ELCOM INTERNATIONAL INC, DEF 14A, 1997-04-28

ELCOM INTERNATIONAL INC
DEF 14A, 1997-04-28
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]

- --------------------------------------------------------------------------------

Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

Elcom International, Inc.
(Name of Registrant as Specified In Its Charter)

[ ]
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

- --------------------------------------------------------------------------------
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[Elcom International Logo]

April 28, 1997

To the Stockholders of Elcom International, Inc.:

The Annual Meeting of Stockholders of Elcom International, Inc. will be
held at 10:00 A.M. (EDT), on June 10, 1997, at The Hilton at Dedham Place, 1
Allied Drive, Dedham, Massachusetts.

We will be reporting on your Company's activities and you will have an
opportunity to ask questions about our technology and operations.

The Board of Directors hopes that you are planning to attend the Annual
Meeting personally, and we look forward to greeting you. Whether or not you
expect to attend in person, the return of the enclosed Proxy as soon as possible
would be greatly appreciated and will ensure that your shares will be
represented at the Annual Meeting. If you do attend the Annual Meeting, you may,
of course, withdraw your Proxy should you wish to vote in person.

On behalf of the Board of Directors and management of Elcom
International, Inc., I would like to thank you for choosing to be a stockholder
of our Company, we appreciate your continued support and confidence.

Sincerely yours,

/s/ Robert J. Crowell
Robert J. Crowell
Chairman and Chief Executive Officer

10 Oceana Way - Norwood, MA 02062 - voice (617) 440-3333 - fax (617) 762-1540
<PAGE> 3

ELCOM INTERNATIONAL, INC.
10 Oceana Way, Norwood, Massachusetts 02062

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1997

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Elcom
International, Inc. (the "Company") will be held at The Hilton at Dedham Place,
1 Allied Drive, Dedham, Massachusetts, on June 10, 1997 at 10:00 A.M. (EDT), for
the following purposes:

1. To elect two Directors of the class whose term of office will
otherwise expire in 1997 for a three-year term ending at the Annual Meeting
of Stockholders in 2000;

2. To ratify and approve The 1996 Stock Option Plan of Elcom
International, Inc. and all options granted thereunder to date; and

3. To transact such other business as may properly come before the
Annual Meeting of Stockholders and any adjournments or postponements
thereof.

Holders of record of shares of Common Stock as of the close of business
on April 17, 1997 are entitled to receive notice of and to vote at the Annual
Meeting of Stockholders.

It is important that your shares be represented at the Annual Meeting.
For that reason we ask that you promptly sign, date and mail the enclosed Proxy
Card in the return envelope provided. Stockholders who attend the Annual Meeting
may revoke their Proxies and vote in person.

BY ORDER OF THE BOARD OF DIRECTORS,

Laurence F. Mulhern
Secretary

Norwood, Massachusetts,
April 28, 1997.
<PAGE> 4

ELCOM INTERNATIONAL, INC.
10 Oceana Way Norwood, Massachusetts 02062

PROXY STATEMENT

MAILED ON OR ABOUT APRIL 28, 1997

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 10, 1997

-------------------------

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Elcom International, Inc., a Delaware
Corporation (the "Company"), to be used at the 1997 Annual Meeting of
Stockholders (the "Annual Meeting") of the Company to be held on June 10, 1997,
and any adjournments or postponements thereof. The time, place and purpose of
the Annual Meeting are stated in the Notice of Annual Meeting of Stockholders
which accompanies this Proxy Statement.

The accompanying Proxy is solicited by the Board of Directors of the
Company and will be voted in accordance with the instructions contained thereon,
if it is returned duly executed and is not revoked. If no choice is specified on
the Proxy, it will be voted FOR the election of the individuals nominated for
election to the Board of Directors and FOR the ratification and approval of The
1996 Stock Option Plan of Elcom International, Inc. and the options granted
thereunder to date. A stockholder may revoke a Proxy at any time before it is
exercised by delivery of written notice to the Secretary of the Company or by
delivery of a duly executed Proxy bearing a later date.

The costs of soliciting Proxies will be borne by the Company. Brokers,
custodians and fiduciaries will be requested to forward proxy soliciting
materials to the owners of stock held in their name and the Company will
reimburse them for their out-of-pocket expenses in connection therewith. In
addition to solicitation by mail, the Company's Directors, officers and
employees, without additional compensation, may solicit Proxies by telephone,
mail and personal interview.

The record date for determination of stockholders entitled to vote at
the Annual Meeting is the close of business on April 17, 1997. On that date,
there were 26,837,977 shares of Common Stock of the Company outstanding and
entitled to vote. The Company's Certificate of Incorporation does not provide
for cumulative voting rights, and each share of Common Stock is entitled to one
vote.

At the Annual Meeting, the inspectors of election appointed by the Board
of Directors for the Annual Meeting will determine the presence of a quorum and
will tabulate the results of stockholder voting. Pursuant to the Company's
By-Laws, the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting, present in person or represented by
Proxy, constitute a quorum. The shares represented at the Annual Meeting by
Proxies which are marked, with respect to the election of Directors, "withheld"
or, with respect to any other proposals, "abstain," will be counted as shares
present for the purpose of determining whether a quorum is present. Under
applicable rules, brokers who hold shares in street name for beneficial owners
have the authority to vote on certain items when they have not received
instructions from such beneficial owners. Pursuant to such rules, brokers that
do not receive instruction are entitled to vote with respect to the election of
Directors, but not with respect to the proposal to ratify and approve The 1996
Stock Option Plan of Elcom International, Inc. Under applicable Delaware law, if
a broker returns a Proxy and has not voted on a certain proposal, such broker
non-votes will count for purposes of determining a quorum.

Pursuant to the Company's By-Laws, at the Annual Meeting, a plurality of
the votes cast by the shares present in person or represented by Proxy is
sufficient to elect a nominee as a Director. In the election of Directors, votes
may be cast in favor or withheld; votes that are withheld and broker non-votes
will have no effect

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on the outcome of the election of Directors, so long as a plurality of the votes
cast are cast for the Director nominees.

In the case of the proposal to ratify and approve The 1996 Stock Option
Plan of Elcom International, Inc., the affirmative vote of the majority of the
votes cast by shares of Common Stock present in person or represented by Proxy
at the Annual Meeting is required to approve this proposal and a vote may be
cast for, cast against or abstained from, this proposal. Abstentions will count
as present for purposes of this proposal and will have the effect of a vote
against the proposal. Broker non-votes, however, are not counted as present and,
accordingly, are not entitled to vote for purposes of determining whether this
proposal has been approved and therefore, will have no effect on the outcome of
this proposal.

Unless otherwise directed, the persons named in the accompanying proxy
will vote FOR the election of the Director nominees and FOR the adoption of the
proposal to ratify and approve The 1996 Stock Option Plan of Elcom
International, Inc. and the options granted thereunder to date.

All other questions and matters brought before the Annual Meeting shall
be decided by the vote of the holders of a majority of the outstanding shares
entitled to vote thereon present in person or represented by Proxy at the Annual
Meeting, unless otherwise provided by law or by the Certificate of Incorporation
or By-Laws of the Company. In voting for such other proposals, votes may be cast
in favor, against or abstained. Abstentions will count as present for purposes
of the proposal on which the abstention is noted and will have the effect of a
vote against such proposal. Broker non-votes, however, are not counted as
present and, accordingly, are not entitled to vote for purposes of determining
whether a proposal has been approved and therefore, will have no effect on the
outcome of any such proposal.

ELECTION OF DIRECTORS

The members of the Company's Board of Directors are divided into three
classes with the term of office of one class expiring each year. At the Annual
Meeting, two Directors will be elected to serve a three-year term until the
Annual Meeting in 2000 and until their successors have been duly elected and
qualified. The Nominating Committee of the Board of Directors has nominated J.
Richard Cordsen and Richard J. Harries, Jr. to stand for election as Directors
at the Annual Meeting. Messrs. Harries and Cordsen are presently Directors of
the Company.

Unless otherwise directed, the persons named in the accompanying Proxy
will vote for the election of the two nominees set forth in the table below as
Directors of the Company for a three-year term. In the event of the death or
inability to act of either of the nominees, the Proxies will be voted for the
election as a Director of such other person as the Board of Directors or its
Nominating Committee may recommend. In no event will the accompanying Proxy be
voted for more than two nominees or for persons other than those named below and
any such substitute nominee for either of them.

The following tables list the nominees for election at the Annual
Meeting and those Directors who will continue in office subsequent to the Annual
Meeting, and certain other information with respect to each individual.

NOMINEES FOR ELECTION AT THE 1997 ANNUAL MEETING

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- ---- ------------------------------------------
<S> <C> <C>
J. Richard Cordsen(1).................. 44 Director of the Company
Richard J. Harries, Jr.(1)(2).......... 59 Director of the Company
</TABLE>

- ---------------
(1) Member of the Nominating Committee.

(2) Member of the Compensation Committee.

J. Richard Cordsen, a Director of the Company since May 1995, has been
head of direct investments of United Gulf Management, Inc. ("United Gulf"), or
related entities, since September 1988 and has held various other positions with
the same group of entities since January 1983. United Gulf is a Boston,
Massachusetts-based

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<PAGE> 6

investment management company. United Gulf's ultimate parent entity is Kuwait
Investment Projects Company (K.S.C.). Prior to his association with United Gulf,
Mr. Cordsen held various positions with Chase Manhattan Bank. Mr. Cordsen holds
an M.B.A. degree from Columbia University and a Bachelor of Science degree from
the University of Colorado.

Richard J. Harries, Jr., a Director of the Company since December 1993,
has been Director of Sales of the Institute for Software Advancement since 1995.
From July 1992 to August 1995, upon early retirement from IBM after twenty-five
years of service, Mr. Harries was Northeast General Manager for Tascor, Inc. and
a sales and marketing consultant. Prior thereto, from 1988 to July 1992, Mr.
Harries served as a National Account Executive for IBM. During his career with
IBM, Mr. Harries held a number of executive marketing and sales management
positions, including ten years of experience in IBM's National Distribution
Division Reseller Channel where he was responsible for field sales and marketing
programs. Mr. Harries holds a Bachelor of Arts Degree in Political Science and a
Master of Arts Degree in Economics from Boston College.

VOTE REQUIRED

The affirmative vote of a plurality of the shares of Common Stock voting
in person or represented by proxy shall be required for the election of the
Director nominees. Unless otherwise directed, the persons named in the
accompanying proxy will vote FOR the election of the Director nominees.

DIRECTORS CONTINUING IN OFFICE

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------
<S> <C> <C>
Robert J. Crowell...................... 45 Chairman of the Board of Directors and
Chief Executive Officer of the Company
William W. Smith(1)(2)(3).............. 46 Vice Chairman and a Director of the
Company
John W. Ortiz(2)(3).................... 73 Director of the Company
James Rousou........................... 49 Director and a Corporate Executive Vice
President of the Company; President and
Chief Executive Officer of Catalink
Direct, Inc.
</TABLE>

- ---------------
(1) Member of the Nominating Committee.

(2) Member of the Compensation Committee.

(3) Member of the Audit Committee.

Robert J. Crowell, the Company's founder, has been the Chairman of the
Board of Directors and Chief Executive Officer of the Company since its
inception in 1992. Mr. Crowell has founded and managed several companies in the
PC industry since 1977. From May 1990 to April 1992, he was the Chairman, and
from May 1990 to January 1992, Chief Executive Officer also, of JWP Information
Services, Inc., a subsidiary of JWP, INC. ("JWP"), with approximately $1.4
billion in 1992 revenues. See "-- JWP." From 1983 to 1990, Mr. Crowell was the
Chairman and Chief Executive Officer of NEECO, Inc. ("NEECO"), a publicly-held
national PC reseller which was acquired by JWP (forming JWP Information
Services, Inc.) in May 1990 for approximately $100 million. From 1977 to 1983,
Mr. Crowell founded and managed New England Electronics Co., Inc. (which was
renamed NEECO and became a public company in 1986), and Microamerica
Distributing Co., Inc. ("Microamerica"), a PC products distributor which Mr.
Crowell founded in 1979 as a subsidiary of NEECO. Microamerica was later
spun-off by its acquirer and subsequently merged with Softsel to form Merisel, a
PC products distributor. Mr. Crowell also founded Professional Software, Inc. in
1980, a PC-based word processing and database software company ("Professional
Software"), which was sold in 1986. In April 1992, Mr. Crowell entered into a
part-time employment relationship with Cumulus Corporation, a privately-held
assembler and remarketer of IBM-compatible PCs located in Cleveland, Ohio. Mr.
Crowell was employed on a part-time basis to act as Vice Chairman of the Board
of Cumulus Corporation until he resigned on August 18, 1992. On January 7, 1993,
an involuntary petition for bankruptcy proceedings was filed against Cumulus
Corporation under Chapter 7 of the United States Bankruptcy Code. Mr. Crowell
holds a Magna Cum Laude Bachelor of Science degree in Accounting from the
University of Massachusetts and is a Vietnam veteran.

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<PAGE> 7

William W. Smith has been Vice Chairman and a Director of the Company
since March 1993. Mr. Smith develops real estate and has been semi-retired since
August 1991. Mr. Smith joined NEECO as a major stockholder in 1978 and served as
Chief Financial Officer until its acquisition by JWP in May 1990. Mr. Smith
continued to serve as Chief Financial Officer of JWP Information Services, Inc.
until December 1990, then he served as a consultant until he retired in August
1991. Mr. Smith holds a Magna Cum Laude Bachelor of Science degree in Accounting
from the University of Massachusetts.

John W. Ortiz, a Director of the Company since December 1993, is a
retired investor who was an executive at South Shore Bank where he was employed
from 1942 to 1989, most recently as Senior Vice President and Group Head of
Commercial Lending. Mr. Ortiz also presided as the president of the New England
Chapter of Robert Morris Associates and as a director of the Massachusetts
Higher Education Loan Corporation at times during his banking career. Mr. Ortiz
is a 1954 graduate of Northeastern University's Bachelor of Arts program.

James Rousou was Lantec's (as hereafter defined) Chairman and Chief
Executive Officer from September 1993 to March 1996 and, since November 1995,
has been a Corporate Executive Vice President of the Company. On April 1, 1996,
Mr. Rousou was appointed Chief Executive Officer of Catalink Direct, Inc.
("Catalink") a wholly-owned subsidiary of the Company, and subsequently also was
appointed President. From September 1991 to August 1993, Mr. Rousou was the
Managing Director of JWP Information Services Ltd. (a PC remarketer in the
United Kingdom) and from January 1991 to August 1991 he was Managing Director,
and from June 1990 to December 1990, Finance Director, of Businessland (U.K.)
Ltd. (a PC remarketer), until it was acquired by JWP. Mr. Rousou holds a
Bachelor of Science Degree in Economics and Finance from the London School of
Economics and has been a Fellow of the Institute of Chartered Accountants in
England and Wales since 1973. See "-- Board Observer."

JWP

JWP acquired NEECO in 1990 and operated its United States computer
reseller and system integration services businesses through an indirect
subsidiary, JWP Information Services, Inc. ("Information Services"). Mr. Crowell
and Mr. Wolf were executive officers of Information Services until their
resignations in April, and May, 1992, respectively. On August 9, 1993, JWP sold
substantially all of its United States computer business operations, comprising
substantially all of the assets of Information Services, to Entex Information
Services, Inc., which is now a competitor of Catalink. In October 1993,
following that sale, Information Services filed a voluntary petition under
Chapter 7 of the United States Bankruptcy Code.

BOARD OBSERVER

Pursuant to a stockholders agreement, originally entered into in
connection with the acquisition of Lantec in June 1995 among certain of the
former stockholders of Lantec, the Company and Robert J. Crowell, and amended
and restated as of April 6, 1996 (the "Lantec Stockholders' Agreement"), until
June 22, 2002, as long as the former stockholders of Lantec are the record
owners of at least 2,500,000 shares of Common Stock (including, on an
as-if-exercised-basis, any shares underlying warrants), such stockholders shall
have the right to designate an observer (the "Board Observer") to attend
meetings of the Company's Board of Directors and committees thereof. No Observer
has the right to vote on any matter presented to the Board of Directors or any
committee thereof. Since the election of James Rousou, a Corporate Executive
Vice President of the Company and President and Chief Executive Officer of
Catalink, as a Director in 1996, Mr. Rousou has also continued in his role as
Board Observer. The Lantec Stockholders' Agreement also provides that the former
stockholders of Lantec may renounce their observer right.

DIRECTORS AND TERMS OF OFFICE

The By-Laws of the Company provide that the Board of Directors shall
consist of such number of Directors, between five and fifteen, as are elected by
the stockholders from time to time. The number of Directors is currently fixed
at six. The Board is divided into three classes, with Directors serving
three-year staggered terms. John W. Ortiz and James Rousou serve as a Class I
Directors, and hold office until the 1999 Annual Meeting of

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Stockholders; J. Richard Cordsen and Richard J. Harries, Jr., serve as Class II
Directors, and hold office until the 1997 Annual Meeting of Stockholders; and
Robert J. Crowell and William W. Smith, serve as Class III Directors, and hold
office until the 1998 Annual Meeting of Stockholders. Messrs. Cordsen and
Harries are standing for re-election to three year terms as Directors at the
Annual Meeting.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has three standing committees: a Compensation
Committee, an Audit Committee and a Nominating Committee. The Compensation
Committee has the authority to: (i) administer the Company's stock option plans,
including the selection of optionees and the timing of option grants; (ii)
review and/or approve compensation and bonus payments made to Company
Executives; and (iii) review and monitor key employee compensation and benefits
policies and administer the Company's management compensation plans. The
Compensation Committee did not meet during 1996, as the Compensation Committee's
actions are generally taken by unanimous written consent. The members of the
Compensation Committee are Messrs. Smith
(Chairman), Harries and Ortiz.

The Audit Committee recommends the annual appointment of the Company's
auditors, with whom the Audit Committee reviews the scope of audit and non-audit
assignments and related fees, the accounting principles used by the Company in
financial reporting, internal financial control procedures and the adequacy of
such internal control procedures. The Audit Committee met two times during 1996
and also conducted an additional meeting in early 1997 relative to the 1996
audit. Messrs. Smith and Ortiz serve as the members of the Audit Committee.

The Nominating Committee reviews potential candidates for election as
Directors of the Company and makes recommendations to the Board of Directors as
to nominees for election. Messrs. Smith, Harries and Cordsen serve as the
members of the Nominating Committee. The Nominating Committee does not consider
stockholder nominations. The Nominating Committee did not meet during 1996,
having taken its action by unanimous written consent.

The Board of Directors met nine times during the 1996 calendar year and
each Director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors during the period he served as a Director,
and (ii) the total number of meetings held by Committees of the Board on which
he served.

DIRECTOR COMPENSATION

Except for the grant of stock options as set forth in the following
paragraph, the Company's Directors are not compensated for any meetings that
they attend, but are reimbursed for expenses that are incurred in attending such
meetings.

1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

Non-employee Directors are entitled to participate in the 1995
Non-Employee Director Stock Option Plan (the "Director Plan"), adopted by the
Board of Directors in October 1995, and approved by stockholders in November
1995. A total of 250,000 shares of Common Stock have been reserved for issuance
under the Director Plan. The Director Plan provides for an automatic grant of an
option to purchase 5,000 shares of Common Stock to each non-employee Director
serving as such on October 9, 1995 or for persons who become a non-employee
Director thereafter, on their date of election or appointment as applicable.
After the initial option is granted to the non-employee Director, he or she is
automatically granted an option to purchase 5,000 shares on June 1 of each
subsequent year that he or she is then a nonemployee Director. Options granted
under the Director Plan have a term of ten years. One-third of the shares
subject to each option vest on each anniversary date of the grant of the option
so long as the optionee continues to serve as a Director on such dates. The
exercise price of the options is the fair market value per share of the
Company's Common Stock on the date of the grant of the option, which was $14.25
per share and $8.13 per share for the 20,000 options granted pursuant to the
Director Plan in 1996 and 1995, respectively. In addition, on December 20, 1996,
each of the non-employee Directors was granted an option to purchase 5,000
shares under the Company's 1993 Stock Option Plan (as hereinafter defined) at
$7.50 per share. At an April 3, 1997 Board meeting, all of the non-employee
Director options were repriced to

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<PAGE> 9

$6.57 per share; see "-- Stock Option Repricing." Messrs. Cordsen, Harries,
Ortiz and Smith are the Company's
current non-employee Directors who received such option grants and repricing
thereof.

APPROVAL OF THE 1996 STOCK OPTION PLAN OF ELCOM INTERNATIONAL, INC.

The stockholders will be asked at the meeting to ratify and approve the
1996 Stock Option Plan of Elcom International, Inc. (the "1996 Stock Option
Plan") and all of the options granted thereunder to date which was adopted by
the Board of Directors on August 19, 1996. The 1996 Stock Option Plan covers
2,400,000 shares of the Company's Common Stock pursuant to which "key
personnel", which includes officers, employees and directors of the Company, as
well as other persons who render services as independent contractors to the
Company, or any of its affiliates, are eligible to receive incentive stock
options ("ISOs") and/or non-qualified stock options ("NQOptions").

The Board of Directors believes that substantial benefits accrue to the
Company from the granting of stock options to key personnel. Such options
encourage employees to acquire a proprietary interest in the Company through
stock ownership and thereby afford them a greater incentive to enhance the value
of the Company's Common Stock through their own efforts in improving the
Company's business. The granting of options also has proven instrumental in
attracting and retaining key executives and other employees. Accordingly, the
Company will, from time to time during the effective period of the Plan, grant
to such key personnel as may be selected to participate in the 1996 Stock Option
Plan, options to purchase Common Stock on the terms and subject to the
conditions set forth in the 1996 Stock Option Plan.

For these reasons, the Board of Directors adopted the 1996 Stock Option
Plan and, accordingly, believes that approval of the Plan is in the best
interests of the Company and recommends that stockholders vote FOR the proposal
to ratify and approve the 1996 Stock Option Plan and all of the options granted
thereunder to date.

The full text of the 1996 Stock Option Plan is attached hereto as
Exhibit A. Important details about specific provisions of the 1996 Stock Option
Plan are more fully described below, but the following summary is
not intended to be complete and it is qualified in its entirety by reference to
the 1996 Stock Option Plan.

DURATION AND ADMINISTRATION OF THE 1996 STOCK OPTION PLAN

The 1996 Stock Option Plan is administered by the Compensation Committee
of the Board, presently comprised of Messrs. Harries, Ortiz and Smith. Members
of the Committee shall be comprised of persons who qualify as "outside
directors" under Section 162(m) of the Internal Revenue Code and who are
"non-employee
directors" under Rule 16(b)(3) of the Securities Exchange Act of 1934. Subject
to the terms and conditions of the 1996 Stock Option Plan, and in addition to
the other authorizations granted to the Committee under the 1996 Stock Option
Plan, the Committee shall have full and final authority in its absolute
discretion to (a) select the optionees to whom options will be granted, (b)
determine the number of shares of Common Stock subject to any option, (c)
determine the time when options will be granted, (d) determine the option price
of Common Stock subject to an option, (e) determine the time when Common Stock
subject to an option may be purchased, (f) prescribe the form of the option
agreements governing the options which are granted under the 1996 Stock Option
Plan and to set the provisions of such option agreements as the Committee may
deem necessary or desirable provided such provisions are not contrary to the
terms and conditions of the 1996 Stock Option Plan, (g) adopt, amend and rescind
such rules and regulations as, in the Committee's opinion, may be advisable in
the administration of the 1996 Stock Option Plan, and (h) construe and interpret
the 1996 Stock Option Plan, the rules and regulations and the instruments
evidencing options granted under the 1996 Stock Option Plan and to make all
other determinations deemed necessary or advisable for the administration of the
1996 Stock Option Plan. If the 1996 Stock Option Plan and the options granted
thereunder to date are not ratified and approved by stockholders at the Annual
Meeting, all options previously or hereafter granted thereunder will be
NQOptions for federal income tax purposes and furthermore, Directors and Named
Executive Officers of the Company will not be eligible to receive option grants
under the 1996 Stock Option Plan.

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<PAGE> 10

Any decision made or action taken by the Committee in connection with
the administration, interpretation, and implementation of the 1996 Stock Option
Plan and of its rules and regulations, shall, to the extent permitted by law, be
conclusive and binding upon all optionees under the 1996 Stock Option Plan and
upon any person claiming under or through such an optionee. Neither the
Committee nor any of its members shall be liable for any act taken by the
Committee pursuant to the 1996 Stock Option Plan. No member of the Committee
shall be liable for the act of any other member.

The 1996 Stock Option Plan will expire by its terms on August 19, 2006.

SECURITIES SUBJECT TO THE 1996 STOCK OPTION PLAN

Not more than 2,400,000 shares of Common Stock of the Company may be
issued pursuant to the 1996 Stock Option Plan in the aggregate. The maximum
number of shares of Common Stock for which options may be granted under the 1996
Stock Option Plan to any one individual in any one fiscal year of the Company is
300,000 shares. As of December 31, 1996, options to acquire 1,326,775 shares of
Common Stock reserved for issuance under the 1996 Stock Option Plan have been
granted; although no grants have been made to any of the Directors or executive
officers of the Company. In the event of stock splits, stock dividends,
combinations, exchanges of shares or similar capital adjustments, the Board or
the Compensation Committee must make an appropriate adjustment in the options
granted under the 1996 Stock Option Plan. If any option expires without having
been fully exercised, the shares with respect to which such option have not been
exercised will be available for further options as will any shares paid or
withheld to satisfy an optionee's withholding tax or option payment liability.

GRANT AND METHOD OF EXERCISE

Subject to certain conditions, the duration of each option granted under
the 1996 Stock Option Plan will be determined by the Committee, provided that no
option shall be granted after the tenth anniversary of the establishment of the
1996 Stock Option Plan and no option shall be exercisable later than the tenth
anniversary of the date the option was granted. Each option granted under the
1996 Stock Option Plan may be subject to restrictions with respect to the time
and method of vesting as determined by the Committee. All options granted under
the 1996 Stock Option Plan as of December 31, 1996 have a duration of ten years
and vesting schedules which vary from one to four years.

ISOs granted under the 1996 Stock Option Plan are exercisable for a
period of up to 10 years from the date of grant at an exercise price that is not
less than the fair market value of the Common Stock on the date of the grant,
except that the term of an incentive stock option granted under the Stock Option
Plans to a stockholder owning more than 10% of the voting power of the Company
on the date of grant may not exceed five years and its exercise price may not be
less than 110% of the fair market value of the Common Stock on the date of the
grant. NQOptions may be granted at less than fair market value under the 1996
Stock Option Plan. Shares of Common Stock underlying an option shall be
purchased by the optionee (i) giving written notice to the Company of the
optionee's purchase of the option accompanied by full payment of the purchase
price either in cash or in whole or in part in shares of Common Stock (at the
sole discretion of the Committee, either by delivery to the Company of
already-owned shares or having the Company withhold shares to be issued) having
a fair market value on the date the shares underlying the option are purchased
equal to that portion of the purchase price for which payment in cash is not
made, and (ii) making appropriate arrangements acceptable to the Company with
respect to income tax withholding, as required, which arrangements may include,
at the sole discretion of the Committee, in lieu of other withholding
arrangements, subject to Section 16 of the Securities Exchange Act of 1934 or
the regulations promulgated thereunder (or any successor laws or regulations)
(collectively, "Section 16"), either (a) the Company withholding from issuance
to the optionee such number of shares of Common Stock otherwise issuable upon
purchase of the shares underlying the option as the Company and the optionee may
agree; or (b) the optionee's delivery to the Company of already-owned shares of
Common Stock, having a fair market value on the date the shares underlying the
option are purchased equal to that portion of the withholding obligation for
which payment in cash is not made.

7
<PAGE> 11

As of December 31, 1996, a total of 1,326,775 options to acquire the
Company's Common Stock had been granted (net of terminated options) under the
1996 Stock Option Plan at a weighted average exercise price of $5.79 per share.
A total of 26,500 of such options, which were granted at a weighted average
exercise price of $7.55 per share, were repriced to $6.57 per share at an April
3, 1997 meeting of the Board (see "-- Option Repricing"). This reduces the
weighted average exercise price of the options outstanding as of December 31,
1996 under the 1996 Stock Option Plan to $5.77 per share. None of the options
granted under the 1996 Stock Option Plan were granted to Directors or executive
officers of the Company.

INCOME TAX TREATMENT

The Company has been advised that under current law certain of the
income tax consequences under the laws of the United States to the Company and
to optionees under the 1996 Stock Option Plan of options granted under the 1996
Stock Option Plan generally should be as set forth in the following summary. The
summary only addresses general United States federal income tax consequences for
optionees under the 1996 Stock Option Plan and the Company.

The options granted under the 1996 Stock Option Plan may be ISO's or
NQOption's for federal income tax purposes; however, if the 1996 Stock Option
Plan is not ratified and approved by stockholders at the Annual Meeting, all
options granted thereunder will be NQOptions for federal income tax purposes. An
optionee to whom an option is granted will not recognize income at the time of
grant of an ISO or NQOption, except in the event a NQOption is granted at less
than fair market value, in which case the recipient thereof will recognize
ordinary compensation income to the extent the total NQOption price is less than
the total fair market value of the shares of Common Stock covered by the option
on the date of grant. An optionee does not recognize income upon exercise of an
ISO and the optionee's tax basis is equal to the option price paid. However, if
an optionee disposes of shares acquired pursuant to an ISO either within two
years of the date of an ISO grant or within one year of an ISO exercise (a
"disqualifying disposition") the optionee will recognize ordinary income equal
to the difference, if any, between the option price paid and the amount realized
upon such disposition. Otherwise, the optionee's capital holding period for
shares acquired pursuant to an ISO commences on the option exercise date. When
an optionee exercises a NQOption, the optionee will recognize ordinary
compensation income equal to the difference, if any, between the option price
paid and the fair market value, as of the date of option exercise, of the shares
the optionee purchased. The tax basis of shares obtained by the exercise of a
NQOption to an optionee is equal to the option price paid, and the optionee's
capital holding period for shares acquired commences on the option exercise
date. Subject to applicable provisions of the Internal Revenue Code and
regulations thereunder, the Company generally will be entitled to a federal
income tax deduction in respect of both ISO's disposed of in a disqualifying
disposition and NQOptions exercised, in an amount equal to the ordinary and/or
compensation income recognized by the optionee.

The discussion set forth above does not purport to be a complete
analysis of all potential tax consequences relevant to recipients of options or
the Company or to describe tax consequences based on particular circumstances.
It is based on United States federal income tax law and interpretational
authorities as of the date of this Proxy Statement, which are subject to change
at any time. The discussion does not address state or local income tax
consequences or income tax consequences for taxpayers who are subject to
taxation in jurisdictions other than the United States.

VOTE REQUIRED

The affirmative vote of the majority of the shares of Common Stock
voting in person or represented by proxy shall be required for the adoption of
the proposal to ratify and approve the 1996 Stock Option Plan of Elcom
International, Inc. and the options granted thereunder to date. Unless otherwise
directed, the persons named in the accompanying proxy will vote FOR the adoption
of the proposal to ratify and approve the 1996 Stock Option Plan of Elcom
International, Inc. and the options granted thereunder to date.

8
<PAGE> 12

PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP

The following table sets forth the beneficial ownership of Common Stock
as of April 17, 1997 by (i) each Director and nominee for election as a Director
of the Company, (ii) each executive officer named in the Executive Compensation
tables included elsewhere herein, (iii) all Directors and executive officers as
a group, and (iv) each person or group known by the Company to own beneficially
more than 5% of its outstanding shares of Common Stock. All information with
respect to beneficial ownership has been furnished by the respective Director or
executive officer, or by reference to a public filing, as the case may be.
Unless otherwise indicated below, each stockholder named below has sole voting
and investment power with respect to the number of shares set forth opposite
his, her or its respective name.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
DIRECTORS AND EXECUTIVE OFFICERS(2) BENEFICIALLY OWNED(1) COMMON STOCK(1)
- -------------------------------------------------- --------------------- ---------------
<S> <C> <C>
CLASS III DIRECTORS - TERM EXPIRES AT THE 1998
ANNUAL MEETING
Robert J. Crowell(3)........................... 4,520,099 16.6%
William W. Smith(4)............................ 8,873 *

CLASS II DIRECTORS - TERM EXPIRES AT THE 1997
ANNUAL MEETING
Richard J. Harries, Jr.(4)..................... 8,333 *
J. Richard Cordsen(5).......................... 1,281,011 4.8%

CLASS I DIRECTORS - TERM EXPIRES AT THE 1999
ANNUAL MEETING
John W. Ortiz(4)............................... 8,333 *
James Rousou(6)................................ 1,800,500 6.6%

EXECUTIVE OFFICERS
Andres Escallon(4)............................. 611,969 2.2%
Laurence F. Mulhern(4)......................... 152,203 *
David Wolf(7).................................. 170,198 *

ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(9 PERSONS)(8).................................. 8,561,519 30.0%

OTHER 5% BENEFICIAL OWNERS
Shell Pensions Trust Ltd. (Trustee of the Shell
Contributory Pension Fund) Shell Centre
London SE1 FNA United Kingdom(9)............. 1,640,000 6.1%
</TABLE>

- ---------------
* Less than 1%.

(1) In accordance with Securities and Exchange Commission (the "Commission")
rules, each beneficial owner's holdings have been calculated assuming full
exercise of outstanding options and warrants to acquire Common Stock which
are exercisable by such owner within 60 days after April 17, 1997, while
assuming no exercise of outstanding options and warrants covering Common
Stock held by any other person.

(2) For purposes hereof, the address for the Company's Directors and executive
officers is that of the Company: 10 Oceana Way, Norwood, Massachusetts
02062.

(3) Mr. Crowell is Chairman of the Board of Directors and Chief Executive
Officer of the Company. Mr. Crowell's Common Stock ownership is comprised of
3,948,544 shares which he owns, 188,401 shares held in a revocable trust for
the benefit of Mr. Crowell's daughter, for which Mr. Crowell serves as
Trustee, and 383,154 shares which he has the right to acquire within 60 days
after April 17, 1997 through the exercise of stock options.

(4) All of the Common Stock beneficially owned by such person is comprised of
shares which he has the right to acquire within 60 days after April 17, 1997
through the exercise of stock options.

(5) As reported in a Schedule 13G filed with the Commission on February 13, 1996
by United Gulf, includes 1,226,451 shares with respect to which Mr. Cordsen,
a Director of the Company, participates in disposition

9
<PAGE> 13

and investment decisions as an employee of United Gulf and as a director of
Worms Management Corporation ("Worms"). Mr. Cordsen also owns a small
limited partnership interest in the general partner of the Worms Funds (as
hereinafter defined). The shares reflected as beneficially owned by Mr.
Cordsen are comprised of 571,425 shares of Common Stock owned by Permal
Private Equity Holdings, L.P., a Cayman Islands limited partnership
("PPEH"), and 655,026 shares of Common Stock owned by Private Equity
Holdings, L.P., a Cayman Island limited partnership ("PEH"). PPEH and PEH
(collectively, the "Worms Funds") are equity funds whose investments are
managed, with respect to voting powers, solely by Worms (or its affiliates),
and with respect to dispositions or investment powers, on a shared basis
between Worms and its investment co-manager, United Gulf, under a six-member
investment committee, with Mr. Cordsen being one of United Gulf's designees
to such committee. Worms' ultimate parent entity is Maison Worms & Cie.
United Gulf's ultimate parent entity is Kuwait Investment Projects Company
(K.S.C.). Mr. Cordsen disclaims beneficial ownership of these 1,226,451
shares. Mr. Cordsen owns 51,227 shares of Common Stock directly and has the
right to acquire 3,333 shares within 60 days after April 17, 1997 through
the exercise of stock options granted pursuant to the Director Plan.

(6) Mr. Rousou is an executive officer and Director of the Company. The number
of shares reflected as beneficially owned by Mr. Rousou includes warrants to
acquire up to an aggregate of 400,500 shares of Common Stock originally
issued in conjunction with the acquisition by the Company of a group of
entities which owned a United Kingdom PC product reseller ("Lantec"), which
are exercisable.

(7) Mr. Wolf is an executive officer of the Company who owns 22,652 shares
directly and has the right to acquire 147,546 shares pursuant to stock
options exercisable within 60 days after April 17, 1997.

(8) Includes 1,724,244 shares of Common Stock which the Directors and executive
officers of the Company have the right to acquire within 60 days after April
17, 1997 through the exercise of warrants and stock options.

(9) As reported in a Schedule 13D filed with the Commission on February 2, 1996.

10
<PAGE> 14

MANAGEMENT -- EXECUTIVE OFFICERS

The name, age and position of the Company's Executive Officers are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Robert J. Crowell...................... 45 Chairman of the Board of Directors and
Chief Executive Officer of the
Company
James Rousou........................... 49 Director and a Corporate Executive Vice
President of the Company; President
and Chief Executive Officer of
Catalink Direct, Inc.
Andres Escallon........................ 42 Corporate Executive Vice President and
Chief Technology Officer of the
Company
Laurence F. Mulhern ................... 42 Corporate Executive Vice President,
Chief Financial Officer, Treasurer and
Secretary of the Company
David B. Wolf.......................... 42 Corporate Executive Vice President of
the Company; President of Elcom
Systems, Inc.
</TABLE>

A brief resume for each of the Company's Executive Officers is set forth
below. The brief resumes of Messrs. Crowell and Rousou are set forth above under
the heading "Election of Directors."

Andres Escallon has been the Company's Chief Technology Officer and a
Corporate Executive Vice President since November 1995. From October 1992 until
November 1995, Mr. Escallon was the Company's Vice President and Chief
Technology Officer, or acted in similar positions. From June 1991 to September
1992, Mr. Escallon served in the technology group of Information Services (See
"Election of Directors -- JWP") and from January 1989 to April 1991, he was
General Manager at Praco Computadores, Bogota, Columbia, a software development
company. Prior thereto, from 1980 to 1989, Mr. Escallon was employed with NEECO
and Professional Software, Inc. where he was the senior technology officer. Mr.
Escallon holds a Bachelor of Science degree in Mechanical Engineering from
Universidad de los Andes and a Masters of Science degree in Systems Engineering
from Boston University.

Laurence F. Mulhern has been the Company's Chief Financial Officer,
Treasurer, Secretary and a Corporate Executive Vice President, or has acted in
similar positions, since July 1993. From 1985 through December 1992, Mr. Mulhern
was Vice President, Finance of Pacific Gateway Properties, Inc., an AMEX-listed
public company which owns and operates income producing real estate. In this
position, Mr. Mulhern was responsible for all financial aspects of the company.
Prior to joining Pacific Gateway Properties, Mr. Mulhern was an Audit Manager
with Arthur Andersen LLP. Mr. Mulhern holds a Bachelor of Science degree in
Accounting from Villanova University and has been a certified public accountant
since 1979.

David B. Wolf has been a Corporate Executive Vice President of the
Company and President of Elcom Systems, Inc., a wholly-owned subsidiary of the
Company ("Elcom Systems"), since November 1995. From January 1993 until November
1995, Mr. Wolf was the Senior Vice President of the Company, or acted in a
similar position. Mr. Wolf was the Executive Vice President of Elcom Systems
from January 1993 until November, 1995. From 1990 to May 1992 he served as Chief
Operating Officer of Information Services. (See "Election of Directors -- JWP.")
Prior to its May 1990 acquisition by JWP, Mr. Wolf was the President and Chief
Operating Officer of NEECO. From 1982 to 1989, Mr. Wolf was a partner with the
law firm of Weiss, Angoff, Coltin, Koski & Wolf, P.C. Mr. Wolf is currently a
member of the Board of Directors of Optometrics Ltd., a publicly-held optical
instrument manufacturer traded on the London Stock Exchange. Mr. Wolf holds a
Bachelor of Arts degree from McGill University and a Juris Doctor degree from
Boston University.

11
<PAGE> 15

EXECUTIVE COMPENSATION

The table below sets forth information concerning the annual and
long-term compensation for services in all capacities with respect to those
persons who were (i) the Chief Executive Officer, and (ii) the other executive
officers of the Company (collectively, the "Named Executive Officers"), at
December 31, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) ------------
----------------- STOCK
NAME AND PRINCIPAL POSITION(1) YEAR SALARY OPTIONS(#)
-------------------------------------------------------- ---- -------- ------------
<S> <C> <C> <C>
Robert J. Crowell....................................... 1996 $202,000 204,500
Chairman of the Board of Directors and Chief 1995 $ 58,000 100,000
Executive Officer of the Company(2) 1994 -- 90,000

James Rousou............................................ 1996 $170,000 32,500
Director and a Corporate Executive Vice President of 1995 $ 81,000 --
the Company; President and Chief Executive Officer 1994 -- --
of Catalink Direct, Inc.(3)

Andres Escallon......................................... 1996 $120,000 --
Corporate Executive Vice President and Chief 1995 $120,000 --
Technology Officer of the Company(4) 1994 $121,000 --

Laurence F. Mulhern..................................... 1996 $142,000 82,500
Corporate Executive Vice President, Chief Financial 1995 $117,000 32,000
Officer, Treasurer and Secretary of the Company 1994 $ 90,000 38,000

David Wolf.............................................. 1996 $150,000 --
Corporate Executive Vice President of the Company; 1995 $150,000 --
President of Elcom Systems, Inc. 1994 $127,000 --
</TABLE>

- ---------------
(1) Unless otherwise indicated herein, no Named Executive Officer received
perquisites or other personal benefits in excess of the lesser of $50,000 or
10% of such individual's salary plus annual bonus.

(2) The Company and Mr. Crowell have entered into an employment agreement
pursuant to which Mr. Crowell has been retained for a term ending September
1997 as the Chairman and Chief Executive Officer. Mr. Crowell was not paid
any salary prior to October 1, 1995, when he began receiving an annual
salary of $275,000 pursuant to his agreement. Mr. Crowell elected to forgo
approximately $73,000 of his annual minimum base salary during 1996. See
" -- Option Grants in 1996" and " -- Employment Contracts."

(3) James Rousou became an executive officer of the Company in June 1995 in
connection with the Company's acquisition of Lantec, of which he was
Chairman and Chief Executive Officer through March 1996. Since November 1995
he has also served as a Corporate Executive Vice President of the Company
and since April 1, 1996 has served as the Chief Executive Officer of
Catalink (and was subsequently appointed President) pursuant to an
employment agreement which entitles Mr. Rousou to an annual base salary of
$190,000 and provides a bonus opportunity of up to 30% of his base salary.
Under his previous Lantec Services Agreement, which terminated in March 1996
upon his resignation from all his Lantec positions, Mr. Rousou received an
annual base salary of approximately $153,000 (100,000 pounds sterling). The
1996 compensation noted above includes amounts paid under both agreements,
but does not include a Lantec pension contribution of approximately $3,000
and the attributed value of a Lantec company car of $5,000. The 1995
compensation noted above is for the period from the acquisition of Lantec
(June 1995) to December 31, 1995, and does not include a pension
contribution of $6,000 and the attributed value of a company car amounting
to $8,000 for such period. Mr. Rousou elected to forgo both approximately
$11,000 of his annual minimum base salary and a bonus of $43,000 during
1996. See "-- Option Grants in 1996" and "-- Employment Contracts."

12
<PAGE> 16

(4) As of December 31, 1996, the Company had loaned Mr. Escallon a total of
$500,000 pursuant to a demand note which accrues interest at a rate of prime
plus 1% and is secured by the underlying value of Mr. Escallon's Company
stock options. Subsequent to year end, the principal amount of the note was
increased to $600,000.

STOCK OPTION PLANS

In addition to the 1995 Non-Employee Director Stock Option Plan, the
Company has adopted The Stock Option Plan of Elcom International, Inc. (the
"1993 Stock Option Plan") and the 1995 (Computerware) Stock Option Plan of the
Company (the "Computerware Stock Option Plan") and the 1996 Stock Option Plan,
collectively hereinafter the "Stock Option Plans" covering 5,000,000, 1,000,000
and 2,400,000 shares, respectively, of the Company's Common Stock, pursuant to
which officers, employees and directors of the Company, as well as other persons
who render services as independent contractors to the Company, or any of its
affiliates, are eligible to receive ISOs and/or NQOptions. ISOs granted under
the Stock Option Plans are exercisable for a period of up to 10 years from the
date of grant at an exercise price that is not less than the fair market value
of the Common Stock on the date of the grant, except that the term of an
incentive stock option granted under the Stock Option Plans to a stockholder
owning more than 10% of the voting power of the Company on the date of grant may
not exceed five years and its exercise price may not be less than 110% of the
fair market value of the Common Stock on the date of the grant. In addition, the
aggregate fair market value of the shares of Common Stock for which ISOs may be
exercisable by a participant during any one calendar year may not exceed
$100,000. NQOptions granted under the Stock Option Plan may be granted at less
than the fair market value of the Common Stock on the date of grant, although
such option grants under the Computerware Stock Option Plan may not be made at
less than the fair market value on the date of grant. The Stock Option Plans are
administered by the Compensation Committee of the Board of Directors. The
maximum number of options that can be granted to any one participant during any
one fiscal year is 500,000 under the 1993 Stock Option Plan, 210,000 under the
Computerware Stock Option Plan and 300,000 under the 1996 Stock Option Plan.

Shares of Common Stock underlying an option shall be purchased by the
optionee (i) giving written notice to the Company accompanied by full payment of
the purchase price either in cash or in whole or at the discretion of the
Compensation Committee in part in shares of Common Stock (either by delivery to
the Company of already-owned shares or having the Company withhold shares to be
issued) having a fair market value on the date the shares underlying the option
are purchased equal to that portion of the purchase price for which payment in
cash is not made, and (ii) making appropriate arrangements acceptable to the
Company with respect to income tax withholding, as required, including (at the
discretion of the Compensation Committee and subject to Section 16 of the
Securities Exchange Act of 1934, as amended, or the regulations promulgated
thereunder), either: (a) the Company withholding from issuance to the optionee
such number of shares of Common Stock otherwise issuable upon purchase of the
shares underlying the option as the Company and the optionee may agree; or (b)
the optionee's delivery to the Company of shares of Common Stock having a fair
market value on the date the shares underlying the option are purchased equal to
that portion of the withholding obligation for which payment in cash is not
made.

The 1993 Stock Option Plan was adopted by the Board of Directors in
February 1993, was approved by the Company's stockholders, and terminates on
February 23, 2003. Of the 5,000,000 shares of Common Stock reserved for issuance
thereunder, as of December 31, 1996, options covering 472,489 shares of Common
Stock have been exercised, and options to acquire an aggregate of 4,123,539
shares of Common Stock (1,916,857 of which were exercisable at December 31,
1996) were outstanding at exercise prices ranging from $.11 to $13.56 per share.
The Computerware Stock Option Plan was adopted by the Board of Directors in
February 1995, was approved by the Company's stockholders, and terminates on
February 5, 2005. Of the 1,000,000 shares of Common Stock reserved for issuance
under the Computerware Stock Option Plan, options to acquire all 1,000,000
shares have been granted at an exercise price of $4.00 per share, 61,200 of
which had been exercised as of December 31, 1996, and 108,800 of which were
exercisable as of December 31, 1996. As of March 15, 1997, options covering an
additional 730,000 shares became exercisable under the Computerware Stock Option
Plan. See "Certain Transactions." The 1996 Stock Option Plan was adopted by the
Board of Directors in August 1996, and is subject to ratification and approval
at the Annual Meeting. Of the 2,400,000 shares of Common Stock

13
<PAGE> 17

reserved for issuance under the 1996 Stock Option Plan, options to acquire an
aggregate of 1,326,775 shares of Common Stock (none of which were exercisable at
December 31, 1996) were outstanding as of December 31, 1996 at exercise prices
ranging from $5.32 to $8.38 per share. See "-- Option Repricing" and "Certain
Transactions."

CHANGE OF CONTROL FEATURE

Generally, all option agreements under the Stock Option Plans, including
those relative to the Named Executive Officers, contain provisions accelerating
the exercisability of the options, or otherwise requiring the cash payment of
the value of the options (represented by the difference between the option
exercise price and the then-current fair market value of the underlying Common
Stock), upon certain defined changes in control or sales of substantially all of
the Company's assets. Such changes of control occur if the Company is
reorganized, consolidated or merged with another company and the Company is not
the surviving company, or if 50% or more of the shares of the capital stock of
the Company which are then issued and outstanding are purchased by a single
person or entity.

OPTION GRANTS IN 1996

Shown below is information relating to grants of stock options pursuant
to the Stock Option Plans during the fiscal year ended December 31, 1996 to the
Named Executive Officers. Such grants are also reflected in the Summary
Compensation Table above.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
-------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION
NO. OF GRANTED FOR THE
SECURITIES TO EMPLOYEES EXERCISE OR OPTION TERM(4)
UNDERLYING IN FISCAL BASE PRICE GRANT EXPIRATION ----------------------
NAME OPTIONS(1) YEAR ($ PER SHARE)(2) DATE(3) DATE 5% 10%
- --------------------- ---------- ------------ ---------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Crowell.... 9,890 0.3% $ 7.50 02/29/96 02/28/06 $ 47,000 $ 118,000
12,110 0.4% $ 8.25 02/29/96 02/28/01 28,000 61,000
125,000 4.0% $ 7.69 04/11/96 04/11/06 604,000 1,531,000
27,500 0.9% $ 5.31 08/21/96 08/21/06 92,000 233,000
30,000 1.0% $ 5.81 08/30/96 08/30/06 110,000 278,000

Laurence F. Mulhern.. 62,500 2.0% $ 7.31 03/29/96 03/29/06 287,000 728,000
20,000 0.6% $ 5.81 08/30/96 08/30/06 73,000 185,000

James Rousou......... 7,500 0.2% $ 5.31 08/21/96 08/21/06 25,000 64,000
25,000 0.8% $ 5.81 08/30/96 08/30/06 91,000 232,000
</TABLE>

- ---------------
(1) The options become fully vested upon certain "changes in control" of the
Company, as described in the Stock Option Plans, and the relevant agreements
thereunder. See "-- Change of Control Feature."

(2) This price represents the fair market value at the date of grant pursuant to
the terms of the Stock Option Plans.

(3) All options granted to these individuals in 1996 become fully vested on the
first anniversary of the option grant date.

(4) Potential Realizable Value is based on certain assumed rates of appreciation
pursuant to rules prescribed by the Commission. Actual gains, if any, on
stock option exercises are dependent on the future performance of the stock.
There can be no assurance that the amounts reflected in this table will be
achieved. In accordance with rules promulgated by the Commission, Potential
Realizable Value is based upon the exercise price of the options.

14
<PAGE> 18

FISCAL YEAR-END OPTION VALUE TABLE

The following table shows the number of shares of Common Stock acquired
during 1996 by the exercise of options and the related value realized, as well
as the number of shares of Common Stock represented by outstanding stock options
held by each of the Named Executive Officers as of December 31, 1996.

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS AT
UNEXERCISED OPTIONS AT DECEMBER 31, 1996($)(1)(2)
SHARES DECEMBER 31, 1996(#)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Crowell.............. -- $ -- 236,154 204,500(3) $ 1,019,000 $ 172,000
Andres Escallon................ 31,000 271,000 611,969 -- 4,770,000 --
Laurence F. Mulhern............ -- -- 89,703 129,801 507,000 295,000
James Rousou................... -- -- -- 32,500 -- 73,000
David Wolf..................... 24,256 175,000 102,533 50,909(4) 780,000 397,000
</TABLE>

- ---------------
(1) Options are in-the-money if the fair market value of the Common Stock
exceeds the exercise price.

(2) Represents the total gain which would be realized if all in-the-money
options beneficially held at December 31, 1996 were exercised, determined by
multiplying the number of shares underlying the options by the difference
between the per share option exercise price and $7.94, the average of the
high and low sales prices per share of the Company's Common Stock on the
NASDAQ Stock Market on December 31, 1996 (the last day of trading in 1996).

(3) Includes options covering 12,110 shares of Common Stock at a price of $8.25
per share which are not "in-the-money" as of December 31, 1996 and therefore
are excluded from the table of Value Of Unexercised In-The-Money-Options.

(4) Includes options covering 5,896 shares of Common Stock which Mr. Wolf
exercised in January 1997.

OPTION REPRICING

On April 3, 1997, the Board approved the repricing of all stock options,
except those granted to Named Executive Officers (see "Management -- Executive
Officers"), granted under the Stock Option Plans at a price in excess of $6.57
per share, to a price of $6.57 per share, which approximates the average trading
price of the Company's Common Stock during the month of March 1997. The Board,
with non-employee Directors abstaining, also repriced options granted to
Non-Employee Directors under the 1993 Stock Option Plan and the Director Plan
(through an amendment to the Director Plan) on the same basis. The Board took
this action in light of the current decline in the Company's Common Stock price
which, in its view, was frustrating the purpose of the Stock Option Plans, since
most employees' options were priced well above the current market value of the
Company's Common Stock. This situation was further exacerbated by the very tight
employment markets, particularly in the respect of technical personnel, in the
Northeast United States and in the United Kingdom.

The Board believes that by taking this action it has, in large part,
restored the incentive that the Stock Option Plans were designed to provide, and
has generated a renewed enthusiasm in the Company's effected personnel.
Accordingly, the Board believes the repricing action was in the best interests
of the Company.

The repricing action had no impact on vesting schedules or any other
option term and does not apply to any options held by Named Executive Officers.
It is also expected that the repricing action will not have any material impact
on the Company's calculation of diluted earnings per share. The following table
sets forth summary information relative to the stock option repricing based on
options outstanding as of December 31, 1996.

15
<PAGE> 19

<TABLE>
<CAPTION>
TOTAL OPTIONS
OUTSTANDING
WEIGHTED AVERAGE
EXERCISE PRICE
TOTAL OPTIONS TOTAL OPTIONS ---------------------
OPTION PLAN OUTSTANDING REPRICED(1) ORIGINAL REPRICED
- ------------------------------------------------- ------------- ------------- -------- --------
<S> <C> <C> <C> <C>
Director Plan.................................... 40,000 40,000 $11.19 $ 6.57
1993 Stock Option Plan........................... 4,123,539 1,153,590(2) 4.33 3.97
Computerware Stock Option Plan................... 938,800 -- 4.00 4.00
1996 Stock Option Plan........................... 1,326,775 26,500 5.79 5.77
--------- --------- ------ ------
Total of all plans..................... 6,429,114 1,220,090 $ 4.64 $ 4.36
========= ========= ====== ======
</TABLE>

- ---------------

(1) The price of all such options was reduced to $6.57 per share.

(2) Includes options covering an aggregate of 20,000 shares originally granted
to non-employee Directors at a price of $7.50 per share. Does not include
options covering 209,500 shares granted to Named Executive Officers at a
weighted average exercise price of $7.60 per share.

EMPLOYMENT CONTRACTS

The Company has entered into an Employment Agreement with Robert J.
Crowell (the "Crowell Agreement") pursuant to which Mr. Crowell has been
retained for a term ending in September 1997, as the Chairman and Chief
Executive Officer of the Company with an annual minimum base salary of $275,000
per year, payable commencing on October 1, 1995. Prior thereto, Mr. Crowell did
not receive any salary. The Crowell Agreement provides that Mr. Crowell is
entitled to participate in all Company compensation plans and fringe benefit
plans, on terms at least as favorable as other executives of the Company and
that Mr. Crowell will participate in any executive profit performance bonus plan
or similar plan implemented by the Company at a minimum rate of 35% of any bonus
pool generated by such plan. Under the Crowell Agreement, Mr. Crowell also is
entitled to receive annual grants of options under the Company's Stock Option
Plan to be made no later than July of each year in amounts commensurate with Mr.
Crowell's position and performance as determined by the Compensation Committee
and on terms no less favorable than the terms for options granted to other
executives. The options generally will be exercisable within a maximum of one
year from date of grant, and, to the maximum extent allowable, shall be ISOs.
All options which are ISOs will have a per share exercise price of 110% of the
fair market value of such shares (so long as Mr. Crowell owns at least 10% of
the Company's outstanding stock) on the date of the grant, and all other
options, including ISOs, if any, granted after he ceases to be a 10%
stockholder, will have an exercise price per share equal to fair market value on
the date of grant.

During 1996, Mr. Crowell elected to forgo approximately $73,000 of his
minimum base salary, which was considered, among other factors, by the
Compensation Committee in determining the quantity of options to be granted to
Mr. Crowell in 1996. Such grants are set forth under the caption " -- Option
Grants in 1996".

If Mr. Crowell should die, become disabled (as defined) or be terminated
other than "for cause" (as defined), he becomes entitled to receive (i) cash
equal to two times his then annual base salary, payable in 12 equal monthly
installments, (ii) his bonus for that year if such termination occurs after
March 1 of the respective fiscal year, and (iii) all other compensation and
benefits to which he otherwise would have been entitled through the remaining
term of the Crowell Agreement. After his employment ends under the Crowell
Agreement, Mr. Crowell is precluded from "competing" (as defined therein)
against the Company for a period of three years. The Crowell Agreement
automatically renews for additional one-year terms unless terminated by either
party more than three months prior to the end of the initial term or any renewal
thereof.

In April 1996, the Company entered into an eighteen month employment
agreement (the "Rousou Agreement"), under which James Rousou was appointed Chief
Executive Officer of Catalink and continued as a Corporate Executive Vice
President of the Company. Mr. Rousou also was subsequently appointed President
of Catalink. The Rousou Agreement is subject to automatic renewal at the
conclusion of each term unless Mr. Rousou or the Company provides notice to the
contrary at least six months prior to the conclusion of each eighteen month
term. Mr. Rousou is entitled to an annual base salary of at least $190,000. The
Rousou

16
<PAGE> 20

Agreement also provides that Mr. Rousou is entitled to participate in all
Company compensation plans and fringe benefit plans, on terms at least as
favorable as other executives. The Rousou Agreement provides that the Company
will provide a bonus program giving Mr. Rousou the opportunity to earn a bonus
of up to 30% of his then current annual base salary based on goals and
objectives to be assigned by the Chairman until any executive profit performance
bonus plan is implemented by the Company which may supersede his then current
bonus plan. If Mr. Rousou is terminated by the Company other than "for cause"
(as defined), he is entitled to continue to receive his base salary for a period
of 12 months plus a lump sum payment equal to 12 months base salary together
with any accrued performance bonus to which he is entitled.

During 1996, Mr. Rousou elected to forgo approximately $11,000 of his
minimum base salary and a bonus of $43,000, which was considered, among other
factors, by the Compensation Committee in determining the quantity of options to
be granted to Mr. Rousou in 1996 and early 1997. The 1996 grants are set forth
under the caption " -- Option Grants in 1996."

In July 1996, the Company entered into a twenty-four month employment
agreement (the "Mulhern Agreement"), under which Laurence F. Mulhern was
retained to continue as Chief Financial Officer and a Corporate Executive Vice
President of the Company. The Mulhern Agreement is subject to automatic renewal
at the conclusion of each term for a one year period unless Mr. Mulhern or the
Company provides notice to the contrary at least six months prior to the
conclusion of each employment year ended June 30. Mr. Mulhern is entitled to an
annual base salary of at least $142,000. The Mulhern Agreement also provides
that Mr. Mulhern is entitled to participate in all Company compensation plans
and fringe benefit plans, on terms at least as favorable as other executives.
The Mulhern Agreement provides that the Company will provide a bonus program
giving Mr. Mulhern the opportunity to earn a bonus of up to 30% of his then
current annual base salary based on goals and objectives to be assigned by the
Chairman until any executive profit performance bonus plan is implemented by the
Company which may supersede his then current bonus plan. A bonus plan has not
been established for Mr. Mulhern with respect to 1996. If Mr. Mulhern is
terminated by the Company other than "for cause" (as defined), he is entitled to
continue to receive his base salary for a period of 12 months plus a lump sum
payment equal to 12 months base salary together with any accrued performance
bonus to which he is entitled.

In February 1993, Elcom Systems entered into a letter agreement with
Andres Escallon (the "Escallon Agreement") pursuant to which Mr. Escallon was
retained as Vice President and Chief Technology Officer of Elcom Systems, is
entitled to a base salary of at least $90,000 and was granted options under the
1993 Stock Option Plan to acquire up to 642,969 shares. Also, in February 1993,
Elcom Systems entered into a similar letter agreement with David Wolf (the "Wolf
Agreement") pursuant to which Mr. Wolf was retained as Executive Vice President
of Elcom Systems, is entitled to a base salary of at least $150,000 and was
granted options under the 1993 Stock Option Plan to acquire up to 169,698
shares. The Escallon Agreement and the Wolf Agreement may be terminated by
either of the respective parties thereto at any time. If Mr. Escallon or Mr.
Wolf is terminated without cause, he shall be entitled to receive a severance
payment of four months' base salary. If Mr. Escallon or Mr. Wolf is terminated
(for any reason) or his position is eliminated, within six months after the
completion of the sale of the Company or the merger of the Company and the
Company is not the surviving corporation, then Mr. Escallon or Mr. Wolf, as
applicable, shall be entitled to receive a severance payment equal to 12 times
his prior month's salary.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following report of the Compensation Committee describes the
philosophy, objectives and components of the Company's executive compensation
programs for 1996 and discusses the determinations concerning the compensation
for the Chief Executive Officer for 1996.

The members of the Compensation Committee are William W. Smith, Richard
J. Harries, Jr., and John W. Ortiz. Each of Messrs. Smith, Harries and Ortiz are
Non-Employee Directors of the Company.

17
<PAGE> 21

COMPENSATION PHILOSOPHY

In reviewing and overseeing the Company's compensation programs, the
Compensation Committee adheres to a compensation philosophy which provides
executive compensation programs that: (i) attract and retain key executives
crucial to the long-term success of the Company; (ii) relate to the achievement
of operational and strategic objectives; and (iii) are commensurate with each
executive's performance, experience and responsibilities. In making its
recommendations concerning salaries and awards under compensation plans, the
Committee considers the financial condition and operational performance of the
Company during the prior year, the Company's success in achieving strategic
objectives that may have a long-term beneficial effect on the Company's results
of operations and financial condition, and its assessment of the contributions
of the individual executive officer to the Company's performance and to the
achievement of its strategic objectives. The Committee, however, does not
specifically focus on the compensation levels of executives in peer group
companies in making compensation decisions. The Committee's decisions concerning
compensation are primarily based on subjective decisions concerning the
appropriate levels of compensation and are not the result of a highly
formalistic process. The Committee does not rely extensively on objective
criteria in measuring individual performance.

COMPENSATION PROGRAM

As a means of implementing these compensation philosophies and
objectives, the Company's compensation program for executive officers consists
of the following primary elements: salary and participation in the Company's
Stock Option Plans. These particular elements are further explained below.

Salaries -- Salary levels for executive officers reflect the Committee's
subjective judgments of appropriate salaries in light of the duties and
responsibilities inherent in the executives' respective positions. The
particular qualification of an individual holding the position and his or her
level of experience are considered in establishing a salary level when the
individual is first appointed to a given position. The performance and
contribution of the individual to the Company, as well as Company performance,
are the primary criteria influencing salary administration. Salaries of
executive officers are generally reviewed each year. In many instances, the
primary factor in setting salary levels was the Company's desire to provide
compensation in amounts sufficient to induce these individuals to join the
Company.

Stock Options -- The Company uses stock options as a long-term incentive
program for executives. Stock options are used because they directly relate the
amounts earned by the executive to the amount of appreciation realized by the
Company's stockholders over comparable periods. Stock options also provide
executives with the opportunity to acquire and build a meaningful ownership
interest in the Company. The Committee considers possible grants of stock
options throughout the year. In determining the number of options awarded to an
individual executive, the Committee generally establishes a level of award based
upon the position of the individual and his or her level of responsibility. The
Committee also considers amounts of base salary and/or bonus payments which
executives and other personnel elect to forgo, in determining the quantity of
options to be granted.

Benefit Programs -- The executive officers also participate in various
welfare and benefit programs that are generally made available to all salaried
employees. Executive officers also receive certain traditional perquisites,
which are customary for their positions.

CHIEF EXECUTIVE OFFICER COMPENSATION

The compensation arrangements for Mr. Crowell with respect to the 1996
fiscal year were primarily based upon the terms of his employment agreement with
the Company, which originally was entered into in 1993, and was amended and
restated as of September 20, 1995 (the "Crowell Agreement"). See "Executive
Compensation -- Employment Contracts." Pursuant to the Crowell Agreement, Mr.
Crowell is entitled to an annual minimum base salary of $275,000 per year
payable commencing on October 1, 1995, which amount may be increased but not
decreased at the discretion of the Compensation Committee (which did not occur
during 1996). The Compensation Committee did not conduct any surveys of
competitive, industry or revenue peer

18
<PAGE> 22

groups, but still believes that this annual base salary would place Mr.
Crowell's compensation in the bottom half of comparable companies' chief
executives.

In addition, the Crowell Agreement provides that Mr. Crowell is entitled
to participate in all of the other Company compensation plans and fringe benefit
plans, on terms at least as favorable as other executives of the Company and
that he will participate in any executive profit performance bonus plan or
similar plan implemented by the Company at a minimum rate of 35% of any bonus
pool generated by such plan, none of which were implemented in 1996. Under the
Crowell Agreement, Mr. Crowell also is entitled to receive annual grants of
options under the Company's Stock Option Plan to be made no later than July of
each year in amounts commensurate with Mr. Crowell's position and performance as
determined by the Compensation Committee and on terms no less favorable than the
terms for options granted to other executives. Certain additional option grants
were made to Mr. Crowell by the Committee in August 1996 which considered, among
other factors, his decision to forgo a portion of his minimum base salary.

The Compensation Committee reviews and recommends the number of shares
subject to stock options awarded to Mr. Crowell annually, no later than July of
each year based upon a number of factors, but does not utilize pre-established,
specific performance goals in making such decisions. Factors considered included
sales and equity growth, market position, product placement and acceptance,
acquisitions and strategic growth strategies, employee attitudes and the
balancing of short-term and long-term goals. In determining the number of stock
options granted to Mr. Crowell in 1996, the Committee considered its conclusions
from an objective and subjective evaluation, with an emphasis on the impact on
the Company's sustainability and competitiveness within its industry, as well as
his position within the Company, the fact that Mr. Crowell elected to forgo
$69,000 of his 1996 minimum base salary, industry stock option grant comparisons
and the ongoing belief that Mr. Crowell is significantly under-compensated. In
1996, Mr. Crowell was granted options to acquire an aggregate of 204,500 shares
of Common Stock at a weighted average exercise price of $7.12 per share.

SECTION 162(M)

Section 162(m) of the Internal Revenue Code (the "Section") disallows a
tax deduction for any publicly traded company for individual compensation
exceeding $1 million in any year for any of the Named Executive Officers, unless
the compensation is performance-based or otherwise meets an applicable
exemption. Since the aggregate compensation of each of the Company's executive
officers is below the $1 million threshold and since the Committee believes that
any options granted under the Company's Stock Option Plans will meet the
performance based provisions under the Section, the Committee currently believes
that the Section will not reduce the tax deduction available to the Company for
compensation paid in 1995 to the Company's executive officers.

COMPENSATION COMMITTEE
William W. Smith, Chairman
Richard J. Harries, Jr.
John W. Ortiz

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee was formed to review, monitor and
approve the compensation and benefits for the Company's executive officers
(including bonuses, if any), administer the Company's stock option plans and
other management compensation plans and make recommendations to the Board of
Directors regarding such matters. No employees or executive officers of the
Company serve on the Committee. The Committee is currently composed of Messrs.
Harries, Ortiz, and Smith. No interlocking relationship exists between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company.

19
<PAGE> 23

CERTAIN TRANSACTIONS

Executive Loan -- As of December 31, 1996, the Company had loaned Mr.
Escallon, a Corporate Executive Vice President, Chief Technology Officer and a
Named Executive Officer of the Company, a total of $500,000 pursuant to a demand
note which accrues interest at a rate of prime plus 1% and is secured by the
underlying value of Mr. Escallon's Company stock options. Subsequent to year
end, the principal amount of the note was increased to $600,000.

Transactions with Affiliated Company -- The Company owns approximately
40% of the equity of ShopLink Incorporated ("ShopLink"), a development stage
entity that has licensed the Company's PECOS technology to provide an electronic
commerce system to market products to the home consumables market. The Company
accounts for this investment under the equity method, with its losses limited to
its $4,000 investment. ShopLink paid $437,500 for a perpetual license of the
Company's PECOS technology and also granted the Company warrants to acquire
200,000 shares of ShopLink common stock at $2.20 per share as partial
consideration for certain exclusivity rights. Under the License Agreement and
related Development Agreement, Extended Maintenance Agreement and Professional
Services Agreement, ShopLink is required to pay additional amounts to continue
its exclusivity rights and for services rendered by the Company in customizing
and maintaining the ShopLink implementation, as well as annual maintenance fees.
During 1996, the Company recognized license and maintenance fees totaling
$370,000 (of the $437,500 license fee) and professional services revenues of
$277,000 related to ShopLink, as well as $71,000 of computer sales. The Company
was also reimbursed by ShopLink for the actual cost of certain rental expense
relative to Company office space occupied by ShopLink and for the cost of
employee benefit expenses that specifically relate to ShopLink's employees.

In addition to the Company's ownership position, Mr. Crowell, the
Company's Chairman and Chief Executive Officer is also a director of ShopLink
and beneficially owns approximately 3% of ShopLink.

Litigation Settlement -- On March 26, 1997, the Company and certain of
its subsidiaries entered into a Final Agreement of Settlement and Mutual Release
of All Claims and Demands (the "Settlement") with the former owners of
Computerware Business Trust ("Computerware"), which the Company acquired in
February 1995, including the dismissal of all litigation pending against the
principal former owners of Computerware (and related counterclaims against the
Company). The essence of the Settlement includes a confirmation of the merger
transaction and confirms that the 1,326,417 shares of Company common stock
issued in 1995 is the appropriate and final amount of stock due and payable in
connection with the transaction. Pursuant to the Settlement, the Company and the
former owners of Computerware also agreed, that based on the level of gross
profit generated by the former Computerware platform, the 1,000,000 options
granted under the Computerware Stock Option Plan would be 90% vested as of March
15, 1997 and fully vested as of March 15, 1998. In addition, the principal
former owners of Computerware have agreed to certain volume and manner-of-sale
limitations on their ability to resell their shares of Company Common Stock.

The five principal former owners of Computerware have agreed not to sell
any Company Common Stock owned by them until June 14, 1997. Thereafter, for a
period of three months, up to 1,500 shares per day, in the aggregate, may be
sold; then, for the three months following that, up to 5,000 shares per day, in
the aggregate, may be sold; and thereafter, up to 10,000 shares per day, in the
aggregate, may be sold. The settlement also provides for monthly sale limits of
twenty times the daily sale maximum.

Pursuant to the Settlement, the Company also agreed to pay John R.
Kovalcik, Jr. $50,000 for expenses associated with his relocation to and from
the Boston area. Mr. Kovalcik was a Director and a Corporate Executive Vice
President of the Company until his employment was terminated in May 1996. Since
that time, the Company has and will continue to pay Mr. Kovalcik his $150,000
annual salary through May 1998, in accordance with his employment agreement. The
Settlement of these disputes and related litigation will not have any adverse
affect on the Company's financial position or results of operations.

STOCKHOLDER AGREEMENTS

Substantially all of the current holders of Common Stock, including
Robert J. Crowell, and all of the holders of options to acquire Common Stock,
including each of the executive officers of the Company (with the

20
<PAGE> 24

exception of former Computerware and Lantec stockholders who are covered by
separate respective stockholders agreements) had entered into an amended and
restated stockholders' agreement with the Company (the "Original Stockholders'
Agreement"), which imposed restrictions on transfers and rights of refusal, on
the shares owned by such stockholders. The Original Stockholders' Agreement was
terminated in connection with the Company's initial public offering in December
1995.

In connection with the Computerware acquisition, the Company and Robert
J. Crowell entered into a Stockholders' Agreement dated February 6, 1995 (the
"Computerware Stockholders' Agreement") with all of the former shareholders of
Computerware, including John R. Kovalcik, Jr., covering all shares of Common
Stock issuable as a result of the acquisition or issuable upon exercise of stock
options that certain of such shareholders received in connection with their
ongoing employment by the Company and/or Computerware (collectively, the
"Covered Shares"). The Computerware Stockholders' Agreement also contained
restrictions on transfer and a right of first refusal, and granted the holders
of the Covered Shares limited preemptive rights to purchase securities of the
Company and, until February 6, 2002, "piggyback" registration rights. The
provisions of the Computerware Stockholders' Agreement, other than the piggyback
registration rights provisions, terminated in connection with the Company's
initial public offering in December 1995.

On June 22, 1995, the Company acquired all of the equity of Lantec from
its former stockholders, including James Rousou. In consideration for the sale
of his portion of Lantec's equity, Mr. Rousou received approximately $3,447,000
from the Company. For the sale of its equity in Lantec, Conqueror Investments
Limited ("Conqueror") received 1,548,504 shares of Common Stock (148,504 of
which were sold in the initial public offering) and warrants to acquire up to
400,500 shares of Common Stock exercisable at $4.75 per share. On April 6, 1996,
such shares and warrants were distributed by way of a dividend, from Conqueror
to the Rousou Life Interest Settlement (a trust, whose sole trustee is Toplaw
Trustees Limited), and then without consideration, such shares and warrants were
distributed to Mr. Rousou as the principal beneficiary of such trust during his
lifetime. In connection with the Lantec acquisition, the Company and Robert J.
Crowell entered into the Lantec Stockholders' Agreement with the former
stockholders of Lantec covering all 2,899,820 shares of Common Stock (346,289 of
which were sold in the initial public offering) issued and the 750,000 shares of
Common Stock issuable upon exercise of warrants (the "Lantec Warrants"). The
Lantec Stockholders' Agreement contains substantially the same provisions as the
Computerware Stockholders' Agreement described above. In addition, the Lantec
Stockholders' Agreement provides the former Lantec stockholders with the right
to designate an observer to attend meetings of the Company's Board of Directors
and its committees (the "Board Observer Right"). See "Election of
Directors -- Board Observer." The provisions of the Lantec Stockholders'
Agreement, other than the piggyback registration rights provisions and the Board
Observer Right, terminated in connection with the Company's initial public
offering in December 1995. The piggyback registration rights expire June 22,
2002 and the Board Observer Right terminates on the earlier to occur of: (i)
June 22, 2002, (ii) such time as all of the former Lantec stockholders own less
than 2,500,000 shares of Common Stock (treating the Lantec Warrants on an
as-if-exercised basis), or (iii) renouncement of the Board Observer Right by
such stockholders.

The Company and Robert J. Crowell have entered into a Securities
Agreement, dated December 10, 1993 and amended on February 1, 1994 (the "Crowell
Securities Agreement"). Pursuant to the Crowell Securities Agreement, Robert J.
Crowell was granted limited preemptive rights to purchase securities of the
Company (which rights have expired) and, until February 2001, "piggyback"
registration rights with respect to 5,000,000 shares of his Common Stock. The
balance of Mr. Crowell's ownership in the Company (including 359,000 shares of
Common Stock) was acquired in conjunction with a 1993 Preferred Stock offering
and is subject to the Preferred Agreements as hereinafter defined. Mr. Crowell
has sold 275,000 shares of such Common Stock, which were transferred with
associated rights, in the Secondary Sale, and 6,300 shares were transferred with
associated rights as gifts. An additional 450,000 of such shares of Common Stock
were sold in conjunction with the Company's initial public offering.

Substantially all of the current holders of Common Stock that originally
represented the 7,987,296 shares of Preferred Stock (which were converted into
Common Stock in connection with the Company's December 1995 initial public
offering) issued by the Company, including Robert J. Crowell, J. Richard Cordsen
and Shell Pensions Trust, Ltd. (which is a greater than 5% beneficial owner of
the Company's voting securities) have entered into stock purchase agreements
with the Company with respect to the shares of Common Stock,

21
<PAGE> 25

which they purchased as Preferred Stock from the Company thereunder in 1993,
1994 and 1995 (the "Preferred Agreements"). Pursuant to the terms of the
respective Preferred Agreements, holders of Preferred Stock were granted limited
"piggyback" registration rights with respect to such shares for a period of
seven years after purchase of the Preferred Stock.

PERFORMANCE GRAPH

Set forth below is a line graph and a table of the related underlying
data comparing the percentage change in the cumulative total stockholders'
return on the Company's Common Stock against the cumulative total return of the
Total Return Index for The Nasdaq Stock Market -- U.S. and Foreign ("NASDAQ
Total"), and the index for NASDAQ Computer and Data Processing Services Stocks
("Industry") for the period beginning with the Company's initial public offering
on December 20, 1995, and as of the last trading day on the NASDAQ in 1995 and
1996. The Industry index includes all NASDAQ listed securities with a Standard
Industrial Classification (SIC) of 737. The graph assumes that the value of the
investment in Elcom International, Inc.'s Common Stock, at its initial public
offering price, and each index was $100 on December 20, 1995 and that all
dividends, if any, were reinvested.

COMPARISON OF ELCOM INTERNATIONAL, INC.'S COMMON STOCK,
THE TOTAL RETURN INDEX FOR THE NASDAQ STOCK MARKET -- U.S. AND FOREIGN
AND THE INDEX FOR NASDAQ COMPUTER AND DATA PROCESSING SERVICES STOCKS
(SIC CODE 737)

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) THE COMPANY NASDAQ TOTAL INDUSTRY
<S> <C> <C> <C>
12/20/95 100 100 100
12/29/95 139 104 103
12/31/96 72 127 127
</TABLE>

OTHER MATTERS

Representatives of Arthur Andersen LLP, the Company's independent
auditors, will be present at the Annual Meeting. They will be afforded the
opportunity to make a statement at the Annual Meeting if they so desire, and are
expected to be available to respond to appropriate questions. The Board of
Directors is not aware of any matter to come before the Annual Meeting other
than those set forth in the Notice of Annual Meeting of Stockholders. If other
matters, however, properly come before the Annual Meeting, it is the intention
of the persons named in the accompanying Proxy to vote in accordance with their
best judgment on such matters insofar as the Proxies are not limited to the
contrary.

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<PAGE> 26

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities (i.e., the
Common Stock), to file reports of ownership and changes in ownership of such
securities with the Commission. Officers, Directors and greater-than-ten-percent
beneficial owners are required by applicable regulations to furnish the Company
with copies of all Section 16(a) forms they file.

Based solely upon a review of the copies of the forms furnished to the
Company during or with respect to 1996, and written representations from certain
reporting persons, the Company believes that no officer, Director or
greater-than-ten-percent beneficial owner failed to file on a timely basis
during the year ended December 31, 1996 any report required by Section 16(a) of
the Securities Exchange Act of 1934.

DATE TO SUBMIT STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING

Any stockholder who wishes to submit a proposal for inclusion in the
proxy materials to be distributed by the Company in connection with its Annual
Meeting of Stockholders to be held in 1998 must do so no later than December 30,
1997. To be eligible for inclusion in the 1998 proxy materials of the Company,
proposals must conform to the requirements set forth in Regulation 14A under the
Securities Exchange Act of 1934.

AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

Upon the receipt of a written request from any stockholder, the Company
will mail, at no charge to the stockholder, a copy of the Company's Annual
Report on Form 10-K, including the financial statements and schedules required
to be filed with the Commission pursuant to Rule 13a-1 under the Securities
Exchange Act of 1934, for the Company's most recent fiscal year. Written
requests for such Report should be directed to:

Chief Financial Officer
Elcom International, Inc.
10 Oceana Way
Norwood, MA 02062

You are urged to sign and return your Proxy promptly in the enclosed
return envelope to make certain your shares will be voted at the Annual Meeting.

BY ORDER OF THE BOARD OF DIRECTORS,

Laurence F. Mulhern
Secretary

April 28, 1997

23
<PAGE> 27

EXHIBIT A

THE 1996 STOCK OPTION PLAN
OF ELCOM INTERNATIONAL, INC.

August 19, 1996

Elcom International, Inc. hereby adopts a stock option plan for the
benefit of certain persons and subject to the terms and provisions set forth
below.

1. Definitions. The following terms shall have the meanings set forth
below whenever used in this instrument:

(a) The word "Affiliate" shall mean any corporation which, on the
effective date of the Plan, is, within the meaning of Section 1563(a) of
the Code, a member of a controlled group of corporations which includes the
Company.

(b) The word "Board" shall mean the Board of Directors of the Company.

(c) The word "Code" shall mean the United States Internal Revenue Code
(Title 26 of the United States Code) as the same may be amended from time
to time.

(d) The word "Committee" shall mean the Compensation Committee
appointed by the Board.

(e) The words "Common Stock" shall mean the common stock, par value
$.01 per share, of the Company.

(f) The word "Company" shall mean Elcom International, Inc., a
Delaware corporation, and its Subsidiaries, if any, and any successor
thereto which shall maintain this Plan.

(g) The words "Incentive Stock Option" shall mean any option which
qualifies as an incentive stock option under the terms of Section 422A of
the Code.

(h) The words "Key Personnel" shall mean any person whose performance
as an employee (whether or not as Director) or as an independent contractor
or outside Director of the Company or an Affiliate of the Company is, in
the judgment of the Committee, important to the successful operation of the
Company or a Subsidiary.

(i) The word "Optionee" shall mean any Key Personnel, or the nominee
designated by such Key Personnel and acceptable to the Committee, to whom a
stock option has been granted pursuant to this Plan, or the transferee
thereof, as allowed by the Committee and/or the Board.

(j) The word "Plan" shall mean The 1996 Stock Option Plan of Elcom
International, Inc., as it was originally adopted, and as it may be
amended.

(k) The word "Subsidiary" shall mean any corporation at least 50% of
the common stock of which is owned directly or indirectly by the Company.

(l) The words "Substantial Stockholder" shall mean any Key Personnel
who owns more than 10% of the total combined voting power of all classes of
stock of the Company. Ownership shall be determined in accordance with
Section 424(d) of the Code and lawful applicable regulations.

2. Purpose of the Plan. The purpose of the Plan is to provide Key
Personnel with greater incentive to serve and promote the interests of the
Company and its stockholders. The premise of the Plan is that, if such Key
Personnel acquire a proprietary interest in the business of the Company or
increase such proprietary interest as they may already hold, then the incentive
of such Key Personnel to work toward the Company's continued success will be
commensurately increased. Accordingly, the Company will, from time to time
during the effective period of the Plan, grant to such Key Personnel as may be
selected to participate in the Plan, options to purchase Common Stock on the
terms and subject to the conditions set forth in the Plan.
<PAGE> 28

3. Effective Date of the Plan. The Plan shall become effective as of
August 19, 1996. In the event the Plan is not approved by the requisite vote of
the holders of the outstanding shares of voting capital stock of the Company by
August 19, 1997, any purported incentive stock options granted hereunder shall
be thereafter treated as non-qualified stock options for all purposes hereunder.

4. Administration of the Plan. The Plan shall be administered by the
Committee. Each member of the Committee shall be a "Non-Employee Director"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934 or any amendment of or successor to such Rule as may be in effect from
time to time and an "outside director" within the meaning of Section 162(m) of
the Code or any amendment of or successor to such provision as may be in effect
from time to time. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members, shall be acts of
the Committee. Subject to the terms and conditions of the Plan, and in addition
to the other authorizations granted to the Committee under the Plan, the
Committee shall have full and final authority in its absolute discretion:

(a) to select the Key Personnel to whom options will be granted;

(b) to determine the number of shares of Common Stock subject to any
option;

(d) to determine the option price of Common Stock subject to an
option;

(e) to determine the time or times when each option may be exercised,
and the duration of the exercise period;

(f) to determine whether and to what extent an option is an Incentive
Stock Option; provided, however, that Incentive Stock Options may only be
granted to employees of the Company;

(g) to prescribe the form of the option agreements governing the
options which are granted under the Plan and to set the provisions of such
option agreements as the Committee may deem necessary or desirable provided
such provisions are not contrary to the terms and conditions of either the
Plan or, where the option is an Incentive Stock Option, Section 422A of the
Code;

(h) to adopt, amend and rescind such rules and regulations as, in the
Committee's opinion, may be advisable in the administration of the Plan;
and

(i) to construe and interpret the Plan, the rules and regulations and
the instruments evidencing options granted under the Plan and to make all
other determinations deemed necessary or advisable for the administration
of the Plan.

Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees under the Plan and upon any person claiming under or
through such an Optionee. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.

5. Persons Eligible for Options. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Key Personnel as designated by the Committee (or their
designees acceptable to the Committee, in its sole discretion), whose initiative
and efforts contribute or may be expected to contribute to the continued growth
and future success of the Company and/or its Subsidiaries. Notwithstanding the
preceding sentence, any Key Personnel who renounces in writing any right he or
she may have to receive stock options under the Plan shall not be eligible to
receive any stock options under the Plan. The Committee may grant more than one
option to the same Key Personnel.

6. Shares Subject to the Plan. Subject to the provisions of the next
succeeding provisions of this Section 6, the aggregate number of shares of
Common Stock for which options may be granted under the Plan shall be 2,400,000
shares of Common Stock. The maximum number of shares of Common Stock for which
options may be granted under the Plan to any one Key Personnel in any one fiscal
year of the Company is

2
<PAGE> 29

300,000, subject to the other provisions of this Section 6. Either treasury or
authorized and unissued shares of Common Stock, or both, in such amounts, within
the maximum limit of the Plan, as the Committee shall from time to time
determine, may be so issued. All shares of Common Stock which are the subject of
any lapsed, expired or terminated options may be made available for reoffering
under the Plan to any Key Personnel. In addition, any shares of Common Stock
which are retained to satisfy an Optionee's withholding tax obligations or which
are transferred to the Company by an Optionee to satisfy such obligations or to
pay all or any portion of the option price in accordance with the terms of the
Plan, may be made available for reoffering under the Plan to any Key Personnel.
If an option granted under this Plan is exercised, any shares of Common Stock
which are the subject thereof shall not thereafter be available for reoffering
under the Plan, except in accordance with the preceding sentence.

In the event that subsequent to the date of adoption of the Plan by the
Board, the outstanding shares of Common Stock are, as a result of a stock split,
stock dividend, combination or exchange of shares, exchange for other
securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or other such change, including without
limitation any transaction described in Section 424(a) of the Code, increased or
decreased or changed into or exchanged for a different number or kind of shares
of stock or other securities of the Company, then (i) there shall automatically
be substituted for each share of Common Stock subject to an unexercised option
granted under the Plan and each share of Common Stock available for additional
grants of options under the Plan the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be exchanged,
(ii) the option price per share of Common Stock or unit of securities shall be
increased or decreased proportionately so that the aggregate purchase price for
the securities subject to the option shall remain the same as immediately prior
to such event, and (iii) the Committee shall make such other adjustments to the
securities subject to options, the provisions of the Plan, and option agreements
as may be appropriate, equitable and in compliance with the provisions of
Section 424(a) of the Code to the extent applicable and any such adjustment
shall be final, binding and conclusive as to each Optionee. Any such adjustment
shall provide for the elimination of fractional shares.

7. Option Provisions.

(a) Option Price. The option price per share of Common Stock which is
the subject of an Incentive Stock Option shall be determined by the Committee at
the time of grant but shall not be less than one hundred percent (100%) of the
fair market value of a share of Common Stock on the date the option is granted;
provided, however, that if any Key Personnel to whom an Incentive Stock Option
is granted is, at the time of the grant, a Substantial Stockholder, the option
price per share of Common Stock shall be determined by the Committee but shall
not be less than one hundred ten percent (110%) of the fair market value of a
share of Common Stock on the date the option is granted. The option price per
share of Common Stock under each option granted pursuant to the Plan which is
not an Incentive Stock Option shall be determined by the Committee at the time
of grant. Such fair market value shall be determined in accordance with
procedures to be established by the Committee. The day on which the Committee
approves the granting of an option shall be deemed for all purposes hereunder
the date on which the option is granted, unless another effective date for such
grant is specified by the Committee.

(b) Period of Option. The Committee shall determine when each option is
to expire but no option shall be exercisable after ten (10) years have elapsed
from the date upon which the option is granted; provided, however, that no
Incentive Stock Option granted to a person who is a Substantial Stockholder at
the time of the grant of such option shall be exercisable after five (5) years
have elapsed from the date upon which the option is granted.

(c) Limitation on Exercise and Transfer of Option. Except as otherwise
provided in the event of an Optionee's death, or as otherwise determined by the
Committee in any particular instance, whether before or after the date of grant
of an option and subject to any and all terms and conditions as determined by
the Committee in its absolute discretion, only the Optionee may exercise an
option; provided, that a guardian or other legal representative who has been
duly appointed for such Optionee may exercise an option on behalf of the
Optionee. Except as it may otherwise be determined by the Committee in any
particular instance, whether before or after the date of grant of an option and
subject to any and all terms and conditions as determined by the

3
<PAGE> 30

Committee in its absolute discretion, (a) no option granted hereunder shall be
transferable except as otherwise provided in the event of an Optionee's death
or, to the extent approved by the Committee, pursuant to a qualified domestic
relations order as defined by the Code, or the rules thereunder, and (b) no
option granted hereunder may be pledged or hypothecated, nor shall any such
option be subject to execution, attachment or similar process.

(d) Conditions Governing Exercise of Option. The Committee may, in its
absolute discretion, either require that, prior to the exercise of any option
granted hereunder, the Optionee shall have been an employee or independent
contractor for a specified period of time after the date such option was
granted, or make any option granted hereunder immediately exercisable. Each
option shall be subject to such additional or different restrictions or
conditions with respect to the time and method of exercise as shall be
prescribed by the Committee. Upon satisfaction of any such conditions, the
option may be exercised in whole or in part at any time during the option
period. Options shall be exercised by the Optionee (i) giving written notice to
the Company of the Optionee's exercise of the option accompanied by full payment
of the purchase price either in cash or, with the consent of the Committee, in
whole or in part in shares of Common Stock (either by delivery to the Company of
already-owned shares or having the Company withhold shares to be issued) having
a fair market value on the date the option is exercised equal to that portion of
the purchase price for which payment in cash is not made, and (ii) making
appropriate arrangements acceptable to the Company with respect to income tax
withholding, as required, which arrangements may include, at the absolute
discretion of the Committee, in lieu of other withholding arrangements, (a) the
Company withholding from issuance to the Optionee such number of shares of
Common Stock otherwise issuable upon exercise of the option as the Company and
the Optionee may agree, or (b) the Optionee's delivery to the Company of shares
of Common Stock having a fair market value on the date the option is exercised
equal to that portion of the withholding obligation for which payment in cash is
not made. Certain dissolutions or liquidations of the Company or, unless the
surviving corporation assumes said options, mergers or consolidations in which
the Company is not the surviving corporation, may cause each outstanding option
to terminate, provided that during the option period each Optionee shall have
the right during the period, if any, prescribed in the option agreement prior to
such dissolution or liquidation, or merger or consolidation in which the Company
is not the surviving corporation, to exercise the then exercisable portion of
his or her option in whole or in part without regard to any limitations
contained in the Plan or the option agreement. Additional provision with respect
to acquisitions, mergers, liquidations or dissolutions may be made in the option
agreement.

(e) Termination of Employment, Etc. If an Optionee ceases to be either
an employee, outside Director or independent contractor, of the Company and all
Subsidiaries, as applicable (the "Cessation Date"), then the Committee shall
have absolute discretion to establish, in the option agreement or otherwise, the
restrictions on the exercisability of options granted hereunder. An Optionee's
employment shall not be deemed to have terminated while he is on a military,
sick or other bona fide approved leave of absence from the Company or a
Subsidiary as such a leave of absence is described in Section 1.421-7(h) of the
Federal Income Tax Regulations or any lawful successor regulations thereto. If
the stock option is an Incentive Stock Option, no option agreement shall:

(i) permit any Optionee to exercise any Incentive Stock Option more
than three (3) months after the date the Optionee ceased to be employed by
the Company or any Subsidiary if the reason for the Optionee's cessation of
employment was other than his death or his disability (as such term is
defined by Section 105(d)(4) of the Code); or

(ii) permit any Optionee to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be employed by the
Company or any Subsidiary if the reason for the Optionee's cessation of
employment was the Optionee's disability (as such term is defined by
Section 105(d)(4) of the Code); or

(iii) permit any person to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be employed by the
Company or any Subsidiary if either (A) the reason for the Optionee's
cessation of employment was his death or (B) the Optionee died within three
(3) months after ceasing to be employed by the Company or any Subsidiary.

4
<PAGE> 31

If any option is by terms of the option agreement exercisable following the
Optionee's death, then such option shall be exercisable by the Optionee's
estate, or the person designated in the Optionee's Last Will and Testament, or
the person to whom the option was transferred by the applicable laws of descent
and distribution or by approval of the Committee.

(f) Limitations on Grant of Incentive Stock Options. In no event may
Incentive Stock Options be granted hereunder to any person other than an
employee of the Company. During the calendar year in which any Incentive Stock
Option first becomes exercisable, the aggregate fair market value of the shares
of Common Stock which are subject to Incentive Stock Options (determined as of
the date the Incentive Stock Options were granted) shall not exceed the sum of
One Hundred Thousand Dollars ($100,000). Options which are not designated as
Incentive Stock Options shall not be subject to the limitations described in the
preceding sentence and shall not be counted when applying such limitation.

(g) Prohibition of Alternative Options. It is intended that Key
Personnel who are employees may be granted, simultaneously or from time to time,
Incentive Stock Options or other stock options, but no eligible Key Personnel
shall be granted alternative rights in Incentive Stock Options and other stock
options so as to prevent options granted as Incentive Stock Options from
qualifying as such within the meaning of Section 422A of the Code.

(h) Waiver by Committee of Conditions Governing Exercise of Option. The
Committee may, in its sole discretion, waive, alter or amend any restrictions or
conditions set forth in an option agreement concerning an Optionee's right to
exercise any option and/or the time and method of exercise.

8. Amendments to the Plan. The Committee is authorized to interpret
the Plan and from time to time adopt any rules and regulations for carrying out
the Plan that it may deem advisable. Subject to the approval of the Board, the
Committee may at any time amend, modify, suspend or terminate the Plan. In no
event, however, without the approval of the Company's stockholders, shall any
action of the Committee or the Board result in:

(a) amending, modifying or altering the eligibility requirements
provided in Section 5 hereof; or

(b) increasing or decreasing, except as provided in Section 6 hereof,
the maximum number of shares for which options may be granted; or

(c) decreasing the minimum option price per share at which options may
be granted under the Plan, as provided in Section 7(a) hereof;

(d) extending either the maximum period during which an option is
exercisable as provided in Section 7(b) hereof or the date on which the
Plan shall terminate as provided in Section 12 hereof; or

(e) changing the requirements relating to the Committee;

except as necessary to conform the Plan and/or the option agreements to changes
in the Code or other governing law. No option may be granted during any
suspension of this Plan or after this Plan has terminated and no amendment,
suspension or termination shall, without the Optionee's consent, alter or impair
any of the rights or obligations under an option theretofore granted to such
Optionee under this Plan.

9. Investment Representation, Approvals and Listing. The Committee may
condition its grant of any option hereunder (or any transfer allowed in its
discretion) upon receipt of an investment representation from the Optionee which
shall be substantially similar to the following:

"Optionee agrees that any shares of Common Stock of Elcom International,
Inc. which may be acquired by virtue of the exercise of this option
shall be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall
become inoperative in the event the shares of Common Stock of Elcom
International, Inc. which are subject to this option shall be registered
under the Securities Act of 1933, as amended, for issuance to the
Optionee or in the event there is presented to Elcom International, Inc.
an opinion of counsel or other evidence satisfactory to Elcom
International, Inc. to the effect that the offer and sale of the shares
of Common

5
<PAGE> 32

Stock of Elcom International, Inc. which are subject to this option may
lawfully be made without registration under the Securities Act of 1933,
as amended".

The Company shall not be required to issue any certificates for shares of Common
Stock upon the exercise of an option granted under the Plan prior to (i)
obtaining any approval from any governmental agency which the Committee shall,
in its sole discretion, determine to be necessary or advisable, (ii) the
admission of such shares to listing on any national securities exchange or the
NASDAQ National Market on which the shares of Common Stock may be listed, (iii)
completion of any registration or other qualification of the shares of Common
Stock under any state or federal law or ruling or regulations of any
governmental body which the Committee shall, in its sole discretion, determine
to be necessary or advisable, or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the shares of Common
Stock is not necessary or advisable, and (iv) obtaining an investment
representation from the Optionee in the form set forth above or in such other
form as the Committee, in its sole discretion, shall determine to be adequate.

10. General Provisions.

(a) Option Agreements Need Not Be Identical. The form and substance of
option agreements, whether granted at the same or different times, need not be
identical.

(b) No Right To Be Employed, Etc. Nothing in the Plan or in any option
agreement shall confer upon any Optionee any right to continue in the employ of
the Company or a Subsidiary, or to serve as a member of the Board or as an
independent contractor, or to be entitled to receive any remuneration or
benefits not set forth in the Plan or such option agreement, or to interfere
with or limit either the right of the Company or a Subsidiary to terminate the
employment of, or independent contractor relationship with, such Optionee at any
time or the right of the stockholders of the Company to remove him as a member
of the Board with or without cause.

(c) Optionee Does Not Have Rights Of Stockholder. Nothing contained in
the Plan or in any option agreement shall be construed as entitling any Optionee
to any rights of a stockholder as a result of the grant of an option until such
time as shares of Common Stock are actually issued to such Optionee pursuant to
the exercise of an option.

(d) Successors In Interest. The Plan shall be binding upon the
successors and assigns of the Company.

(e) No Liability Upon Distribution of Shares. The liability of the
Company under the Plan and any distribution of shares of Common Stock made
hereunder is limited to the obligations set forth herein with respect to such
distribution and no term or provision of the Plan shall be construed to impose
any liability on the Company or the Committee in favor of any person with
respect to any loss, cost or expense which the person may incur in connection
with or arising out of any transaction in connection with the Plan, including,
but not limited to, any liability to any Federal, state or local tax authority
and/or any securities regulatory authority.

(f) Taxes. Appropriate provisions shall be made for all taxes required
to be withheld and/or paid in connection with the options or the exercise
thereof, and the transfer of Common Stock pursuant thereto, under the applicable
laws or other regulations of any governmental authority, whether Federal, state
or local and whether domestic or foreign.

(g) Use of Proceeds. The cash proceeds received by the Company from the
issuance of shares of Common Stock pursuant to the Plan will be used for general
corporate purposes, or in such other manner as the Board deems appropriate.

(h) Expenses. The expenses of administering the Plan shall be borne by
the Company.

(i) Captions. The captions and section numbers appearing in the Plan
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.

(j) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
may require.

6
<PAGE> 33

(k) Gender. The use of the feminine, masculine or neuter pronoun shall
not be restrictive as to gender and shall be interpreted in all cases as the
context may require.

11. Termination of the Plan. The Plan shall terminate on August 19,
2006, and thereafter no options shall be granted under the Plan. All options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms of the option agreements governing such
options and the terms and conditions of the Plan.

12. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable federal
law.

13. Venue. The venue of any claim brought hereunder by an Optionee
shall be Boston, Massachusetts.

14. Changes in Governing Rules and Regulations. All references herein
to the Code or sections thereof, or to rules and regulations of the Department
of Treasury or of the Securities and Exchange Commission, shall mean and include
the Code sections thereof and such rules and regulations as are now in effect or
as they may be subsequently amended, modified, substituted or superseded.

IN WITNESS WHEREOF, Elcom International, Inc., by its appropriate
officer duly authorized, has executed this document as of the 19th day of
August, 1996.

ELCOM INTERNATIONAL, INC.

/s/ ROBERT J. CROWELL
By: ..................................
ROBERT J. CROWELL,
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

7
<PAGE> 34
ELCOM INTERNATIONAL, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS, JUNE 10, 1997

The undersigned hereby constitutes and appoints Robert J. Crowell and
Laurence F. Mulhern, and each of them, his or her true and lawful agents and
proxies with full power of substitution in each, to represent and vote all of
the shares of Common Stock, $.01 par value per share, of Elcom International,
Inc. held of record as of April 17, 1997 by the undersigned at the Annual
Meeting of Stockholders of Elcom International, Inc. to be held at The Hilton at
Dedham Place, 1 Allied Drive, Dedham, Massachusetts on Tuesday, June 10, 1997 at
10:00 a.m. (E.D.T.), and at any adjournment or postponement thereof, on all
matters coming before said meeting.

You are encouraged to specify your choice by marking the appropriate
box, SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot vote
your shares unless you sign and return this card.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 35
[ELCOM INTERNATIONAL LOGO]

THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.

Regardless of whether you plan to attend the Annual Meeting of Stockholders, you
can be sure your shares are represented at the meeting by promptly returning
your proxy in the enclosed envelope.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
AND AUTHORIZES THE PROXIES TO TAKE ACTION IN THEIR DISCRETION UPON OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF BOTH NOMINEES AS DIRECTORS AND FOR THE
RATIFICATION AND APPROVAL OF THE 1996 STOCK OPTION PLAN OF ELCOM INTERNATIONAL,
INC. AND THE OPTIONS GRANTED THEREUNDER TO DATE.

1. ELECTION OF DIRECTORS - To elect two Directors of the class whose term of
office will otherwise expire in 1997 for a three-year term ending at the
Annual Meeting of Stockholders in 2000. Nominees for Director: CLASS II: J.
Richard Cordsen and Richard J. Harries, Jr. The Board of Directors
recommends a vote FOR the election of both nominees for Director.

[ ] FOR [ ] WITHHELD
BOTH FROM BOTH
NOMINEES NOMINEES

[ ] For, except vote withheld from the following nominee:
---------------------

2. RATIFICATION AND APPROVAL OF THE 1996 STOCK OPTION PLAN OF ELCOM
INTERNATIONAL, INC. AND THE OPTIONS GRANTED THEREUNDER TO DATE.

The Board of Directors recommends a vote FOR the ratification and approval
of The 1996 Stock Option Plan of Elcom International, Inc. and the options
granted thereunder to date.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. IN THEIR DISCRETION TO ACT ON ANY OTHER MATTER OR MATTERS WHICH MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]

MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]

Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, or guardian, please
give full title as such.

Signature: Date:
--------------------- -----------------------