April 5, 2000
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 May 11, 2000, at the Occasions Banquet Facility,
1369 Providence Highway, Norwood, 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,
Robert J. Crowell
Chairman and Chief Executive Officer
<PAGE>
ELCOM INTERNATIONAL, INC.
10 Oceana Way, Norwood, Massachusetts 02062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Elcom
International, Inc. (the "Company") will be held at the Occasions Banquet
Facility, 1369 Providence Highway, Norwood, Massachusetts, on May 11, 2000 at
10:00 A.M. (EDT), for the following purposes:
1. To fix the size of the Board of Directors at six and to elect
the Director of the class whose term of office will otherwise
expire in 2000 for a three-year term ending at the Annual
Meeting of Stockholders in 2003;
2. To ratify, approve and adopt The 2000 Stock Option Plan of
Elcom International, Inc.; 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 March 20, 2000 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 postage paid envelope provided. Stockholders who attend the
Annual Meeting may revoke their Proxies and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS,
Peter A. Rendall
Secretary
Norwood, Massachusetts,
April 5, 2000.
<PAGE>
ELCOM INTERNATIONAL, INC.
10 Oceana Way, Norwood, Massachusetts 02062
PROXY STATEMENT
Mailed on or about April 5, 2000
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2000
--------------------
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 2000 Annual Meeting of
Stockholders (the "Annual Meeting") of the Company to be held on May 11, 2000,
and any adjournments or postponements thereof. The time, place and purposes 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 fixing the size of the Board of Directors at six
and the election of the individual nominated for election to the Board of
Directors, and FOR the ratification, approval and adoption of The 2000 Stock
Option Plan of the Company. 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 March 20, 2000. On that date,
there were 30,660,713 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 the other proposal, "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 fixing the size
of the Board of Directors and the election of Directors, but not with respect to
the proposal to ratify, approve and adopt The 2000 Stock Option Plan of the
Company. 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.
1
<PAGE>
Pursuant to the Company's By-Laws, at the Annual Meeting, a plurality
of the votes cast by the shares entitled to vote and 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 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, approve and adopt The 2000 Stock
Option Plan of the Company, the affirmative vote of the majority of the votes
cast by shares of Common Stock entitled to vote on this matter and 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 are not
considered shares entitled to vote on this matter and therefore, will have no
effect on the outcome of this proposal, so long as a majority of the votes cast
are cast for this proposal.
Unless otherwise directed, the persons named in the accompanying proxy
will vote FOR fixing the size of the Board of Directors at six and the election
of the Director nominee, and FOR the ratification, approval and adoption of The
2000 Stock Option Plan of the Company.
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 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.
2
<PAGE>
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, a Director will be elected to serve a three-year term until the Annual
Meeting in 2003 and until a successor has been duly elected and qualified. The
Nominating Committee of the Board of Directors has submitted that the size of
the Company's Board of Directors be fixed at six, as currently established, and
has nominated Richard J. Harries, Jr. to stand for election as a Director at the
Annual Meeting. Mr. Harries is presently a Director of the Company.
Unless otherwise directed, the persons named in the accompanying Proxy
will vote for fixing the size of the Company's Board of Directors at six and for
the election of the nominee set forth in the table below as Director of the
Company for a three-year term. In the event of the death or inability to act of
the nominee, 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 one
nominee or for persons other than those named below and any such substitute
nominee.
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.
Nominee For Election At The 2000 Annual Meeting
NAME AGE POSITION
------------------------- ----- ------------------
Richard J. Harries, Jr. (1) (2) 62 Director of the Company
- --------------
(1) Member of the Compensation Committee.
(2) Member of the Nominating Committee.
Richard J. Harries, Jr., a Director of the Company since December 1993,
rejoined IBM North America as a Business Partner Senior Sales Executive in 1997.
During 1995 and 1996, Mr. Harries was a Director of Sales of the Institute for
Software Advancement. From July 1992 to August 1995, upon retiring from IBM
after twenty-five years of service, Mr. Harries worked as the general manager of
Tascor; was a sales and marketing consultant; and was an independent distributor
for Equinox, Inc. Prior thereto, from 1988 to July 1992, Mr. Harries served as a
National Account Executive for IBM. During his career with IBM, Mr. Harries has
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.
3
<PAGE>
Vote Required
The affirmative vote of a plurality of the shares of Common Stock
voting in person or represented by proxy shall be required to elect the Director
nominee. Unless otherwise directed, the persons named in the accompanying proxy
will vote FOR the election of the Director nominee.
Directors Continuing In Office
NAME AGE POSITION
Robert J. Crowell 48 Chairman of the Board of Directors and
Chief Executive Officer of the Company
William W. Smith (1)(2)(3) 48 Vice Chairman and a Director of the Company
John W. Ortiz (1) (2) 76 Director of the Company
- ----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating 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 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. 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. Mr. Crowell
holds a Magna Cum Laude Bachelor of Science degree in Accounting from the
University of Massachusetts and is a Vietnam veteran.
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 and is a Vietnam Veteran.
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 graduate of Northeastern University's Bachelor of Arts program.
Board Observer
Pursuant to a stockholders agreement, originally entered into in June
1995 in connection with the acquisition of a group of entities which owned a
United Kingdom PC products reseller ("Lantec") by and among certain of the
former stockholders of
4
<PAGE>
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,
as a Director in 1996, Mr. Rousou also has continued in his role as Board
Observer. The Lantec Stockholders' Agreement also provides that the former
stockholders of Lantec may renounce their Board Observer right. Mr. Rousou
retired from the Board of Directors and as an employee effective as of December
8, 1999 and March 28, 2000, respectively. The above named stockholder group
renounced the right to appoint a Board Observer effective December 16, 1999.
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 serves as a Class I Director, and
holds office until the 2002 Annual Meeting of Stockholders; Richard J. Harries,
Jr., serves as a Class II Director, and holds office until the 2000 Annual
Meeting of Stockholders; and Robert J. Crowell and William W. Smith, serve as
Class III Directors, and hold office until the 2001 Annual Meeting of
Stockholders. Mr. Harries is standing for re-election to a three year term as
Director at the Annual Meeting. Mr. Rousou resigned from the Board of Directors
in December 1999, and no replacement has been elected. Accordingly, the Board
has one open Class I Director seat, and one open Class II Director seat. The
Board intends to fill both vacancies when suitable candidates are identified.
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 1999, 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 three times during
1999 and also conducted an additional meeting in early 2000 relative to the 1999
audit. On October 20, 1999, the Audit Committee appointed KPMG LLP as the
Company's auditors for the 1999 calendar year audit. Messrs. Smith (Chairman)
and Ortiz serve as the members of the Audit Committee.
The Nominating Committee considers the appropriate size of the Board of
Directors, reviews potential candidates for election as Directors of the
Company, and makes recommendations to the Board of Directors as to the size of
the Board and nominees for election thereto. Messrs. Smith and Harries
(Chairman) serve as the members of the Nominating Committee. The Nominating
Committee does not consider stockholder nominations. The Nominating Committee
did not meet during 1999, having taken its action by unanimous written consent.
The Board of Directors met eight times during the 1999 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.
5
<PAGE>
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 non-employee 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 (an aggregate of 20,000 shares) under the Company's 1993 Stock Option
Plan (as hereinafter defined) at $7.50 per share. On June 1, 1998 and June 2,
1997, 20,000 additional options were granted under the Director Plan at per
share prices of $4.25 and $5.875, respectively. Mr. Cordsen resigned from the
Board effective as of June 30, 1998, and all of his stock options subsequently
lapsed without any being exercised. On June 1, 1999 15,000 options were granted
under the Director Plan at a price of $6.00 per share. The 1999 grants were
issued to Messrs. Harries, Ortiz and Smith, the Company's current non-employee
Directors. At December 31, 1999, there were 75,000 options outstanding under
this plan.
6
<PAGE>
APPROVAL OF THE 2000 STOCK OPTION PLAN OF
ELCOM INTERNATIONAL, INC.
On March 22, 2000, the Board of Directors approved the 2000 Stock
Option Plan of Elcom International, Inc. (the "2000 Stock Option Plan") covering
2,750,000 shares. The stockholders will be asked at the Annual Meeting to
ratify, approve and adopt The 2000 Stock Option Plan. Pursuant to the 2000 Stock
Option Plan, "key personnel", which includes employees and outside directors of
the Company or any affiliate, as well as other persons who render services as
independent contractors to the Company, or any of its affiliates, who in the
judgment of the Compensation Committee, are important to the successful
operation of the Company or an affiliate, are eligible to receive stock options.
Stock options may include incentive stock options ("ISO's"), which may only be
granted to employees of the Company or a subsidiary, and/or non-qualified stock
options ("NQOptions"), which may be granted to any key personnel.
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 2000 Stock
Option Plan, grant to such key personnel as may be selected to participate in
the 2000 Stock Option Plan, options to purchase Common Stock on the terms and
subject to the conditions set forth in the 2000 Stock Option Plan. The Company
had approximately 435 employees as of December 31, 1999.
The Board of Directors has submitted the 2000 Stock Option Plan for the
ratification, approval and adoption of the stockholders in order to qualify
certain grants made pursuant to the 2000 Stock Option Plan under Section 162(m)
of the Internal Revenue Code, as well as allow for the granting of ISO's
pursuant to the 2000 Stock Option Plan. If the 2000 Stock Option Plan is not
ratified, approved and adopted by stockholders at the Annual Meeting, the 2000
Stock Option Plan will remain in effect; however, grants under the 2000 Stock
Option Plan will be limited to NQOptions and named executive officers of the
Company will not be eligible to receive grants under the 2000 Stock Option Plan.
The full text of the 2000 Stock Option Plan, as amended, is attached
hereto as Exhibit A. Important details about specific provisions of the 2000
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 2000 Stock Option Plan, as amended.
Duration and Administration of the 2000 Stock Option Plan
The 2000 Stock Option Plan is administered by the Compensation
Committee of the Board (the "Committee"), presently comprised of Messrs.
Harries, Ortiz and Smith. Members of the Committee must be persons who qualify
as "outside directors" under Section 162(m) of the Internal Revenue Code and who
are "non-employee directors" under Rule16(b)(3) of the Securities Exchange Act
of 1934. Subject to the terms and conditions of the 2000 Stock Option Plan, and
in addition to the other authorizations granted to the Committee under the 2000
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 2000 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 2000 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 2000 Stock Option Plan, and (h) construe and interpret
the 2000 Stock Option Plan, the rules and regulations and the instruments
evidencing options granted under the 2000 Stock Option Plan and to make all
other determinations deemed necessary or advisable for the administration of the
2000 Stock Option Plan.
7
<PAGE>
As stated above, the Committee is authorized to interpret the 2000
Stock Option Plan and from time to time adopt any rules and regulations for
carrying out the 2000 Stock Option Plan that it may deem advisable. Subject to
the approval of the Board of Directors, the Committee may at any time amend,
modify, suspend or terminate the 2000 Stock Option Plan. In no event, however,
without the prior 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 for those persons eligible for options; (b) increasing
or decreasing, except as provided in Section 6 of the 2000 Stock Option Plan,
the maximum number of shares for which options may be granted; (c) decreasing
the minimum option price per share at which options may be granted under the
2000 Stock Option Plan; (d) extending either the maximum period during which an
option is exercisable or the date on which the 2000 Stock Option Plan shall
terminate; or (e) changing the requirements relating to the Committee; except as
necessary to conform the 2000 Stock Option Plan and/or the option agreements to
changes in the Internal Revenue Code or other governing law.
Any decision made or action taken by the Committee in connection with
the administration, interpretation, and implementation of the 2000 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 2000 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 action taken by the
Committee pursuant to the 2000 Stock Option Plan. No member of the Committee
shall be liable for the action of any other Committee member. The 2000 Stock
Option Plan by its term expires on March 21, 2010 and no option shall be granted
after the expiration of the 2000 Stock Option Plan.
Securities Subject to the 2000 Stock Option Plan
Subject to the following, not more than 2,750,000 shares of Common
Stock of the Company may be issued pursuant to the 2000 Stock Option Plan in the
aggregate. The maximum number of shares of Common Stock for which options may be
granted under the 2000 Stock Option Plan to any one individual in any one fiscal
year of the Company is 150,000 shares. As of the date hereof, no options to
purchase shares of Common Stock under the 2000 Stock Option Plan were granted.
In the event of stock splits, stock dividends, combinations, exchanges of shares
or similar capital adjustments, the Compensation Committee must make an
appropriate adjustment in the options granted under the 2000 Stock Option Plan,
and the aggregate number of shares reserved for issuance thereunder also shall
be adjusted accordingly. If any option expires without having been fully
exercised, the shares with respect to which such options 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 2000 Stock Option Plan will be determined by the Committee, provided
that no option shall be exercisable later than the tenth anniversary of the date
the option was granted. Each option granted under the 2000 Stock Option Plan may
be subject to restrictions with respect to the time and other conditions of
exercise as determined by the Committee.
ISOs granted under the 2000 Stock Option Plan are exercisable for a period
of up to ten 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 Plan
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 more or less than fair market value under the 2000
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 exercise of the option accompanied by full payment of the purchase
price either in cash or, with the consent of the Committee (or as per the terms
of the option agreement), 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
8
<PAGE>
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. Options granted under the 2000
Stock Option Plan are generally not transferable other than upon an Optionee's
death, provided that the Committee has discretion to permit the transferability
of NQOptions granted under the 2000 Stock Option Plan to certain parties.
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 2000 Stock Option Plan of options granted under the 2000
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 2000 Stock Option Plan and the Company.
The options granted under the 2000 Stock Option Plan may be ISOs (when
the 2000 Stock Option Plan is approved by the Stockholders) or 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. 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 the ISO grant
or within one year of the ISO exercise (a "disqualifying disposition"), the
optionee will generally recognize ordinary income equal to the difference, if
any, between the option price paid and the value of the stock on the date of
exercise. Otherwise, the optionee's capital holding period for shares acquired
pursuant to an ISO commences on the option exercise date. When an optionee
exercises an 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 an NQOption to an
optionee is equal to the option price paid, plus ordinary compensation income
recognized, 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 shares acquired
upon exercise of an ISO which are 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 general 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 and entitled to vote thereon shall be
required for the adoption of the proposal to ratify, approve and adopt The 2000
Stock Option Plan of Elcom International, Inc. Unless otherwise directed, the
persons named in the accompanying proxy will vote FOR the adoption of the
proposal to ratify, approve and adopt The 2000 Stock Option Plan of Elcom
International, Inc.
9
<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock
as of March 20, 2000 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
or its respective name.
Number of
Shares
Beneficially Percentage of
Owned (1) Common Stock (1)
Directors And Executive Officers (2) ------------ ----------------
Class III Directors - Term expires at
the 2001 Annual Meeting
Robert J. Crowell(3) 5,259,944 16.5%
William W. Smith(4) 9,999 *
Class I Directors - Term expires at the
2002 Annual Meeting
John W. Ortiz(4) 21,999 *
Class II Director - Term expires at the
2000 Annual Meeting
Richard J. Harries, Jr. (4) 19,999 *
Named Executive Officers
James Rousou (5) 1,724,971 5.6%
Peter A. Rendall (4) 7,500 *
John E. Halnen (6) 4,800 *
Laurence F. Mulhern (7) 395,504 1.3%
Michael J. McEachern (8) 0
All Directors And Executive Officers
as a Group (8 Persons)(9) 5,324,241 16.7%
- ----------------
* 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 March 20,
2000, while assuming no exercise of outstanding options and warrants
covering Common Stock held by any other person.
(2) For purposes hereof, the address of the Company's Directors and
executive officers is the same as 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 3,765,727 shares which he owns directly; 188,401 shares
held in a revocable trust for the benefit of Mr. Crowell's daughter, for
which Mr. Crowell serves as Trustee; 121,616 shares held by the Crowell
Educational Foundation with respect to which Mr. Crowell shares the
power to vote and dispose of; and 1,184,200 shares which he has the
right to acquire within 60 days after March 20, 2000 through the
exercise of stock options. See "Executive Compensation - Option Grants
in 1999, and Fiscal Year End Option Value Table."
(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 March
20, 2000 through the exercise of stock options. See "Executive
Compensation - Option Grants in 1999, and Fiscal Year End Option Value
Table."
10
<PAGE>
(5) Mr. Rousou was an executive officer and Director of the Company until
his retirement from the Board of Directors on December 8, 1999 and as an
employee of the Company on March 28, 2000. The number of shares
reflected as beneficially owned by Mr. Rousou are all shares which he
owns directly.
(6) Mr. Halnen's Common Stock ownership is comprised of 800 shares held in
an Individual Retirement Account and 4,000 shares which he has the right
to acquire within 60 days after March 20, 2000 through the exercise of
stock options. See "Executive Compensation - Option Grants in 1999, and
Fiscal Year End Option Value Table."
(7) Mr. Mulhern was an executive officer of the Company until his
resignation on October 1, 1999. The number of shares reflected as
beneficially owned includes 67,004 owned directly and 328,500 shares of
Common Stock which Mr. Mulhern has the right to acquire through the
exercise of stock options.
(8) Mr. McEachern was an executive officer of the Company until the
cessation of his employment on February 29, 2000.
(9) Includes 1,247,697 shares of Common Stock which the Directors and
executive officers of the Company have the right to acquire within 60
days after March 20, 2000 through the exercise of stock options.
Includes Directors and executive officers as of December 31, 1999.
11
<PAGE>
MANAGEMENT - EXECUTIVE OFFICERS
The name, age and position of the Company's Executive Officers are as
follows:
Name Age Position
Robert J. Crowell 48 Chairman of the Board of Directors and
Chief Executive Officer of the Company
John E. Halnen 33 President and Chief Executive Officer of Elcom
Services Group, Inc.
Peter A. Rendall 34 Chief Financial Officer and Secretary of the Company
Paul J. Mueller 46 Vice President of Finance and Treasurer of the Company
Scott M. Soloway 38 General Counsel of the Company
A brief resume for each of the Company's Executive Officers is set forth
below. The brief resume of Mr. Crowell is set forth above under the heading
"Election of Directors."
John E. Halnen has been the President and Chief Executive Officer of Elcom
Services Group, Inc. since December, 1999. From April 1998 through December
1999, Mr. Halnen was Chief Operations Officer for Elcom Services Group, Inc.
From January 1995 through April 1998 Mr. Halnen served as Vice President of
Operations for Elcom Services Group, Inc. and prior to that time held other
positions at Elcom Services Group, Inc. since joining the organization in
October 1992.
Peter A. Rendall has been the Company's Chief Financial Officer since
October, 1999. From April, 1999 through September 1999, Mr. Rendall was Vice
President of Finance of Elcom Services Group, Inc. From 1996 through March 1999
Mr. Rendall held the positions of Vice President of Operations and Vice
President of Finance with Logica, Inc., a subsidiary of Logica, plc, a UK
publicly-held international software integration services company. Prior to
joining Logica, Mr. Rendall was a senior manager with PriceWaterhouseCoopers, in
their Boston office. Mr. Rendall holds a Bachelor of Science degree in
biochemistry from The University of London, United Kingdom and is a Chartered
Accountant.
Paul J. Mueller has been the Company's Vice President of Finance and
Treasurer since March 2000. During 1999 Mr. Mueller was Controller of Arepa.com,
an Internet company providing software on demand. From 1981 to 1998 Mr. Mueller
held positions of increasing responsibility with MediaOne, a publicly-held
telecommunications company, most recently as Assistant Corporate Controller.
Prior to MediaOne, Mr. Mueller was employed by Ernst & Young, an international
accounting firm. Mr. Mueller is a Certified Public Accountant and has an MBA
degree from Bentley College and a Bachelor of Science degree from Stonehill
College.
Scott M. Soloway has been the Company's General Counsel since March 2000.
From April 1993 to March 2000, Mr. Soloway held various positions within the
legal department of Progress Software Corporation. Most recently, Mr. Soloway
was Senior Counsel at Progress Software with responsibility for corporate,
securities and international legal matters. Prior to Progress Software, Mr.
Soloway practiced law for five years with law firms in Boston, Massachusetts.
Mr. Soloway received his J.D. from Boston University School of Law, his Masters
in City Planning from M.I.T and his B.A. in Government from Wesleyan University.
12
<PAGE>
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 (collectively, the "Named Executive Officers") who were (i) the Chief
Executive Officer and (ii) the other executive officers of the Company at the
end of the fiscal year, as well as the individuals that were executive officers
during the year ended December 31, 1999.
Summary Compensation Table
<TABLE>
Long-Term
Annual Compensation
Compensation(1) Awards
------------------------ ------------------
Shares of Common
Stock All
Name And Principal Position(1) Year Salary Underlying Other
Option Grants (#) Compensation
- -------------------------------------------------- ------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Robert J. Crowell 1999 $343,000 355,000 $ 433
Chairman of the Board of Directors and 1998 $325,000 285,000 $ 665
Chief Executive Officer of the Company (2) 1997 $ 76,000 325,000 $ 536
James Rousou 1999 $151,000 40,000 -
Former Director and Corporate Executive Vice 1998 $132,000 85,000 -
President of the Company (3) 1997 $190,000 99,750 $ 635
John E. Halnen 1999 $205,000 315,000 -
President, Elcom Services Group, Inc. (4) 1998 $175,000 85,000 -
1997 $120,000 10,000 -
Peter A. Rendall 1999 $123,000 155,000 -
Chief Financial Officer and Secretary of 1998 - - -
the Company (5) 1997 - - -
Laurence F. Mulhern 1999 $325,000 40,000 $765,947
Former Corporate Executive Vice President, 1998 $299,000 175,000 $ 212
Chief Financial Officer, Treasurer and 1997 $161,000 21,000 $ 98
Secretary of the Company (6)
Michael J. McEachern 1999 $127,000 35,000 $ 65,000
Former Vice President and Treasurer 1998 $104,000 20,000 -
of the Company (7) 1997 $ 72,000 25,000 -
</TABLE>
- ---------------
(1) Unless otherwise indicated herein, no Named Executive Officer received a
bonus with respect to each of the three years in the period ended December
31, 1999, and 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 unless otherwise indicated herein.
(2) On June 1, 1997, the Company and Mr. Crowell entered into an Amended
Employment Agreement (the "1997 Crowell Agreement"), pursuant to which Mr.
Crowell has been retained for a term ending on May 31, 2000 as the Chairman
and Chief Executive Officer of the Company. The 1997 Crowell Agreement
amended and restated the employment agreement between Mr. Crowell and the
Company entered into in September 1995 (the "1995 Crowell Agreement") which
was due for renewal in 1997. The 1997 Crowell Agreement provides for a
minimum annual base salary of $325,000, and a 35% participation in the
Executive Profit Performance Bonus Plan for Executive Officers,
13
<PAGE>
("the Executive Performance Plan"), whereas the 1995 Crowell Agreement
provided for a minimum annual base salary of $275,000. Mr. Crowell was not
paid any salary prior to October 1, 1995, when he began receiving an annual
salary pursuant to the 1995 Crowell Agreement. Mr. Crowell elected to forgo
approximately $228,000 of his annual minimum base salary during 1997. All
other compensation represents premiums paid by the Company for Group Term
Life Insurance. See "--Executive Profit Performance Bonus Plan", "-- Option
Grants in 1999" and "-- Employment Contracts."
(3) As of April 1, 1996, the Company and Mr. Rousou entered into an employment
agreement which entitled Mr. Rousou to an annual base salary of $190,000
and provided a bonus opportunity of up to 30% of his base salary. Mr.
Rousou's agreement was amended effective as of December 15, 1997 to provide
a base salary of $300,000 until April 15, 1998, at which time such base
salary was reduced to $120,000 and to replace Mr. Rousou's bonus
opportunity with an 8.8% participation in the Executive Performance Plan.
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 100,000 pounds sterling. Mr. Rousou
elected to forgo annual minimum base salary and bonus amounts totaling
$63,000 during 1997. All other compensation represents premiums paid by the
Company for Group Term Life Insurance. Mr. Rousou retired from his position
as a Director and employee of the Company effective December 8, 1999 and
March 28, 2000 respectively. See "-- Executive Profit Performance Bonus
Plan", "-- Option Grants in 1999" and "-- Employment Contracts."
(4) Mr. Halnen joined the Company's subsidiary, Elcom Services Group, Inc. on
October 15, 1992 and has held several executive positions including Vice
President of Operations, Chief Operating Officer and President of Elcom
Services Group, Inc.
(5) Mr. Rendall joined the Company on April 12, 1999 as a Vice President of
Finance of Elcom Services Group, and was appointed Chief Financial Officer
of Elcom International on October 4, 1999 at an annual salary of $200,000
and a bonus opportunity of up to $40,000.
(6) Mr. Mulhern joined the Company in July 1993 and was employed as Chief
Financial Officer and a Corporate Executive Vice President of the Company
pursuant to an Amended Employment Agreement (the "1997 Mulhern Agreement").
The 1997 Mulhern Agreement provided for a minimum annual base salary of
$275,000 and a 17.5% participation in the Executive Performance Plan. Mr.
Mulhern elected to forgo approximately $58,000 of his annual minimum base
salary during 1997. Mr. Mulhern resigned as Chief Financial Officer and
Corporate Executive Vice President of the Company effective October 1,
1999. Pursuant to his amended employment agreement, Mr. Mulhern will
receive severance payments of (i) a payment of $665,500 payable over the
twelve month period beginning April 1, 2000 and (ii) a payment of $100,000
payable in April 2001 in exchange for waiving participation in the
Executive Profit Performance Plan for the year commencing January 1, 2000.
All other compensation includes $447, $212 and $98 for premiums paid by the
Company for Group Term Life Insurance in 1999, 1998 and 1997, respectively.
See "-- Executive Profit Performance Bonus Plan", "-- Option Grants in
1999" and "-- Employment Contracts."
(7) Mr. McEachern's employment was terminated without cause effective February
29, 2000 and he will receive severance payments totaling $65,000 through
August 29, 2000.
Stock Option Plans
In addition to the Director Plan, the Company has adopted The Stock
Option Plan of Elcom International, Inc. (the "1993 Stock Option Plan"), The
1995 (Computerware) Stock Option Plan of the Company (the "Computerware Stock
Option Plan"), The 1996 Stock Option Plan of the Company (the "1996 Stock Option
Plan"), and The 1997 Stock Option Plan of the Company (the "1997 Stock Option
Plan"), (collectively hereinafter the "Stock Option Plans") covering 5,000,000,
1,000,000, 2,400,000 and 3,000,000 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. These plans generally operate in a manner similar to the 2000 Stock
Option Plan, as described above. The maximum number of options that can be
granted to any one participant during any one
14
<PAGE>
fiscal year is 500,000 under the 1993 Stock Option Plan, 210,000 under the
Computerware Stock Option Plan, 300,000 under the 1996 Stock Option Plan and
150,000 under the 1997 Stock Option Plan.
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, 1999, options covering 2,147,880 shares of Common
Stock have been exercised, and options to acquire an aggregate of 2,735,173
shares of Common Stock (2,004,508 of which were exercisable at December 31,
1999) were outstanding at exercise prices ranging from $.11 to $8.80 per share,
and accordingly, options covering 116,947 shares of Common Stock may be granted
under such option plan. 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, 215,800 of which have been exercised as of December 31, 1999, and 784,200
of which were exercisable as of December 31, 1999. An aggregate of 56,319 and
21,401 shares of previously owned Common Stock were submitted in payment of the
exercise price and withholding tax obligations with respect to the options
exercised under the Computerware Stock Option Plan and the 1993 Stock Option
Plan, and accordingly, additional options covering such shares may be granted
under such option plans. The 1996 Stock Option Plan was adopted by the Board of
Directors in August 1996, was approved by the Company's stockholders and
terminates on August 19, 2006. Of the 2,400,000 shares of Common Stock reserved
for issuance under the 1996 Stock Option Plan, as of December 31, 1999, options
covering 416,602 shares of Common Stock have been exercised, and options to
acquire an aggregate of 1,974,133 shares of Common Stock (558,087 of which were
exercisable at December 31, 1999) were outstanding as of December 31, 1999, at
exercise prices ranging from $1.28 to $7.69 per share, and accordingly, options
covering 9,265 shares of Common Stock may be granted under such option plan. The
1997 Stock Option Plan was adopted by the Board of Directors in April 1997,
initially amended in February 1998, and approved by stockholders at the 1998
Annual Meeting. The 1997 Stock Option Plan also was amended in March 1999 to
increase the shares covered by 1,000,000 (to a total of 3,000,000 shares) and
was approved by the stockholders at the 1999 Annual Meeting. Of the 3,000,000
shares reserved for issuance thereunder, as of December 31, 1999, options
covering 169,200 shares of Common Stock have been exercised and options to
acquire an aggregate of 2,813,810 shares of Common Stock (248,600 of which were
exercisable at December 31, 1999) were outstanding at exercise prices ranging
form $1.64 to $12.62 per share, and accordingly, options covering 16,990 shares
of Common Stock may be granted under such option plan.
Change of Control Feature
Generally, all option agreements under the Stock Option Plans,
including those relative to the Named Executive Officers, contain provisions
requiring the cash payment of the value of the options (represented by the
difference between the option exercise price and the then-current fair market
value of the underlying Common Stock), upon certain defined changes in control
or sales of substantially all of the Company's assets. Such changes of control
also may trigger, in certain cases, acceleration of the exercisability of
certain options, which may occur if the Company is reorganized, consolidated or
merged with another company and the Company is not the surviving company, or if
50% or more of the shares of the capital stock of the Company which are then
issued and outstanding are purchased by a single person or entity.
15
<PAGE>
Option Grants In 1999
Shown below is information relating to grants of stock options pursuant
to the Stock Option Plans during the fiscal year ended December 31, 1999 to the
Named Executive Officers. Such grants also are reflected in the Summary
Compensation Table above.
<TABLE>
Individual Grants
-------------------------------------------------------------------
Potential
Realizable Value At
% of Total Assumed Annual
Options Exercise Rates of Stock Price
No. of Granted To or Base Appreciation for the
Securities Employees Price Option Term (3)
Underlying In Fiscal ($ per Grant Expiration -----------------------
Name Options Year share)(1) Date Date 5% 10%
- ---- ----------- ----------- ----------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Crowell (4) 60,949 1.27% $ 1.81(4) 02/16/99 02/16/04 $ 30,000 $ 67,000
149,051 3.11% 1.64 02/16/99 02/16/09 154,000 390,000
95,000 1.98% 3.81 08/31/99 08/31/09 228,000 577,000
50,000 1.04% 4.16 11/01/99 11/01/09 131,000 331,000
James Rousou (4) 40,000 .84% 1.64 02/16/99 02/16/09 41,000 105,000
John E. Halnen (5) 104,400 2.18% $ 1.64 02/16/99 02/16/09 $108,000 $273,000
35,600 .74% 1.64 02/16/99 02/16/09 37,000 93,000
39,500 .83% 3.81 08/31/99 08/31/09 95,000 240,000
110,500 2.31% 3.81 08/31/99 08/31/09 264,000 671,000
25,000 .52% 4.16 11/01/99 11/01/09 65,000 165,000
Peter A. Rendall (6) 50,000 1.04% $ 3.16 04/12/99 04/12/09 $99,000 $252,000
51,300 1.07% 3.81 08/31/99 08/31/09 123,000 312,000
28,700 .60% 3.81 08/31/99 08/31/09 69,000 174,000
17,500 .37% 4.16 11/01/99 11/01/09 46,000 116,000
7,500 .16% 4.16 11/01/99 11/01/09 20,000 50,000
Laurence F. Mulhern (4) 40,000 .84% $ 1.64 02/16/99 02/16/09 41,000 $105,000
Michael J. McEachern (7) 25,000 .52% $ 1.64 02/16/99 02/16/09 26,000 $65,000
10,000 .21% 3.81 08/31/99 08/31/09 24,000 61,000
</TABLE>
- ------------------
(1) This price represents the fair market value at the date of grant pursuant
to the terms of the Stock Option Plans.
(2) 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.
(3) This price represents 110% of the fair market value at the date of grant
pursuant to the terms of the Stock Option Plans.
(4) These option grants become fully vested on the first anniversary of the
option grant date.
(5) The options granted to Mr. Halnen vest as follows:
16
<PAGE>
(i) of the 104,400 options granted on February 16, 1999, 49,000 options
vest on February 16, 2000 and 55,400 options vest on February 16, 2001
(ii) the 35,600 options granted on February 16, 1999 vest on February 16,
2001
(iii)of the 39,500 options granted on August 31, 1999, 13,500 options vest
on August 31, 2002 and 26,000 options vest on August 31, 2003
(iv) of the 110,500 options granted on August 31, 1999, 22,500 options vest
on August 31, 2000, 30,000 options vest on August 31, 2001, 31,500
options vest on August 31, 2002 and 26,500 options vest on August 31,
2003
(v) of the 25,000 options granted on November 1, 1999, 3,750 options vest
on November 1, 2000, 5,000 options vest on November 1, 2001, 7,500
options vest on November 1, 2002 and 8,750 options vest on November 1,
2003
(6) The options granted to Mr. Rendall vest as follows:
(i) of the 50,000 options granted on April 12, 1999, 7,500 options vest on
April 12, 2000, 10,000 options vest on April 12, 2001, 15,000 options
vest on April 12, 2002 and 17,500 options vest on April 12, 2003
(ii) of the 51,300 options granted on August 31, 1999, 12,000 options vest
on August 31, 2000, 16,000 options vest on August 31, 2001, 12,600
options vest on August 31, 2002 and 10,700 options vest on August 31,
2003
(iii)of the 28,700 options granted on August 31, 1999, 11,400 options vest
on August 31, 2002 and 17,300 options vest on August 31, 2003
(iv) of the 7,500 options granted November 1, 1999, 3,750 options vest on
November 1, 2000, 1,700 options vest on November 1, 2001, 1,100
options vest on November 1, 2002 and 950 options vest on November 1,
2003
(v) of the 17,500 options granted on November 1, 1999, 3,300 options vest
on November 1, 2001, 6,400 options vest on November 1, 2002 and 7,800
options vest on November 1, 2003
(7) Mr. McEachern was terminated without cause effective February 29, 2000 and
as a result all but 8,750 options were forfeited.
Fiscal Year-End Option Value Table
The following table shows the number of shares of Common Stock acquired
during 1999 by the exercise of options and the related value realized, as well
as the number of shares of Common Stock and values represented by outstanding
stock options held by each of the Named Executive Officers as of December 31,
1999. The value of unexercised in-the-money options at December 31, 1999 is
calculated using $31.125 per share. See note (2) below.
<TABLE>
Number Of Securities Value Of Unexercised
Underlying In-The-Money
Shares Unexercised Options at Options At
Acquired on Value December 31, 1999(#) December 31, 1999($)(1)(2)
Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------ ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Crowell 30,300 $ 41,460 974,200 355,000 $25,100,000 $10,125,000
James Rousou -- -- 217,250 -- 5,465,000 --
John E. Halnen 136,992 765,000 14,000 384,500 410,000 10,866,000
Peter A. Rendall -- -- -- 155,000 -- 4,258,000
Laurence F. Mulhern -- -- 415,504 40,000 11,200,000 1,180,000
Michael J. McEachern 18,250 $ 147,000 -- 61,750(3) -- 1,717,000
</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, 1999 were exercised, determined
by multiplying the number of shares underlying the options by the
difference
17
<PAGE>
between the per share option exercise price and $31.125, 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, 1999.
(3) Mr. McEachern was terminated without cause effective February 29, 2000 and
as a result these options were forfeited.
Performance Bonus Plans
At the Company's 1998 Annual Meeting, the stockholders approved the
Elcom International, Inc. Executive Profit Performance Bonus Plan For Executive
Officers ("the "Executive Performance Plan") which was approved by the Board of
Directors in September, 1997. The Executive Performance Plan covers, for a
fiscal year, those persons who, on the ninetieth day of that particular fiscal
year, are the executive officers of the Company ("Executive Officers"). As such,
the number of people covered will generally be limited to no more than ten, and
in order to participate in the Executive Performance Plan, the Executive Officer
must be employed as of March 30th of the calendar year and must be awarded a
participation (also by March 30th) by the Compensation Committee of the Board of
Directors (the "Committee").
The Executive Performance Plan provides for incentive compensation payments
(limited in amount to the lesser of: (a) two times the executive's base salary
or (b) one million dollars) to be made to covered Executive Officers based upon
the increase in the Company's reported operating income over the prior year.
Accordingly, the Board of Directors believes that the Executive Performance Plan
provides a substantial incentive to those Executive Officers in the best
position to affect the Company's operating performance and that substantial
benefits will accrue to the Company from granting participations in the
Executive Performance Plan. Such participations afford the Executive Officers a
substantial incentive to enhance the value of the Company's Common Stock through
their own efforts in improving the Company's operating results. The granting of
participations also is expected to be instrumental in attracting and retaining
key executives. Accordingly, the Company will, from time to time, grant
participations to such Executive Officers as may be selected to participate in
the Executive Performance Plan in accordance with the terms thereof. Since the
Company's reported operating profit declined from 1998 to 1999, there was no
Bonus Pool available in respect of 1999 and no payments are due to Executive
Officers for 1999 in respect of the Executive Performance Plan.
The Executive Performance Plan is administered by the Compensation
Committee of the Board, presently comprised of Messrs. Harries, Ortiz and Smith.
Members of the Committee must be 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.
Through December 31, 2000, the Executive Performance Plan may not be
terminated or amended in any way that would adversely impact any current
participant, without such participant's written consent. Thereafter, the Board
of Directors or the Committee may amend or terminate the Executive Performance
Plan. The participants have waived participation in the Executive Performance
Plan for the year 2000, except in certain circumstances. See "Employment
Contracts".
The Elcom International, Inc. Key Personnel Profit Performance Plan
(the "Key Personnel Performance Plan"), which is designed to operate in
conjunction with the Executive Performance Plan, is intended to provide a
substantial incentive to key personnel who are not Executive Officers, but who
can, in the performance of their duties, affect the Company's operating results.
The Key Personnel Performance Plan Bonus Pool is limited to that portion of the
20% Bonus Pool calculated under the terms of the Executive Performance Plan less
payments under the Executive Performance Plan. Accordingly, the bonus pool
available under the Key Personnel Performance Plan is generally limited to that
portion of the 20% Bonus Pool calculated under the Executive Performance Plan,
which is either unallocated to Executive Officers or is in excess of the payment
limitations under the Executive Performance Plan (the annual payment to any one
individual is limited in amount to the lesser of: (a) two times the executive's
base salary or (b) one million dollars). Thus, based on existing allocations
under the Executive Performance Plan, for 1999 approximately 38.7% of any Bonus
Pool would have been available for award under the Key Personnel Performance
Plan. The terms and administration of the Key Personnel Performance Plan
generally
18
<PAGE>
correspond to those of the Executive Performance Plan, except that in
the case of the Key Personnel Performance Plan, the annual payout to any one
participant is limited to the lesser of $500,000 or two times the participant's
base salary. The Compensation Committee controls participation in the Key
Personnel Performance Plan. Because the Company's operating income declined from
1998 to 1999, there was no Bonus Pool established for 1999 and no payments are
due in respect of 1999 under the Executive Performance Plan or the Key Personnel
Performance Plan.
Employment Contracts
Effective June 1, 1997, the Company entered into the 1997 Crowell
Agreement pursuant to which Mr. Crowell has been retained for a term ending May
31, 2000, as the Chairman and Chief Executive Officer of the Company. The 1997
Crowell Agreement amended and restated the employment agreement between Mr.
Crowell and the Company entered into in September 1995 (the "1995 Crowell
Agreement") which was due for renewal in 1997. The 1997 Crowell Agreement
provides for a minimum annual base salary of $325,000, whereas the 1995 Crowell
Agreement provided for a minimum annual base salary of $275,000. Mr. Crowell was
not paid any salary prior to October 1, 1995, when he began receiving an annual
salary pursuant to the 1995 Crowell Agreement. The 1997 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 have a 35% participation in
the Executive Performance Plan Bonus Pool. Mr. Crowell waived participation in
the Executive Profit Performance Plan for the year commencing January 1, 2000.
The Compensation Committee may still make a discretionary payment under the
Executive Performance Plan to Mr. Crowell for that year. Under the 1997 Crowell
Agreement, Mr. Crowell also is entitled to receive annual grants of options
under the Company's Stock Option Plans 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.
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 1997 Crowell Agreement. After his employment ends, under
the 1997 Crowell Agreement, Mr. Crowell is automatically retained as a
consultant for two years (at $125,000 per year) and is precluded from
"competing" (as defined therein) against the Company for a period of three
years. The 1997 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 term thereof.
Effective December 15, 1997 the Company and Mr. Rousou entered into an
amended employment agreement (the "Rousou Agreement"), to establish the base
salary thereunder to $300,000 until April 15, 1998, when the base salary
decreased to $120,000; to provide Mr. Rousou an 8.8% participation in the
Executive Performance Plan; and to put the agreement on a calendar year basis.
These amendments were made because Mr. Rousou ceased to be President and Chief
Executive Officer of Elcom Services Group, Inc. on April 15, 1998, but continued
as a Director and Corporate Executive Vice President of the Company. Mr. Rousou
retired from his position as a Director and as an employee of the Company
effective December 8, 1999 and March 28, 2000, respectively and the Rousou
Agreement was thereby terminated without any future payment obligations by the
Company. As a result, Mr. Rousou waived participation in the Executive
Performance Plan for the year commencing January 1, 2000.
On June 1, 1997, the Company and Mr. Mulhern entered into the 1997
Mulhern Agreement pursuant to which Mr. Mulhern has been retained for a term
ending on May 31, 2000 as the Chief Financial Officer and a Corporate Executive
Vice President of the Company. The 1997 Mulhern Agreement provided for a minimum
19
<PAGE>
annual base salary of $275,000 and a 17.5% participation in the Executive
Performance Plan. Mr. Mulhern resigned as Chief Financial Officer and Corporate
Executive Vice President of the Company effective October 1, 1999. Pursuant to
an amended employment agreement, Mr. Mulhern will receive severance payments
through April 2001. As a result, Mr. Mulhern waived participation in the
Executive Performance Plan for the year commencing January 1, 2000. The
Compensation Committee may still make a discretionary payment under the
Executive Performance Plan to Mr. Mulhern for that year in certain
circumstances. See - "Executive Compensation".
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 1999 and discusses the determinations concerning the compensation
for the Chief Executive Officer for 1999.
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.
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 are designed to: (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) be 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, has not
historically specifically focused on the compensation levels of executives in
peer group companies in making compensation decisions. The Committee does not
rely extensively on objective criteria in measuring individual performance and
its 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.
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, participation in the Company's Stock
Option Plans, and participation in the Executive Performance Plan. 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 qualifications of an individual being considered for a position and
his or her level of experience are considered in establishing a salary level
when an 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
20
<PAGE>
her level of responsibility. The Committee also considers amounts of base salary
and/or bonus payments which executives and other personnel may elect to forgo,
in determining the quantity of options to be granted.
Executive Performance Plan - The Executive Performance Plan reflects
the Committee's desire to provide the Company's executives an opportunity to
earn bonuses based upon actual reported improvements in the Company's
performance. Accordingly, the Committee believes that the Executive Performance
Plan provides a substantial incentive to the executives who are in the best
position to affect the Company's operating performance. The Committee believes
that by granting participations in the Executive Performance Plan, the
executives will have a substantial incentive to enhance the value of the
Company's Common Stock through their own efforts in improving the Company's
operating profitability.
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 1999
fiscal year were primarily based upon the terms of his employment contract with
the Company, as described under "Executive Compensation--Employment Contracts."
Pursuant to the 1997 Crowell Agreement, Mr. Crowell is entitled to an annual
minimum base salary of $325,000 per year, which amount may be increased but not
decreased at the discretion of the Compensation Committee (Mr. Crowell's salary
was increased to $343,000 for 1999). The Compensation Committee did not conduct
any surveys of competitive, industry or revenue peer 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 1997 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 participates in the Executive Performance Plan at a minimum
rate of 35% of any bonus pool generated by such plan. Under the 1997 Crowell
Agreement, Mr. Crowell also is entitled to receive annual grants of options
under the Company's Stock Option Plans 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. An additional option grant was
made to Mr. Crowell by the Committee in November of 1999.
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 1999, 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, industry stock option grant comparisons and the
ongoing belief that Mr. Crowell is under-compensated. In 1999, Mr. Crowell was
granted options to acquire an aggregate of 355,000 shares of Common Stock at a
weighted average exercise price of $2.60 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
options granted under the Company's Stock Option Plans will meet the performance
based
21
<PAGE>
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 1999 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.
CERTAIN TRANSACTIONS
Transactions With and Related to Affiliated Company - The Company
currently owns approximately 3% of the equity of ShopLink Incorporated
("ShopLink"), a development stage entity that has licensed the Company's
PECOS.cm technology to provide an electronic commerce system to market products
to the home consumables market. The Company now accounts for this investment
under the cost method, and has expensed its $4,000 investment in a prior year.
In 1996, ShopLink paid $437,500 for a perpetual license of the Company's
PECOS.cm 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. In 1997, the license agreement was amended to
eliminate certain ongoing user and transaction fees in exchange for a
supplemental license fee of $350,000, which was paid to the Company, and
cancellation by the Company of all of its warrants to acquire ShopLink common
stock. Under the Amended License Agreement and related Development Agreement,
Extended Maintenance Agreement and Professional Services Agreement, ShopLink is
required to pay additional amounts based on advertising revenues that it
receives, and for services rendered by the Company in customizing and
maintaining the ShopLink implementation, as well as annual maintenance fees.
In addition to the Company's ownership position, Mr. Crowell, the
Company's Chairman and Chief Executive Officer, also was Chairman of ShopLink's
Board of Directors until he stepped down from ShopLink's Board on March 12,
1999. Mr. Crowell currently beneficially owns approximately 15.5% of ShopLink.
As of September 30, 1997, the Company sold options to acquire its
entire equity ownership interest in ShopLink. The Company received $418,000 in
payment for the options which were exercisable through March 31, 1999. These
options lapsed on March 31, 1999 without any being exercised. The $418,000
received in payment for the options includes $165,000 from Mr. Crowell.
22
<PAGE>
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,
1996, 1997, 1998 and 1999. The Industry index includes all NASDAQ listed
securities with a Standard Industrial Classification (SIC) of 737. The graph
assumes that the value of an investment in the Common Stock of Elcom
International, Inc., 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 the Common Stock of Elcom International, Inc. ("The Company"),
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 (SIC Code 737) ("Industry")
12/20/95 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
The Company 100 139 72 64 18 309
NASDAQ Total 100 103 126 154 212 389
Industry 100 103 127 156 279 589
INDEPENDENT ACCOUNTANTS
In September 1999, the Audit Committee of the Board of Directors of the
Company solicited proposals for the year-end audit of its calendar 1999
consolidated financial statements. The Company solicited proposals from four
independent accounting firms, including Arthur Andersen LLP ("Andersen"), who
had been previously engaged by the Company as its principal auditor. The Audit
Committee took this action to ensure that the Company would continue to receive
the best possible audit services at a competitive price.
23
<PAGE>
During September and October 1999, management met with and provided
appropriate information to the independent accounting firms involved. On October
19, 1999, the Audit Committee met and decided it would not engage Andersen to
act as the Company's independent accountants for calendar year 1999. Andersen,
the Company's independent accountants in 1998 and prior years was informed of
the Audit Committee's decision on October 20, 1999.
Andersen, in its reports on the Company's consolidated financial
statements for each of the calendar years ended December 31, 1998 and 1997,
neither expressed an adverse opinion or a disclaimer of opinion, or qualified or
modified such reports as to uncertainty, audit scope or accounting principles.
During each of the years ended December 31, 1998 and 1997, and during
the period from January 1, 1999 through the date of this report, (i) there were
no disagreements between the Company and Andersen on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Andersen,
would have caused Andersen to make reference thereto in its report on the
financial statements of the Company for such years; and (ii) there have been no
reportable events (as defined in the Regulation S-K Item 304 (a) (1) (v)).
The Audit Committee voted to offer its year end audit engagement for
calendar 1999 to KPMG LLP ("KPMG") as its new independent accountants in October
1999. KPMG entered into an engagement letter with the Company in December 1999
to act as the Company's new independent accountants. KPMG will serve as the
Company's independent accountants for the current fiscal year. During the two
most recent fiscal years and through the date of this report, the Company has
not consulted with KPMG on items that were or should have been subject to SAS 50
or concerned the subject matter of a disagreement or reportable event with
Andersen, as described in Regulation S-K Item 304 (a) (2).
Representatives of KPMG 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.
OTHER MATTERS
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.
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 1999, 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, 1999 any report required by Section 16(a) of
the Securities Exchange Act of 1934.
24
<PAGE>
DATE TO SUBMIT STOCKHOLDER
PROPOSALS FOR 2001 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 2001 must do so no later than December 6,
2000. To be eligible for inclusion in the 2001 Annual Meeting proxy materials of
the Company, proposals must conform to the requirements set forth in Regulation
14A under the Securities Exchange Act of 1934. The Company may use its
discretion in voting Proxies with respect to stockholder proposals not included
in the Company's proxy materials for the 2001 Annual Meeting of Stockholders,
unless the Company receives notice of such proposal(s) prior to February 19,
2001.
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,
Peter A. Rendall
April 5, 2000 Secretary
25
<PAGE>
Exhibit A
THE 2000 STOCK OPTION PLAN
OF ELCOM INTERNATIONAL, INC.
March 22, 2000
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 or other entity which controls,
is controlled by, or is under common control
with the Company including, without
limitation, any Subsidiary.
(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, which shall consist of at least two
"outside directors" as such term is defined
in Section 162(m) of the Code, or if no such
committee is appointed, the word "Committee"
shall mean 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 any successor thereto that shall
maintain this Plan.
(g) The words "Incentive Stock Option" shall
mean any option that qualifies as an
incentive stock option under the terms of
Section 422 of the Code.
1
<PAGE>
(h) The words "Key Personnel" shall mean any
person whose performance as an employee, or
independent contractor, or outside Director
of the Company or an Affiliate is, in the
judgment of the Committee, important to the
successful operation of the Company or an
Affiliate.
(i) The word "Optionee" shall mean any Key
Personnel to whom a stock option has been
granted pursuant to this Plan.
(j) The word "Plan" shall mean The 2000 Stock
Option Plan of Elcom International, Inc., as
it was originally adopted, and as it may be
amended.
(k) The word "Subsidiary" shall have the same
meaning as "subsidiary corporation" under
Section 424(f) of the Code.
(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.
3. Effective Date of the Plan. The Plan shall become effective
as of March 22, 2000, the date of the Board's approval and adoption of this
Plan.
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
2
<PAGE>
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.
The Committee may delegate any of its authority to any other person or persons
that it deems appropriate. 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;
(c) to determine the time when options will be granted;
(d) to determine the option price of Common Stock subject
to an option, including any repricing thereof;
(e) to determine the time 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 or a Subsidiary;
(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 422 of the Code;
3
<PAGE>
(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 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 Key Personnel designated by the Committee; provided, that
any Key Personnel who renounces in writing any right he 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. Notwithstanding the foregoing, no options may be granted to any
executive officer of the Company who at the time of grant either was a CEO
during the last completed fiscal year or was one of the four most highly
compensated executive officers of the Company at the end of the last completed
fiscal year (as such positions are defined in Item 402 of Regulation S-K
promulgated by the United States Securities and Exchange Commission), unless and
until such time as the stockholders of the Company have approved, adopted and
ratified this Plan.
4
<PAGE>
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 two
million seven hundred fifty thousand (2,750,000) 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
150,000 subject to the other provisions of this Section 6. Either treasury or
authorized and unissued shares of Common Stock, or both, in such numbers, 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 that 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
that are retained to satisfy an Optionee's withholding tax obligations or that
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
that 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
5
<PAGE>
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 divided or 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 that 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 that is not an Incentive
Stock Option shall be determined by the Committee at the time of grant.
Fair market value shall mean, as of any particular date, (i) the average of
the high and low sale prices per share of the Common Stock as reported on
the principal stock exchange on which the Common Stock is then trading, if
any, or, if, applicable, The Nasdaq
6
<PAGE>
Stock Market, on such day, or if there are no sales on such day, on the
next preceding trading day during which a sale occurred, or (ii) if clause
(i) does not apply because the Common Stock is not then trading on a stock
exchange or The Nasdaq Stock Market, the fair market value of a share of
Common Stock as determined 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) Transferability of Options. Except as provided in this subsection
(c), no option granted under this Plan shall be transferable by an Optionee
other than by will or the laws of descent and distribution, and options
shall be exercisable during an Optionee's lifetime only by the Optionee or,
in the event of the Optionee's legal incapacity, by his guardian or legal
representative acting in a fiduciary capacity on behalf of the grantee
under state law. The Committee may expressly provide in an option agreement
or other written form of consent that an Optionee may transfer an option
which is not an Incentive Stock Option to his spouse or lineal descendants
("Family Members"), or a trust for the exclusive benefit of the Optionee
and/or Family Members, or a partnership or other entity affiliated with the
Optionee that may be approved by the Committee. Subsequent transfers of any
such option shall be prohibited except in accordance with the preceding
sentence. All terms and conditions of any such option agreement, including
provisions relating to the termination of the Optionee's employment or
service with the Company
7
<PAGE>
and its Affiliates, shall continue to apply following a transfer made in
accordance with this subsection (c).
(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 (which may be included in the option
agreement), in whole or in part in shares of Common Stock, by delivery to
the Company of shares of Common Stock that have been already owned by the
Optionee for at least six months, 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 (which may be included in the option agreement)
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 for the
minimum required withholdings, 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
8
<PAGE>
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, but need not, cause each
outstanding option to terminate, provided, that each Optionee may have the
right during the period, if and only to the extent 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 other limitations contained in the Plan or the
option agreement. Additional provisions with respect to acquisitions,
mergers, liquidations or dissolutions may be set forth in the option
agreement.
(e) Termination of Employment, Etc. If an Optionee ceases to be an
employee and/or outside Director and/or independent contractor of the
Company and all Affiliates, 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 an Affiliate 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 and all
Subsidiaries 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 22(c)(3)
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 and all
Subsidiaries if the reason for the Optionee's
9
<PAGE>
cessation of employment was the Optionee's disability
(as such term is defined by Section 22(c)(3) 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 and all
Subsidiaries 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 and all Subsidiaries.
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) Termination of Stock Options Under Certain Circumstances. The
Committee may cancel any unexpired stock options at any time if the
Optionee is not in compliance with all applicable provisions of this Plan
or with any stock option agreement entered into pursuant to this Plan, or
if the Optionee, without the prior written consent of the Company, engages
in any of the following activities: (i) renders services for an
organization, or engages in a business, that is, in the judgment of the
Committee, in competition with the Company or an Affiliate, or (ii)
discloses to anyone outside of the Company and the Affiliates, or uses for
any purpose other than the business of the Company or an Affiliate, any
confidential information or material relating to the Company or an
Affiliate, whether acquired by the Optionee during or after employment with
the Company or an Affiliate, in a fashion or with a result that the
Committee, in its judgment, deems is or may be injurious to the best
interests of the Company or an Affiliate. The Committee may, in its
discretion and as a condition to the exercise of a stock option, require an
Optionee to acknowledge in writing that he is in compliance with all
applicable provisions of this Plan and any stock option
10
<PAGE>
agreement entered into in connection with this Plan and has not engaged in any
activities referred to in clauses (i) and (ii) of this Section 7(f).
(g) 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 or an Affiliate. In respect of any individual
Optionee, the aggregate fair market value of the shares of Common Stock
(determined as of the date the respective Incentive Stock Options were
granted) that are subject to Incentive Stock Options that first become
exercisable during any particular calendar year shall not exceed the sum of
One Hundred Thousand Dollars ($100,000). Options that are not Incentive
Stock Options shall not be subject to the limitations described in the
preceding sentence and shall not be counted when applying such limitation.
(h) 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 422 of the
Code.
(i) 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; or
(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. that 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. that 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
12
<PAGE>
is presented to Elcom International, Inc. an opinion of
counsel or other evidence, in either case, satisfactory to
Elcom International, Inc. and/or its counsel to the effect
that the offer and sale of the shares of Common Stock of
Elcom International, Inc. that 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 Stock 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 an Affiliate, 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
an Affiliate 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.
14
<PAGE>
(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.
(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 at the close of
business on March 21, 2010, 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
15
<PAGE>
rules and regulations as are now in effect or as they may be subsequently
amended, modified, substituted or superseded.
16
<PAGE>
PROXY
ELCOM INTERNATIONAL, INC.
Proxy Solicited on Behalf of the Board of Directors of the
Company for the 2000 Annual Meeting of Stockholders, May 11, 2000
The undersigned hereby constitutes and appoints Robert J. Crowell and
William W. Smith, 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 the close of business on March 20, 2000 by the
undersigned at the Annual Meeting of Stockholders of Elcom International, Inc.
to be held at the Occasions Banquet Facility, 1369 Providence Highway, Norwood,
Massachusetts at 10:00 a.m. (E.D.T.) on May 11, 2000, 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.
This proxy, when properly executed, will be voted in the manner directed
herein and authorizes the Proxies to take action in their discretion upon any
other matters that may properly come before the meeting. If no direction is
made, this proxy will be voted FOR fixing the size of the Board of Directors at
six and election of the nominee as Director; and FOR the ratification, approval
and adoption of The 2000 Stock Option Plan of Elcom International, Inc.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-------------
SEE REVERSE
SIDE
-------------
<PAGE>
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.
The Board of Directors recommends a vote FOR fixing the size of the Board of
Directors at six and the election of the nominee for Director, and FOR
ratification, approval and adoption of The 2000 Stock Option Plan of Elcom
International, Inc.
1. ELECTION OF DIRECTOR - To fix the size of the Board of Directors at six and
to elect the Director of the class whose term of office will otherwise
expire in 2000 for a three-year term ending at the Annual Meeting of
Stockholders in 2003. Nominee for Director: Class II: Richard J. Harries,
Jr.
------------ ------------
FOR WITHHELD
------------ NOMINEE ------------ FROM NOMINEE
2. RATIFICATION, APPROVAL AND ADOPTION OF THE 2000 STOCK OPTION PLAN OF ELCOM
INTERNATIONAL, INC.
---------- ---------- ----------
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
------------
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: Signature: Date:
----------------- --------- ----------------- -------
