SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
The Dewey Electronics Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE DEWEY ELECTRONICS CORPORATION
_________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of THE DEWEY
ELECTRONICS CORPORATION (the "Corporation") will be held at the office of
the Corporation at 27 Muller Road, Oakland, New Jersey, on Thursday,
December 8, 2011 at 10 a.m. (Eastern Standard Time) for the purposes of:
(1) electing five directors to serve until the next annual meeting of
stockholders and until their successors shall be elected and shall qualify;
(2) approving the Corporation's 2011 Stock Option Plan; and
(3) transacting such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on October 21, 2011 as
the record date for determination of stockholders entitled to notice of
and to vote at the meeting.
If you will be unable to attend the meeting, you are respectfully
requested to sign and return the accompanying proxy in the enclosed envelope.
By Order of the Board of Directors
JOHN H.D. DEWEY
Secretary
November 1, 2011
2
THE DEWEY ELECTRONICS CORPORATION
_______________________________________
PROXY STATEMENT
This proxy statement is furnished to the stockholders of The Dewey Electronics
Corporation (hereinafter referred to as the "Corporation") in connection with
the solicitation of proxies for the annual meeting of stockholders to be held on
December 8, 2011. The mailing address of the Corporation's executive offices is
27 Muller Road, Oakland, New Jersey 07436, and its telephone number is (201)
337-4700. The Corporation plans to commence the mailing of this proxy statement
to stockholders on or about November 1, 2011.
The enclosed proxy is solicited by the Board of Directors of the Corporation.
A person giving the proxy has the power to revoke it at any time before its
exercise by notice to such effect delivered to the Secretary of the Corporation
The Corporation will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of stock. In addition to the use of
the mails, proxies may be solicited by personal interviews, by telephone or by
electronic means. No additional compensation will be paid to the Corporation's
directors, officers or other employees for such services.
It is important that your shares are represented at the meeting.
Whether or not you expect to attend the meeting, please be sure that the
enclosed proxy card is properly completed, dated, signed and returned without
delay in the enclosed envelope, which requires no postage if mailed in the
United States. You may revoke your proxy at any time prior to the time it is
voted.
VOTING SECURITIES OUTSTANDING; VOTES REQUIRED
Shares of Common Stock, 1,362,031 of which were outstanding as of the close
of business on September 30, 2011, are the only voting securities of the
Corporation and are entitled to one vote per share. Only holders of Common
Stock of record at the close of business on October 21, 2011 will be entitled
To vote at the annual meeting of stockholders.
A plurality of the votes cast by the stockholders entitled to vote at the
annual meeting is required to elect the director nominees, and a majority of the
votes cast by the stockholders entitled to vote at the annual meeting is
required to approve the 2011 Stock Option Plan and take any other action. Votes
withheld, abstentions and any broker non-votes will not have the effect of votes
cast either in favor of or in opposition to a nominee, with respect to approval
of the 2011 Stock Option Plan, or with respect to any other business properly
brought before the annual meeting, but will be treated as present for quorum
purposes.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON DECEMBER 8, 2011
The Corporation's proxy statement and Annual Report for the year ended June
30, 2011 are available at http://www.cfpproxy.com/2919.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Corporation's Common Stock, as of September 30, 2011 (except as otherwise
noted), by: (i) each person who is known by the Corporation to own beneficially
more than five percent of the Corporation's Common Stock, (ii) each of the
Corporation's directors and nominees for director, (iii) each of the
Corporation's executive officers for whom information is provided in the
"Summary Compensation Table" below, and (iv) all executive officers and
directors as a group. The information presented in the table is based upon
certain filings with the Securities and Exchange Commission by such persons, as
indicated in the notes to the table below, or upon information otherwise
provided by such persons to the Corporation. According to such filings or other
information, such persons have sole voting and investment power with respect to
shares reported as beneficially owned (except as indicated in the notes to the
table below).
3
The address of each person who is a director or officer of the Corporation
is 27 Muller Road, Oakland, New Jersey 07436.
Name of Beneficial Owner Number of Shares % of the
Beneficially Owned Common Stock
John H.D. Dewey 457,072 (1) (3) 33.15%
Frederick R. Dewey
2835 Second St.,
Santa Monica, CA 90405 259,905 (2) (3) 19.08%
Hummingbird Management, LLC
145 East 57th St.,
NY, NY 10022 220,546 (4) 16.19%
LTG James M. Link (USA Retired) 1,000 *
Nathaniel Roberts 10,998 *
John B. Rhodes 0 --
Ronald Tassello 0 --
Edward L. Proskey 16,810 (5) 1.23%
Stephen P. Krill 3,800 (6) *
Dana P. Hollis 3,800 (7) *
All Directors and Executive
Officers as a Group (8 persons) 493,480 (8) 35.42%
* Less than 1%.
(1) Consists of (i) 150,059 shares of Common Stock owned directly by John H.D.
Dewey ("JHDD"), (ii) 16,800 shares of Common Stock issuable upon exercise of
stock options which are exercisable as of or within 60 days after September 30,
2011, (iii) 97,258 shares of Common Stock owned directly by a trust for the
benefit of JHDD's sister, of which JHDD is the sole trustee, (iv) 20,000 shares
of Common Stock held in a custodial account for JHDD's son who is a minor and
(v) 172,955 shares of Common Stock held by the Estate of Frances D. Dewey (the
"Estate Shares"). The table does not include 4,000 shares issuable under stock
options which become exercisable on December 13, 2011 and 4,700 shares issuable
under stock options which become exercisable on September 22, 2012.
(2) Based on Amendment #1 to Schedule 13G filed with the Securities and
Exchange Commission on September 4, 2009 by Frederick R. Dewey ("FRD").
Consists of (i) 86,950 shares of Common Stock owned directly by FRD and (ii)
the Estate Shares.
(3) On August 19, 2009, JHDD and his brother, FRD, were appointed executors of
the Estate of Frances D. Dewey by the Surrogate's Court of New York County. In
such capacity, they share beneficial ownership of the Estate Shares.
(4) Based on a Form 3 filed with the Securities and Exchange Commission on July
7, 2009 by Paul D. Sonkin, The Hummingbird Value Fund, L.P., The Tarsier Nanocap
Value Fund, LP, Hummingbird Capital, LLC, and Hummingbird Management, LLC (the
"Reporting Persons"). The Form 3 provides that (a) 129,763 shares are owned
directly by The Hummingbird Value Fund, L.P. and (b) 90,783 shares are owned
directly by The Tarsier Nanocap Value Fund, LP. According to the Form 3, (a)
Paul D. Sonkin is the Managing Member of (i) Hummingbird Capital, LLC, which is
the general partner of The Hummingbird Value Fund, L.P. and The Tarsier Nanocap
Value Fund, LP, and (ii) Hummingbird Management, LLC, which is the investment
manager to The Hummingbird Value Fund, L.P. and The Tarsier Nanocap Value Fund,
LP, and (b) the Reporting Persons are members of a group for purposes of Section
13(d) of the Securities Exchange Act of 1934.
4
(5) Includes 6,800 shares issuable upon exercise of stock options which are
exercisable as of or within 60 days after September 30, 2011. The table does
not include 3,000 shares issuable under stock options which become exercisable
on December 13, 2011 and 1,700 shares issuable under stock options which become
exercisable on September 22, 2012.
(6) Includes 3,800 shares issuable upon exercise of stock options which are
exercisable as of or within 60 days after September 30, 2011. The table does
not include 3,000 shares issuable under stock options which become exercisable
on December 13, 2011 and 1,700 shares issuable under stock options which become
exercisable on September 22, 2012.
(7) Includes 3,800 shares issuable upon exercise of stock options which are
exercisable as of or within 60 days after September 30, 2011. The table does
not include 3,000 shares issuable under stock options which become exercisable
on December 13, 2011 and 1,700 shares issuable under stock options which become
exercisable on September 22, 2012.
(8) Includes 31,200 shares issuable upon exercise of stock options which are
exercisable as of or within 60 days after September 30, 2011. The table does
not include 13,000 shares issuable under stock options which become exercisable
on December 13, 2011 and 9,800 shares issuable under stock options which become
exercisable on September 22, 2012.
ELECTION OF DIRECTORS
At the annual meeting of stockholders, five directors are to be elected, to
serve for the ensuing year and until their respective successors are elected and
qualify. The shares represented by the accompanying proxy will be voted for the
re-election of John H.D. Dewey, LTG James M. Link (USA Ret), Nathaniel Roberts,
John B. Rhodes, and Ronald Tassello, unless a contrary specification is made.
If any such nominee becomes unavailable for any reason, or if a vacancy should
occur before the election (which events are not anticipated), the shares
represented by the accompanying proxy may be voted for such other person as may
be determined by the holders of such proxies, or the Board of Directors may
elect to reduce the number of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ELECTION OF THE
ABOVE NOMINEES AS DIRECTORS.
Information Concerning Directors and Nominees
The following table sets forth the name of each nominee for election to the
Board of Directors, his age, principal occupation during the past five years and
the name and principal business of any corporation or organization in which such
occupation is or was carried on, and the period during which he has served as
director.
5
Name Age Principal Occupation During Past Director
Five Years; Other Directorships Since
and Positions With Corporation
John H.D. 46 President, Chief Executive Officer 1999
Dewey and Secretary of the Corporation
(Secretary since September 23, 2009;
President and Chief Executive Officer
since December 4, 2002; Acting Chief
Executive Officer from June 14, 2002
until December 4, 2002)
Not-For-Profit organization:
Trustee, NY Institute for Special Education
(since January 15, 2003)
Chairman since November 1, 2010
Cornerstone Literacy, Inc.
LTG James M. 69 Retired since January 31, 2008 2001
Link (USA Retired) Special Advisor, Teledyne
Technologies Inc. (until January 31, 2008)
President and Director,
Teledyne Brown Engineering
(retired August 1, 2007)
(Systems Engineering)
Director, Superior Bank
Nathaniel 45 President, Managed Citrus, Inc. 1999
Roberts (Citrus Growers)
Chair, Economic Council of Palm
Beach County
John B. 55 Senior Advisor 2005
Rhodes (from April 2007 through June 2010)
Good Energies, Inc.
(Renewable Energy Investments)
Director, Tonix Pharmaceuticals
(since October 2010)
Not-For-Profit organizations:
Board President, NY Institute for Special
Education
Treasurer (since November 2010)
and former Chairman (until October 31, 2010)
of Cornerstone Literacy Inc (formerly
known as Cornerstone, a program of the NYISE)
Secretary, Citizens Budget Commission of New York
Audit Committee Chair, American Federation of
Aging Research
Trustee, Hospital for Joint Diseases, New York
City (until December 2010)
Director, SPARC (Sickness Prevention Achieved
Through Regional Cooperation) (until May 2011)
Ronald
Tassello, CPA 54 Chief Financial Officer 2006
(since December 2007)
Wolfson Casing Corporation
(Producers of Sausage Casings)
Chief Financial Officer (until December 2007)
HYTORC (division of UNEX Corporation)
(Industrial Bolting Tools and Technology)
Chief Financial Officer (from 1996 to July 2006)
Alcan Baltek Corporation
(Producer of Balsa-based Products)
As indicated in the table above, each nominee for election to the Board of
Directors is currently serving as a member of the Board and is standing for
re-election. Mr. Dewey's experience as the Corporation's President and Chief
Executive Officer and, previously, as a management consultant to technology and
engineering clients, makes him a valuable member of the Board. LTG Link's
military and engineering background and his experience in the defense industry
makes him a valuable member of the Board. Mr. Robert's business and executive
management experience, including experience with large property management,
makes him a valuable member of the Board. Mr. Rhodes' business and consulting
experience (including his former position as a Vice President of Booz Allen
Hamilton, Inc. advising aerospace and defense companies) makes him a valuable
member of the Board. Mr. Tassello's financial and accounting experience and his
service as a chief financial officer makes him a valuable member of the Board.
6
SEC rules require that the Corporation disclose whether members of the
Board of Directors are "independent", as that term is defined in stock exchange
rules. Although the Corporation's shares do not trade on Nasdaq, if the Nasdaq
definition of "independence" were to apply, LTG James M. Link, Nathaniel
Roberts, John B. Rhodes and Ronald Tassello would be "independent" for these
purposes and John H.D. Dewey would not be "independent" for these purposes.
During the Corporation's last fiscal year ended June 30, 2011, the Board
of Directors and its committees held a total of ten meetings (including
telephonic meetings). The Board of Directors has the following committees:(1)
Audit Committee, (2) Executive Compensation Committee, (3) Stock Option ommittee
and (4) Business Development Committee. The Board does not have a nominating
committee.
The Audit Committee is composed of Ronald Tassello (Chairman), John Rhodes
and James M. Link. Although the Corporation's shares do not trade on Nasdaq, if
the Nasdaq definition of "independence" were to apply, all of the members of the
Audit Committee would be "independent" for these purposes. The Committee held
four meetings during the last fiscal year. For additional information regarding
the Audit Committee, see "Independent Public Accountants" below.
The Executive Compensation Committee is composed of Messrs. Roberts, Link
and Tassello. Although the Corporation's shares do not trade on Nasdaq, if the
Nasdaq definition of "independence" were to apply, all of the members of the
Executive Compensation Committee would be "independent" for these purposes. The
Committee held one meeting during the last fiscal year. The Committee assists
the Board in meeting its responsibilities with regard to oversight and
determination of executive compensation. It reviews and makes recommendations to
the Board with respect to major compensation plans, policies and programs for
the Corporation. The CEO meets with, and discusses executive performance with,
the Committee. The Committee evaluates this information and takes it into
account in making recommendations to the entire Board for approval. The
Committee did not retain advisors in the last fiscal year. It does not have a
charter.
The Stock Option Committee is composed of Messrs. Rhodes and Roberts. The
Committee held one meeting during the last fiscal year. Although the
Corporation's shares do not trade on Nasdaq, if the Nasdaq definition of
"independence" were to apply, all of the members of the Stock Option Committee
would be "independent" for these purposes. The Committee administers the 1998
Stock Option Plan of the Corporation and will administer the 2011 Stock Option
Plan of the Corporation described below under "Approval of the 2011 Stock Option
Plan" (if such plan is approved by the Corporation's stockholders at the annual
meeting). The Committee did not retain advisors in the last fiscal year. It
does not have a charter.
The Business Development Committee is composed of John H.D. Dewey and LTG
Link. The Committee assists in the identification and pursuit of potential
business opportunities for the Corporation.
During the fiscal year ended June 30, 2011, each incumbent director attended
at least 75% of the aggregate of (1) the total number of meetings of the Board
of Directors (held during the period for which he has been a director) and (2)
the total number of meetings held by all committees of the Board on which he
served (during the periods that he served).
Director Compensation
The following table sets forth the compensation paid to each non-employee
director of the Corporation for the fiscal year ended June 30, 2011:
Name of Director Fees Earned or Paid in Cash Total
James M. Link $28,800 $28,800
Nathaniel A. Roberts $4,800 $4,800
John B. Rhodes $4,800 $4,800
Ronald Tassello $4,400 $4,400
7
The Corporation's current policy regarding standard compensation of
directors is to pay $4,000 per annum plus $400 for each Board meeting attended
in person. For the fiscal year ended June 30, 2011, no payments for services as
a director or committee member were made to John H.D. Dewey (who received
compensation as an officer of the Corporation). In addition to the standard
directors fees, James M. Link was paid $24,000 for serving on the Business
Development Committee. In December 2001, stockholders approved a Stock Option
Plan for Non-Employee Directors under which options exercisable for a total of
50,000 shares of Common Stock may be granted. To date, no options have been
granted under this plan, which is administered by the Board.
Executive Officers
In addition to John H. D. Dewey (see "Information Concerning Directors and
Nominees" above), the Corporation's executive officers are:
Edward L. Proskey, age 55, who was elected Vice President, Operations of the
Corporation in June 1994. He became Senior Vice President, Operations in June
2003 and Senior Vice President in August 2008.
Dana P. Hollis, age 60, who was elected as Vice President, Business
Development/Program Management in January 2007. Previously, from May 1985 to
2006, Mr. Hollis was employed by Smiths Aerospace, LLC, a systems and avionics
manufacturer, in various positions, including Senior Project Engineering Manager
and Senior Program Manager; and previous to that he was the Senior Project
Engineer - Engine Controls and Accessories at United Technologies from October
1979 to April 1985.
Stephen P. Krill, age 59, who became an employee of the Corporation in
September 2005 and was elected Treasurer in December 2005. Previously, from
January 16, 2005, Mr. Krill provided financial consulting services to the
Corporation as an employee of Resources Global Professionals, a temporary
financial staffing company; from 2001 to 2005 he was an associate with Robert
Half, Inc., also a temporary financial staffing company; and previous to that he
spent 15 years at Southco Inc., a manufacturer of access hardware, as a
Controller and Corporate Financial Consultant.
Summary Compensation Table
The following table sets forth the aggregate compensation paid by the
Corporation during the Corporation's last two fiscal years to (1) the chief
executive officer of the Corporation and (2) the three most highly compensated
executive officers of the Corporation other than the chief executive officer.
Name and Fiscal Year Salary Bonus Option Total
Principal Position ended ($) ($) Awards ($)
June 30, ($)(1)(2)
John H.D. Dewey
President/CEO,
Secretary 2011 165,636 -- 5,591 171,227
2010 157,703 -- 6,077 163,780
Edward L. Proskey 2011 131,481 -- 4,729 136,210
Senior V.P. 2010 125,692 3,500 4,988 134,180
Stephen P. Krill 2011 136,577 -- 4,729 141,306
Treasurer 2010 133,023 -- 4,988 138,011
Dana P. Hollis, V.P., 2011 134,499 12,000 4,729 151,228
Business Development/ 2010 128,671 12,000 4,988 145,659
Program Management
(1) Reflects the grant date fair value of stock options, computed in accordance
with Financial Accounting Standards Board Accounting Standards Codification 718
(excluding the estimated effect of any forfeitures), granted in fiscal years
ended June 30, 2011 and 2010 pursuant to the Corporation's 1998 Stock Option
Plan (as amended). This is the total amount the Corporation would expect to
expense in its financial statements over the vesting period of the options.
Assumptions used in the calculation of such amounts are included in Note 5 to
the Corporation's audited financial statements for the fiscal year ended June
30, 2011 included in the Corporation's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on September 26, 2011. Amounts reflected in
this column may not correspond to the actual value that will be received by the
executive from these awards. These options were granted (a) on December 13,
2010 and become fully vested on December 13, 2011 and (b) on March 31, 2010 and
became fully vested on March 31, 2011.
8
(2) During the fiscal year ended June 30, 2011, John Dewey was granted an option
to purchase 4,000 shares of Common Stock and each other named executive officer
was granted an option to purchase 3,000 shares of Common Stock. The exercise
price and expiration date of these options is shown in the "Outstanding Equity
Awards at 2011 Fiscal Year-End" table below. During the fiscal year ended June
30, 2010, John Dewey was granted an option to purchase 4,000 shares of Common
Stock and each other named executive officer was granted an option to purchase
3,000 shares of Common Stock. The exercise price and expiration date of these
options is shown in the "Outstanding Equity Awards at 2011 Fiscal Year-End" able
below.
Stock Options
None of the executive officers of the Corporation for whom information is
provided in the "Summary Compensation Table" above exercised any stock options
during the Corporation's last fiscal year (ended June 30, 2011). The following
table sets forth, for each such executive officer, the total number of
securities underlying unexercised options as of the end of the Corporation's
last fiscal year (June 30, 2011).
Outstanding Equity Awards at 2011 Fiscal Year-End
Name of Option Number of Number of Option Option
Executive Grant Securities Securities Exercise Expiration
Date Underlying Underlying Price ($) Date
(1) Unexercised Unexercised
Options (#) Options (#)
Exercisable Unexercisable
John H.D.
Dewey 12/11/02 12,000 0 3.93 12/10/12
12/3/08 800 0 1.76 12/2/13
3/31/10 4,000 0 2.47 3/30/15
12/13/10 0 4,000 2.20 12/12/15
Edward L.
Proskey 12/11/02 3,000 0 3.93 12/10/12
12/3/08 800 0 1.60 12/2/18
3/31/10 3,000 0 2.24 3/30/20
12/13/10 0 3 2.00 12/12/20
Dana P.
Hollis 12/3/08 800 0 1.60 12/2/18
3/31/10 3,000 0 2.24 3/30/20
12/13/10 0 3,000 2.00 12/12/20
Stephen P.
Krill 12/3/08 800 0 1.60 12/2/18
3/31/10 3,000 0 2.24 3/30/20
12/13/10 0 3,000 2.00 12/12/20
(1) Options granted on December 11, 2002 vested and become exercisable as to
each named executive officer in two installments: 50% on December 11, 2003 and
50% on December 11, 2004. Options granted on December 3, 2008 vested and became
exercisable on December 3, 2009. Options granted on March 31, 2010 vested and
became exercisable on March 31, 2011. Options granted on December 13, 2010 will
vest and become exercisable on December 13, 2011.
Retirement Benefits
The Corporation has a non-contributory pension plan for substantially all
active employees, under which, in general, employees can receive an amount per
month equal to 0.8% multiplied by their years of service (up to a maximum of 35
years of service) multiplied by their average monthly earnings (based on
earnings during the five years preceding retirement), up to a specified maximum
of $850 per month for life assuming normal retirement at age 65. Upon the
employee's death, 50% of the monthly benefit is payable to the employee's spouse
for life.
9
Insurance Arrangements
The Corporation has insurance coverage under which its directors and
officers (as well as the Corporation) are indemnified under certain
circumstances with respect to litigation and other costs and liabilities
arising out of actual or alleged misconduct of such directors and officers.
The Corporation pays all premiums to the insurer.
Section 16(a) Beneficial Ownership Reporting Compliance
For the fiscal year ended June 30, 2011, based solely on a review of copies
of reports furnished to the Corporation or written representations that no other
reports were required, the Corporation believes that all filing requirements
under Section 16(a) of the Securities Exchange Act of 1934 applicable to its
executive officers, directors and 10% shareholders were complied with.
Certain Corporate Governance Matters
Board Leadership Structure. The positions of Chairman of the Board and
Chief Executive Officer of the Corporation are currently held by the same
individual, John Dewey. The Board of Directors does not have a lead independent
director. The Board believes that, in light of the Corporation's size, as well
as the size of the Board, this structure currently is the preferable leadership
structure for the Corporation.
Board Role in Risk Oversight. The Board of Directors as a whole has
ultimate oversight responsibility for the risk management process. The risk
oversight function is carried out both by the full Board and by individual Board
committees. The Audit Committee oversees risks associated with financial and
accounting matters, and the Corporation's financial reporting and internal
control systems. On a regular basis the Board and its committees receive
information and reports from senior management (and, when appropriate, from
outside counsel and other advisors) in order to identify, evaluate and take
steps to manage and mitigate the risks associated with the Corporation's
strategic and business plans and operations.
Code of Business Conduct and Ethics. The Corporation has adopted a Code of
Business Conduct and Ethics that applies to all of its directors, officers and
employees. The code is available at the Corporation's website at
www.deweyelectronics.com. Any substantive amendments to the code and any grant
of a waiver from a provision of the code requiring disclosure under applicable
SEC rules will be disclosed in a report on Form 8-K.
Stockholder Communications with the Board of Directors. The Corporation's
Board of Directors has adopted the following policy by which stockholders may
communicate with the Board or with individual directors or Board committees.
The communication should be in writing, addressed to the Board or applicable
committee or directors, c/o Corporate Secretary, The Dewey Electronics
Corporation, at the Corporation's executive offices. The Corporate Secretary
will review all such correspondence received and will periodically, at least
quarterly, forward to the applicable directors a summary of all such
correspondence together with copies of correspondence that the Corporate
Secretary believes should be seen in its entirety. Correspondence or summaries
will be forwarded to the applicable directors on an expedited basis where the
Corporate Secretary deems it appropriate. Communications raising concerns
related to the Corporation's accounting, internal controls, or auditing matters
will be immediately brought to the attention of the Audit Committee.
Directors may at any time review a log of correspondence received by the
Corporation that is addressed to the director (or to the full Board or a Board
committee on which he serves) and may request copies of any such correspondence.
The Corporation believes that it is important for directors to directly
hear concerns expressed by stockholders. Accordingly, it is the Corporation's
policy that Board members are expected to attend the Annual Meeting of
Stockholders absent a compelling commitment that prevents such attendance. The
December 2010 Annual Meeting was attended by Messrs. Dewey , Link, Roberts and
Rhodes; Mr. Tassello did not attend.
Director Nominations. The candidates for election as directors at the
annual meeting have been nominated by the Board. The Corporation does not have
a nominating committee; the Board believes that it is desirable for such
decisions to be made by the entire Board.
In evaluating director candidates for purposes of recommending director
candidates to the Board, the Board will consider the following factors: the
candidate's moral character and personal integrity; whether the candidate has
expertise and experience relevant to the Corporation's business; whether the
candidate's expertise and experience complements the expertise and experience of
the other directors; whether the candidate would be independent of any
particular constituency and able to represent the interests of all stockholders
of the Corporation; the congeniality of the candidate with the other directors;
whether the candidate would have sufficient time available to devote to Board
activities; and any other factors deemed relevant by the Board. The Board does
not believe that there are any specific minimum qualifications, qualities or
skills that a Board-recommended nominee for election to the Board of Directors
must possess, and instead is of the view that each candidate should be
considered based on his or her individual experience and other qualifications,
as well as the Corporation's circumstances. The Board does not have a diversity
policy for consideration of director candidates.
10
The Board will consider director candidates recommended by stockholders of
the Corporation. Stockholders may recommend an individual for consideration by
submitting to the Board the name of the individual, his or her background
(including education and employment history), a statement of the particular
skills and expertise that the candidate would bring to the Board, the name,
address and number of shares of the Corporation beneficially owned by the
stockholder submitting the recommendation, any relationship or interest between
such stockholder and the proposed candidate, and any additional information that
would be required under applicable SEC rules to be included in the Corporation's
proxy statement if such proposed candidate were to be nominated as a director.
Such submissions should be addressed to the Board of Directors c/o
Corporate Secretary, at the Corporation's executive offices. In order for a
candidate to be considered for any annual meeting, the submission must be
received by the Corporation no later than the May 15 preceding such annual
meeting. The Corporation anticipates that its next annual meeting will be held
in December 2012 (the month when it typically holds its annual meetings).
The Board will evaluate the biographical information and background material
relating to each potential candidate and may seek additional information from
the submitting stockholder, the potential candidate, and/or other sources. The
Board may hold interviews with selected candidates. Individuals recommended by
stockholders will be considered under the same factors as individuals
recommended by other sources.
"Audit Committee Financial Expert." The Board of Directors has determined
that Mr. Ronald Tassello, a member of the Audit Committee, is the Corporation's
"audit committee financial expert" as that term is defined by SEC rules.
Although the Corporation's shares do not trade on Nasdaq, if the Nasdaq
definition of "independence" were to apply, Mr. Tassello would be "independent"
for these purposes.
INDEPENDENT PUBLIC ACCOUNTANTS
On August 16, 2010, the Corporation was notified that Amper, Politziner and
Mattia, LLP ("Amper"), the Corporation's independent registered public
accounting firm, combined its practice with that of Eisner LLP ("Eisner") and
that the combined practice operates under the name EisnerAmper LLP
("EisnerAmper"). The Audit Committee of the Corporation's Board of Directors
amended the Corporation's engagement of Amper to provide for EisnerAmper to
serve as the Corporation's independent registered public accounting firm
effective August 16, 2010. The Audit Committee has selected EisnerAmper as the
Corporation's independent registered public accounting firm for the current
fiscal year. It is expected that a representative of EisnerAmper will be
present at the annual meeting of stockholders with the opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
The audit reports on the financial statements of the Corporation as of and
for the years ended June 30, 2010 and June 30, 2011 did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles. During the Corporation's
fiscal year ended June 30, 2010 and the subsequent period through August 16,
2010 (when Amper combined its practice with Eisner), there were (i) no
disagreements (as such term is used in Item 304(a)(1)(iv) of Regulation S-K)
between the Corporation and Amper on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreement(s), if not resolved to the satisfaction of Amper, would have
caused Amper to make reference to the subject matter of the disagreement(s) in
connection with its report on the Corporation's financial statements for such
year or for any subsequent reporting period and (ii) no reportable events within
the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
11
During the Corporation's fiscal year ended June 30, 2010 and the subsequent
period through August 16, 2010, the Corporation did not consult with Eisner
regarding any of the matters set forth in Items 304(a)(2)(i) and (ii) of
Regulation S-K.
Audit Fees. For the fiscal year ended June 30, 2011, the
aggregate fees billed for audit services rendered by EisnerAmper (or its
predecessor Amper prior to August 16, 2010) were $118,400. These services
consisted of reviews of the Corporation's quarterly financial statements and the
audit of the Corporation's financial statements for the fiscal year ended June
30, 2011.
For the fiscal year ended June 30, 2010, the aggregate fees billed for audit
services by Amper (prior to its combination with Eisner) were $77,500. These
services consisted of reviews of the Corporation's quarterly financial
statements and the audit of the Corporation's annual financial statements for
the fiscal year ended June 30, 2010. Subsequent to the combination of Eisner
and Amper, EisnerAmper billed the Corporation for an aggregate of $45,100 of
audit fees with respect to the audit of the Corporation's financial statements
for the fiscal year ended June 30, 2010.
Tax Fees; Audit-Related Fees; All Other Fees. In the fiscal years ended
June 30, 2011 and June 30, 2010, there were no other fees billed by Amper or
EisnerAmper for professional services rendered to the Corporation.
Report of Audit Committee
The Corporation's Audit Committee is responsible primarily to assist the
Board of Directors in fulfilling its responsibilities for providing oversight of
the Corporation's accounting and financial reporting practices, as more fully
described in its written charter approved by the Board of Directors. The Audit
Committee charter is available on the Corporation's website,
www.deweyelectronics.com. Management is responsible for preparing the
Corporation's financial statements and the Corporation's independent registered
public accounting firm is responsible for auditing those statements.
In discharging its responsibilities, the Audit Committee (1) reviewed and
discussed the audited financial statements of the Corporation at and for the
fiscal year ended June 30, 2011 with management, (2) received the written
disclosures and the letter from the Corporation's independent registered public
accounting firm required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent registered public
accounting firm's communications with the Audit Committee concerning
independence, and (3) discussed with the independent registered public
accounting firm the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended, as adopted by the Public Company Accounting
Oversight Board, and the independent registered public accounting firm's
independence from the Corporation.
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the Corporation's audited financial
statements be included in the Corporation's Annual Report on Form 10-K for the
fiscal year ended June 30, 2011, for filing with the Securities and Exchange
Commission.
Submitted by the Audit Committee:
Ronald Tassello, Chairman
LTG James M. Link (USA Ret)
John B. Rhodes
12
APPROVAL OF THE 2011 STOCK OPTION PLAN
General
On September 22, 2011, the Board of Directors of the Corporation adopted the
Corporation's 2011 Stock Option Plan (the "2011 Plan" or the "Plan"), subject to
stockholder approval. A copy of the 2011 Plan is set forth as Exhibit A to this
proxy statement. The Corporation's prior stock option plan, which was last
approved by stockholders in 2001, has no more shares available for future
grants.
The 2011 Plan, like the prior plan, is intended to give employees of the
Corporation and its subsidiary corporations the opportunity to acquire a
proprietary interest in the Corporation and an additional incentive to continue
their employment and in general to stimulate their efforts on behalf of the
Corporation. The Board of Directors believes that the 2011 Plan is necessary in
order to achieve these goals.
Description of the 2011 Plan
The following summary of the 2011 Plan is qualified in its entirety by
reference to the full text of the plan, which is attached as Exhibit A to this
Proxy Statement.
The 2011 Plan is administered by a committee (the "Committee") to be
appointed from time to time by the Board of Directors of the Corporation,
consisting of at least two members of the Board. The Committee is authorized to,
among other things, grant and amend awards under the Plan; adopt and interpret
administrative rules for the Plan; interpret the provisions of the Plan and all
awards granted under the Plan; and make all factual and other determinations
necessary for administration of the Plan.
The maximum number of shares of Common Stock which may be delivered under
the 2011 Plan is 133,300, all of which may be granted as incentive stock options
(within the meaning of Section 422 of the Internal Revenue Code). Lapsed,
expired or terminated options will not count against this limit and shares that
were subject to such options will be available for subsequent grants. If the
exercise price is paid in Common Stock, the shares delivered by an optionee will
not count against this limit and will be available for subsequent grants. If
any option is exercised by applying a portion of the shares subject to the
option to satisfy the exercise price, only the number of shares actually
delivered to the optionee (representing the appreciation in the Common Stock
over the exercise price) will count against the share limit. Similarly, shares
withheld in order to satisfy tax withholding obligations will not count against
the share limit. The shares distributed under the 2011 Plan may be shares held
in treasury or authorized but unissued shares.
Options under the 2011 Plan may be granted to any employee of the
Corporation or its subsidiaries. No more than 13,300 shares may be granted to
any employee within any two consecutive calendar years.
Awards under the 2011 Plan may be incentive stock options within the meaning
of Section 422 of the Internal Revenue Code ("ISOs") or non-qualified stock
options. The Committee is authorized to determine the employees to whom options
will be granted, the number and type of options to be granted to each employee,
the timing of such grants, and the terms and conditions of such awards, subject
to the following limitations. The option price per share may not be less than
the fair market value of a share of Common Stock on the date of grant. The term
of an option may not be longer than 10 years. The Committee has discretion to
determine the time or times an option becomes exercisable and the extent to
which the option may be exercised after an optionee's termination of employment.
The Committee is authorized to provide different post-termination provisions
based on the nature of and reason for the termination.
The 2011 Plan authorizes the Committee to specify the manner of payment of
the option exercise price. Payment may be made in cash, Common Stock, or in any
other manner specified by the Committee.
The Committee may provide that the stock options will be transferable by
gift to members of the optionee's immediate family or a trust for their benefit,
on such terms and conditions as may be set by the Committee.
13
In the event of specified changes in the Corporation's corporate structure,
the Board or the Committee has discretion to adjust the number and kinds of
shares authorized by the 2011 Plan and authorized to be granted to any employee
within any two-year period, the number and kind of shares or other property
covered by outstanding awards, and the exercise price of outstanding options in
such manner as it deems appropriate to prevent enlargement or dilution of
benefits. In the event of certain transactions including certain mergers, sale
of assets, or tender offer, the Board or the Committee has discretion to
accelerate the time within which options may be exercised, cash out outstanding
options, provide for the assumption of outstanding options by a successor
corporation, provide that upon exercise instead of receiving Common Stock
optionees would receive the consideration they would have received in the
transaction in exchange for sharesof Common Stock (or the fair market value
of such consideration in cash), and/or provide optionees a period of at least
ten days in which to exercise their options after notice of a proposed
transaction after which all unexercised options will terminate.
The Board may amend the 2011 Plan without stockholder approval, unless such
approval is required by applicable law or regulation. The Committee may amend
the terms of any award, provided that no amendment may impair the rights of the
award holder without his or her written consent. No awards may be granted
under the 2011 Plan after December 7, 2021.
Federal Income Tax Consequences
The following is a summary of certain federal income tax aspects of stock
options which may be awarded under the 2011 Plan based on the laws in effect as
of the date hereof.
Non-Qualified Stock Options. An employee generally will not recognize
income at the time a non-qualified option is granted. Upon exercise of the
option, the employee will recognize ordinary income in an amount equal to the
excess of the fair market value of the shares on the date of exercise over the
exercise price. At disposition of the shares, any appreciation after the date
of exercise is treated as capital gain; the holding period for purposes of
determining whether such gain is long term will begin on the date of exercise.
Incentive Stock Options. An employee generally will not recognize income
upon the grant of an ISO or upon its exercise while an employee of the
Corporation or one of its subsidiaries or within three months after termination
of employment (longer in the case of termination due to disability or death).
However, the "spread" between the fair market value of the shares at the time of
exercise and the exercise price is includible in the calculation of alternative
minimum taxable income for purposes of the alternative minimum tax. The exercise
of an ISO after expiration of the specified time periods results in such
exercise being treated in the same manner as the exercise of a non-qualified
stock option. If the shares received upon exercise are held for the longer of
two years after grant and one year after exercise, the optionee will recognize
capital gain or loss when he/she disposes of the shares. Such gain or loss will
be measured by the difference between the exercise price and the amount received
for the shares at the time of disposition. If the shares acquired upon exercise
of an ISO are disposed of before the end of the above holding period, the
disposition is a "disqualifying disposition," which causes the optionee to
recognize ordinary income in an amount generally equal to the lesser of (1) the
excess of the value of the shares on the option exercise date over the exercise
price or (2) the excess of the amount received upon disposition of the shares
over the exercise price. Any excess of the amount received upon disposition of
the shares over the value of the shares on the exercise date will be taxed to
the optionee as capital gain.
Company Deductions. As a general rule, the Corporation or one of its
subsidiaries will be entitled to a deduction for federal income tax purposes at
the same time and in the same amount that an employee recognizes ordinary income
from awards under the 2011 Plan, to the extent such income is considered
reasonable compensation under the Code. The Corporation will not, however, be
entitled to a deduction to the extent compensation in excess of $1 million is
paid during any year to any of specified officers named in the Summary
Compensation Table of the proxy statement who was employed by the Corporation at
year-end, unless the compensation qualifies as "performance-based" under Section
162(m) of the Code or certain other exceptions apply. The Corporation will not
be entitled to a deduction with respect to payments which are contingent upon a
change of control if such payments are deemed to constitute "excess parachute
payments" pursuant to Section 280G of the Code and do not qualify as reasonable
compensation pursuant to that Section; such payments will subject the recipients
to a 20% excise tax.
14
The closing price of the Common Stock on the OTC Bulletin Board on September
22, 2011 was $1.55 per share.
The enclosed proxy will be voted FOR approval of the 2011 Plan unless a
contrary specification is made. The favorable vote of a majority of votes cast
on the proposal will be required for approval of the 2011 Plan. Abstentions
andbroker non-votes will not be treated as votes cast on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 2011 STOCK
OPTION PLAN)
EQUITY COMPENSATION PLAN INFORMATION AS OF JUNE 30, 2011
(a) (b)
Number of Weighted- Number of
securities to be average securities
issued upon exercise price remaining
exercise of of outstanding available
outstanding options, warrants for future
options, and rights ($) issuance under
warrants and equity
rights (#) compensation
plans (excluding
securities
reflected in
column (a)) (#)
Plan Category
Equity compensation
plans approved by
security holders 52,700 2.6582 59,800
Equity compensation
plans not approved
by security holder -- -- --
Total 52,700 2.6582 59,800
STOCKHOLDER PROPOSALS
Any proposals of stockholders which are intended to be presented at the
Corporation's next annual meeting of stockholders must be received by the
Corporation not later than July 3, 2012 in order to be considered for inclusion
in the Corporation's proxy statement and form of proxy relating to such meeting.
If a stockholder proposal is received by the Corporation after September 16,
2012, the persons named as proxies in the form of proxy for the Corporation's
2012 Annual Meeting of Stockholders will be entitled to exercise their
discretionary voting power with respect to such proposal.
DISCRETIONARY AUTHORITY
While the notice of annual meeting of stockholders calls for transaction of
such other business as may come before the meeting, management has no knowledge
of any matters to be presented for action by the stockholders other than as set
forth above. The accompanying form of proxy gives discretionary authority,
however, in the event that any additional matters should be presented.
By Order of the Board of Directors
JOHN H.D. DEWEY
Secretary
November 1, 2011
15
EXHIBIT A
THE DEWEY ELECTRONICS CORPORATION
2011 STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of The Dewey Electronics Corporation 2011 Stock Option Plan (the
"Plan") is to give employees of The Dewey Electronics Corporation (the
"Corporation") and its subsidiary corporations the opportunity to acquire a
proprietary interest in the Corporation and an additional incentive to continue
their employment and in general to stimulate their efforts on behalf of the
Corporation. As used in the Plan the terms "subsidiary corporation" and "parent
corporation" shall have the same meaning as such terms have in Section 424 of
the Internal Revenue Code, and shall refer to both present and future such
corporations.
2. Administration.
The Plan shall be administered by a committee (the "Committee") to be
appointed from time to time by the Board of Directors of the Corporation (the
"Board"), consisting of no less than two members of the Board. While the Board
shall endeavor to appoint Committee members each of whom shall qualify as an
"outside director" within the meaning of Internal Revenue Code Section 162(m)
and as a "non-employee director" within the meaning of Rule 16b-3 under the
Securities Act of 1934, as amended, failure of a Committee member to so qualify
shall not invalidate a grant of options by the Committee as a grant under this
Plan. The Committee from time to time may adopt such rules and regulations as
it may deem appropriate for the proper administration of the Plan and from time
to time may make such determinations under and interpretations of, and take such
steps in connection with, the Plan or the options granted under the Plan as it
may in its discretion deem necessary or advisable. Any determination,
interpretation, construction or other action made or taken pursuant to the
provisions of the Plan by the Committee shall be final, binding and conclusive
for all purposes and upon all persons, including, without limitation, the
Corporation, its stockholders, optionees and their respective successors in
interest.
3. Shares Subject to the Plan
The shares issuable upon exercise of options which may be granted under the
Plan shall not exceed 133,000 shares of the Common Stock of the Corporation,
subject to adjustment pursuant to the provisions of paragraph 11 of the Plan,
all of which may be granted as incentive stock options within the meaning of
Internal Revenue Code Section 422 ("incentive stock options"); no more than
13,300 shares may be granted to any employee within any two consecutive calendar
year periods, subject to adjustment as aforesaid. Such shares may be made
available either from authorized and unissued Common Stock or from Common Stock
issued and held in the treasury of the Corporation. If for any reason any
option under the Plan lapses, expires or is terminated in whole or in part,
shares of Common Stock subject to such lapsed, expiring or terminated option may
again be subjected to options under the Plan. Shares of Common Stock equal in
number to the shares surrendered in payment of the option price, and shares of
Common Stock which are withheld in order to satisfy federal, state or local tax
withholding obligations with respect to any option, shall not count against the
above limit and shall again be available for awards under the Plan. In the
event that any option is exercised by delivery of only the net shares
representing the appreciation in the Common Stock over the option price, only
the net shares delivered shall count against the Plan's share limit.
4. Grant of Options; Incentive Stock Option Limitations
The Committee, at any time or from time to time, may grant options under the
Plan to such eligible employees as it may select, for such numbers of shares of
Common Stock, at such option prices, for such periods, for such type or types of
options, at such time or times for exercise and in such form of instrument as
the Committee shall designate, subject to the limitations set forth below. The
type or types of options may include incentive stock options as defined in
Section 422 of the Internal Revenue Code ("incentive stock options") and non-
qualified options. Any option which is either expressly designated as a non-
qualified option or which fails to satisfy the requirements for qualification as
an incentive stock option shall be a non-qualified option.
16
Notwithstanding the provisions of paragraphs 6 and 7 of the Plan, an option
granted to an employee who owns more than 10% (taking into account the
applicable stock attribution rules of the Internal Revenue Code) of the total
voting power of all classes of stock of the Corporation or of any parent or
subsidiary corporation of the Corporation will not be an incentive stock option
unless (i) the option price is at least 110% of the fair market value of the
Common Stock at grant and (ii) the option is not exercisable more than five
years after grant.
An option that otherwise qualifies as an incentive stock option nevertheless
fails to be an incentive stock option to the extent that the aggregate fair
market value (determined as of the time the option is granted) of the Common
Stock with respect to which incentive stock options (granted under the Plan and
all other plans of the Corporation and its parent and subsidiary corporations)
are exercisable for the first time in any calendar year exceeds $100,000.
5. Eligibility
Options may be granted to all employees (including officers) of the
Corporation or of its subsidiary corporations, including subsidiary corporations
which become such after adoption of the Plan. A director of the Corporation or
of a subsidiary corporation who is not an employee will not be eligible to
receive an option.
6. Option Price
The purchase price per share of the shares of Common Stock subject to an
option granted under the Plan shall not be less than the fair market value of
the Common Stock, as determined by the Committee, at the time of the granting of
the option.
7. Option Period
The term of each option granted under the Plan shall not exceed ten years
from the date such option is granted. Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be provided by the
Committee.
8. Exercise
Options may be exercised by giving notice of exercise to the Corporation in
such form and manner as may be specified by the Corporation specifying the
number of shares to be purchased, accompanied by payment of the aggregate option
price for such shares. Payment for shares purchased upon exercise of an option
granted under the Plan shall be made in such manner as may be specified by the
Committee, which may include cash, delivery of shares of Common Stock already
owned by the optionee, any other manner permitted by law, or any combination
thereof. No shares of Common Stock shall be issued until full payment therefor
has been made. An optionee shall not be deemed to have acquired any shares of
Common Stock or have any rights of a stockholder until a certificate for such
shares has been duly issued (or the optionee has otherwise been duly recorded as
the owner of the shares on the books of the Corporation). Shares issued
pursuant to the exercise of options granted under the Plan shall be deemed fully
paid and non-assessable.
9. Non-Transferability of Options
Incentive stock options may be exercised only by the person to whom granted,
except that they may be transferred by will or the laws of descent and
distribution. In the event of the optionee's death, his or her legal
representatives may exercise his or her option. The Committee, in its sole
discretion may, at the time of grant or at any time thereafter, permit non-
qualified stock options (or incentive stock options which have been amended to
become non-qualified options) to be transferred by gift to members of the
optionee's immediate family or a trust for their benefit, on such terms and
conditions as may be determined by the Committee.
10. Termination of Employment
Upon the termination of an optionee's employment, his or her options shall
be exercisable to the extent determined by the Committee. The Committee may
provide different post-termination exercise provisions, which may vary based on
the nature of and reason for the termination. In no event, however shall an
option be exercised after the expiration of the option term.
17
11. Adjustment in Certain Events
In the event of any merger, reorganization, consolidation, sale of
substantially all assets, recapitalization, stock dividend, stock split, spin-
off, split-up, split-off, distribution of assets or other change in corporate
structure affecting the Common Stock such that an adjustment is determined by
the Board or the Committee to be appropriate under the Plan to prevent
enlargement or dilution of benefits, then the Board or the Committee shall, in
such a manner as it may in its discretion deem equitable, adjust any or all of
(i) the aggregate number and kind of shares reserved for issuance under the Plan
and authorized to be granted to any employee within any two-year period, (ii)
the number and kind of shares or other property subject to outstanding awards,
and (iii) the exercise price of outstanding stock options.
In addition, upon the dissolution or liquidation of the Corporation or upon
any reorganization, merger, or consolidation as a result of which the
Corporation is not the surviving corporation (or survives as a wholly-owned
subsidiary of another corporation), or upon a sale of substantially all the
assets of the Corporation or the commencement or consummation of a tender offer
for the Common Stock, the Board or the Committee may take such action as it in
its discretion deems appropriate to (i) accelerate the time within which options
vest and/or may be exercised, (ii) cash out outstanding stock options at or
immediately prior to the date of such event, (iii) provide for the assumption of
outstanding stock options by surviving, successor or transferee corporations,
(iv) provide that in lieu of shares of Common Stock optionees shall be entitled
to receive upon exercise the consideration they would have received in such
transaction in exchange for such shares of Common Stock (or the fair market
value of such consideration in cash), and/or (v) provide that options shall be
exercisable for a period of at least ten business days from the date of receipt
of a notice from the Company of such proposed event, following the expiration of
which period any unexercised options shall terminate.
No fractional shares shall be issued or delivered under the Plan. The Board
or Committee shall determine whether the value of fractional shares shall be
paid in cash or other property, or whether such fractional shares and any rights
thereto shall be cancelled without payment.
The Board's or Committee's determination as to which adjustments shall be
made under this paragraph 11 and the extent thereof shall be final, binding and
conclusive.
12. Amendment or Discontinuance of the Plan
No option shall be granted under this Plan after December 7, 2021. The
Board may discontinue the Plan at any time and may amend it from time to time.
No amendment or discontinuation of the Plan shall adversely affect any award
previously granted without the award holder's written consent. Amendments may
be made without stockholder approval except as required to satisfy applicable
laws or regulations or the requirements of any stock exchange or market on which
the Common Stock is listed or traded.
The Committee may amend the terms of any award prospectively or
retroactively; provided, however, that no amendment shall impair the rights of
the award holder without his or her written consent.
13. Restrictions on Disposition
Each award under the Plan shall be subject to the requirement that, if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the Common Stock subject or related thereto upon any securities
exchange or market or under any state or federal law, or (ii) the consent or
approval of any government regulatory body or (iii) an agreement by the
recipient of an award with respect to the disposition of Common Stock, is
necessary or desirable in order to satisfy any legal requirements, such stock
options shall not be granted or exercised, in whole or in part, unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee. The application of this paragraph shall not extend the term of any
stock option. The Corporation shall have no obligation to effect any
registration or qualification of the Common Stock under federal or state laws or
to compensate the optionee for any loss caused by the implementation of this
paragraph 13.
14. Indemnification
No member of the Board of Directors or the Committee nor any officer or
employee of the Corporation acting on behalf of the Board or the Committee shall
be personally liable for any action, determination or interpretation taken or
made with respect to the Plan or any award hereunder. The Corporation shall
indemnify all members of the Board and the Committee and all such officers and
employees acting on their behalf, to the extent permitted by law, from and
against any and all liabilities, costs and expenses incurred by such persons as
a result of any act, or omission to act, in connection with the performance of
such persons' duties, responsibilities and obligations under the Plan.
18
15. Right to Terminate Employment
Nothing contained in the Plan or in any stock option granted under the Plan
shall restrict the right of the Corporation or any of its subsidiary
corporations to terminate the employment of any optionee at any time, with or
without cause.
16. Tax Withholding
Each award holder shall, no later than the date as of which an amount with
respect to an award first becomes includible in such person's gross income for
applicable tax purposes, pay to the Corporation, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state, local or
other taxes of any kind required by law to be withheld with respect to the
award. The obligations of the Corporation under the Plan shall be conditional
on such payment or arrangements. The Corporation and its subsidiaries shall, to
the extent permitted by law, have the right to deduct any such required tax
withholdings from any payment of any kind otherwise due to the award holder.
To the extent permitted by the Committee, and subject to such terms and
conditions as the Committee may provide, an employee may elect to have the
minimum amount of any required tax withholding obligation satisfied by having
the Corporation withhold shares of Common Stock otherwise deliverable to such
person with respect to the award. Alternatively, the Committee may require that
a portion of the shares of Common Stock otherwise deliverable be applied to
satisfy the withholding tax obligations with respect to the award.
17. Miscellaneous
Nothing in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including arrangements providing for the
issuance of Common Stock.
Determinations by the Committee under the Plan relating to the form, amount,
and terms and conditions of awards need not be uniform, and may be made
selectively among persons who receive or are eligible to receive awards under
the Plan, whether or not such persons are similarly situated.
Although the Corporation may endeavor to qualify an award for favorable tax
treatment (e.g. incentive stock options under Internal Revenue Code Section 422)
or to avoid adverse tax treatment (e.g. under Internal Revenue Code Section
409A), the Corporation makes no representation that the desired tax treatment
will be available and expressly disclaims any liability for the failure to
maintain favorable or avoid unfavorable tax treatment.
18. Effective Date
The Plan shall become effective on December 8, 2011, subject to approval of
the shareholders of the Corporation on such date.
19
REVOCABLE PROXY
THE DEWEY ELECTRONICS CORPORATION
__PLEASE MARK VOTES AS IN THIS EXAMPLE
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints JOHN H.D. DEWEY and RONALD TASSELLO, or either
of them, with power of substitution, attorneys and proxies to represent the
undersigned at the annual meeting of stockholders of The Dewey Electronics
Corporation to be held on December 8, 2011 at 10:00 A.M. (Eastern Standard Time)
at the offices of the Corporation at 27 Muller Road, Oakland, New Jersey, and
any adjournments thereof with all power which the undersigned would possess if
personally present and to vote all shares of common stock of the Corporation
held by the undersigned, which may be entitled to vote at said meeting upon the
following matter and upon other matters as may come before the meeting.
1. ELECTION OF DIRECTORS FOR WITHHOLD FOR ALL EXCEPT
(except as marked to the contrary below)
John H.D. Dewey, James M. Link, John Rhodes,
Nathaniel Roberts, Ronald Tassello
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below:
2. APPROVAL OF 2011 STOCK
OPTION PLAN FOR AGAINST ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is given, this proxy will be voted FOR the election of the
nominees listed above and FOR approval of the 2011 Stock Option Plan.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President, or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Please be sure to sign and date this Date_______________
Proxy in the box below.
_______________________________ _____________________________
Stockholder sign above Co-holder (if any sign above)