice. Any notice which may be given hereunder
shall be in writing and be deemed given when hand delivered and
acknowledged or, if mailed, one day after mailing by registered
or certified mail, return receipt requested, to either party
hereto at their respective address stated above, or at such
other address as either party may by similar notice designate,
provided that a photocopy of such notice is dispatched at the
same time as the notice is mailed.
13. Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the
provisions of paragraph 8 hereof were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of
paragraph 8 hereof and to enforce specifically the terms and
provisions of paragraph 8 hereof, this being in addition to any
other remedy to which either party is entitled at law or in
equity.
14. No Third Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to confer upon any
person or entity other than the parties (and the Executive's
heirs, executors, administrators and legal representatives as
provided in paragraph 11 hereof) any rights or remedies of any
nature under or by reason of this Agreement.
15. Mitigation. The Executive shall not be required
to mitigate the amount of any payment provided for in paragraph
3 hereof by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in paragraph
3 hereof be reduced by any compensation earned by the Executive
as the result of employment by another employer or by
retirement benefits payable after the termination of this
Agreement, except that the Company shall not be required to
provide the Executive and his eligible dependents with medical
insurance coverage as long as the Executive and his eligible
dependents are receiving comparable medical insurance coverage
from another employer.
16. Construction. This Agreement shall be governed by
and construed in accordance with the internal laws of the
Commonwealth of Pennsylvania, without giving effect to
principles of conflict of laws. All headings in this Agreement
have been inserted solely for convenience of reference only,
are not to be considered a part of this Agreement and shall not
affect the interpretation of any of the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
AYDIN CORPORATION
By: /s/ Donald S. Taylor
Authorized Signatory
/s/ I. Gary Bard
I. GARY BARD
<PAGE>
EXHIBIT
10.2
EMPLOYMENT AGREEMENT
AGREEMENT dated as of August 22, 1996 between AYDIN
CORPORATION, a Delaware corporation having its principal office
at 700 Dresher Road, Horsham, Pennsylvania 19044 (the
"Company"), and Klaus D. Oebel (the "Executive") residing at 2
Old Fort Road, Bernardsville, NJ 07924.
The parties are entering into this Agreement to set forth
and confirm their respective rights and obligations with
respect to the Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto mutually agree as follows:
1. Employment and Term. (a) The Company hereby employs the
Executive as Vice President & Director of Corporate Business
Development of the Company (the "Position"). The Executive
agrees to serve in the employ of the Company in the Position
for a term (the "Initial Term") which commenced on August 22,
1996, and, subject to paragraphs 1(b) and 1(c) hereof, shall
terminate on the third anniversary thereof.
(b) Unless written notice terminating the term of
employment is given by either the Company or the Executive not
less than 60 days in advance of the termination date of this
Agreement, this Agreement shall be automatically extended, on
all of the terms and conditions hereof, for additional periods
of one year.
(c) The Company shall have the right to terminate the
Executive's employment hereunder prior to the anniversary of
the date hereof, but only for Cause. For purposes of this
Agreement, "Cause" means (i) the Executive's willful and
continued failure substantially to perform his duties with the
Company, (ii) fraud, misappropriation or intentional material
damage to the property or business of the Company by the
Executive or (iii) the Executive's admission or conviction of,
or plea of nolo contendere to, any felony that, in the judgment
of the Board of Directors of the Company (the "Board"),
adversely affects the Company's reputation or the Executive's
ability to carry out his obligations under this Agreement. The
Executive shall not be entitled to any compensation under this
Agreement for any period after such termination pursuant to
this paragraph 1(c) except to the extent the Executive is
entitled to receive benefits under the Plans (as defined
herein) following such termination.
(d) The Executive shall have the right to terminate his
employment hereunder at any time prior to the third anniversary
of the date hereof for Good Reason or in the event a Change in
Control occurs. For purposes of this Agreement, "Good Reason"
means the Executive's Position or the scope of the Executive's
responsibilities are materially modified without the
Executive's written consent, it being understood that any such
modification would constitute a material breach of this
Agreement. For purposes of this Agreement, "Change of Control"
means (i) any merger or consolidation of the Company with or
into any other corporation, (ii) any corporate reorganization
involving the Company, (iii) any sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company or (iv) any sale or other disposition of shares of
capital stock of the Company, if, immediately following such
merger, consolidation, reorganization, sale, lease, exchange or
other disposition, any person or group (as such terms are used
in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") shall be the
beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of more than 50% of the Company's outstanding
capital stock, provided, however, that any merger or
consolidation of the Company with or into EA Industries, Inc.
or a subsidiary thereof or any acquisition by EA Industries,
Inc. or an affiliate thereof of more than 50% of the
outstanding capital stock of the Company shall not constitute a
Change in Control. A transaction constituting a Change in
Control shall be deemed to have occurred upon the closing of
the transaction.
2. Duties. (a) Subject to the ultimate control and
discretion of the Board, the Executive shall serve in the
Position and perform all duties and services commensurate with
the Position as Director of Corporate Business Development.
Except for travel normally incidental and reasonably necessary
to the business of the Company and the duties of the Executive
hereunder, the duties of the Executive shall be performed in
the greater Philadelphia, Pennsylvania metropolitan area.
(b) The Executive shall devote all of the Executive's time
and attention during regular business hours to the performance
of the Executive's duties hereunder and, during the term of his
employment hereunder, shall not engage in any other business
enterprise which requires the Executive's personal time or
attention, unless granted the prior permission of the Board.
The foregoing provision shall not prevent the Executive's
involvement in charitable or community activities, provided,
that the time and attention which the Executive devotes to
activities does not materially interfere with the performance
of his duties hereunder.
(c) The Executive shall be entitled to such personal
vacations with full compensation, and to be taken at such time
or times, as the Executive and the Company shall mutually
determine. Such vacation time shall be for a period not less
than the vacation time made available to other executive
officers of the Company.
3. Compensation. For all services to be rendered by the
Executive hereunder:
(a) The Company shall pay the Executive an annual base
salary at a rate of not less than One Hundred Ninety-Five
Thousand Dollars ($195,000) per year, plus such other
compensation as may, from time to time, be determined by the
Company. Such salary and other compensation shall be payable in
accordance with the Company's normal payroll practices as in
effect from time to time. At the end of each fiscal year, the
Company shall review the Executive's annual base salary level,
and shall increase such level for the following year to such
amount as the Board may determine.
(b) The Company shall pay the Executive a bonus upon and
in consideration of the Executive's execution of this Agreement
consisting of (i) the issuance to the Executive without
consideration of 10,000 restricted shares of the Company's
Common Stock. These shares would vest on a pro-rata basis over
three years pursuant to the terms of a Restricted Stock
Agreement , a copy of which is attached.
(c) In consideration of the Executive's execution of this
Agreement and pursuant to the Company's 1996 Stock Option Plan,
the Company shall grant the Executive options, which shall be
incentive stock options to the extent permitted under the
Internal Revenue Code of 1986, as amended, to purchase an
aggregate of 70,000 shares of the Company's Common Stock
exercisable at the mean price thereof on the New York Stock
Exchange on the date determined by the Board. Such options
shall be exercisable for a period of five years from the date
granted in installments as follows: (i) 25% on and after the
first anniversary of the date granted; (ii) 50% on and after
the second anniversary of the date granted; (iii) 75% on and
after the third anniversary of the date hereof and (iv) 100% on
and after the fourth anniversary of the grant hereof. Payment
of the exercise price of such options may be made in cash, in
Common Stock of the Company (valued at the fair market value
thereof on the trading day immediately preceding the date of
exercise) or by a combination of cash and shares of Common
Stock. In addition, the cashless exercise of such options shall
be permitted.
(d) (i) The Company agrees that the Executive shall
be eligible to participate in The Performance Incentive Plan
(the Plan ) established by the Company. This Plan provides
the opportunity for the Executive to receive a bonus up to 70%
of the Executive s annual base salary to be specified in the
bonus plan upon satisfaction of Board-approved objectives. The
bonuses under such Plan may be payable in cash or in Common
Stock of the Company at the discretion of the Board.
(ii) If the Company (i) terminates the Executive's
employment hereunder, other than in accordance with paragraph
1(c) hereof, or (ii) if the Executive terminates his employment
hereunder within one month after (A) a change in the Position
that constitutes Good Reason or (B) a Change in Control, the
Executive shall be entitled to receive that portion of the
bonus payable pursuant to clause (i) hereof for the year in
which such termination occurs as is determined by multiplying
the full amount of such bonus for such year by a fraction the
numerator of which is the number of calendar days elapsed in
that year to the date of termination and the denominator of
which is 365.
(e) The compensation provided for in this paragraph 3
shall be in addition to such rights as the Executive may have,
during the Executive's employment hereunder or thereafter, to
participate in and receive benefits from or under any bonus,
stock option, pension, profit-sharing, insurance or other
employee benefit plan or plans of the Company which may exist
now or hereafter (collectively, the "Plans").
(f) During any period in which the Company is obligated
to pay salary to the Executive under this paragraph 3, the
Company shall provide the Executive with an automobile
allowance of $300.00 per month.
(g) The Company will provide you with an allowance of
$1,000 per month during the term of this Agreement for your use
in defraying the expense of the monthly rental of an apartment
for your use in the Horsham, PA area. It is agreed that any
rental contract you may enter into will be for no longer than
one year, with you having the option to renew or until such
time as you relocate to this area.
4. Expenses. The Company shall promptly reimburse the
Executive for all reasonable expenses paid or incurred by the
Executive in connection with the performance of the Executive's
duties and responsibilities hereunder, upon presentation of
expense vouchers or other appropriate documentation therefor.
5. Death of the Executive. In the event of the death of
the Executive while having been continuously employed by the
Company since the date of this Agreement, the Company shall
have no further obligations or liability to the Executive
hereunder except (i) to pay to the Executive's estate, or as
otherwise designated in a writing delivered by the Executive to
the Secretary of the Company, within 60 days of the date of the
Executive's death, the then accrued and unpaid portion of the
Executive's compensation pursuant to paragraph 3(a) hereof and
bonus pursuant to paragraph 3(d) hereof to the date of the
Executive's death and (ii) to notify the Executive s estate of
any vested, unexercised stock options of the Executive that can
be exercised by the estate.
6. Total Disability of the Executive. In the event of the
Total Disability (as defined herein) of the Executive for a
period of 180 days while having been continuously employed by
the Company since the date of this Agreement, the Company shall
have no further obligations or liability to the Executive
hereunder except to pay to the Executive the following amounts:
(a) on the Disability Date (as defined herein) the then accrued
and unpaid portion of the compensation payable to the Executive
pursuant to paragraph 3(a) hereof and bonus pursuant to
paragraph 3(d) hereof through the period ending on the 180th
day of such Total Disability (the "Disability Date") and (b)
that amount as is equal to one-half of the Executive's then
annual base salary as provided in paragraph 3(a) hereof. For as
long as the Executive is entitled to receive payments pursuant
to this paragraph 6, the Company shall provide continuing
coverage under all Plans, or pay for equivalent coverage, for
the Executive and his eligible dependents. The disability
payments provided for herein shall be reduced to the extent of
payments received by the Executive from any disability benefit
program maintained and paid for by the Company. The term Total
Disability as used herein shall mean the inability of the
Executive to perform his duties under this Agreement by reason
of disability or incapacity resulting from a mental or physical
illness or injury as certified by a licensed physician.
7. Indemnification. The Company shall indemnify the
Executive, to the fullest extent permitted by law, for any and
all liabilities to which the Executive may be subject as a
result of, in connection with or arising out of his employment
by the Company hereunder, as well as the costs and expenses
(including attorneys' fees) of any legal action brought or
threatened to be brought against him or the Company as a result
of, in connection with or arising out of such employment. The
Company will advance legal expenses to the Executive in
connection with any such legal action, provided the Executive
delivers to the Company his undertaking to repay any expenses
so advanced in the event it is ultimately determined that the
Executive is not entitled to indemnification against such
expenses. Expenses reasonably incurred by the Executive in
successfully establishing the right to indemnification or
advancement of expenses, in whole or in part, pursuant to this
paragraph 7, shall also be indemnified by the Company. The
Executive shall be entitled to the full protection of any
insurance policies which the Company may elect to maintain
generally for the benefit of its directors and officers.
8. Confidentiality and Non-competition. (a) The Executive
shall not use or disclose at any time during the Executive's
employment with the Company, or at any time thereafter, any
trade secret or proprietary or confidential information of the
Company or any of its affiliates.
(b) During the Executive's employment with the Company
the Executive shall not be engaged as an officer, director or
employee of, or in any way be associated in a management or
ownership capacity with, any corporation, partnership or other
enterprise or venture which conducts a business which is in
competition with the business of the Company as of the time of
such termination or expiration, provided, however, that the
Executive may own not more than 3% of the outstanding
securities, or equivalent equity interests, of any class of any
corporation or firm which is in competition with the business
of the Company, which securities are listed on a national
securities exchange or traded in the over-the-counter market.
(c ) The Executive agrees that during his employment
to promptly disclose and assign to the Company the Executive s
entire right, title and interest in any and all inventions and
copyrights (including intellectual properties) solely or
jointly conceived and/or reduced to practice by the Executive
during the term of his employment relating to the current or
projected business of the Company. The Executive agrees that
all of such inventions and copyrights are the property of said
Company.
(d) The Executive agrees to receive confidential,
proprietary and other information of the Company in confidence,
and not, directly or indirectly, during the term of is
employment or any time after his employment is terminated for
any reason to disclose or furnish to others, assist others in
the application of or use for the Executive s own gain, such
information, including, but not limited to, the Company s
customer lists and trade secrets, methods of conducting or
obtaining business, the manner or process of manufacture, and
the design and drawings of its products, or any part thereof,
unless and until it has become public knowledge, or has come
into the possession of such or others by legal and equitable
means. Furthermore, whether or not such information comprises
proprietary information, trade secrets , or confidential
information, the Executive also agrees not to disclose,
furnish to others, assist others in the application of, or use
for the Executive s own gain, either any information within the
categories of information hereinabove specifically listed,
including the identity of any customers of the Company, or any
other information relating to the Company s business not made
available by the Company to the public or in the public domain.
(e) To assist in carrying out the intent of
subparagraph (d) above, the Executive, during the term of his
employment, agrees to refrain from engaging on his own behalf
or on behalf of any third party in the design, manufacture, or
sale of electronic equipment, accessories and components
thereof, or to perform services or research work in this field
of activity.
(f) The Executive agrees to deliver to the Company,
upon termination of his employment, all property and documents
of the Company and all data relating to the Company s business
then in his custody and not take with him any drawings,
documents, or reproductions of confidential or trade secret
information or of any other information of any kind not made
available to the public by the Company.
(g) The Executive also agrees that the Company may use
for any purpose, at any time during his employment or after
such employment, all photographs of the Executive taken during
the term of his employment.
(h) The Executive also agrees that he will not,
directly or indirectly, during the term of his employment or
within one year after termination of his employment for any
reason, in any manner, encourage, persuade, or induce any other
employee of the Company to terminate his employment, or any
person or entity engaged by the Company to represent it to
terminate that relationship.
9. Representation and Warranty of the Executive. The
Executive represents and warrants that he is not under any
obligation, contractual or otherwise, to any other firm or
corporation, which would prevent his entry into the employ of
the Company or his performance of the terms of this Agreement.
10. Entire Agreement; Amendment. This Agreement contains
the entire agreement between the Company and the Executive with
respect to the subject matter hereof, and may not be amended,
waived, changed, modified or discharged except by an instrument
in writing executed by the parties hereto.
11. Assiqnability. The services of the Executive
hereunder are personal in nature, and neither this Agreement
nor the rights or obligations of the Company hereunder may be
assigned by the Company, whether by operation of law or
otherwise, without the Executive's prior written consent. This
Agreement shall be binding upon, and inure to the benefit of,
the Company and its permitted successors and assigns hereunder.
This Agreement shall not be assignable by the Executive, but
shall inure to the benefit of the Executive's heirs, executors,
administrators and legal representatives.
12. Notice. Any notice which may be given hereunder shall
be in writing and be deemed given when hand delivered and
acknowledged or, if mailed, one day after mailing by registered
or certified mail, return receipt requested, to either party
hereto at their respective addresses stated above, or at such
other address as either party may by similar notice designate,
provided that a photocopy of such notice is dispatched at the
same time as the notice is mailed.
13. Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the
provisions of paragraph 8 hereof were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of
paragraph 8 hereof and to enforce specifically the terms and
provisions of paragraph 8 hereof, this being in addition to any
other remedy to which either party is entitled at law or in
equity.
14. No Third Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to confer upon any
person or entity other than the parties (and the Executive's
heirs, executors, administrators and legal representatives as
provided in paragraph 11 hereof) any rights or remedies of any
nature under or by reason of this Agreement.
15. Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in paragraph 3
hereof by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in paragraph 3
hereof be reduced by any compensation earned by the Executive
as the result of employment by another employer or by
retirement benefits payable after the termination of this
Agreement, except that the Company shall not be required to
provide the Executive and his eligible dependents with medical
insurance coverage as long as the Executive and his eligible
dependents are receiving comparable medical insurance coverage
from another employer.
16. Construction. This Agreement shall be governed by and
construed in accordance with the internal laws of the
Commonwealth of Pennsylvania, without giving effect to
principles of conflict of laws. All headings in this Agreement
have been inserted solely for convenience of reference only,
are not to be considered a part of this Agreement and shall not
affect the interpretation of any of the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
AYDIN CORPORATION
By: /s/ I. Gary Bard
/s/ Klaus Oebel
Executive
<PAGE>
EXHIBIT
10.3
AYDIN CORPORATION
Telephone 700 Dresher
Road
(215) 657-7510 P.O. Box
349
FAX Horsham, PA
19044
(215) 657-3830
U.S.A.
October 23, 1996
Mr. Barry Maser
3741 Ridgeview Road
Huntingdon Valley, PA 19006
Dear Mr. Maser:
I am pleased to offer you the position of Vice President of
Business Development of Aydin Corporation reporting directly to
me as Chairman of the Board, President and Chief Executive
Officer. In that position you would be expected to support me
in improving the performance of Aydin Corporation in the short
term and to work with me in turning Aydin into a world-class
technology transfer company of substantial size, reputation and
market value. Your appointment as a Vice President of the
Company is subject to Board approval.
In this position, your salary will be at the annual rate of
$175,000, payable weekly.
In addition to your salary, you will receive an incentive bonus
based upon mutually agreeable performance criteria. The
performance criteria are to be negotiated within 60 days of the
commencement of your employment, to coincide with an incentive
compensation study presently underway by the Hay Group. This
incentive will provide the opportunity for you to earn up to
70% of your base salary. The first year incentive will be a
guaranteed minimum of $75,000.
As an incentive for you to accept this offer, I will request
that the Board of Directors authorize the issuance, upon
approval of listing on the New York Stock Exchange, of a grant
to you of 10,000 restricted shares of Aydin Corporation's
Common Stock. These shares would vest on a pro-rata basis over
four years pursuant to the terms of a "Restricted Stock
Agreement", a copy of which is enclosed.
In addition, the Board of Directors will be asked to grant you
an initial stock option to purchase up to 50,000 shares of
Aydin's Common Stock pursuant to the terms and conditions of
the company's 1996 Equity Incentive Plan, with a portion of
that option in the form of "Incentive Stock Options" as that
term is defined in the tax code. Also, you will participate,
along with other executives of the Company regarding the grant
of additional stock options based upon the results of
compensation review study being performed for the Company.
You will receive a car allowance of $300 per month.
The term of your employment will be for a period of 24 months.
If, as a result of any merger, acquisition, diversification,
reorganizing or any other similar circumstances, you are
terminated at any time during 24 months covered in this
contract, Aydin Corporation agrees to provide your base salary
compensation for the remainder of the 24 months, or 12 months
from the date of termination, whichever is longer.
After a waiting period of 30 days from the date that your
employment commences, you are eligible to participate in the
Company's welfare benefit plans, including medical, dental,
life and long-term disability insurance. Each of these benefit
plans, if you elect to participate, require an employee
contribution. If you elect to remain with your current
provider for medical benefits, the Company will reimburse you
for your actual out-of-pocket costs for up to one year.
Enrollment dates with the Company's 401(k) Salary Reduction
Savings Plan are January 1 and July 1 next following the date
you have completed six months of employment.
The enclosed Notice to Prospective Employees is made a part of
this offer of employment letter.
Please indicate your acceptance of this offer by signing and
returning one copy of this letter to me. I look forward to
your acceptance and believe that you employment with Aydin will
be mutually beneficial.
Very truly yours,
/s/ I. Gary Bard
I. Gary Bard
Chairman, President and
Chief Executive Officer
Enclosures
I accept this offer: /s/ H. Barry Maser
Barry Maser
<PAGE>
EXHIBIT
10.4
AYDIN CORPORATION
Telephone 700 Dresher
Road
(215) 657-7510 P.O. Box
349
FAX Horsham, PA
19044
(215) 657-3830
U.S.A.
June 21, 1996
Mr. James Henderson
709 Poplar Drive
Falls Church, VA 22046
Dear Mr. Henderson:
I am pleased to offer you the position of Vice President and
Chief Financial Officer of Aydin Corporation reporting directly
to me as Chairman of the Board and Chief Executive Officer.
In this position, your salary will be at the weekly rate of
$2,597 payable weekly.
In addition to your salary, you will receive an incentive bonus
based on mutually agreeable performance. The performance
characteristics are to be negotiated within 60 days of
employment - this incentive will provide the opportunity to
earn up to 50% of the base salary. In the first year, this
bonus will be no less than $30,000, payable in two
installments; $15,000 will be paid upon starting at Aydin and
the balance to be paid by March 31, 1997.
The Company will reimburse you for relocation expenses to cover
closing costs on the sale of your Virginia property and the
purchase of a similar property, including up to 3 points and PA
state transfer tax, in Pennsylvania. Aydin will pay directly
for all moving expenses and reimburse miscellaneous relocation
expense. A $4,000 payment will be issued upon starting at Aydin
to cover all temporary living expenses.
For those expenses that represent tax liabilities, Aydin
Corporation will gross up the compensation to cover the tax
consequences. Should you not be able to complete the
transaction on the sale of your home prior to moving into a new
home, Aydin Corporation will agree to provide you a bridge loan
to cover up to the net equity value of your current property
for a period of one year. Interest on the bridge load will be
charged based on the current Aydin borrowing rate for that day
published in the Wall Street Journal. Principle and interest
will be reimbursed to Aydin after your Virginia home as
completed settlement.
If, as a result of any merger, acquisition diversification,
reorganization or any similar circumstances, you are terminated
at any time through 24 months after you accept this offer, than
Aydin Corporation agrees to provide compensation for the
remainder to the 24 month period.
Aydin Corporation also agrees to pay, in accordance with the
Company's tuition reimbursement program, your continuing
education courses for your Master Degree, consistent with the
Company's Educational Assistance Program.
The Board of Directors will be asked to grant you a stock
option in accordance with the Corporate Stock Option Policy
based upon the results of a compensation review study being
performed for the Company.
You will receive standard Company benefits including medical,
dental, life and long-term disability insurance. Benefits
become effective 30 days after your start date and require an
employee contribution. Enrollment dates for the 401k Plan are
January 1 and July 1. You must be employed for six months
prior to one of those dates in order to be eligible. A
benefits packaged is enclosed for your information. Aydin will
pay the cost of enrolling you and your family into a COBRA plan
for 30 days prior to the start date of Aydin's medical and
dental benefits.
The enclosed Notice to Prospective Employees is made as part of
this offer of employment letter.
Please indicate your acceptance of this offer by signing and
returning one copy of this letter to me. I look forward to
your acceptance and believe that your employment with Aydin
will be mutually beneficial.
Very truly yours,
/s/ I. Gary Bard
I. Gary Bard
Chairman of the Board
and Chief Executive Officer
IGB:amf
Enclosures
I accept this offer: /s/ James R. Henderson
James Henderson
<PAGE>
EXHIBIT
10.5
THE 1994 INCENTIVE STOCK OPTION PLAN
OF
AYDIN CORPORATION
150,000 Shares
(Last amended, October 8, 1996)
I. Purpose
The purpose of this Plan is to advance the interests of
the Corporation and its shareholders by strengthening the
ability of the Corporation to attract and retain in its employ
key individuals of training, experience and ability and to
furnish additional incentive to officers and valued key
employees upon whose judgement, initiative and efforts the
successful conduct and development of its business largely
depends, by encouraging them to purchase stock in the
Corporation.
II. Definitions
As used in this Plan, "Corporation" means Aydin
Corporation; "Board of Directors" means the Board of Directors
of Aydin Corporation; "employee" includes officers and other
key employees of the Corporation and its subsidiaries; but
excludes members of the Board of Directors who are not also
officers or employees of the Corporation; "Stock Option
Committee" (the "Committee") means the Board of Directors;
"Common Stock" means the Corporation's Common Stock of the par
value of $1.00 per share; "Code" means the Internal Revenue
Code of 1986, as amended from time to time.
III. Eligible Personnel
A. All full-time salaried officers and key employees.
B An employee who has been granted an option may, if
he is otherwise eligible, be granted an additional
option or options.
IV. Stock Option Committee
A. Subject to the provisions of the Plan, the Committee
shall administer the Plan. It shall have authority to
construe and interpret the Plan, to define the terms
used therein, to prescribe, amend and rescind rules
and regulations for the administration of the Plan and
to take such other action in the administration of the
Plan as it shall deem proper. The interpretation by
the Committee of any provision of the Plan or of any
option agreement entered into hereunder shall be in
accordance with Section 422 of the Code and
Regulations issued thereunder as they may be amended
from time to time, in order that rights granted
hereunder and under said option agreements shall
constitute "Incentive Stock Options" within the
meaning of that Section.
B. A majority of the members of the Committee shall
constitute a quorum and make all determinations, take
all actions and conduct all business. They shall keep
minutes of their respective meetings.
C. Any Committee action may be taken or determination
made without a meeting if all members of the
respective committee shall individually or
collectively consent in writing to such action or
determination. Such written consent or consents shall
be filed with the minutes of the Corporation.
D. All interpretations, determinations and actions by the
respective committee shall be final, conclusive and
binding upon all parties.
E. No member of the Committee shall be liable for any
action or determination made in good faith with
respect to the Plan or any option agreement.
V. Granting of Options
A. The Committee may at any time and from time to time
grant options to eligible employees, to purchase
shares of Common Stock of the Corporation under this
Plan, and determine the specific employees to whom
options may be granted, the number of shares to be
subject to each option, the terms and provisions of
the option agreements, and the time or times at which
such options shall be granted.
B. The date of grant shall be the date the Committee
takes the necessary action to make the grant;
provided, however, that if the minutes or appropriate
resolutions of the Committee provide than an option is
to be granted as of a date in the future, the date of
grant shall be such future date. In any event, the
optionee must be an employee on the date of the grant.
C. No option shall be granted under this Plan after the
close of business on December 31, 2003, but options
theretofore granted may extend beyond that date.
D. The options granted hereunder shall be "Incentive
Stock Options" as that term is used in Section 422 of
the Code.
VI. Shares Subject to the Plan
The total number of shares of Common Stock that may be
purchased pursuant to options granted under this Plan shall not
exceed 100,000 subject to adjustment as provided in Section IX
and subject to amendment as provided in Section X. If any
option outstanding hereunder shall expire or terminate for any
reason without having been exercised in full, the unpurchased
shares subject to the option shall again be available for the
grant of options under this Plan. Upon the exercise of an
option outstanding hereunder, the Corporation may reissue
Common Stock held in its treasury or issue authorized but
unissued Common Stock.
VII. Terms of Options
A. Each option granted under the Plan shall include the
following provisions, or terms consistent with the
following provisions:
1. The purchase price (option price) of the
shares
subject to option shall be not less than
the fair
market value of the stock on the day the
option is
granted. Such fair market value shall be
established as the following, in order of
descending preference:
a. Mean between the highest and the lowest
quoted selling prices of the stock on an
exchange.
b. Lacking a. above, the mean between the
"bid" and "asked" prices as provided to the
Company by a legitimate broker.
c. Lacking a. or b. for the date of grant, the
mean between the "bid" and "asked" prices
for the most recent date quoted, as
obtained for the Company by a legitimate
broker.
d. Lacking a., b. or c., the last established
determinable price.
2. Except as provided in Section VIII herein, no
option may be exercised unless the optionee is at
the time of such exercise in the employ of the
Corporation or of a subsidiary and shall have been
continuously so employed since the granting of his
option. For the purpose of the Plan, an employee
who is on leave of absence or who is in the Armed
Services or the civilian employment of the United
States will be considered in the employ of the
Corporation or its subsidiaries to the extent his
employment would be treated as continuing intact
under Sections 421 and 422 of the Code, and the
Regulations thereunder, as amended, from time to
time.
3. No option may be exercised prior to one year nor
after five years from the date of its grant.
Unless the option Agreement provides otherwise,
any time after one year from the date of grant the
employee may exercise his option in accordance
with the following schedule:
After: The optionee may purchase:
One year from date of grant...................25% of the total.
Two years from date of grant....An additional 25% of the total.
Three years from date of grant..An additional 25% of the total.
Four years from date of grant...An additional 25% of the total.
4. Upon each exercise of an option the purchase
price shall be payable in full in cash, (or its
equivalent acceptable to the Corporation), or
Common Stock already owned by the employee, or
a combination of cash and Common Stock.
5. No fractional shares shall be issued under this
Plan or under any option granted hereunder, nor
shall any cash payment be made in lieu thereof.
6. An option shall not be assignable or
transferable by the employee to whom granted
otherwise than by will or by the laws of
descent and distribution, and may be exercised,
during his lifetime, only by such employee.
7. No person shall have the rights and privileges
of a shareholder with respect to shares subject
to or purchased under an option until the date
appearing on the certificates issued upon the
exercise of the option.
B. The aggregate fair market value (determined as of the
date the option is granted) of the stock for which
any employee may be granted options first exercisable
in any calendar year under this Plan and all other
"Incentive Stock Option Plans" of the Corporation or
its subsidiaries, shall not exceed $100,000.
C. No option under this Plan may be granted to an
employee who, at the time the option is granted, owns
stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the
Corporation or of its subsidiaries, provided,
however, this limitation shall not apply if such
option is granted at an option price of at least 110
percent of the fair market value of the stock on the
date of the grant.
D. Each option granted under this Plan may, but need
not, include other terms and conditions not
inconsistent with the provisions hereof, including a
requirement that the optionee represent at the time
of each exercise of option that the shares purchased
are being acquired for investment and not for resale.
E. Nothing in this Plan nor in any option granted
hereunder shall confer any rights to continue in the
employ of the Corporation or its subsidiaries or
interfere in any way with the rights of the
Corporation or any subsidiary to terminate the
employee at any time.
VIII. Termination of Employment or Death of Employee
A. If the employment of an optionee is terminated for
cause, or if he voluntarily quits, his option shall
expire forthwith, but he may exercise any options
that are exercisable as of the date of termination or
voluntary quit provided payment for same is received
within 30 days of the termination. Retirement,
including Early Retirement, under any retirement plan
of the Corporation or subsidiary is not deemed a
voluntary quit.
B. If the employment of an optionee terminates for any
reason other than termination for cause, a voluntary
quit, disability or death, the option shall expire
three months thereafter unless by its terms it
expires sooner. During said period, the option may
be exercised in accordance with its terms but only
for the number of shares with respect to which
options could be exercised as of the date of
termination of employment.
C. If an optionee dies while he is employed by the
Corporation or a subsidiary or within the three month
period referred to in Section VIII(B) above or within
the twelve month period referred to in Section
VIII(D) below, during said period, the option may be
exercised by his personal representatives or the
persons to whom his rights under the option shall
pass by will or the laws of descent and distribution
in accordance with terms of the option but only for
that number of shares with respect to which options
could be exercised as of the date of death. Such
exercisable option must be exercised within three
months of death, unless, by its terms, it expires
sooner.
D. If the employment of an optionee terminates by reason
of the optionee's "disability" (within the meaning of
Section 22(e)(3) of the Code), the option shall
expire 12 months thereafter unless by its terms it
expires sooner. During said period, the option may
be exercised in accordance with its terms but only
for the number of shares with respect to which
options could be exercised as of the date of
termination of employment.
E. Notwithstanding the above, an option may not be
exercised after the expiration of five years from the
date the option is granted.
IX. Adjustments Upon Changes in Capitalization
In the event of any recapitalization, stock dividend,
stock split, or combination affecting the stock subject to this
Plan, or in the event of any merger, consolidation, or
reorganization as a result of which the Corporation is the
surviving corporation, the Committee will make appropriate
adjustments in the aggregate number of kind of shares subject
to the Plan, the number of shares that may be granted to any
one employee, and the number of shares and the price per share
subject to outstanding options provided that such options
remain or constitute incentive stock options within the meaning
of Section 422 of the Code. Any such determination of
adjustment shall be final and conclusive upon the parties.
In the event of the dissolution or liquidation of the
Corporation, or in the event of a reorganization, merger, or
consolidation of the Corporation with one or more corporations
as a result of which the Corporation is not the surviving
corporation, or in the event of a sale of substantially all of
the property or stock of the Corporation to another
corporation, the Plan shall terminate; and any option then
outstanding hereunder shall terminate on the effective date of
such transaction; provided, however, that in the event of any
such transaction the Board of Directors may, but need not,
modify all outstanding options so as to make all such options
exercisable in full on a date sufficiently in advance of the
effective date of such transaction to permit the shares
acquired pursuant to any exercise of such options to be issued
before the effective date of such transaction.
X. Amendment and Termination
A. The Board of Directors shall have the power, in its
discretion, to amend, suspend or terminate this Plan
at any time. The Board of Directors shall not have
the power except as may be permitted in Section IX
herein:
1. To change the class of employees eligible to
receive options under the Plan; or
2. To increase the number of shares subject to the
Plan in the aggregate unless such increase is
submitted to the shareholders of the
Corporation for their approval; or
3. To increase the number of shares subject to an
option for any one individual; or
4. To reduce the option price below the fair
market value of the stock (or below the 110%
fair market value when required by Section VII
(C) hereof) at the time the option was granted;
or
5. To increase the maximum terms of options
provided herein.
B. The Board of Directors may, with the consent of an
optionee, make such modifications of the terms and
conditions of his option as it shall deem advisable.
XI. Compliance with Rule 16b-3
The provisions of this Plan are intended to comply in all
respects with the provisions of Rule 16b-3 under the Securities
Exchange Act of 1934 and any amendments thereto, and, if this
Plan shall not so comply, whether on the date of adoption or by
reason of any later amendment to or interpretation of Rule 16b-
3, the provisions of this Plan shall be deemed to be
automatically amended so as to bring them into full compliance
with such rule.
XII. Effective Date of Plan
This Plan shall become effective as of January 3, 1994
upon approval of the shareholders of the Corporation and shall
terminate at the close of business on December 31, 2003.
<PAGE>
EXHIBIT
10.6
THE 1996 EQUITY INCENTIVE PLAN
OF
AYDIN CORPORATION
500,000 Shares
(Last Amended October 8, 1996)
1. Purpose. The purpose of the Aydin Corporation 1996
Equity Incentive Plan (the "Plan") is to further the growth,
development and financial success of Aydin Corporation and its
subsidiaries by providing additional incentives to those
officers and key employees who are responsible for the
management of the business affairs of the Company, or its
subsidiaries, which will enable them to participate directly in
the growth of the capital stock of the Company. The Company
intends that the Plan will facilitate securing, retaining and
motivating management employees of high caliber and potential.
To accomplish these purposes, the Plan provides a means whereby
management employees may receive stock options ("Options") to
purchase the Company's Common Stock.
2. Definitions. As used in this plan, "Corporation" or
the "Company" means Aydin Corporation; "Board of Directors"
means the Board of Directors of Aydin Corporation; "employee"
includes directors, officers and other key employees of the
Corporation and its subsidiaries; "Stock Option Committee" (the
"Committee") means the Board of Directors; "Common Stock" means
the Corporation's Common Stock of the par value of $1.00 per
share; "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
3. Administration. The Plan shall be administered by
the Committee who shall have full and final authority, in its
sole discretion, to interpret the provisions of the Plan and to
decide all questions of fact arising in its application; to
determine the employees to whom Options shall be granted and
the type, amount, size and terms of each such grant; to
determine the time when Options shall be granted; and to make
all other determinations necessary or advisable for the
administration of the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on
all optionees and all other holders of Options granted under
the Plan.
4. Stock Subject to the Plan. Subject to Section 17
hereof, the shares that may be issued under the Plan shall not
exceed in the aggregate 500,000 shares of Common Stock. Such
shares may be authorized and unissued shares or shares issued
and subsequently reacquired by the Company. Except as
otherwise provided herein, any shares subject to an Option that
for any reason expires or are terminated unexercised as to such
shares shall again be available under the Plan.
5. Eligibility To Receive Options. Persons eligible
to receive Options under the Plan shall be limited to those
officers and other key employees of the Company, or any
subsidiary of the Company (as defined in Section 425 of the
Code), who are in positions in which their decisions, actions
and counsel significantly impact upon the profitability and
success of the Company, or any subsidiary of the Company.
Directors of the Company who are not also officers or employees
of the Company, or any subsidiary of the Company shall be
eligible to participate in the Plan, provided that such persons
shall not be eligible to receive grants of Incentive Stock
Options, as such term is defined in Section 6 hereof.
6. Types of Options. Grants may be made at any time
and from time to time by the Committee in the form of stock
options to purchase shares of Common Stock. Options granted
hereunder may be Options that are intended to qualify as
incentive stock options within the meaning of Section 422 of
the Code or any amendment or substitute thereto ("Incentive
Stock Options") or Options that are not intended to so qualify
("Nonqualified Stock Options").
7. Option Agreements. Options for the purchase of
Common Stock shall be evidenced by written agreements in such
form not inconsistent with the Plan as the Committee shall
approve from time to time. The Options granted hereunder may be
evidenced by a single agreement or by multiple agreements, as
determined by the Committee in its sole discretion. Each option
agreement shall contain in substance the following terms and
conditions:
(a) Type of Option. Each option agreement shall
identify the Options represented thereby either as Incentive
Stock Options or Nonqualified Stock Options, as the case may
be.
(b) Option Price. Each option agreement shall
set forth the purchase price of the Common Stock purchasable
upon the exercise of the Option evidenced thereby. Subject to
the limitation set forth in Section 7(d)(ii) off the Plan, the
purchase price of the Common Stock subject to an Incentive
Stock Option shall be not less than 100% of the fair market
value of such stock on the date the Option is granted, as
determined by the Committee, but in no event less than the par
value of such stock. The purchase price of the Common Stock
subject to a Nonqualified Stock Option shall be not less than
100% of the fair market value of such stock on the date the
Option is granted, as determined by the Committee. For this
purpose, fair market value on any date shall be the mean
between the highest and the lowest quoted selling prices of the
stock on an exchange, or if the stock is not traded that day,
the fair market value shall be as determined by the Committee
pursuant to Section 422 of the Code.
(c) Exercise Term. No option may be exercised
prior to one year nor after five years from the date of its
grant. Unless the option Agreement provides otherwise, any
time after one year from the date of grant the employee may
exercise his option in accordance with the following schedule:
After: The optionee may purchase:
One year from date of grant...................25% of the total.
Two years from date of grant....An additional 25% of the total.
Three years from date of grant..An additional 25% of the total.
Four years from date of grant...An additional 25% of the total.
The Committee shall have the power to permit an acceleration of
previously established exercise terms, subject to the
requirements set forth herein, upon such circumstances and
subject to such terms and conditions as the Committee deems
appropriate.
(d) Incentive Stock Options. In the case of an
Incentive Stock Option, each option agreement shall contain
such other terms, conditions and provisions as the Committee
determines to be necessary or desirable in order to qualify
such Option as a tax-favored Option (within the meaning of
Section 422 of the Code or any amendment or substitute thereto
or regulation thereunder) including without limitation, each of
the following except that any of these provisions may be
omitted or modified if it is no longer required in order to
have an Option qualify as a tax-favored Option within the
meaning of Section 422 of the Code or any substitute therefor:
(i) The aggregate fair market value (determined
as of the date the Option is granted) of the Common Stock with
respect to which Incentive Stock Options are first exercisable
by any employee during any calendar year (under all plans of
the Company) shall not exceed $100,000.
(ii) No Incentive Stock Options shall be granted
to any employee if at the time the Option is granted to the
individual who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
its subsidiaries unless at the time such Option is granted the
Option price is at least 110% of the fair market value of the
stock subject to the Option and, by its terms, the Option is
not exercisable after the expiration of five years from the
date of grant.
(iii) No Incentive Stock Options shall be exercisable
more than 30 days (or three months, in the case where the
employee is placed on layoff, or one year, in the case of an
employee who dies or becomes disabled within the meaning of
Section 22(e)(3) of the Code or any substitute therefor) after
termination of employment.
(e) Substitution of Options. Options may be
granted under the Plan from time to time in substitution for
stock options held by employees of other corporations who are
about to become, and who do concurrently with the grant of such
options become, employees of the Company, or a subsidiary of
the Company as a result of a merger or consolidation of the
employing corporation with the Company, or a subsidiary of the
Company, or the acquisition by the Company, or a subsidiary of
the Company of the assets of the employing corporation, or the
acquisition by the Company, or a subsidiary of the Company of
stock of the employing corporation, The terms and conditions of
the substitute options so granted may vary from the terms and
conditions set forth in this Section 7 to such extent as the
Committee at the time of grant may deem appropriate to conform,
in whole or in part, to the provisions of the stock options in
substitution for which they are granted.
8. Date of Grant. The date on which an Option shall
be deemed to have been granted under the Plan shall be the date
of the Committee's authorization of the Option or such later
date as may be determined by the Committee at the time the
Option is authorized. Notice of the determination shall be
given to each individual to whom an Option is so granted within
a reasonable time after the date of such grant.
9. Exercise and Payment for Shares. Options may be
exercised in whole or in part, from time to time, by giving
written notice of exercise to the Secretary of the Company,
specifying the number of shares to be purchased, except that no
Option may be exercised in whole or in part during the first
twelve months after such Option is granted. The purchase price
of the shares with respect to which an Option is exercised
shall be payable in full with the notice of exercise in cash,
Common Stock at fair market value, or a combination thereof.
The fair market value of Stock so delivered shall be the mean
of the high and the low prices on the principal exchange upon
which the Stock is traded on the trading day immediately
preceding the date of exercise.
10. Rights upon Termination of Employment. In the
event that an optionee ceases to be an employee of the Company,
or any subsidiary of the Company for any reason other than
lay-off, death, or disability (within the meaning of Section
22(e)(3) of the Code or any substitute therefore), the optionee
shall have the right to exercise the Option during its term
within a period of 30 days (three months in the event of a
lay-off) after such termination to the extent that the Option
was exercisable at the time of termination. In the event that
an optionee dies or becomes disabled prior to the expiration of
his Option and without having fully exercised his Option, the
optionee or his successor shall have the right to exercise the
Option during its term within a period of one year after
termination of employment due to death or disability to the
extent that the Option was exercisable at the time of
termination unless, by its terms, it expires sooner.
11. General Restrictions. Each Option granted under
the Plan shall be subject to the requirement that if at any
time the Committee shall determine that (i) the listing,
registration or qualification of the shares of Common Stock
subject or related thereto upon any securities exchange or
under any state or federal law, or (ii) the consent or approval
of any government regulatory body, or (iii) an agreement by the
recipient of an Option with respect to the disposition of
shares of Common Stock is necessary or desirable as a condition
of or in connection with the granting of such Option or the
issuance or purchase of shares of Common Stock thereunder, such
Option shall not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
12. Rights of a Stockholder. The recipient of any
Option under the Plan, unless otherwise provided by the Plan,
shall have no rights as a stockholder unless and until
certificates for shares of Common Stock are issued and
delivered to him.
13. Right to Terminate Employment. Nothing contained
in the Plan or in any option agreement entered into pursuant to
the Plan shall confer upon any optionee the right to continue
in the employment of the Company or any subsidiary of the
Company or affect any right that the Company or any subsidiary
of the Company may have to terminate the employment of such
optionee.
14. Withholding. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the
Plan, the Company shall have the right to require the recipient
to remit to the Company an amount sufficient to satisfy any
federal, state or local withholding tax requirements prior to
the delivery of any certificate or certificates for such
shares. If and to the extent authorized by the Committee in its
sole discretion, an optionee may make an election, by means of
a form of election to be prescribed by the Committee, to have
shares of Common Stock that are acquired upon exercise of an
Option withheld by the Company or to tender other shares of
Common Stock or other securities of the Company owned by the
optionee to the Company at the time of exercise of an Option to
pay the amount of tax that would otherwise be required by law
to be withheld by the Company as a result of any exercise of an
Option. Any such election shall be irrevocable and shall be
subject to termination by the Committee, in its sole
discretion, at any time. Any securities so withheld or tendered
will be valued by the Committee at the mean of the high and the
low prices the Common Stock traded on the trading day
immediately preceding the date exercised.
15. Non-Assignability. No Option under the Plan shall be
assignable or transferable by the recipient thereof except by
will or by the laws of descent and distribution. During the
life of the recipient, such Option shall be exercisable only by
such person or by such person's guardian or legal
representative.
16. Non-Uniform Determinations. The Committee's
determination under the Plan (including without limitation
determinations of the persons to receive Options, the form,
amount and timing of such grants, the terms and provisions of
Options, and the agreements evidencing same) need not be
uniform and may be made selectively among persons who receive,
or are eligible to receive, grants of Options under the Plan
whether or not such persons are similarly situated.
17. Adjustments.
(a) Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the number
of shares of Common Stock covered by each outstanding Option
and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option, as well
as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Committee,
whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to an
Option.
(b) Dissolution or Liquidation. In the event of
the proposed dissolution or liquidation of the Company, all
outstanding Options will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided
by the Committee. The Committee may, in the exercise of its
sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Committee and give
each Option holder the right to exercise his Option as to all
or any part of the shares of Common Stock covered by the
Option, including shares as to which the Option would not
otherwise be exercisable.
(c) Sale or Merger. In the event of a proposed
sale of all or substantially all of the assets of the Company,
or the merger of the Company with or into another corporation,
the Committee, in the exercise of its sole discretion, may take
such action as it deems desirable, including, but not limited
to (i) causing an Option to be assumed or an equivalent option
to be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, (ii) providing that
each Option holder shall have the right to exercise his Option
as to all of the shares of Common Stock covered by the Option,
including shares as to which the Option would not otherwise be
exercisable, or (iii) declare that an Option shall terminate at
a date fixed by the Committee provided that the Option holder
is given notice and opportunity to exercise his Option prior to
such date.
18. Amendment. The Committee may terminate or amend the
Plan at any time. The termination or any modification or
amendment of the Plan shall not, without the consent of a
participant, affect his rights under an Option previously
granted.
19. Reservation of Shares. The Company, during the
term of the Plan, will at all times reserve and keep available
such number of shares as shall be sufficient to satisfy the
requirement of the Plan. Inability of the Company to obtain
authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder, shall
relieve the Company of any liability for the failure to issue
or sell such shares as to which such requisite authority shall
not have been obtained.
20. Effect on Other Plans. Participation in the Plan
shall not affect an employee's eligibility to participate in
any other benefit or incentive plan of the Company or any
subsidiary of the Company. Any Options granted pursuant to the
Plan shall not be used in determining the benefits provided
under any other plan of the Company or any subsidiary of the
Company unless specifically provided.
21. Duration of the Plan. The Plan shall remain in
effect until all Options granted under the Plan have been
satisfied by the issuance of shares, but no Option shall be
granted more than ten years after the date the Plan is adopted
by the Company's Board of Directors.
22. Forfeiture for Dishonesty. Notwithstanding
anything to the contrary in the Plan, if the Committee finds,
by a majority vote, after full consideration of the facts
presented on behalf of both the Company and any optionee, that
the optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or dishonest conduct in the course of
his employment or retention by the Company or any subsidiary of
the Company that damaged the Company, or any subsidiary of the
Company or that the optionee has disclosed confidential
information of the Company or any subsidiary of the Company,
the optionee shall forfeit all unexercised Options and all
exercised Options under which the Company has not yet delivered
the certificates. The decision of the Committee in interpreting
and applying the provisions of this Section 22 shall be final.
No decision of the Committee however, shall affect the finality
of the discharge or termination of such optionee by the Company
or any subsidiary of the Company in any manner.
23. No Prohibition on Corporate Action. No provision
of the Plan shall be construed to prevent the Company or any
officer or director thereof from taking any action deemed by
the Company or such officer or director to be appropriate or in
the Company's best interests whether or not such action could
have an adverse effect on the Plan or any Options granted
hereunder, and no optionee or optionee's estate, personal
representative or beneficiary shall have any claim against the
Company or any officer or director thereof as a result of the
taking of such action.
24. Indemnification. With respect to the
administration of the Plan, the Company shall indemnify each
present and future member of the Committee and the Board of
Directors against, and each member of the Committee and the
Board of Directors shall be entitled without further action on
their part to indemnity from the Company for, all expenses
(including the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself)
reasonably incurred by them in connection with or arising out
of, any action, suit or proceeding in which they may be
involved by reason of they being or having been a member of the
Committee or the Board of Directors, whether or not they
continue to be such member at the time of incurring such
expenses; provided, however, that such indemnity shall not
include any expenses incurred by any such member of the
Committee or the Board of Directors (i) in respect of matters
as to which they shall be finally adjudged in any such action,
suit or proceeding to have been guilty of gross negligence or
willful misconduct in the performance of their duty as such
member of the Committee or the Board of Directors: or (ii) in
respect of any matter in which any settlement is affected for
an amount in excess of the amount approved by the Company on
the advice of its legal counsel; and provided further that no
right of indemnification under the provisions set forth herein
shall be available to or enforceable by any such member of the
Committee or the Board of Directors unless, within 60 days
after institution of any such action, suit or proceeding, they
shall have offered the Company in writing the opportunity to
handle and defend same at its own expense. The foregoing right
of indemnification shall inure to the benefit of the heirs,
executors or administrators of each such member of the
Committee or the Board of Directors and shall be in addition to
all other rights to which such member may be entitled as a
matter of law, contract or otherwise.
25. Miscellaneous Provisions.
(a) Compliance with Plan Provisions. No optionee
or other person shall have any right with respect to the Plan,
the Common Stock reserved for issuance under the Plan or in any
Option until a written option agreement shall have been
executed by the Company and the optionee and all the terms,
conditions and provisions of the Plan and the Option applicable
to such optionee (and each person claiming under or through
him) have been met.
(b) Approval of Counsel. In the discretion of the
Committee, no shares of Common Stock, other securities or
property of the Company or other forms of payment shall be
issued hereunder with respect to any Option unless counsel for
the Company shall be satisfied that such issuance will be in
compliance with applicable federal, state, local and foreign
legal, securities exchange and other applicable requirements.
(c) Compliance with Rule 16b-3. To the extent
that Rule 16b-3 under the Exchange Act applies to Options
granted under the Plan, it is the intent of the Company that
the Plan comply in all respects with the requirements of Rule
16b-3, that any ambiguities or inconsistencies in construction
of the Plan be interpreted to give effect to such intention and
that if the Plan shall not so comply, whether on the date of
adoption or by reason of any later amendment to or
interpretation of Rule 16b-3, the provisions of the Plan shall
be deemed to be automatically amended so as to bring them into
full compliance with such rule.
(d) Effects of Acceptance of Option. By
accepting any Option or other benefit under the Plan, each
optionee and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the
Plan by the Company, the Board of Directors, the Committee or
its delegates.
(e) Construction. The masculine pronoun shall
include the feminine and neuter, and the singular shall include
the plural, where the context so indicates.
26. Stockholder Approval. The exercise of any Option
granted under the Plan shall be subject to the approval of the
Plan by the affirmative vote of the holders of a majority of
the outstanding shares of the Common Stock present, or
represented, and entitled to vote at a meeting duly held.
<PAGE>
EXHIBIT
15
Securities and Exchange Commission
Washington, D.C. 20549
We have made a review of the condensed consolidated financial
statements of Aydin Corporation and subsidiaries as of
September 28, 1996 and for the three-month and nine-month
periods ended September 28, 1996, in accordance with standards
established by the American Institute of Certified Public
Accountants, and issued our report thereon dated October 24,
1996. We are aware that such financial statements and our
above-mentioned report appearing in the Form 10-Q of Aydin
Corporation for the quarter ended September 28, 1996 are being
incorporated by reference in the Registration Statement Nos.
33-61537; 33-53549; 33-34863; 33-22016; 33-14284; 2-97645;
2-93603; 2-77623; 2-64093 and that such report pursuant to Rule
436(c) of the Securities Act of 1933 is not considered a part
of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Paragraphss 7 and 11 of that Act.
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
October 24, 1996
<PAGE>
EXHIBIT
19
Dear Stockholder:
During the past four months, Aydin Corporation has been
undergoing a major restructuring in order to return the Company
to increased revenues and profitability.
Utilizing the experience and expertise Aydin has achieved
in producing products for the military sector, we are expanding
further into manufacturing and selling a range of products,
systems and services to commercial markets. Our thrust is to
build the same strength in our marketing and client service
operations as we have achieved in the past in engineering our
technologically-advanced products.
Towards the goal of maximizing revenues and profits,
management is focusing more on marketing, sales and
communications to increase the number of customers, generate
new business from existing customers, and ensure client
satisfaction.
Third quarter 1996 results were consistent with the
Company s expectations as we undergo restructuring. We do
anticipate additional but reduced losses in the fourth quarter.
Management s challenge is to achieve break-even operations by
mid 1997.
In the third quarter of 1996, sales of $25,249,000
represented a 23% decrease compared to sales of $32,932,000 in
the same period last year. The Company incurred a net loss for
the third quarter of 1996 of $5,467,000, or $1.07 per share,
compared to net income of $ 774,000, or $.15 per share, in last
year s third quarter.
Sales for the first nine months of 1996 were $88,238,000,
a 16% decrease from last year's nine month sales of
$105,014,000. For the first nine months of 1996, a net loss of
$11,528,000, or $2.25 per share was reported, compared to a net
income of $3,038,000, or $.60 per share, for the first nine
months of 1995.
Third quarter 1996 results include a restructuring charge
of $3.7 million pre-tax, or $2.8 million ($.55 per share) after
tax. The Company s restructuring plan includes the following
actions designed to improve future operating results and
enhance the Company s working capital position: (1) sale of the
Company s San Jose owned facility; (2) sale of the Company s
High Power Amplifier product line (accomplished in October);
and (3) exit and severance costs resulting from the
consolidation of various product lines operated in different
locations and divisions.
During the quarter, we had significant achievements in
contract performance which contributed to a positive cash flow
from operations of approximately $3 million and should continue
to enhance future cash flows.
(page 1)
<PAGE>
In August, we signed a protocol with the Turkish Air Force
(TMRC) that established a new baseline for the future delivery
of air defense systems and resulted in a $6.5 million payment
during the quarter. Three of the 13 systems have been installed
and accepted by the customer. Our plans are to install one
system about every six weeks. We also successfully achieved
Preliminary Systems Acceptance on the first RIS site of our
NATO contract for which payment was received in October.
Backlog at September 28, 1996 was approximately $90
million, versus $116 million at September 30, 1995, and $94
million at June 30, 1996. These backlog numbers do not include
probable production options. In August, Aydin was awarded an
$8.4 million delivery order contract to provide Miniature Data
Acquisition Units over a three year period for the Department
of Defense Flight Test Program. These units gather information
to evaluate airframe and aircraft flight worthiness. This award
will be included in backlog as delivery orders are received.
The Board of Directors decided that Aydin could best
maximize its shareholder value by remaining independent at this
time, and a possible merger with EA Industries is no longer
being considered.
Our mission is to be a world class provider of products
and systems for the acquisition and distribution of information
over electronic communication media, and to focus on customers
and their needs. We look to the future with optimism as we
position and strengthen the Company for growth and
profitability in 1997.
For the latest news and information on Aydin and our
products, you can look at our Internet pages located at:
http://www.aydin.com. You will also be able to give feedback,
offer ideas and suggestions on what you would like to see
featured. . . . . and even have an opportunity to chat with the
CEO.
/s/ I. Gary Bard
I. Gary Bard
Chairman and Chief Executive Officer
October 30, 1996
(page 2)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($000 omitted except for per share amounts)
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
9/28/96 9/30/95 9/28/96 9/30/95
(Unaudited) (Unaudited)
<C> <S> <S> <S> <S>
NET SALES $ 25,249 $ 32,932 $ 88,238 $ 105,014
COST AND EXPENSES
Cost of sales 20,425 24,014 70,961 76,612
Selling, general and
administrative 6,557 5,954 21,946 18,699
Research and
development 2,353 1,777 6,904 4,998
Interest expense,
(income) net (60) 110 364 128
Restructuring costs 3,730 -0- 3,730 -0-
________ _________ ________ _________
Total 33,005 31,855 103,905 100,437
________ _________ ________ _________
INCOME (LOSS) BEFORE
INCOME TAXES AND
MINORITY INTEREST (7,756) 1,077 (15,667) 4,577
INCOME TAXES (RECOVERY)(2,289) 311 (4,049) 1,528
________ _________ ________ _________
INCOME (LOSS) BEFORE
MINORITY INTEREST (5,467) 766 (11,618) 3,049
LESS MINORITY INTEREST -0- (8) (90) 11
________ _________ ________ _________
NET INCOME LOSS) $(5,467) $ 774 $ (11,528) $ 3,038
________ _________ _________ _________
________ _________ _________ _________
EARNINGS (LOSS)
PER SHARE $ (1.07) $ .15 $ (2.25) $ .60
________ _________ _________ _________
________ _________ _________ _________
</TABLE>
(page 3)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000 Omitted)
ASSETS
<TABLE>
<CAPTION>
Sept. 28, 1996 Dec. 31, 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents-
1996, $2,713; 1995, $3,569 $ 4,594 $ 4,638
Restricted cash 6,623 11,672
Accounts receivable 32,300 53,216
Unbilled revenue, after
progress billings 42,897 46,927
Inventories:
Raw materials 8,590 11,581
Work-in-process 5,940 7,965
Finished product 2,893 3,234
Prepaid expenses 1,988 1,577
________ ________
Total current assets 105,825 140,810
PROPERTY, PLANT AND EQUIPMENT,
net of accumulated depreciation:
1996, $60,066; 1995, $59,055 24,235 25,624
OTHER ASSETS 9 426
________ ________
TOTAL ASSETS $130,069 $166,860
________ ________
________ ________
__________________________________________________________________
<FN>
NOTE TO FINANCIAL STATEMENTS:
Interim financial statements reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results for the periods. The 1995 balance sheet has been derived
from the audited financial statements contained in the 1995 Annual
Report to Stockholders. These interim financial statements conform
with the requirements for interim financial statements and
consequently do not include all the disclosures normally required
by generally accepted accounting principles. Reporting
developments have been updated where appropriate. In this
connection, there are no significant changes in contingency
disclosures and although the Company's liquidity and financial
flexibility have improved since year end, they continue to be
adversely affected until we receive further collections against
unbilled revenue or get new borrowing facilities in place, which
we expect to happen around year-end 1996. Pretax income for the
nine months includes foreign currency translation gains relating
to the Turkish subsidiary of $605,000 for 1996 and $323,000 for
1995.
The third quarter includes a $3.7 million pretax restructuring
charge in accordance with the following plan, which is expected to
be completed by June 30, 1997: 1) sale of Company-owned
facilities; 2) sale of the High Power Amplifier product line
(accomplished in October); and 3) exit and severance costs in
connection with the consolidation of various product lines
operated in different locations and divisions. Of the total
restructuring charge of $3.7 million, approximately $1.3 million
of costs were incurred in the third quarter and the balance has
been reflected in the September 28, 1996 balance sheet as accrued
liabilities or asset reductions.
</FN>
</TABLE>
(page 4)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000 Omitted)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Sept. 28, 1996 Dec. 31, 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of
long-term debt $ -0- $ 342
Short-term bank debt 3,798 5,486
Accounts payable 18,337 29,222
Accrued liabilities 6,985 7,370
Advanced payments and
contract billings in
excess of recognized
revenue 2,728 2,843
Accrued and deferred
income taxes 337 9,932
________ _______
Total current liabilities 32,185 55,195
LONG-TERM DEBT,
less current maturities -0- 770
DEFERRED INCOME TAXES 4,700 6,232
MINORITY INTEREST -0- 90
STOCKHOLDERS' EQUITY:
Common stock, par value $1-
authorized 7,500,000
shares: issued 1996,
5,125,900 shares;
1995, 5,112,127 shares 5,126 5,112
Additional paid-in capital 2,356 2,188
Retained earnings 86,355 97,883
Foreign currency
translation effects (653) (610)
________ _______
Stockholders' equity 93,184 104,573
________ _______
TOTAL LIABILITIES
AND EQUITY $130,069 $166,860
________ _______
________ _______
</TABLE>
(page 5)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
($000 omitted)
<TABLE>
<CAPTION>
Nine Months Ended
Sept. 28, 1996 Sept. 30, 1995
(Unaudited) (Unaudited)
<C> <S> <S>
OPERATING ACTIVITIES
Net Income (Loss) $ (11,528) $ 3,038
Items not affecting cash:
Depreciation and amortization 2,215 2,325
Deferred income taxes 300 300
Minority Interest (90) 11
Gain on sale of facility (216) -0-
Other 374 (50)
Changes in certain working
capital items:
Accounts receivable 20,916 3,922
Unbilled revenue 4,030 (15,613)
Advance payments and contract
billings in excess of
recognized revenue (115) (1,002)
Inventories 5,357 (1,212)
Prepaid expenses (411) (294)
Accounts payable and accrued
liabilities (11,270) (1,115)
Accrued income taxes (11,427) (149)
__________ ___________
CASH (USED) BY
OPERATING ACTIVITIES (1,865) (9,839)
INVESTING ACTIVITIES
Net property, plant and
equipment additions (1,769) (2,203)
Proceeds from sale of facility 1,159 -0-
__________ ___________
CASH (USED) BY
INVESTING ACTIVITIES (610) (2,203)
FINANCING ACTIVITIES
Release of collateral on
restricted cash 5,049 8,062
Principal payments on
long-term debt (1,112) (808)
Net repayments of
short-term borrowings (1,688) (200)
Purchase of treasury shares -0- (78)
Minority investment in
consolidated subsidiary -0- 103
Proceeds from exercise of
stock options 182 1,002
__________ ___________
CASH PROVIDED BY
FINANCING ACTIVITIES 2,431 8,081
__________ ___________
DECREASE IN CASH
AND CASH EQUIVALENTS (44) (3,961)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 4,638 9,771
__________ ___________
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 4,594 $ 5,810
__________ ___________
__________ ___________
</TABLE>
(page 6)
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF
INTERIM FINANCIAL INFORMATION
Board of Directors and Stockholders
Aydin Corporation
We have reviewed the condensed consolidated balance sheet of
Aydin Corporation and subsidiaries as of September 28, 1996, and
the related condensed consolidated statements of operations and
cash flows for the nine month periods ended September 28, 1996 and
September 30, 1995 in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these
condensed consolidated financial statements is the representation
of the management of Aydin Corporation and subsidiaries.
A review of interim financial information consists
principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet as of
December 31, 1995, and the related consolidated statements of
operations and cash flows for the year then ended (not presented
herein) and in our report dated February 26, 1996, except as to
Note A for which the date is March 22, 1996, we expressed
an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1995 is
fairly stated, in all material respects in relation to the
consolidated balance sheet from which it has been derived.
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
October 24, 1996
- ------------------------------------------------------------------
A copy of Aydin Corporation's Form 10Q may be obtained without
charge, upon written request sent to Aydin Corporation
(page 7)
<PAGE>
AYDIN CORPORATION
Aydin Corporation designs, engineers, manufactures, markets,
distributes, installs, and operates technologically advanced
communication and information systems.
The Company s capabilities include: telecommunications;
airborne and ground data acquisition and avionics; computer
equipment and software; air and other traffic control; radars,
radar simulation, integration and modernization; command control
and communications systems; and systems integration.
Aydin is a world-class provider of products and services for
the acquisition and distribution of information over electronic
communications media.
The Company has facilities in the United States, the United
Kingdom, Turkey and South America.
(page 8)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Third Quarter Report to Stockholders and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-28-1996
<CASH> 4,594
<SECURITIES> 6,623
<RECEIVABLES> 32,300
<ALLOWANCES> 0
<INVENTORY> 17,423
<CURRENT-ASSETS> 105,825
<PP&E> 84,301
<DEPRECIATION> 60,066
<TOTAL-ASSETS> 130,069
<CURRENT-LIABILITIES> 32,185
<BONDS> 0
<COMMON> 5,126
0
0
<OTHER-SE> 88,058
<TOTAL-LIABILITY-AND-EQUITY> 130,069
<SALES> 25,249
<TOTAL-REVENUES> 25,249
<CGS> 20,425
<TOTAL-COSTS> 33,005
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (60)
<INCOME-PRETAX> (7,756)
<INCOME-TAX> (2,289)
<INCOME-CONTINUING> (5,467)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,467)
<EPS-PRIMARY> (1.07)
<EPS-DILUTED> (1.07)
</TABLE>
