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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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-11(c) or Rule 14a-12

ODETICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)  Title of each class of securities to which transaction applies:
N/A 
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(2)  Aggregate number of securities to which transaction applies:
N/A
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(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):
N/A
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(4)  Proposed maximum aggregate value of transaction:
N/A 
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(5)  Total fee paid:
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[ ]  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:
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(3)  Filing Party:
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(4)  Date Filed:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
ODETICS, INC.
TO BE HELD SEPTEMBER 5, 1997
------------------------

To the Stockholders of Odetics, Inc.:

The Annual Meeting of the Stockholders of Odetics, Inc., a Delaware
corporation (the "Company"), will be held at the Company's principal executive
offices located at 1515 South Manchester Avenue, Anaheim, California 92802, on
Friday, September 5, 1997 at 10:00 a.m., Pacific Daylight Time, for the
following purposes:

1. To elect a Board of Directors of eight directors to serve on the
Company's Board of Directors. The nominees for election by the holders of Class
A Common Stock are Crandall Gudmundson and Leo Wexler. The nominees for election
by the holders of the Class B Common Stock are Kevin C. Daly, Ph.D., Ralph R.
Mickelson, Jerry F. Muench, Stanley Molasky, Joel Slutzky and Paul E. Wright.

2. To consider and approve the Company's 1997 Stock Incentive Plan.

3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1998.

4. To transact any other business which may properly come before the Annual
Meeting or any adjournment(s) thereof.

The Board of Directors has fixed the close of business on August 1, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and at any continuation or adjournment thereof. A
list of stockholders entitled to vote at the Annual Meeting will be available
for inspection at the Company's principal executive office.

You are cordially invited to attend the Annual Meeting in person. Even if
you plan to attend the Annual Meeting, please promptly mark, sign, date and
return the enclosed proxy card in the envelope provided herewith. If you decide
to attend the Annual Meeting and wish to change your proxy vote, you may do so
at the Annual Meeting.

Please read the enclosed proxy material carefully. Your vote is important.
The Company appreciates your cooperation in considering and acting on the
matters presented.

Dated: August 4, 1997                     By Order of the Board of Directors

JERRY F. MUENCH
Secretary

IT IS IMPORTANT THAT YOU COMPLETE AND RETURN THE ENCLOSED PROXY CARD. YOUR
COOPERATION IN PROMPTLY RETURNING YOUR SIGNED PROXY CARD CAN HELP THE COMPANY
AVOID THE EXPENSE OF DUPLICATE PROXY SOLICITATIONS.

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STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES

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

ODETICS, INC.
PROXY STATEMENT
ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD SEPTEMBER 5, 1997

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

GENERAL

These proxy materials and the enclosed proxy card are being furnished in
connection with the solicitation of proxies by the Board of Directors of
Odetics, Inc., a Delaware corporation (the "Company"), to be voted at the Annual
Meeting of Stockholders of the Company to be held on September 5, 1997 at 10:00
a.m., Pacific time, or any adjournment or postponement thereof (the "Annual
Meeting"). These proxy materials and the related form of proxy were first mailed
to the Company's stockholders on or about August 6, 1997.

The mailing address of the Company's principal executive offices is 1515
South Manchester Avenue, Anaheim, California 92802.

PURPOSE OF MEETING

The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of the
Stockholders. Each proposal is described in more detail in this Proxy Statement.

VOTING RIGHTS

The record date for determining those stockholders who are entitled to
notice of, and to vote at, the Annual Meeting has been fixed as August 1, 1997.
At the close of business on the record date, 5,335,130 shares of the Company's
Class A Common Stock were issued and outstanding and 1,064,241 shares of the
Company's Class B Common Stock were issued and outstanding.

Holders of the Class A Common Stock will be entitled to elect 25% of the
Board (rounded up to the nearest whole number) or two directors. The balance of
the Board (six directors) will be elected by the holders of the Class B Common
Stock. With respect to the election of directors, the stockholders of each class
of Common Stock will be entitled to one vote for each share then held unless
cumulative voting is in effect. Directors standing for election by each class of
Common Stock will be elected by a majority of the voting power of each class of
Common Stock present in person or represented by proxy at the Annual Meeting,
unless cumulative voting is in effect.

Pursuant to the Company's Bylaws, no stockholder is entitled to cumulate
his or her votes (as described below) except as to candidates whose names have
been placed in nomination prior to the commencement of voting and unless at
least one stockholder has given notice prior to commencement of the voting of
his or her intention to cumulate votes. If any stockholder has given such
notice, then each stockholder may cumulate votes by multiplying the number of
shares of each class of Common Stock the stockholder is entitled to vote by the
number of directors to be elected by such class. The number of cumulative votes
thus determined may be distributed among two or more candidates or cast for one
candidate. The candidates receiving the highest number of votes, up to the
number of directors to be elected by each class of Common Stock, will be
elected. If cumulative voting is in effect, the persons named in the
accompanying proxy will vote the shares of each class of the Common Stock
covered by proxies received by them (unless authority to vote for directors is
withheld) among the candidates named herein as they determine.

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Except as described above for the election of directors, holders of each
class of Common Stock will vote at the Annual Meeting as a single class on all
matters, with each holder of shares of Class A Common Stock entitled to
one-tenth of one vote per share held and each holder of shares of Class B Common
Stock entitled to one vote per share held. All matters submitted for stockholder
approval at the Annual Meeting other than the election of directors will be
decided by the affirmative vote of a majority of the voting power of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote on each matter.

The majority of the aggregate of the outstanding shares of the Company's
Class A Common Stock and Class B Common Stock entitled to vote will constitute a
quorum for the transaction of business at the Annual Meeting. Abstentions may be
specified on all proposals except the election of directors. Abstentions and
broker nonvotes (shares held by a broker or other nominee having discretionary
power to vote on some matters but not others) are counted as being present for
purposes of determining a quorum. If shares are not voted by the broker who is
the record holder of the shares, or if shares are not voted in other
circumstances in which proxy authority is defective or has been withheld with
respect to any matter, these nonvoted shares are not deemed to be present or
represented for purposes of determining whether stockholder approval of that
matter has been obtained.

Properly executed proxies will be voted in the manner directed by the
stockholders. If no direction is made on proxies, such proxies will be voted FOR
the election of all nominees named under the caption "Election of Directors" as
directors of the Company, FOR the approval of the 1997 Stock Incentive Plan and
FOR the ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1998.

At July 15, 1997, directors and executive officers of the Company may be
deemed to be the beneficial owners of an aggregate of 644,910 shares of Class A
Common Stock and 483,818 shares of Class B Common Stock (excluding shares
issuable upon exercise of outstanding stock options) constituting approximately
34.3% of the total voting power of all of the outstanding securities of the
Company which are entitled to vote at the Annual Meeting. Such directors and
executive officers have indicated to the Company that each such person intends
to vote or direct the vote of all shares of each class of Common Stock held or
owned by such persons, or over which such person has voting control, in favor of
all of the Proposals. See "Principal Stockholders and Common Stock Ownership of
Management."

REVOCABILITY OF PROXIES

The enclosed proxy is revocable at any time before it is voted. A proxy may
be revoked by the holder of record by filing with the Company's Secretary, at
the Company's principal executive office, a written notice of revocation or a
new duly executed proxy bearing a date later than the date indicated on the
previous proxy. Proxies may also be revoked by any stockholder present at the
Annual Meeting who elects to vote his or her shares in person. Attendance at the
meeting will not, by itself, revoke a proxy.

SOLICITATION

The enclosed proxy is being solicited by the Company's Board of Directors.
The Company will bear the entire cost of proxy solicitation, including costs of
preparing, assembling, printing and mailing this Proxy Statement, the proxy card
and any additional material furnished to the stockholders. Copies of the
solicitation materials will be furnished to brokerage houses and others to
forward to the beneficial owners. The Company may reimburse such persons for
their expenses in forwarding solicitation materials. Solicitation will be made
primarily through the use of the mail, but may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other regular
employees of the Company.

In the discretion of management, the Company reserves the right to retain a
professional firm of proxy solicitors to assist in solicitation of proxies.
Although management does not currently expect to retain such a firm, it
estimates that the fees of such firm would range from $5,000 to $10,000 plus
out-of-pocket expenses, all of which would be paid by the Company.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

NOMINEES

The Board of Directors of the Company is currently comprised of eight
members. Eight directors are to be elected at the Annual Meeting and hold office
until their successors are duly elected and qualified at the next Annual
Meeting. Holders of Class A Common Stock are entitled to elect two of the eight
directors to be elected at the Annual Meeting, and the holders of Class B Common
Stock are entitled to elect the other six directors. The two candidates
receiving the highest number of affirmative votes of shares of Class A Common
Stock present in person or represented by proxies and entitled to vote at the
Annual Meeting will be elected directors of the Company, and the six candidates
receiving the highest number of affirmative votes of shares of Class B Common
Stock entitled to vote at the Annual Meeting will be elected directors of the
Company. If cumulative voting is in effect, however, the proxy holders of each
class of Common Stock will have the right to cumulate and allocate votes among
those nominees standing for election with respect to such class of Common Stock
as such proxy holders elect.

Messrs. Gudmundson and Wexler will stand for election by the holders of
Class A Common Stock, and Messrs. Slutzky, Muench, Mickelson, Molasky and Wright
and Dr. Daly will stand for election by the holders of Class B Common Stock.

INFORMATION WITH RESPECT TO NOMINEES

The following table sets forth certain information concerning the nominees
for director of the Company as of July 31, 1997.

NOMINEES FOR ELECTION

DIRECTOR
NAME            AGE                           POSITION                           SINCE
- ------------------------  ---     ----------------------------------------------------    --------

Joel Slutzky              58      Chairman of the Board and Chief Executive Officer of      1969
the Company
Kevin C. Daly, Ph.D.      53      Vice President and Chief Technical Officer of the         1993
Company
President and Chief Executive Officer of ATL
Products, Inc.
Crandall Gudmundson       66      President of the Company                                  1979
Ralph R. Mickelson (1)    70      Partner, Rudnick & Wolfe                                  1975
Stanley Molasky (1)       70      Investor                                                  1969
Jerry F. Muench           62      Vice President, Marketing of the Company                  1969
Leo Wexler (1)            87      Investor                                                  1969
Paul E. Wright (1)        66      President of Wright Associates -- Engineering and         1993
Business Consultants

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

(1) Member of the Compensation and Stock Options Committee and the Audit
Committee

Joel Slutzky founded the Company in 1969 and has served as Chairman of the
Board of Directors since 1969 and the Chief Executive Officer since 1975. From
August 1993 until January 1994, Mr. Slutzky assumed the additional
responsibilities of Chief Financial Officer on an interim basis following the
retirement of the Company's former Chief Financial Officer. Mr. Slutzky also
served as the President of the Company from 1969 to 1975, and has served as a
Director of ATL Products, Inc. since its formation in 1993. Prior to founding
the Company, Mr. Slutzky was an engineering manager at Leach Corporation, now
part of the Lockheed Electronics Division of Lockheed Corporation.

Kevin C. Daly, Ph.D. has served as a director of the Company and President,
Chief Executive Officer and a director of the Company's subsidiary, ATL since
its formation in 1993. Dr. Daly has also served as Vice

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President and Chief Technical Officer of the Company since 1987. Prior to that,
Dr. Daly served as the Director of Space Systems of Odetics since 1985 when he
joined the Company. From March 1974 until June 1985, Dr. Daly served as the
Director of the Control and Dynamics Division of the Charles Stark Draper
Laboratory. During that period, Dr. Daly participated in the design and
development of guidance, navigation and control systems for several major space
programs, including the United States Space Shuttle program. Dr. Daly also
served as a manager of electronic systems for a major space program of the
United States Air Force from March 1970 to March 1974. Dr. Daly has informed the
Company that he intends to resign from the Board of Directors of the Company and
as Vice President and Chief Technology Officer during fiscal 1998 upon
consummation of the distribution by the Company of its shares of Class A Common
Stock of ATL to the stockholders of the Company.

Crandall Gudmundson is a co-founder of the Company and has served as its
President since 1975 and as a director since 1979. Mr. Gudmundson has also
served as a director of ATL since 1993. Prior to co-founding the Company, Mr.
Gudmundson was the lead project engineer for Leach Corporation. Mr. Gudmundson
has announced his intent to retire from Odetics during fiscal 1998.

Ralph R. Mickelson has been an outside member of the Board of Directors
since 1975 and is senior partner in the Chicago law firm of Rudnick & Wolfe.

Stanley Molasky has been an outside member of the Board of Directors since
1969. Mr. Molasky has been engaged primarily as a private investor since his
retirement in 1983 as President of Phil Nix Window & Screen Company, a
specialized construction company.

Jerry F. Muench is a founder of the Company and has served as a director
and its Secretary since 1969. Mr. Muench has also served as the Vice President,
Marketing of the Company since 1975. Prior to founding the Company, Mr. Muench
was the manager of applications engineering at Leach Corporation. Mr. Muench has
announced his intent to retire from Odetics during fiscal 1998.

Leo Wexler has been an outside member of the Board of Directors since 1969.
Mr. Wexler has been self-employed as a private investor since his retirement in
1978 as the Secretary and Treasurer of Silverman & Wexler, Inc., a food
processing corporation.

Paul E. Wright was appointed as a director of the Company in June 1993. Mr.
Wright is the President of Wright Associates -- Engineering and Business
Consultants, a company he formed in 1997. Mr. Wright served as the Chairman of
Chrysler Technologies Corp., the aerospace and defense electronics subsidiary of
Chrysler Corporation, a position he held from 1988 until his retirement in 1997.
From 1986 to 1988, Mr. Wright served as the President and Chief Operating
Officer of Fairchild Industries, Inc. Prior to joining Fairchild, he was
employed for 28 years by RCA Corporation, where he last served as the Senior
Vice President responsible for planning RCA's merger into General Electric
Corporation.

All directors currently are elected annually and hold office until the next
Annual Meeting of the Stockholders and until their successors are duly elected
and qualified. All of the nominees are currently directors of the Company and
have indicated that they are willing to continue to serve as directors. In the
event any nominee is unable or declines to serve as a director at the time of
the Annual Meeting, the proxies will be voted for an additional nominee who
shall be designated by the current Board of Directors. As of the date of this
Proxy Statement, the Board of Directors is not aware of any nominee who is
unable or will decline to serve as director.

COMPENSATION OF DIRECTORS

Directors who are not employees of the Company receive an annual fee of
$12,000 per year, paid quarterly, in addition to $1,500 for each Board meeting
attended in person and $250 for each telephone conference Board meeting. All
directors are reimbursed for their out-of-pocket expenses incurred in attending
meetings of the Board of Directors and its committees.

Nonemployee directors will also be eligible to receive periodic option
grants pursuant to the Automatic Option Grant Program under the proposed 1997
Stock Incentive Plan. Under this plan, as proposed, each

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nonemployee director will receive an option to purchase 5,000 shares of Class A
Common Stock in connection with his initial appointment to the Board of
Directors and an additional option to purchase 4,000 shares of Class A Common
Stock on the date of each Annual Meeting thereafter. Each such option will have
an exercise price equal to the fair market value of the Class A Common Stock on
the grant date and will have a maximum term of ten years, subject to earlier
termination following the optionee's cessation of service as a Board member. See
"1997 Stock Incentive Plan."

BOARD MEETINGS AND COMMITTEES

The Board of Directors met a total of three times during the fiscal year
ended March 31, 1997. Each of the directors nominated for reelection attended at
least 75% of the aggregate of (i) the total number of meetings of the Board of
Directors and (ii) the total number of meetings held by all committees of the
Board on which such director served.

The Company has two standing committees, the Compensation and Stock Option
Committee and the Audit Committee. The Company has no standing nominating
committee, and the Board as a whole acts upon matters which would otherwise be
the responsibility of a nominating committee.

The Audit Committee supervises and reviews the audit and audit review
programs and procedures of the Company's independent auditors, the Company's
internal accounting staff and the results of internal auditing procedures. The
Audit Committee also reviews the independence, professional services, fees,
plans and results of the independent auditors' engagement, and recommends their
retention or discharge to the Board. The members of the Company's Audit
Committee are Messrs. Mickelson, Molasky, Wexler and Wright. The Audit Committee
held one (1) meeting during the fiscal year ended March 31, 1997.

The Compensation and Stock Option Committee makes recommendations to the
Board concerning the compensation of all officers of the Company and administers
the Company's stock option plans. The members of the Company's Compensation and
Stock Option Committee are Messrs. Mickelson, Molasky, Wexler and Wright. The
Company's Compensation and Stock Option Committee held one (1) meeting during
the fiscal year ended March 31, 1997.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
PROXIES RETURNED TO THE COMPANY WILL BE VOTED "FOR" EACH NOMINEE UNLESS
OTHERWISE INSTRUCTED IN WRITING ON SUCH PROXY.

PROPOSAL NO. 2

APPROVAL OF THE COMPANY'S 1997 STOCK INCENTIVE PLAN

The Company's stockholders are being asked to approve the 1997 Stock
Incentive Plan (the "1997 Plan") under which 530,000 shares of the Company's
Class A Common Stock will be reserved for issuance. The Board of Directors has
authorized the implementation of the 1997 Plan as a comprehensive equity
incentive program to attract and retain the services of those individuals
essential to the Company's growth and financial success. The 1997 Plan will
become effective upon the approval of the stockholders at the 1997 Annual
Meeting (the "Effective Date").

EXISTING EQUITY INCENTIVE PLAN

The Company currently maintains the 1994 Long-Term Stock Incentive Plan
(the "1994 Plan"), under which 801,143 shares of Class A Common Stock have been
reserved for issuance. As of July 15, 1997, options covering 652,646 shares of
Class A Common Stock were outstanding. Such options vest in three equal
installments commencing one year following the grant date. Upon completion of
the proposed distribution of all of the Company's shares of Class A Common Stock
of ATL to the Company's stockholders (the "Distribution"), the vesting schedules
for all outstanding options under the 1994 Plan will be accelerated. The

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outstanding options to purchase 69,999 shares of Class A Common Stock held by
employees of ATL who will cease to be employees of the Company following the
Distribution will terminate if not exercised during the 90 day period following
the Distribution. THE COMPANY ANTICIPATES THAT THE HOLDERS OF A SIGNIFICANT
NUMBER OF THE REMAINING OUTSTANDING OPTIONS WILL ALSO EXERCISE THEIR OPTIONS IN
ORDER TO PARTICIPATE IN THE DISTRIBUTION. AS A RESULT, THE NUMBER OF OUTSTANDING
OPTIONS SUBJECT TO VESTING REQUIREMENTS MAY BE SIGNIFICANTLY REDUCED. BECAUSE
OPTIONS SUBJECT TO VESTING REQUIREMENTS PROVIDE A SUBSTANTIAL INCENTIVE FOR
EMPLOYEES TO REMAIN IN THE COMPANY'S EMPLOY, THE COMPANY BELIEVES A NEW OPTION
PLAN IS NECESSARY AT THIS TIME TO ACCOMMODATE THE EFFECT OF THE DISTRIBUTION.

DESCRIPTION OF THE 1997 PLAN

The following is a summary of the principal features of the 1997 Plan. The
summary does not, however, purport to be a complete description of all the
provisions of the 1997 Plan. Any stockholder of the Company who wishes to obtain
a copy of the actual plan document may do so upon written request to the
Secretary at the Company's principal executive offices in Anaheim, California.

STRUCTURE. The 1997 Plan will contain three separate equity incentive
programs: (i) a Discretionary Option Grant Program, (ii) a Stock Issuance
Program, and (iii) an Automatic Option Grant Program. The principal features of
each program are described below.

ADMINISTRATION. The Compensation and Stock Options Committee of the Board
will serve as the initial Plan Administrator with respect to the Discretionary
Option Grant and Stock Issuance Programs. However, one or more additional Board
committees may be appointed to administer those programs with respect to certain
designated classes of individuals in the Company's service. The term "Plan
Administrator" as used in this summary will mean the Compensation Committee and
any other appointed committee acting within the scope of its administrative
authority under the 1997 Plan. Administration of the Automatic Option Grant
Program will be self-executing in accordance with the express provisions of such
program.

SHARE RESERVE. The maximum number of shares reserved for issuance under the
1997 Plan will be limited to 530,000 shares of the Company's Class A Common
Stock. In no event may any one participant in the 1997 Plan be granted stock
options, separately exercisable stock appreciation rights and direct stock
issuances for more than 80,000 shares in the aggregate per calendar year.

Shares subject to any outstanding options under the 1997 Plan which expire
or otherwise terminate prior to exercise will be available for subsequent option
grants and direct issuances. Unvested shares issued under the 1997 Plan and
subsequently repurchased by the Company, at the exercise price or direct issue
price paid per share, pursuant to its repurchase rights under the 1997 Plan will
also be available for subsequent issuance. However, shares subject to any option
surrendered in accordance with the stock appreciation right provisions of the
1997 Plan will not be available for subsequent issuance.

ELIGIBILITY. Officers and employees, nonemployee Board members and
independent consultants and advisors in the service of the Company or its parent
and subsidiaries (whether now existing or subsequently established) will be
eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs. Only nonemployee members of the Board will be eligible to participate
in the Automatic Option Grant Program. As of July 15, 1997, ten executive
officers, 667 other employees and four nonemployee Board members were eligible
to participate in the 1997 Plan.

VALUATION. The fair market value per share of Class A Common Stock on any
relevant date under the 1997 Plan will be the closing sales price per share on
that date on the Nasdaq National Market. On July 15, 1997, the closing sales
price per share of Class A Common Stock was $15 1/8.

DISCRETIONARY OPTION GRANT PROGRAM

GRANTS. The Plan Administrator has complete discretion under the
Discretionary Option Grant Program to determine which eligible individuals are
to receive option grants, the time or times when such grants are to be made, the
number of shares subject to each such grant, the status of any granted option as
either an

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incentive stock option or a nonstatutory option under the federal tax laws, the
vesting schedule (if any) to be in effect for the option grant and the maximum
term for which any granted option is to remain outstanding.

PRICE AND EXERCISABILITY. Each granted option will have an exercise price
per share not less than one hundred percent (100%) of the fair market value per
share of Class A Common Stock on the option grant date, and no granted option
will have a term in excess of ten years. The option will generally become
exercisable in a series of installments over a specified period of service
measured from the grant date. The exercise price may be paid in cash or in
shares of the Class A Common Stock.

No optionee will have any stockholder rights with respect to the option
shares until such optionee has exercised the option and paid the exercise price
for the purchased shares. Options are generally not assignable or transferable
other than by will or the laws of inheritance and, during the optionee's
lifetime, the option may be exercised only by such optionee. The Plan
Administrator may, however, allow nonstatutory options to be transferred or
assigned during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more of such
family members, to the extent such transfer or assignment is in furtherance of
the optionee's estate plan.

TERMINATION OF SERVICE. Upon the optionee's cessation of employment or
service, the optionee will have a limited period of time in which to exercise
his or her outstanding options for any shares which have vested at that time.
However, at any time while the options remain outstanding, the Plan
Administrator will have complete discretion to extend the period during which
those options may be exercised following the optionee's cessation of service.
The Plan Administrator will also have complete discretion to accelerate the
exercisability or vesting of those options in whole or in part at any time.

STOCK APPRECIATION RIGHTS. The Plan Administrator is authorized to issue
two types of stock appreciation rights in connection with option grants made
under the Discretionary Option Grant Program:

Tandem stock appreciation rights provide the holders with the right to
surrender their options for an appreciation distribution from the Company
equal in amount to the excess of (a) the fair market value of the vested
shares of Class A Common Stock subject to the surrendered option less (b)
the aggregate exercise price payable for those shares. Such appreciation
distribution may, at the discretion of the Plan Administrator, be made in
cash or in shares of Class A Common Stock.

Limited stock appreciation rights may be provided to one or more
officers of the Company as part of their option grants. Any option with
such a limited stock appreciation right may be surrendered to the Company
upon the successful completion of a hostile tender offer for more than
fifty percent (50%) of the Company's outstanding voting stock. In return
for the surrendered option, the officer will be entitled to a cash
distribution from the Company in an amount per surrendered option share
equal to the excess of (a) the highest price per share of Class A Common
Stock paid in connection with the tender offer less (b) the exercise price
payable for such share.

CANCELLATION/REGRANT PROGRAM. The Plan Administrator will have the
authority to effect the cancellation of outstanding options under the
Discretionary Option Grant Program and to issue replacement options with an
exercise price equal to the fair market value per share of Class A Common Stock
at the time of the new grant.

STOCK ISSUANCE PROGRAM

Shares of Class A Common Stock may be issued under the Stock Issuance
Program as a bonus for services rendered to the Company or sold at a price per
share not less than one hundred percent (100%) of their fair market value,
payable in cash or through a promissory note payable to the Company. The shares
issued as a bonus for past services will be fully vested upon issuance. All
other shares issued under the program will be subject to a vesting schedule tied
to the performance of service or the attainment of performance goals. The Plan
Administrator will, however, have the discretionary authority at any time to
accelerate the vesting of any and all unvested shares outstanding under the 1997
Plan.

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AUTOMATIC OPTION GRANT PROGRAM

Under the Automatic Option Grant Program, nonemployee Board members will
receive option grants at specified intervals over their period of Board service.
All grants under the Automatic Option Grant Program will be made in strict
compliance with the express provisions of such program, and stockholder approval
of this Proposal will also constitute preapproval of each option granted
pursuant to the provisions of the Automatic Option Grant Program summarized
below and the subsequent exercise of that option in accordance with such
provisions.

GRANTS. Each individual who first becomes a nonemployee Board member on or
after the Effective Date, whether through election by the stockholders or
appointment by the Board, will automatically be granted, at the time of such
initial election or appointment, a nonstatutory option to purchase 5,000 shares
of Class A Common Stock, provided such individual has not previously been in the
Company's employ.

On the date of each Annual Meeting, beginning with the 1998 Annual Meeting,
each individual who is to continue to serve as a nonemployee Board member,
whether or not such individual is standing for re-election at that particular
Annual Meeting, will automatically be granted a nonstatutory option to purchase
4,000 shares of Class A Common Stock, provided such individual has served as a
nonemployee Board member for at least six months. There will be no limit on the
number of such 4,000 share option grants any one nonemployee Board member may
receive over his or her period of Board service, and nonemployee Board members
who have previously been employed by the Company will be eligible to receive one
or more of those annual grants.

EXERCISE/VESTING. Each automatic option grant will have an exercise price
per share equal to 100% of the fair market value per share of Class A Common
Stock on the grant date and a maximum term of ten years measured from such date.
Each option will be immediately exercisable for all of the option shares. Any
shares purchased under the option will, however, be subject to repurchase by the
Company at the exercise price paid per share upon the optionee's cessation of
Board service prior to vesting in those shares. The shares of Class A Common
Stock subject to each initial 5,000 share will be fully vested, and the shares
subject to each annual 4,000 share grant will vest in a series of four
successive equal annual installments over the optionee's period of continued
Board service measured from the automatic grant date.

Each automatic option will remain exercisable for a twelve month period
following the optionee's cessation of service as a Board member. In no event,
however, may the option be exercised after the expiration date of the option
term. During the applicable post-service exercise period, the option may not be
exercised for more than the number of option shares (if any) in which the Board
member is vested at the time of his or her cessation of Board service.

SPECIAL VESTING. The shares subject to each automatic option grant will
immediately vest upon (i) the optionee's death or permanent disability while a
Board member, (ii) an acquisition of the Company by merger or asset sale, (iii)
the successful completion of a tender offer for more than 50% of the Company's
outstanding voting stock, or (iv) a change in the majority of the Board effected
through one or more contested elections for Board membership.

STOCK APPRECIATION RIGHTS. Upon the successful completion of a hostile
tender offer for more than 50% of the Company's outstanding voting stock, each
outstanding automatic option grant may be surrendered to the Company for a cash
distribution per surrendered option share in an amount equal to the excess of
(a) the highest price per share of Class A Common Stock paid in connection with
such tender offer less (b) the exercise price payable for such share.
Stockholder approval of this Proposal will constitute preapproval of each option
granted with such a surrender right and the subsequent surrender of that option
in accordance with the foregoing provisions. No additional approval of the 1997
Plan Administrator or the Board will be required at the time of the actual
option surrender and cash distribution.

The remaining terms and conditions of each automatic option grant will, in
general, conform to the terms summarized above for option grants made under the
Discretionary Option Grant Program and will be incorporated into the option
agreement evidencing the automatic grant.

9

11

GENERAL PROVISIONS

ACCELERATION. In the event that the Company is acquired by merger or asset
sale, each outstanding option under the Discretionary Option Grant Program which
is not to be assumed by the successor corporation will automatically accelerate
in full, and all unvested shares under the Discretionary Option Grant and Stock
Issuance Programs will immediately vest, except to the extent the Company's
repurchase rights with respect to those shares are to be assigned to the
successor corporation. The Plan Administrator will have complete discretion to
grant one or more options under the Discretionary Option Grant Program which
will become fully exercisable for all the option shares in the event those
options are assumed in the acquisition and the optionee's service with the
Company or the acquiring entity terminates within a designated period following
such acquisition. The Plan Administrator also has the authority to grant options
which will immediately vest upon an acquisition of the Company, whether or not
those options are assumed by the successor corporation. The vesting of
outstanding shares under the Stock Issuance Program may be accelerated upon
similar terms and conditions.

The Plan Administrator is also authorized to provide for the full and
immediate vesting of all outstanding options and unvested shares under the
Discretionary Option Grant and Stock Issuance Programs in connection with a
change in control of the Company (whether by successful tender offer for more
than fifty percent (50%) of the outstanding voting stock or a change in the
majority of the Board by reason of one or more contested elections for Board
membership), with such vesting to occur either at the time of such change in
control or upon the subsequent termination of the individual's service within a
designated period following such change in control.

The acceleration of vesting in the event of a change in the ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.

FINANCIAL ASSISTANCE. The Plan Administrator may institute a loan program
to assist one or more participants in financing the exercise of outstanding
options or the purchase of shares under the 1997 Plan. The terms of any such
assistance will be established in the sole discretion of the Plan Administrator.
However, all loans made under the 1997 Plan will be full-recourse and interest
bearing, and the maximum credit available may not exceed the purchase price
payable for the acquired shares plus any withholding tax liability incurred in
connection with such acquisition.

CHANGES IN CAPITALIZATION. In the event any change is made to the
outstanding shares of Class A Common Stock by reason of any recapitalization,
stock dividend, stock split, combination of shares, exchange of shares or other
change in corporate structure effected without the Company's receipt of
consideration, appropriate adjustments will automatically be made to (i) the
maximum number and/or class of securities issuable under the Plan, (ii) the
number and/or class of securities for which any one person may be granted stock
options, separately exercisable stock appreciation rights and direct stock
issuances per calendar year, (iii) the number and/or class of securities for
which grants are subsequently to be made under the Automatic Option Grant
Program to new and continuing Board members and (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option. The adjustments to such outstanding options will preclude the dilution
or enlargement of the rights and benefits available under those options.

SPECIAL TAX ELECTION. The Plan Administrator may provide one or more
holders of options or unvested shares with the right to have the Company
withhold a portion of the shares otherwise issuable to such individuals in
satisfaction of the tax liability incurred by such individuals in connection
with the exercise of those options or the vesting of those shares.
Alternatively, the Plan Administrator may allow such individuals to deliver
previously acquired shares of Class A Common Stock in payment of such tax
liability.

AMENDMENT AND TERMINATION.  The Board may amend or modify the 1997 Plan in
any or all respects whatsoever subject to any required stockholder approval. The
Board may terminate the 1997 Plan at any time, and the 1997 Plan will in all
events terminate upon the expiration of the ten (10) year term measured from the
Effective Date.

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FEDERAL INCOME TAX CONSEQUENCES

OPTION GRANTS. Options granted under the 1997 Plan may be either incentive
stock options which satisfy the requirements of Section 422 of the Internal
Revenue Code (the "Code") or nonstatutory options which are not intended to meet
such requirements. The federal income tax treatment for the two types of options
differs as follows:

Incentive Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized
at the time the option is exercised. The optionee will, however, recognize
taxable income in the year in which the purchased shares are sold or
otherwise made the subject of a taxable disposition. For federal tax
purposes, dispositions are divided into two categories: (i) qualifying and
(ii) disqualifying. A qualifying disposition occurs if the sale or other
disposition is made after the optionee has held the shares for more than
two years after the option grant date and more than one year after the
exercise date. If either of these two holding periods is not satisfied,
then a disqualifying disposition will result. If the optionee makes a
disqualifying disposition of the purchased shares, then the Company will be
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal to the excess of (i) the fair market value of
such shares on the option exercise date over (ii) the exercise price paid
for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased
shares.

Nonstatutory Options. No taxable income is recognized by an optionee
upon the grant of a nonstatutory option. The optionee will in general
recognize ordinary income in the year in which the option is exercised
equal to the excess of the fair market value of the purchased shares on the
exercise date over the exercise price paid for the shares, and the optionee
will be required to satisfy the tax withholding requirements applicable to
such income. If the shares acquired upon exercise of the nonstatutory
option are unvested and subject to repurchase by the Company in the event
of the optionee's termination of service prior to vesting in those shares,
then the optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income, as and when the
Company's repurchase right lapses, an amount equal to the excess of (i) the
fair market value of the shares on the date the repurchase right lapses
over (ii) the exercise price paid for the shares. The optionee may,
however, elect under Section 83(b) of the Internal Revenue Code to include
as ordinary income in the year of exercise of the option an amount equal to
the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the
Section 83(b) election is made, the optionee will not recognize any
additional income as and when the repurchase right lapses. The Company will
be entitled to an income tax deduction equal to the amount of ordinary
income recognized by the optionee with respect to the exercised
nonstatutory option. The deduction will generally be allowed for the
taxable year of the Company in which such ordinary income is recognized by
the optionee.

STOCK APPRECIATION RIGHTS. An optionee who is granted a stock appreciation
right will recognize ordinary income in the year of exercise equal to the amount
of the appreciation distribution. The Company will be entitled to an income tax
deduction equal to such distribution for the taxable year in which the ordinary
income is recognized by the optionee.

DIRECT STOCK ISSUANCES. The tax principles applicable to direct stock
issuances under the 1997 Plan will be substantially the same as those summarized
above for the exercise of nonstatutory option grants.

DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The Company anticipates that any
compensation deemed paid by it in connection with disqualifying dispositions of
incentive stock option shares or exercises of nonstatutory options will qualify
as performance based compensation for purposes of Code Section 162(m) of the
Internal Revenue Code and will not have to be taken into account for purposes of
the $1 million limitation per covered individual on the deductibility of the
compensation paid to certain executive officers of the Company. Accordingly, all
compensation deemed paid with respect to those options will remain deductible by
the Company without limitation under Code Section 162(m).

11

13

ACCOUNTING TREATMENT

Option grants or stock issuances with exercise or issue prices at 100% of
fair market value will not result in any direct charge to the Company's
earnings. However, the fair value of those options is required to be disclosed
in the notes to the Company's financial statements, and the Company must also
disclose, in pro forma statements to the Company's financial statements, the
impact those options would have upon the Company's reported earnings were the
value of those options at the time of grant treated as compensation expense. In
addition, the number of outstanding options may be a factor in determining the
Company's earnings per share on a fully diluted basis.

NEW PLAN BENEFITS

As of July 31, 1997, no option grants or direct stock issuances had been
made under the 1997 Plan.

STOCKHOLDER APPROVAL

The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented by proxies and entitled to vote at the 1997
Annual Meeting is required for approval of the 1997 Plan. If such approval is
obtained, the 1997 Plan will become effective on the date of the 1997 Annual
Meeting. In the absence of such approval, the 1997 Plan will not be implemented.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE 1997 STOCK INCENTIVE PLAN.

PROPOSAL NO. 3

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The accounting firm of Ernst & Young LLP served as the Company's
independent auditors for the fiscal year ended March 31, 1997. The Board of
Directors has selected that firm to continue in this capacity for the current
fiscal year. The Company is asking the stockholders to ratify the selection by
the Board of Directors of Ernst & Young LLP as the Company's independent
auditors to audit the financial statements of the Company for the fiscal year
ending March 31, 1998 and to perform other appropriate services. Stockholder
ratification of the selection of Ernst & Young LLP as the Company's independent
auditor is not required by the Company's Bylaws or otherwise. In the event that
the stockholders fail to ratify the appointment, the Board of Directors will
reconsider its selection. Even if the selection is ratified, the Board of
Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if the Board of
Directors feels that such a change would be in the best interest of the Company
and its stockholders.

A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting to respond to stockholders' questions, and that representative
will be given an opportunity to make a brief presentation to the stockholders if
he or she so desires.

STOCKHOLDER APPROVAL

The affirmative vote of a majority of the outstanding shares of the Company
present or represented and entitled to vote at the Annual Meeting will be
required for ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1998.

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14

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION AND APPROVAL OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 1998.

GENERAL

PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP OF MANAGEMENT

The following table sets forth, as of July 15, 1997, the number and
percentage ownership of the Company's Class A Common Stock and Class B Common
Stock by (i) all persons known to the Company to beneficially own more than 5%
of either class of outstanding Common Stock (based upon reports filed by such
persons with the Commission), (ii) each of the named executive officers in the
Summary Compensation Table which appears elsewhere herein, (iii) each director
of the Company and director nominee named under "Election of Directors," and
(iv) all executive officers and directors of the Company as a group. To the
Company's knowledge, except as otherwise indicated, each of the persons named in
this table has sole voting and investment power with respect to the Common Stock
shown as beneficially owned, subject to community property and similar laws,
where applicable.

CLASS A COMMON STOCK                 CLASS B COMMON STOCK
--------------------------------     --------------------------------
AMOUNT AND NATURE                    AMOUNT AND NATURE
NAME AND ADDRESS OF             OF BENEFICIAL       PERCENT OF       OF BENEFICIAL       PERCENT OF
BENEFICIAL OWNER(1)            OWNERSHIP(2)(3)       CLASS(2)       OWNERSHIP(2)(3)       CLASS(2)
- ------------------------------------  -----------------     ----------     -----------------     ----------

Gerald A. Weber.....................       231,858(4)           4.4%            195,524(4)          18.4%
Joel Slutzky........................       140,416(5)           2.6             258,559(6)          24.3
Crandall Gudmundson.................       104,080(7)           1.9              69,743
Jerry F. Muench.....................       102,987(8)           1.9              61,537(9)           5.8
Kevin C. Daly, Ph.D.................        66,138(10)          1.2                  --                *
Stanley Molasky.....................        56,002(11)          1.1              48,268
Ralph R. Mickelson..................        27,325(12)            *              20,445(13)
Leo Wexler..........................        18,325(14)            *              24,728(15)          2.3
Paul E. Wright......................        19,125(16)            *                  --                *
David E. Lewis......................        15,195(17)            *                  --                *
All executive officers and directors
as a group (14 persons)...........       644,910(18)         11.4%            483,818             45.5%

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

*  Less than 1%

(1) The address for Gerald A. Weber is 222 North LaSalle, Suite 899, Chicago,
Illinois 60601. The address of Messrs. Slutzky, Gudmundson and Muench is
1515 South Manchester Avenue, Anaheim, California 92802.

(2) Based on 5,320,397 shares of Class A Common Stock and 1,064,241 shares of
Class B Common Stock outstanding as of July 15, 1997. Shares of each class
of Common Stock subject to options which are exercisable within 60 days of
July 15, 1997 are deemed to be beneficially owned by the person holding
such options for the purpose of computing the percentage of ownership of
such person but are not treated as outstanding for the purpose of computing
the percentage of any other person. Other than as described in the
preceding sentence, shares issuable upon exercise of outstanding options
are not deemed to be outstanding for purposes of this calculation.

(3) In addition to shares held in the individual's name, this column also
includes shares held for the benefit of the named person in the Company's
401(k) Plan and Associate Stock Ownership Plan.

(4) All of such shares are owned beneficially of record by various trusts with
respect to which Mr. Weber serves as trustee or co-trustee. Mr. Weber
shares investment and voting power as to 69,718 shares of Class A Common
Stock and 120,977 shares of Class B Common Stock. Mr. Weber exercises sole

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15

investment and voting power over the remaining 162,140 shares of Class A
Common Stock and 74,547 shares of Class B Common Stock. The shares shown
include an aggregate of 203,979 shares of Class A Common Stock and 168,546
shares of Class B Common Stock, respectively, held in trust for the benefit
of the children and relatives of Mr. Slutzky, as to which shares Mr.
Slutzky has no investment or voting power and disclaims any beneficial
ownership. The shares shown also include 27,879 shares of Class A Common
Stock and 26,978 shares of Class B Common Stock, respectively, held in
trust for the benefit of the children of Mr. Wexler, as to which shares Mr.
Wexler has no investment or voting power and disclaims any beneficial
ownership.

(5) Includes 90,267 shares issuable upon exercise of options which are
exercisable within 60 days. Excludes 203,979 shares held in trust for the
benefit of the children and relatives of Mr. Slutzky as to which Mr.
Slutzky has no investment or voting power and disclaims any beneficial
ownership. See note 4.

(6) Excludes 168,546 shares held in trust for the benefit of the children and
relatives of Mr. Slutzky as to which Mr. Slutzky has no investment or
voting power and disclaims any beneficial ownership. See note 4.

(7) Includes 4,500 shares held by Mr. Gudmundson's IRA and 32,000 shares
issuable upon exercise of options which are exercisable within 60 days.

(8) Includes 31,114 shares held by Mr. Muench's spouse. Also includes 30,067
shares issuable upon exercise of options which are exercisable within 60
days.

(9) Includes 23,235 shares held by Mr. Muench's spouse.

(10) Includes 100 shares held by Dr. Daly's spouse and 31,400 shares issuable
upon exercise of options which are exercisable within 60 days.

(11) Includes 12,325 shares issuable upon exercise of options which are
exercisable within 60 days.

(12) Includes 7,000 shares held by Mr. Mickelson's IRA and 12,325 shares
issuable upon exercise of options which are exercisable within 60 days.

(13) Includes 18,445 shares held in trust for the benefit of Mr. Mickelson's
wife, as to which Mr. Mickelson shares investment and voting power with his
wife.

(14) Includes 10,425 shares issuable upon exercise of options which are
exercisable within 60 days. Excludes 27,879 shares held in trust for the
benefit of relatives of Mr. Wexler, as to which Mr. Wexler has no
investment or voting power and disclaims any beneficial ownership. See note
4.

(15) Includes 20,940 shares held in trust for the benefit of Mr. Wexler and his
relatives, as to which Mr. Wexler shares investment and voting power with
his son. Excludes 26,978 shares held in trust for the benefit of relatives
of Mr. Wexler, as to which Mr. Wexler has no investment or voting power and
disclaims any beneficial ownership. See note 4.

(16) Includes 11,125 shares issuable upon exercise of options which are
exercisable within 60 days.

(17) Includes 9,416 shares issuable upon exercise of options which are
exercisable within 60 days.

(18) Includes 318,879 shares of Class A Common Stock issuable upon exercise of
options held by all of the executive officers and directors as a group
which are exercisable within 60 days.

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16

EXECUTIVE COMPENSATION AND OTHER INFORMATION

EXECUTIVE OFFICERS

The following table sets forth certain information regarding all executive
officers and directors of the Company.

NAME              AGE                     CAPACITIES IN WHICH SERVED
- ----------------------------  ----      ------------------------------------------------------

Joel Slutzky................   58       Chairman of the Board and Chief Executive Officer of
the Company
Kevin C. Daly, Ph.D.........   53       Director, Vice President and Chief Technology Officer
of the Company
Chairman of the Board, Chief Executive Officer and
President of ATL
Crandall Gudmundson.........   66       President and Director of the Company
Frank Borst.................   38       Vice President of the Company
President of Gyyr, Inc.
Timothy Crabtree............   42       Vice President of the Company
General Manager of the Broadcast Division
Jack Johnson................   50       Vice President of the Company
General Manager of the Intelligent Transportation
Systems Division
David E. Lewis..............   63       Vice President of the Company
Chairman of the Board of Gyyr, Inc.
Jerry F. Muench.............   62       Vice President, Marketing, Secretary and Director of
the Company
Gregory A. Miner............   42       Vice President and Chief Financial Officer of the
Company
Chief Financial Officer of ATL
Gary Smith..................   40       Vice President and Controller of the Company

The following is a brief description of the capacities in which each of the
executive officers has served during the past five years. The biographies of
Messrs. Slutzky, Gudmundson and Muench and Dr. Daly appear earlier in this Proxy
Statement. See "Election of Directors."

Timothy Crabtree has served as the General Manager of the Broadcast
Division and a Vice President of the Company since 1994. Between 1988 and 1994,
Mr. Crabtree served as the Director of Engineering for the Broadcast Division.
Prior to that, Mr. Crabtree served as a Senior Project Engineer since joining
the Company in 1983.

Frank Borst has served as the Vice President of the Company since 1994 and
President of the Company's wholly-owned subsidiary, Gyyr, Inc. since its
formation in 1997. Prior to that, Mr. Borst served as the Director of Global
Business Development from 1992 to 1997. Mr. Borst has also served as the
Managing Director for Odetics Europe Limited and Odetics Asia Pacific Pte.,
Ltd., subsidiaries of the Company.

Jack Johnson has served as the Vice President of the Company since 1986 and
has served as the General Manager of the Intelligent Transportation Division
since 1996. From 1990 to 1996, Mr. Johnson served as the General Manager of
Customer Service. Mr. Johnson served in various other capacities with the
Company since joining the Company in 1974, including the General Manager of the
Omutec Division, Contracts Manager and the Controller of the Company.

David E. Lewis has served as the Vice President of the Company since 1983
and as the General Manager of the Gyyr Division since 1979. Upon the formation
of the Company's wholly-owned subsidiary, Gyyr, Inc. in 1997, Mr. Lewis became
the Chairman of the Board of Gyyr, Inc. Between 1990 and 1994, Mr. Lewis also
served as the General Manager of the Broadcast Division.

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17

Gregory A. Miner has served as Vice President and Chief Financial Officer
of the Company and its subsidiary, ATL since joining the Company in January
1994. From December 1984 until joining the Company, Mr. Miner served as Vice
President and Chief Financial Officer and a member of the Board of Directors of
Laser Precision Corporation, a manufacturer of telecommunications test
equipment.

Gary Smith has served as Controller of the Company since 1992 and was
appointed Vice President in August 1994. Prior to that, Mr. Smith served as
Assistant Controller of the Company between 1990 and 1992, and Senior Financial
Analyst from 1986 until 1990.

Officers serve at the discretion of the Board of Directors.

EXECUTIVE COMPENSATION

The following table sets forth the compensation earned by the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company whose total cash salary and bonus during the
fiscal year ended March 31, 1997 exceeded $100,000 (the "Named Executive
Officers") for each of the three fiscal years ended March 31, 1997, 1996 and
1995. No executive officer who would have otherwise been includable in such
table on the basis of salary and bonus earned for fiscal 1997 resigned or
terminated employment during that year.

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION
-------------------------
AWARDS
-------------------------
ANNUAL COMPENSATION                    SECURITIES     ALL OTHER
FISCAL ------------------------    RESTRICTED   UNDERLYING    COMPENSATION
NAME AND PRINCIPAL POSITIONS     YEAR   SALARY ($)(1)  BONUS ($)    STOCK ($)    OPTIONS (#)      ($)(2)
- ---------------------------------  -----  -------------  ---------   ------------  -----------   ------------

Joel Slutzky.....................   1997     326,362      $84,000           --(3)     55,000        $4,817
Chairman of the Board and         1996     279,214       68,800       $2,567        48,000(4)      3,229
Chief Executive Officer           1995     284,441           --           --            --         2,994
Crandall Gudmundson..............   1997     190,860       40,000           --(3)         --         4,141
President                         1996     185,653       35,900        2,404        22,000(4)      3,158
1995     179,464           --           --            --         2,606
Kevin C. Daly, Ph.D..............   1997     201,810       60,000           --(3)         --         4,106
Vice President and Chief          1996     164,104       50,000        2,465        22,000(4)      3,258
Technology Officer;               1995     174,521           --           --            --         2,951
Chief Executive Officer,
Chairman and President of
ATL Products, Inc.
David E. Lewis...................   1997     183,836       20,000           --(3)         --         4,557
Vice President;                   1996     171,810       40,000        2,567        20,000(4)      3,959
Chairman of the Board of          1995     165,772           --           --            --         2,044
Gyyr, Inc.
Jerry F. Muench..................   1997     186,735       22,400           --(3)         --         3,655
Vice President, Marketing         1996     178,813       29,300        2,175        20,667(4)      3,222
1995     142,998           --           --            --         3,030

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

(1) Represents all amounts earned from the Company and its subsidiaries during
the fiscal years shown, including amounts deferred under the Company's
Executive Deferral Plan and the Company's 401(k) Plan.

(2) Represents the Company's matching contribution to the respective accounts of
the named officers under the Company's 401(k) Plan.

(3) The Company made a contribution of Class A Common Stock valued at
approximately $513,000 to the Company's Associate Stock Ownership Plan (the
"ASOP") during the fiscal year ended March 31, 1997. The amount of the
contribution made to the ASOP that is allocable to the named officer has not
yet been determined.

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18

(4) During fiscal 1996, the Company offered all holders of options that were
granted in fiscal 1994 the opportunity to have the option exercise price of
outstanding fiscal 1994 options reduced to the then current 1996 trading
price. In connection with any such option repricing, one-third of any
repriced options were required to be cancelled. According, the number of
options indicated for Messrs. Slutzky, Gudmundson, Lewis and Muench and Dr.
Daly include options which were repriced for the purchase of 22,000, 10,000,
10,000, 8,667 and 10,000 shares, respectively, of the Company's Class A
Common Stock. The option information contained in this table does not take
into account any options that may have been cancelled in connection with any
option repricing.

OPTION GRANTS IN THE FISCAL YEAR ENDED MARCH 31, 1997

The following table sets forth information with respect to grants of
options to purchase Class A Common Stock during fiscal 1997 to each of the Named
Executive Officers. No stock appreciation rights were granted to any of the
Named Executive Officers.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS                      VALUE AT ASSUMED
------------------------------------------------------    ANNUAL RATES OF
NUMBER OF     PERCENT OF                                       STOCK
SECURITIES   TOTAL OPTIONS                              PRICE APPRECIATION
UNDERLYING    GRANTED TO                                FOR OPTION TERM(3)
OPTIONS     EMPLOYEES IN     EXERCISE OR    EXPIRATION -------------------
NAME              GRANTED(1)    FISCAL 1997    BASE PRICE(2)     DATE        5%        10%
- ------------------------------ ----------   -------------   -------------   ---------  --------   --------

Joel Slutzky..................   55,000          30.1%          $9.90        08/14/06  $261,802   $739,402
Crandall Gudmundson...........       --            --              --              --        --         --
Kevin C. Daly, Ph.D(4)........       --            --              --              --        --         --
David E. Lewis................       --            --              --              --        --         --
Jerry F. Muench...............       --            --              --              --        --         --

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

(1) All of the options were granted pursuant to the Company's 1994 Plan on
August 14, 1996 and entitle the holder to purchase shares of Class A Common
Stock. Such options have a maximum term of ten years, subject to earlier
termination in the event of the optionee's termination of employment with
the Company or its subsidiaries. The options vest in three equal annual
installments commencing August 14, 1997, subject to acceleration of vesting
(at the discretion of the Committee of the Board of Directors that
administers the 1994 Plan) in the event of the merger, consolidation or
reorganization of the Company. It is anticipated that all of the options
under the 1994 Plan will be accelerated in connection with the Company's
planned distribution of all of its shares of Class A Common Stock of ATL
Products, Inc. to the Company's stockholders on or prior to December 31,
1997. Such distribution is subject to the fulfillment of certain conditions,
including the receipt from the Internal Revenue Service of a letter ruling
confirming the tax-free nature of the distribution.

(2) The exercise price per share of the options granted represented 110% of the
closing sales price of the underlying shares of Class A Common Stock on the
date the options were granted.

(3) The 5% and 10% assumed rates of appreciation are prescribed by the rules and
regulations of the Securities and Exchange Commission and do not represent
management's estimate or projection of future trading prices of the Class A
Common Stock. Unless the market price of the Common Stock does in fact
appreciate over the option term, no value will be realized from the option
grants.

(4) Dr. Daly was granted an option to purchase 250,000 shares of Class B Common
Stock of ATL. Such options expire in December 2006 and become exercisable as
follows: 25% of such options vest in December 1997 and the remaining options
vest in 24 equal monthly installments thereafter.

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OPTION EXERCISES IN THE FISCAL YEAR ENDED MARCH 31, 1997

The table below sets forth certain information with respect to the
Company's Named Executive Officers concerning their exercise of options to
purchase Class A Common Stock during fiscal 1997 and the unexercised options
they held as of the end of fiscal 1997. None of the Named Executive Officers
held or exercised any SARs during fiscal 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES

NUMBER OF SECURITIES
UNDERLYING               VALUE OF UNEXERCISED
NUMBER OF                   UNEXERCISED OPTIONS          IN-THE-MONEY OPTIONS
SHARES       VALUE        AT MARCH 31, 1997(#)         AT MARCH 31, 1997(#)(2)
ACQUIRED ON   REALIZED   ---------------------------   ---------------------------
NAME               EXERCISE(#)    ($)(1)    EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
- -----------------------------  -----------   --------   -----------   -------------   -----------   -------------

Joel Slutzky.................      5,100     $ 70,125      63,267         72,333        496,583        323,842
Crandall Gudmundson..........      3,000       41,250      28,000          8,000        226,813         71,000
Kevin C. Daly, Ph.D. ........      2,900       39,875      27,400          8,000        222,425         71,000
David E. Lewis...............     23,550      320,100       6,083          6,667         49,174         59,170
Jerry F. Muench..............      2,900       22,838      26,067          8,000        210,595         71,000

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

(1) Calculated based on the closing sale price per share of the Class A Common
Stock on the date of exercise less the applicable exercise price.

(2) Calculated based on the closing sale price per share of the Class A Common
Stock at March 31, 1997 ($13 1/8) less the applicable exercise price.

TEN YEAR INFORMATION REGARDING REPRICING, CANCELLATION AND REGRANT OF OPTIONS

In May 1995, the Company repriced certain outstanding stock options which
were originally granted in January 1994. In connection with the repricing, the
Company made an offer to the holders of the options, including the Named
Executive Officers, to reduce by one-third the number of shares covered by these
options in consideration of a reduction in the exercise price of the options
from their original exercise price to the market price of the Company's Class A
Common Stock at the time of the offer. The following table sets forth certain
information with respect to the repricing of options held by the Named Executive
Officers.

TEN YEAR OPTION/SAR REPRICINGS

LENGTH OF
ORIGINAL NUMBER       AMENDED                                                       ORIGINAL
OF SECURITIES         NUMBER        MARKET PRICE                                 OPTION TERM
UNDERLYING       OF SECURITIES       OF STOCK     EXERCISE PRICE     NEW        REMAINING AT
OPTIONS          UNDERLYING        AT TIME         AT TIME       EXERCISE       DATE OF
NAME             DATE        REPRICED       OPTIONS REPRICED   OF REPRICING    OF REPRICING     PRICE        REPRICING
- ----------------------  --------   ---------------   ----------------   ------------   --------------   --------     ------------

Joel Slutzky..........  05/23/95        33,000            22,000           $ 4.25          $ 9.90       $4.675 (1)     8.67 Years
Crandall Gudmundson...  05/23/95        15,000            10,000           $ 4.25          $ 9.00       $4.25          8.67 Years
Kevin C. Daly,
Ph.D. ..............  05/23/95        15,000            10,000           $ 4.25          $ 9.00       $4.25          8.67 Years
David E. Lewis........  05/23/95        15,000            10,000           $ 4.25          $ 9.00       $4.25          8.67 Years
Jerry F. Muench.......  05/23/95        13,000             8,667           $ 4.25          $ 9.00       $4.25          8.67 Years

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

(1) Represents 110% of the closing sales price of the Class A Common Stock on
the date of the repricing.

ASSOCIATE BENEFIT PLANS

The Company maintains a Profit Sharing Plan and Trust (the "Profit Sharing
Plan") which qualifies under Section 401 of the Code. The Profit Sharing Plan
provides that associates who meet a six month service requirement automatically
become participants. Each fiscal year, the Company, at its discretion, makes a
contribution to the Profit Sharing Plan. The Company may contribute Class A
Common Stock or cash to the

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Profit Sharing Plan. These contributions are allocated to separate accounts of
the participants in proportion to their relative compensation, and are held in
trust and invested. Participant accounts are credited with investment gains and
losses. Vesting depends on the participant's years of service, with
contributions being fully vested after the participant has five years of
service. When an associate leaves the Company, his account under the Profit
Sharing Plan, if vested, becomes distributable in a lump sum or over a period of
time at the discretion of the Profit Sharing Plan Administrator. No
contributions were made to the Profit Sharing Plan for fiscal years 1997, 1996
and 1995.

The Profit Sharing Plan also includes the Odetics, Inc. 401(k) Plan (the
"401(k) Plan"). Under the 401(k) Plan, associates with at least six months of
service with the Company or any subsidiary may elect to defer up to 15% of their
annual compensation, not to exceed the limits set by the Code. The maximum
deferral for calendar year 1997 is $9,500.

The Company maintains an Associate Stock Ownership Plan (the "ASOP"), which
qualifies under Section 401 of the Code. The ASOP provides that associates who
meet a six month service requirement automatically become participants. Each
fiscal year, the Company, at its discretion, makes a contribution to the ASOP.
The Company may contribute Class A Common Stock, or the cash to buy Class A
Common Stock. These contributions are allocated to separate accounts of the
participants in proportion to their relative compensation, and are held in
trust. Vesting depends on the participant's years of service, with contributions
being fully vested after the participant has five years of service. When an
associate leaves the Company, his account under the ASOP, if vested, is
distributed in shares of Class A Common Stock. The Company contributed Class A
Common Stock valued at approximately $513,000 as of the date of the contribution
to the ASOP for fiscal year 1997.

The Company maintains an Executive Deferral Plan (the "Deferral Plan")
which is intended to provide deferred compensation benefits to designated
executives of the Company who contribute to the Company's growth and success.
Eligible executives may elect to defer up to 75%, but not less than $5,000, of
their annual compensation. Participation in the Deferral Plan is voluntary and
may be discontinued at any time. Payment of benefits commences upon the
retirement, death, disability or termination of employment of a participating
executive.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL
ARRANGEMENTS

The Company does not currently have any employment contracts in effect with
any of its executive officers. The Company provides incentives such as salary,
benefits and option grants (which are typically subject to a four year vesting
schedule) to attract and retain executive officers and other key associates. The
Compensation Committee, as Plan Administrator of the 1997 Plan, will have the
authority to provide for the accelerated vesting of the shares of Common Stock
subject to any outstanding options held by such individual, in connection with
the termination of the individual's employment following an acquisition in which
these options are assumed or the repurchase rights with respect to the unvested
shares are assigned or certain hostile changes in control of the Company. Other
than such accelerated vesting, there is no agreement or policy which would
entitle any executive officers to severance payments or any other compensation
as a result of such officer's termination.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware General Corporation Law, the Company can
indemnify its directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). The Company's Bylaws provide that the Company will
indemnify its directors and officers to the fullest extent permitted by law and
require the Company to advance litigation expenses upon receipt by the Company
of an undertaking by the director or officer to repay such advances if it is
ultimately determined that the director or officer is not entitled to
indemnification. The Bylaws further provide that rights conferred under such
Bylaws do not exclude any other right such persons may have or acquire under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

The Company's Certificate of Incorporation provides that, pursuant to
Delaware Law, its directors shall not be liable for monetary damages for breach
of the directors' fiduciary duty of care to the Company and its

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stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware Law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company or its
stockholders, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.

The Company has entered into agreements to indemnify its directors and
certain of its officers in addition to the indemnification provided for in the
Certificate of Incorporation and Bylaws. [confirm] These agreements, among other
things, indemnify the Company's directors and certain of its officers for
certain expenses (including attorneys' fees), judgments, fines and settlement
amounts incurred by such person in any action or proceeding, including any
action by or in the right of the Company, on account of services as a director
or officer of the Company, or as a director or officer of any other company or
enterprise to which the person provides services at the request of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation and Stock Options Committee of the
Company's Board of Directors during fiscal 1997 were Messrs. Mickelson, Molasky,
Wexler and Wright. Mr. Slutzky, the Company's Chief Executive Officer and
Chairman of the Board, serves on the Board of Directors of ATL and on its
Compensation Committee. Dr. Daly, the Chief Technology Officer and Vice
President of the Company is also a director and an officer of ATL. It is
anticipated that Mr. Wright will be elected to the Board of Directors of ATL and
will also serve on ATL's Compensation Committee. Except as set forth above, none
of the executive officers of the Company has served on the Board of Directors or
on the compensation committee of any other entity, any of whose officers served
either on the Board of Directors or on the Compensation and Stock Options
Committee of the Company. No member of the Compensation and Stock Option
Committee was an officer or employee of the Company or its subsidiary during
fiscal 1997.

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Notwithstanding anything to the contrary, set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate by reference
previous or future filings, including this Proxy Statement, in whole or in part,
the following Compensation Committee Report and the Performance Graph are not
"soliciting materials," are not deemed filed with the Commission and shall not
be incorporated by reference into any of such filings.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

This report covers the Company's fiscal year ended March 31, 1997.

The Compensation and Stock Option Committee (the "Compensation Committee")
for fiscal 1997 was comprised of four outside directors, Messrs. Wexler,
Molasky, Mickelson and Wright. The Compensation Committee recommends the general
compensation levels for executives. The Compensation Committee meets
periodically to review and recommend for approval by the Board of Directors, the
salaries, bonuses and benefit plans for officers and key associates. In fiscal
1997, the Compensation Committee met on one occasion.

The guiding principle of the Compensation Committee is to establish a
compensation program that aligns executive compensation with the Company's
objectives and business strategies as well as with financial and operational
performance. In keeping with this principle the Compensation Committee seeks to:

(1) Attract and retain qualified senior executives who can play a
significant role in the achievement of the Company's goals;

(2) Reward executives for strategic management and the long-term
enhancement of stockholder value; and

(3) Create a performance-oriented environment that rewards performance with
respect to the financial and operational goals of the Company.

In fiscal year 1997, the annual compensation for the executive officers
included base salaries, bonuses and stock options.

The Company establishes salaries for the Chief Executive Officer and other
officers by considering the salaries of officers at comparably sized companies
according to data obtained by the Compensation Committee from executive
compensation consultants and from other independent outside sources, including
the American Electronics Association annual survey of executive compensation.
Half of the annual bonuses payable to the Company's executive officers are based
upon the achievement by the Company and its divisions of certain corporate
financial targets established for each fiscal year. The remaining portion of the
bonuses is discretionary based upon the performance of the individual officers.

A substantial portion of the compensation of executive officers is based
upon the award of stock options which rely on increases in the value of the
Company's Class A Common Stock. The award of options is intended to encourage
executives to establish a meaningful, long-term ownership interest in the
Company consistent with the interests of the Company's stockholders. Under the
Company's stock option plans, options are granted from time to time to certain
officers and key associates of the Company and its subsidiaries at the fair
market value of the shares of Class A Common Stock at the time of grant. Because
the compensation element of options is dependent on increases over time in the
market value of such shares, stock options represent compensation that is tied
to the Company's long-term performance. The award of stock options to the Chief
Executive Officer and the other executive officers is determined based upon
individual performance, level of base salary and position with the Company.

The Committee has reviewed the fiscal year 1997 base salaries of the Chief
Executive Officer and each of the other executive officers and is of the opinion
that such salaries are not unreasonable in view of those paid by the Company's
competitors and by other companies of similar size. The Committee also reviewed
the stock options awarded to the executive officers for their services in fiscal
year 1997 and is of the opinion that the option awards are reasonable in view of
the officers' individual performance and positions with the Company.

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COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Code generally disallows a tax deduction to publicly held corporations for
compensation exceeding $1.0 million paid to certain of the corporation's
executive officers. The limitation applies only to compensation which is not
considered to be performance-based. The nonperformance based compensation to be
paid to the Company's executive officers for fiscal year 1997 did not exceed the
$1.0 million limit per officer, nor is it expected that the nonperformance based
compensation to be paid to the Company's executive officers for fiscal year 1998
will exceed that limit. The Company's 1997 Plan is structured so that any
compensation deemed paid to an executive officer in connection with the exercise
of option grants made under that plan will qualify as performance-based
compensation which will not be subject to the $1.0 million limitation. Because
it is very unlikely that the cash compensation payable to any of the Company's
executive officers in the foreseeable future will approach the $1.0 million
limit, the Compensation Committee has decided at this time not to take any other
action to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Compensation Committee will reconsider this
decision should the individual compensation of any executive officer ever
approach the $1.0 million level.

COMPENSATION COMMITTEE:
Paul E. Wright, Chairman
Ralph R. Mickelson
Stanley Molasky
Leo Wexler

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PERFORMANCE GRAPH FOR ODETICS, INC.
INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN

The Performance Graph shows the cumulative total return on investment
assuming an investment of $100 on April 1, 1992 in each of Odetics, Inc. Class A
Common Stock and Class B Common Stock and the Nasdaq National Market Index, the
American Stock Exchange ("AMEX") Market Value Index and Media General's Industry
Groups 07 for Business Data Processing and 071 for Computers, Subsystems and
Peripherals. The total stockholder return assumes reinvestment of dividends on a
daily basis, although dividends have not been declared on either class of the
Company's Common Stock. Until January 1994, the Company's Class A and Class B
Common Stock were traded on the AMEX. Since such time, the Company's Class A and
Class B Common Stock have been listed on the Nasdaq National Market.
Accordingly, the Company is using both broad market indices. The stockholder
return shown in the following graph is not necessarily indicative of future
performance.

Odetics Inc.     Media General                     Odetics Inc.    Media General
Measurement Period            Class A          Industry      Nasdaq National     Class B         Industry      
(Fiscal Year Covered)         Common Stock       Group 071      Market Index     Common Stock      Group 07       AMEX Index

1993                                    133.33           88.28          111.91          121.82           99.44          107.57
1994                                    183.33          100.25          129.33          156.36          109.65          110.85
1995                                     91.67          123.72          137.21           90.91          140.40          116.91
1996                                    120.83          177.58          184.56          101.82          202.07          141.34
1997                                    218.75          205.30          206.47          207.27          226.06          142.76

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CERTAIN TRANSACTIONS

Prior to the initial public offering of ATL in March 1997 (the "IPO"), ATL
was a wholly-owned subsidiary of the Company. As the sole stockholder, the
Company maintained substantial control over the operations of ATL and provided
ATL with significant management, financial, administrative and other resources,
including treasury, accounting, tax, internal audit, legal, human resources,
sales and marketing and other support services. ATL was charged and/or allocated
expenses of $1.6 million, $1.5 million and $1.6 million for the years ended
March 31, 1995, 1996 and 1997, respectively. The costs of these services have
been directly charged and/or allocated using methods that ATL's management
believes are reasonable. Such charges and allocations are not necessarily
indicative of the costs ATL would have incurred to obtain these services had it
been a separate entity. Neither the Company nor ATL has conducted any study or
obtained any estimates from third parties to determine what the cost of
obtaining such services from third parties may have been.

ATL paid approximately $6.7 million of the proceeds from the IPO to the
Company to reduce the intercompany indebtedness. In addition, in April 1997, the
company entered into a four year promissory note payable to the Company in the
original principal amount of approximately $13.0 million representing the
balance of ATL's intercompany borrowings from the Company. This note is payable
in sixteen equal quarterly installments of principal plus accrued interest
commencing June 30, 1997 and bears interest at a rate equal to the Company's
cost of borrowing (8.5% at March 31, 1997).

ATL and the Company have entered into a number of agreements for the
purpose of defining their continuing relationship. These agreements were
negotiated in the context of a parent-subsidiary relationship and therefore are
not the result of negotiations between independent parties. It is the intention
of ATL and the Company that such agreements and the transactions provided for
therein, taken as a whole, should accommodate the parties' interests in a manner
that is fair to both parties, while continuing certain mutually beneficial joint
arrangements. The parties intend that such agreements and transactions provide
fair market value to them on terms no less favorable to ATL as would otherwise
be available from unaffiliated parties. Because of the complexity of the various
relationships between ATL and the Company, however, there can be no assurance
that each of such agreements, or the transactions provided for therein, will be
effected on terms at least as favorable to ATL as could have been obtained from
unaffiliated third parties. While these agreements will provide ATL with certain
benefits, ATL is only entitled to the ongoing assistance of the Company for a
limited time and ATL may not be able to continue to enjoy benefits from its
relationship with the Company beyond the term of the agreements. ATL has adopted
a policy that all future agreements between ATL and the Company will be on terms
that ATL believes are no less favorable to ATL than the terms ATL believes would
be available from unaffiliated parties. There can be no assurance that upon
termination of such assistance from the Company that ATL will be able to provide
adequately such services internally or obtain favorable arrangements from third
parties to replace such services.

SEPARATION AND DISTRIBUTION AGREEMENT

The Separation and Distribution Agreement set forth the agreements between
ATL and the Company with respect to the principal corporate transactions
required to effect the IPO, to separate the operations of ATL from the Company
(the "Separation"), and to facilitate the distribution of all of the Company's
shares of Class A Common Stock of ATL to the stockholders of the Company (the
"Distribution"). Pursuant to this agreement, the Company sold all assets related
to the business of ATL to ATL, and ATL has assumed and agreed to faithfully
perform and fulfill all related liabilities and obligations. All assets conveyed
have been transferred for a purchase price equal to their respective book
values, calculated in accordance with generally accepted accounting principles,
which the parties believe is equivalent to the fair market value thereof. The
Separation and Distribution Agreement also provides that, subject to the terms
and conditions thereof, the Company and ATL will take all reasonable steps
necessary and appropriate to cause all conditions to the Distribution to be
satisfied and to effect the Distribution. The Directors of the Company will have
the sole discretion to determine the date of consummation of the Distribution,
however, the Company has agreed to

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consummate the Distribution as promptly as practicable following the
satisfaction or waiver of all the following conditions, but not later than
December 31, 1997:

(i)  A private letter ruling from the IRS shall have been obtained, and
shall continue in effect, to the effect that, among other things, the
Distribution will qualify as a tax-free distribution for federal
income tax purposes under Section 355 of the Code, and such ruling
shall be in form and substance satisfactory to the Company, in its
sole discretion;

(ii)  Any material governmental approvals and consents necessary to
consummate the Distribution shall have been obtained and be in full
force and effect;

(iii) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Distribution shall be in effect,
and no other event outside the control of the Company shall have
occurred or failed to occur that prevents the consummation of the
Distribution; and

(iv)  No other events or developments shall have occurred that, in the
judgment of the Board of Directors of the Company, would result in
the Distribution having a material adverse effect on the Company or
on its stockholders.

The Separation and Distribution Agreement also provided for a full and
complete release and discharge after the IPO of all liabilities existing or
arising from all acts and events occurring or failing to occur or alleged to
have occurred or to have failed to occur and all conditions existing or alleged
to have existed on or before the IPO, between or among ATL and its affiliates,
on the one hand, and the Company and its affiliates, on the other hand
(including any contractual agreements or arrangements existing or alleged to
exist between or among them on or before the IPO), except as expressly set forth
in the Separation and Distribution Agreement. Neither the Company nor ATL is
aware of any such liabilities existing as of the date of this Proxy Statement.

ATL has agreed to indemnify, defend and hold the Company and its affiliates
harmless from and against all liabilities relating to, arising out of or
resulting from (i) the failure of ATL or any other person to pay, perform or
otherwise promptly discharge any Company liabilities in accordance with their
respective terms, (ii) ATL's business, or any contract of ATL, (iii) any breach
by ATL or of the Separation and Distribution Agreement or any ancillary
agreements, and (iv) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to all information contained in ATL's Registration Statement on
Form S-1 in connection with the IPO.

The Company has agreed to indemnify, defend and hold ATL and its affiliates
from and against all liabilities relating to, arising out of or resulting from
(i) the failure of the Company or any other person to pay, perform or otherwise
promptly discharge any liabilities of the Company, (ii) the business of the
Company or any contract of the Company, and (iii) any breach by the Company or
any of its affiliates of the Separation and Distribution Agreement or any
ancillary agreements. Neither ATL nor the Company is aware of any liabilities
existing as of the date hereof which would give rise to an indemnification
obligation under the Separation and Distribution Agreement.

The Separation and Distribution Agreement also provides that during the
period prior to the Distribution, ATL will reimburse the Company for its
proportionate share of premiums paid or accrued on insurance policies under
which ATL continues to have coverage.

SERVICES AGREEMENT

ATL and the Company entered into an Administrative Services Agreement (the
"Services Agreement") in March 1997, pursuant to which the Company agreed to
continue to provide limited services to ATL, including treasury, accounting,
tax, internal audit, legal and human resources functions. The Company
anticipates that ATL's aggregate costs under the Services Agreement for the
fiscal year ended March 31, 1998 will be approximately $500,000.

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TAX ALLOCATION AGREEMENT

ATL and the Company entered into a Tax Allocation Agreement pursuant to
which ATL agreed to make a payment to the Company in an amount equal to the
taxes attributable to the operations of ATL on the consolidated federal income
tax returns and combined or consolidated state income or franchise tax returns
filed by the Company for the period commencing on April 1, 1996 and ending on
the date on which ATL ceases to be a member of the Company' consolidated group.
The Tax Allocation Agreement also requires the Company to indemnify ATL against
any unpaid taxes due for periods prior to April 1, 1996. Neither ATL nor the
Company is aware of any such unpaid taxes. In addition, the Tax Allocation
Agreement will provide that members of the Company consolidated group generating
tax losses after April 1, 1996 will be paid by the other members which utilize
such losses to reduce such other members' tax liability. For the year ended
March 31, 1997, ATL paid $1.6 million to the Company, representing its
obligation for fiscal 1997.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the federal securities laws, the Company's directors and officers and
any persons holding more than 10% of the Company's Common Stock are required to
report their ownership of the Company's Common Stock and any changes in that
ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established, and the Company is required to report in
this Proxy Statement any failure to file by these dates. During fiscal 1997, all
of these filing requirements were satisfied by its directors, officers and 10%
stockholders, except as follows: (i) In December 1996, Jerry Muench exercised an
option to purchase 2,900 shares of Class A Common Stock but failed to report the
exercise on Form 4 by January 10, 1997, the due date of such report; (ii) in
January 1997, Dr. Daly, and Messrs. Gudmundson and Slutzky exercised option to
purchase 2,900, 3,000 and 5,100 shares, respectively of Class A Common Stock,
but failed to timely file their Form 4s which were due on February 15, 1997. The
transactions were subsequently reported on Form 5 filed by these officers in May
1995 when the oversight was brought to their attention by the Company's
personnel charged with assisting directors and officers with these filings.

In making these statements, the Company has relied upon a review of Forms
3, 4 and 5 and amendments thereto furnished to the Company during fiscal 1997
pursuant to Rule 16a-3 under the Securities Exchange Act of 1934, as amended.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Under the present rules of the Commission, the deadline for stockholders to
submit proposals to be considered for inclusion in the Company's Proxy Statement
for next year's Annual Meeting of Stockholders is anticipated to be April 8,
1998. Such proposals may be included in next year's Proxy Statement if they
comply with certain rules and regulations promulgated by the Commission.
Stockholder proposals must be mailed to the attention of the Company's Secretary
at the Company's principal executive offices located at 1515 South Manchester,
Anaheim, California 92802.

ANNUAL REPORT

A copy of the Company's Annual Report to Stockholders, including
consolidated financial statements for the fiscal year ended March 31, 1997,
accompanies the proxy materials being mailed to all stockholders. No material
contained in the Annual Report shall constitute proxy solicitation materials.

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OTHER BUSINESS

The Board of Directors is not aware of any other matter which may be
presented for action at the Annual Meeting other than the matters set forth in
this Proxy Statement. Should any other matter requiring a vote of the
stockholders arise, it is intended that the proxy holders will vote on such
matters in accordance with their judgment. Discretionary authority with respect
to such other matters is granted by execution of the enclosed proxy card.

Anaheim, California                       By Order of the Board of Directors,
August 4, 1997

JERRY F. MUENCH
Secretary

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APPENDIX A
(EDGAR FILING ONLY)

ODETICS, INC.
1997 STOCK INCENTIVE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I.        PURPOSE OF THE PLAN

This 1997 Stock Incentive Plan is intended to promote the
interests of Odetics, Inc., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for
them to remain in the service of the Corporation.

Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.

II.         STRUCTURE OF THE PLAN

A.       The Plan shall be divided into three separate equity
programs:

-       the Discretionary Option Grant Program under
which eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Class A Common Stock,

-       the Stock Issuance Program under which
eligible persons may, at the discretion of the Plan Administrator, be issued
shares of Class A Common Stock directly, either through the immediate purchase
of such shares or as a bonus for services rendered the Corporation (or any
Parent or Subsidiary), and

-       the Automatic Option Grant Program under
which eligible nonemployee Board members shall automatically receive option
grants at periodic intervals to purchase shares of Class A Common Stock.

B.       The provisions of Articles One and Five shall apply
to all equity programs under the Plan and shall govern the interests of all
persons under the Plan.

III.        ADMINISTRATION OF THE PLAN

A.       The Primary Committee shall have sole and exclusive
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders.  Administration of the
Discretionary Option Grant and Stock Issuance

30

Programs with respect to all other persons eligible to participate in those
programs may, at the Board's discretion, be vested in the Primary Committee or
a Secondary Committee, or the Board may retain the power to administer those
programs with respect to all such persons.

B.       Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and
may be removed by the Board at any time.  The Board may also at any time
terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.

C.       Each Plan Administrator shall, within the scope of
its administrative functions under the Plan, have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Discretionary
Option Grant and Stock Issuance Programs and to make such determinations under,
and issue such interpretations of, the provisions of such programs and any
outstanding options or stock issuances thereunder as it may deem necessary or
advisable.  Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Discretionary Option Grant and Stock
Issuance Programs under its jurisdiction or any option or stock issuance
thereunder.

D.       Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee.  No member
of the Primary Committee or the Secondary Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any option grants or
stock issuances under the Plan.

E.       Administration of the Automatic Option Grant Program
shall be self executing in accordance with the terms of that program, and no
Plan Administrator shall exercise any discretionary functions with respect to
any option grants or stock issuances made under such program.

IV.         ELIGIBILITY

A.       The persons eligible to participate in the
Discretionary Option Grant and Stock Issuance Programs are as follows:

(i)         employees,

(ii)         nonemployee members of the Board or
the board of directors of any Parent or Subsidiary, and

2.

31
(iii)         consultants and other independent
advisors who provide services to the Corporation (or any Parent or
Subsidiary).

B.       Each Plan Administrator shall, within the scope of
its administrative jurisdiction under the Plan, have full authority to
determine, (i) with respect to the option grants under the Discretionary Option
Grant Program, which eligible persons are to receive option grants, the time or
times when such option grants are to be made, the number of shares to be
covered by each such grant, the status of the granted option as either an
Incentive Option or a Nonstatutory Option, the time or times when each option
is to become exercisable, the vesting schedule (if any) applicable to the
option shares and the maximum term for which the option is to remain
outstanding and (ii) with respect to stock issuances under the Stock Issuance
Program, which eligible persons are to receive stock issuances, the time or
times when such issuances are to be made, the number of shares to be issued to
each Participant, the vesting schedule (if any) applicable to the issued shares
and the consideration to be paid for such shares.

C.       The Plan Administrator shall have the absolute
discretion either to grant options in accordance with the Discretionary Option
Grant Program or to effect stock issuances in accordance with the Stock
Issuance Program.

D.       The individuals who shall be eligible to participate
in the Automatic Option Grant Program shall be limited to (i) those individuals
serving as nonemployee Board members on the Plan Effective Date, (ii) those
individuals who first become nonemployee Board members on or after the Plan
Effective Date, whether through appointment by the Board or election by the
Corporation's stockholders, and (ii) those individuals who continue to serve as
nonemployee Board members at one or more Annual Stockholders Meetings held
after the Plan Effective Date.

V.        STOCK SUBJECT TO THE PLAN

A.       The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Class A Common Stock, including shares
repurchased by the Corporation on the open market.  The maximum number of
shares of Class A Common Stock reserved for issuance over the term of the Plan
shall not exceed 530,000 shares, subject to certain changes in the
Corporation's capital structure.

B.       No one person participating in the Plan may receive
options, separately exercisable stock appreciation rights and direct stock
issuances for more than 80,000 shares of Class A Common Stock in the aggregate
per calendar year, beginning with the 1997 calendar year.

C.       Shares of Class A Common Stock subject to outstanding
options shall be available for subsequent issuance under the Plan to the extent
those options expire or terminate for any reason prior to exercise in full.
Unvested shares issued under the Plan

3.

32
and subsequently cancelled or repurchased by the Corporation, at the original
exercise or direct issue price paid per share, pursuant to the Corporation's
repurchase rights under the Plan shall be added back to the number of shares of
Class A Common Stock reserved for issuance under the Plan and shall accordingly
be available for reissuance through one or more subsequent option grants or
direct stock issuances under the Plan.  However, shares subject to any options
surrendered in connection with the stock appreciation right provisions of the
Plan shall not be available for reissuance.  Should the exercise price of an
option under the Plan be paid with shares of Class A Common Stock or should
shares of Class A Common Stock otherwise issuable under the Plan be withheld by
the Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an option or the vesting of a stock issuance under the
Plan, then the number of shares of Class A Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised or which vest under the stock issuance, and not by the net
number of shares of Class A Common Stock issued to the holder of such option or
stock issuance.

D.       If any change is made to the Class A Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Class A
Common Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
for which any one person may be granted stock options, separately exercisable
stock appreciation rights and direct stock issuances under the Plan per
calendar year, (iii) the number and/or class of securities for which grants are
subsequently to be made under the Automatic Option Grant Program to new and
continuing nonemployee Board members, and (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option under the Plan.  Such adjustments to the outstanding options are to be
effected in a manner which shall preclude the enlargement or dilution of rights
and benefits under such options.  The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

E.       In the event of a restructuring of the Corporation in
which the Corporation is divested of one or more Subsidiaries, the Plan
Administrator may, in its sole discretion, make appropriate adjustments to the
vesting schedule, number and/or class of securities and the exercise price per
share in effect under each outstanding option under the Plan (i) held by an
individual who is to remain in the Corporation's Service following such
divestiture or (ii) held by an individual who is to provide services to the
divested Subsidiary immediately following the divestiture, which the Plan
Administrator deems advisable in order to reflect the effect of the divestiture
on the Corporation's capital structure and the fair market value of the Common
Stock.

4.

33
ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I.        OPTION TERMS

Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below.  Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the
Plan applicable to such options.

A.       EXERCISE PRICE.

1.      The exercise price per share shall be fixed
by the Plan Administrator but shall not be less than one hundred percent (100%)
of the Fair Market Value per share of Class A Common Stock on the option grant
date.

2.      The exercise price shall become immediately
due upon exercise of the option and shall, subject to the provisions of Section
I of Article Five and the documents evidencing the option, be payable in one or
more of the forms specified below:

(i)         cash or check made payable to the
Corporation,

(ii)         shares of Class A Common Stock held
for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date, or

(iii)         to the extent the option is
exercised for vested shares, through a special sale and remittance
procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions to (a) a Corporation designated brokerage
firm to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by the Corporation
by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale.

Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.

5.

34
B.       EXERCISE AND TERM OF OPTIONS.  Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option.  However, no option shall have a term in
excess of ten (10) years measured from the option grant date.

C.       EFFECT OF TERMINATION OF SERVICE.

1.      The following provisions shall govern the
exercise of any options held by the Optionee at the time of cessation of
Service or death:

(i)         Any option outstanding at the time
of the Optionee's cessation of Service for any reason shall remain
exercisable for such period of time thereafter as shall be determined
by the Plan Administrator and set forth in the documents evidencing
the option, but no such option shall be exercisable after the
expiration of the option term.

(ii)         Any option exercisable in whole or
in part by the Optionee at the time of death may be subsequently
exercised by the personal representative of the Optionee's estate or
by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and
distribution.

(iii)         During the applicable exercise
period following termination of Service, the option may not be
exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the Optionee's
cessation of Service.  Upon the expiration of the applicable exercise
period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised.  However, the
option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares.

(iv)         Should the Optionee's Service be
terminated for Misconduct, then all outstanding options held by the
Optionee shall terminate immediately and cease to be outstanding.

2.      The Plan Administrator shall have complete
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding, to:

(i)        extend the period of time for which
the option is to remain exercisable following the Optionee's cessation
of Service from the limited exercise period otherwise in effect for
that option to such greater

6.

35
period of time as the Plan Administrator shall deem appropriate, but
in no event beyond the expiration of the option term, and/or

(ii)        permit the option to be exercised,
during the applicable Service exercise period following termination of
service, not only with respect to the number of vested shares of Class
A Common Stock for which such option is exercisable at the time of the
Optionee's cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested had
the Optionee continued in Service.

D.       STOCKHOLDER RIGHTS.  The holder of an option shall
have no stockholder rights with respect to the shares subject to the option
until such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.

E.       REPURCHASE RIGHTS.  The Plan Administrator shall have
the discretion to grant options which are exercisable for unvested shares of
Class A Common Stock.  Should the Optionee cease Service while holding such
unvested shares, the Corporation shall have the right to repurchase, at the
exercise price paid per share, any or all of those unvested shares.  The terms
upon which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.

F.       LIMITED TRANSFERABILITY OF OPTIONS.  During the
lifetime of the Optionee, Incentive Options shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the Optionee's death.  However,
a Nonstatutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established
exclusively for one or more such family members.  The assigned portion may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.

II.         INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive
Options.  Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Five shall be applicable to Incentive
Options.  Options which are specifically designated as Nonstatutory Options
when issued under the Plan shall not be subject to the terms of this Section
II.

7.

36
A.       ELIGIBILITY.  Incentive Options may only be granted
to Employees.

B.       DOLLAR LIMITATION.  The aggregate Fair Market Value
of the shares of Class A Common Stock (determined as of the respective date or
dates of grant) for which one or more options granted to any Employee under the
Plan (or any other option plan of the Corporation or any Parent or Subsidiary)
may for the first time become exercisable as Incentive Options during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000).  To the extent the Employee holds two (2) or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are granted.

C.       10% STOCKHOLDER.  If any Employee to whom an
Incentive Option is granted is a 10% Stockholder, then the exercise price per
share shall not be less than one hundred ten percent (110%) of the Fair Market
Value per share of Class A Common Stock on the option grant date, and the
option term shall not exceed five (5) years measured from the option grant
date.

III.        CORPORATE TRANSACTION/CHANGE IN CONTROL

A.       In the event of any Corporate Transaction, each
outstanding option shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Class A
Common Stock at the time subject to such option and may be exercised for any or
all of those shares as fully vested shares of Class A Common Stock.  However,
an outstanding option shall not so accelerate if and to the extent:  (i) such
option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof), (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing at the time of the Corporate Transaction on any shares for
which the option is not otherwise at that time exercisable and provides for
subsequent payout in accordance with the same exercise/vesting schedule
applicable to those option shares or (iii) the acceleration of such option is
subject to other limitations imposed by the Plan Administrator at the time of
the option grant.

B.       All outstanding repurchase rights shall automatically
terminate, and the shares of Class A Common Stock subject to those terminated
rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent: (i) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

C.       Immediately following the consummation of the
Corporate Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

8.

37
D.       Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction.  Appropriate adjustments to reflect such Corporate Transaction
shall also be made to (i) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same, (ii) the maximum number and/or class of
securities available for issuance over the remaining term of the Plan and (iii)
the maximum number and/or class of securities for which any one person may be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan per calendar year.

E.       The Plan Administrator shall have the discretionary
authority to provide for the automatic acceleration of one or more outstanding
options under the Discretionary Option Grant Program upon the occurrence of a
Corporate Transaction, whether or not those options are to be assumed in the
Corporate Transaction, so that each such option shall, immediately prior to the
effect date of such Corporate Transaction, become fully exercisable with
respect to the total number of shares of Class A Common Stock at the time
subject to that option and may be exercised for any or all of those shares as
fully vested shares of Class A Common Stock. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more
of the Corporation's repurchase rights under the Discretionary Option Grant
Program so that those rights shall not be assignable in connection with such
Corporate Transaction and shall accordingly terminate upon the consummation of
such Corporate Transaction, and the shares subject to those terminated rights
shall thereupon vest in full.

F.       The Plan Administrator shall have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to provide for the automatic acceleration
of one or more outstanding options under the Discretionary Option Grant Program
in the event the Optionee's Service is subsequently terminated by reason of an
Involuntary Termination within a designated period (not to exceed eighteen (18)
months) following the effective date of any Corporate Transaction in which
those options are assumed and do not otherwise accelerate.  Any options so
accelerated shall remain exercisable for fully vested shares until the earlier
of (i) the expiration of the option term or (ii) the expiration of the one (1)
year period measured from the effective date of the Involuntary Termination.
In addition, the Plan Administrator may provide that one or more of the
Corporation's outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately
terminate, and the shares subject to those terminated repurchase rights shall
accordingly vest in full.

9.

38
G.       The Plan Administrator shall have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to provide for the automatic acceleration
of one or more outstanding options under the Discretionary Option Grant Program
upon (i) a Change in Control or (ii) the subsequent termination of the
Optionee's Service by reason of an Involuntary Termination within a designated
period (not to exceed eighteen (18) months) following the effective date of
such Change in Control.  Each option so accelerated shall remain exercisable
for fully vested shares until the earlier of (i) the expiration of the option
term or (ii) the expiration of the one (1) year period measured from the
effective date of Optionee's cessation of Service.  In addition, the Plan
Administrator shall have discretionary authority to structure one or more of
the Corporation's outstanding repurchase rights so that those repurchase rights
shall immediately terminate with respect to any shares held by the Optionee at
the time of such Change in Control or Involuntary Termination, and the shares
subject to those terminated rights shall accordingly vest in full.

H.       The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One
Hundred Thousand Dollar ($100,000) limitation is not exceeded.  To the extent
such dollar limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Nonstatutory Option under the Federal tax laws.

I.       The outstanding options shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

IV.         CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option
holders, the cancellation of any or all outstanding options under the
Discretionary Option Grant Program and to grant in substitution new options
covering the same or different number of shares of Class A Common Stock but
with an exercise price per share equal to the Fair Market Value per share of
Class A Common Stock on the new grant date.

V.        STOCK APPRECIATION RIGHTS

A.       The Plan Administrator shall have the authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.

B.       The following terms shall govern the grant and
exercise of tandem stock appreciation rights:

10.

39
(i)         One or more Optionees may be granted the
right, exercisable upon such terms as the Plan Administrator may
establish, to elect between the exercise of the underlying option for
shares Class A Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to
the excess of (a) the Fair Market Value (on the option surrender date)
of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion) over (b) the
aggregate exercise price payable for those shares.

(ii)        No such option surrender shall be effective
unless it is approved by the Plan Administrator, either at the time of
the actual option surrender or at any earlier time.  If the surrender
is so approved, then the distribution to which the Optionee shall be
entitled may be made in shares of Class A Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in
shares and partly in cash, as the Plan Administrator shall in its sole
discretion deem appropriate.

(iii)         If the surrender of an option is not approved
by the Plan Administrator, then the Optionee shall retain whatever
rights the Optionee had under the surrendered option (or surrendered
portion) on the option surrender date and may exercise such rights at
any time prior to the later of (a) five (5) business days after the
receipt of the rejection notice or (b) the last day on which the
option is otherwise exercisable in accordance with the terms of the
documents evidencing such option, but in no event may such rights be
exercised more than ten (10) years after the option grant date.

C.       The following terms shall govern the grant and
exercise of limited stock appreciation rights:

(i)         One or more Section 16 Insiders may be
granted limited stock appreciation rights with respect to their
outstanding options.

(ii)        Upon the occurrence of a Hostile Takeover,
each individual holding one or more options with such a limited stock
appreciation right shall have the unconditional right (exercisable for
a thirty (30) day period following such Hostile Takeover) to surrender
each such option to the Corporation, to the extent the option is at
the time exercisable for vested shares of Class A Common Stock.  In
return for the surrendered option, the Optionee shall receive a cash
distribution from the Corporation in an amount equal to the excess of
(A) the Takeover Price of the shares of Class A Common Stock which are
at the time vested under each surrendered option (or surrendered
portion) over (B) the aggregate exercise price payable for those
shares.  Such cash distribution shall be paid within five (5) days
following the option surrender date.

11.

40
(iii)         The Plan Administrator shall preapprove, at
the time the limited right is granted, the subsequent exercise of that
right in accordance with the terms of the grant and the provisions of
this Section V.  No additional approval of the Plan Administrator or
the Board shall be required at the time of the actual option surrender
and cash distribution.

(iv)        The balance of the option (if any) shall
remain outstanding and exercisable in accordance with the documents
evidencing such option.

12.

41
ARTICLE THREE

STOCK ISSUANCE PROGRAM

I .       STOCK ISSUANCE TERMS

Shares of Class A Common Stock may be issued under the Stock
Issuance Program through direct and immediate issuances without any intervening
option grants.  Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.

A.       PURCHASE PRICE.

1.      The purchase price per share shall be fixed
by the Plan Administrator, but shall not be less than one hundred percent
(100%) of the Fair Market Value per share of Class A Common Stock on the
issuance date.

2.      Subject to the provisions of Section I of
Article Five, shares of Class A Common Stock may be issued under the Stock
Issuance Program for any combination of the following items of consideration
which the Plan Administrator may deem appropriate in each individual instance:

(i)         cash or check made payable to the Corporation, or

(ii)         past services rendered to the
Corporation (or any Parent or Subsidiary).

B.       VESTING PROVISIONS.

1.      Shares of Class A Common Stock issued under
the Stock Issuance Program may, in the discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service or upon attainment of
specified performance objectives.  The elements of the vesting schedule
applicable to any unvested shares of Class A Common Stock issued under the
Stock Issuance Program shall be determined by the Plan Administrator and
incorporated into the Stock Issuance Agreement.

2.      Any new, substituted or additional securities
or other property (including money paid other than as a regular cash dividend)
which the Participant may have the right to receive with respect to the
Participant's unvested shares of Class A Common Stock by reason of any stock
dividend, stock split, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Class A Common Stock as a
class without the Corporation's receipt of consideration shall be issued
subject

13.

42
to (i) the same vesting requirements applicable to the Participant's unvested
shares of Class A Common Stock and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.

3.      The Participant shall have full stockholder
rights with respect to any shares of Class A Common Stock issued to the
Participant under the Stock Issuance Program, whether or not the Participant's
interest in those shares is vested.  Accordingly, the Participant shall have
the right to vote such shares and to receive any regular cash dividends paid on
such shares.

4.      Should the Participant cease to remain in
Service while holding one or more unvested shares of Class A Common Stock
issued under the Stock Issuance Program or should the performance objectives
not be attained with respect to one or more such unvested shares of Class A
Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares.  To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase money note of the Participant attributable to the
surrendered shares.

5.      The Plan Administrator may in its discretion
waive the surrender and cancellation of one or more unvested shares of Class A
Common Stock which would otherwise occur upon the cessation of the
Participant's Service or the non attainment of the performance objectives
applicable to those shares.  Such waiver shall result in the immediate vesting
of the Participant's interest in the shares as to which the waiver applies.
Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non attainment of the
applicable performance objectives.

II.     CORPORATE TRANSACTION/CHANGE IN CONTROL

A.       All of the Corporation's outstanding repurchase
rights under the Stock Issuance Program shall terminate automatically, and all
the shares of Class A Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction
or (ii) such accelerated vesting is precluded by other limitations imposed in
the Stock Issuance Agreement.

B.       The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued under
the Stock Issuance Program or any time while the Corporation's repurchase
rights with respect to those shares remain outstanding, to structure one or
more of those repurchase rights so that such rights

14.

43
shall not be assignable in connection with a Corporate Transaction and shall
accordingly terminate upon the consummation of such Corporate Transaction, and
the shares subject to those terminated repurchase rights shall thereupon vest
in full.

C.       The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or any
time while the Corporation's repurchase rights remain outstanding under the
Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Class A Common Stock subject
to those terminated rights shall immediately vest, in the event the
Participant's Service should subsequently terminate by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of any Corporate Transaction in which those
repurchase rights are assigned to the successor corporation (or parent
thereof).

D.       The Plan Administrator shall have the discretionary
authority, exercisable either at the time the unvested shares are issued or any
time while the Corporation's repurchase rights with respect to those shares
remain outstanding under the Stock Issuance Program, to structure one or more
of those repurchase rights so that such rights shall automatically terminate in
whole or in part, and the shares of Class A Common Stock subject to those
terminated rights shall immediately vest, upon (i) a Change in Control or (ii)
the subsequent termination of the Participant's Service by reason of an
Involuntary Termination within a designated period (not to exceed eighteen (18)
months) following the effective date of such Change in Control or Involuntary
Termination.

III.    SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator's discretion,
be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.

15.

44
ARTICLE FOUR

AUTOMATIC OPTION GRANT PROGRAM

I.        OPTION TERMS

A.       GRANT DATES.  Option grants shall be made on the
dates specified below:

1.      Each individual serving as a nonemployee
Board member on the Plan Effective Date shall automatically be granted at that
time a Nonstatutory Option to purchase 5,000 shares of Class A Common Stock,
provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

2.      Each individual who is first elected or
appointed as a nonemployee Board member on or after the Plan Effective Date
shall automatically be granted, on the date of such initial election or
appointment, a Nonstatutory Option to purchase 5,000 shares of Class A Common
Stock, provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

3.      On the date of each Annual Stockholders
Meeting, beginning with the 1998 Annual Stockholders Meeting, each individual
who is to continue to serve as an Eligible Director, whether or not that
individual is standing for reelection to the Board at that particular Annual
Meeting, shall automatically be granted a Nonstatutory Option to purchase 4,000
shares of Class A Common Stock, provided such individual has served as a
nonemployee Board member for at least six (6) months.  There shall be no limit
on the number of such 4,000 share option grants any one Eligible Director may
receive over his or her period of Board service, and nonemployee Board members
who have previously been in the employ of the Corporation (or any Parent or
Subsidiary) shall be eligible to receive one or more such annual option grants
over their period of continued Board service.

Stockholder approval of the Plan on the Plan
Effective Date will constitute preapproval of each option granted pursuant to
the express terms of this Automatic Option Grant Program and the subsequent
exercise of that option in accordance with its terms.

B.       EXERCISE PRICE.

1.      The exercise price per share shall be equal
to one hundred percent (100%) of the Fair Market Value per share of Class A
Common Stock on the option grant date.

2.      The exercise price shall be payable in one or
more of the alternative forms authorized under the Discretionary Option Grant
Program.  Except to the

16.

45
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

C.       OPTION TERM.  Each option shall have a term of ten
(10) years measured from the option grant date.

D.       EXERCISE AND VESTING OF OPTIONS.  Each initial 5,000
share option grant shall be immediately exercisable for any or all of the
option shares as fully vested shares of Class A Common Stock and shall remain
so exercisable until the expiration or sooner termination of the option term.
Each annual 4,000 share grant shall also be immediately exercisable for any or
all of the option shares.  However, the shares of Class A Common Stock
purchased under each annual 4,000 share grant shall be subject to repurchase by
the Corporation, at the exercise price paid per share, upon the Optionee's
cessation of Board service prior to vesting in those shares.  Each annual 4,000
share grant shall vest, and the Corporation's repurchase right shall lapse, in
a series of four (4) successive equal annual installments upon the Optionee's
completion of each year of Board service over the four (4) year period measured
from the automatic grant date.

E.       TERMINATION OF BOARD SERVICE.  The following
provisions shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:

(i)         The Optionee (or, in the event of
Optionee's death, the personal representative of the Optionee's estate
or the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and
distribution) shall have a twelve (12) month period following the date
of such cessation of Board service in which to exercise each such
option.

(ii)         During the twelve (12) month
exercise period, the option may not be exercised in the aggregate for
more than the number of vested shares of Class A Common Stock for
which the option is exercisable at the time of the Optionee's
cessation of Board service.

(iii)         Should the Optionee cease to serve
as a Board member by reason of death or Permanent Disability, then all
shares at the time subject to the option shall immediately vest so
that such option may, during the twelve (12) month exercise period
following such cessation of Board service, be exercised for all or any
portion of those shares as fully vested shares of Class A Common
Stock.

(iv)         In no event shall the option remain
exercisable after the expiration of the option term.  Upon the
expiration of the twelve (12) month exercise period or (if earlier)
upon the expiration of the option

17.

46
term, the option shall terminate and cease to be outstanding for any
vested shares for which the option has not been exercised.  However,
the option shall, immediately upon the Optionee's cessation of Board
service for any reason other than death or Permanent Disability,
terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares.

II.         CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKEOVER

A.       The shares of Class A Common Stock subject to each
option outstanding under this Article Four at the time of a Corporate
Transaction but not otherwise vested shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for all of the shares of Class
A Common Stock at the time subject to such option and may be exercised for all
or any portion of those shares as fully vested shares of Class A Common Stock.
Immediately following the consummation of the Corporate Transaction, each
automatic option grant shall terminate and cease to be outstanding, except to
the extent assumed by the successor corporation (or parent thereof).

B.       The shares of Class A Common Stock subject to each
option outstanding under this Article Four at the time of a Change in Control
but not otherwise vested shall automatically vest in full so that each such
option shall, immediately prior to the effective date of the Change in Control,
become fully exercisable for all of the shares of Class A Common Stock at the
time subject to such option and may be exercised for all or any portion of
those shares as fully vested shares of Class A Common Stock. Each such option
shall remain exercisable for such fully vested option shares until the
expiration or sooner termination of the option term or the surrender of the
option in connection with a Hostile Takeover.

C.       All outstanding repurchase rights under the Automatic
Option Grant Program shall automatically terminate, and the unvested shares of
Class A Common Stock subject to those terminated rights shall immediately vest
in full, in the event of any Corporate Transaction or Change in Control.

D.       Upon the occurrence of a Hostile Takeover, the
Optionee shall have a thirty (30) day period in which to surrender to the
Corporation each of his or her outstanding automatic option grants.  The
Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Takeover Price of the
shares of Class A Common Stock at the time subject to each surrendered option
(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares.  Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation.  Stockholder approval of the Plan on the Plan
Effective Date shall constitute preapproval of the grant of each such

18.

47
option surrender right under this Automatic Option Grant Program and the
subsequent exercise of such right in accordance with the terms and provisions
of this Section II.D.  No additional approval or consent of the Plan
Administrator or the Board shall be required at the time of the actual option
surrender and cash distribution.

E.       Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction.  Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.

F.       The grant of options under the Automatic Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

III.        REMAINING TERMS

The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.

19.

48
ARTICLE FIVE

MISCELLANEOUS

I.        FINANCING

The Plan Administrator may permit any Optionee or Participant
to pay the option exercise price under the Discretionary Option Grant Program
or the purchase price of shares issued under the Stock Issuance Program by
delivering a full recourse, interest bearing promissory note payable in one or
more installments.  The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion.  In no event may the maximum credit
available to the Optionee or Participant exceed the sum of (i) the aggregate
option exercise price or purchase price payable for the purchased shares (less
the par value of those shares) plus (ii) any Federal, state and local income
and employment tax liability incurred by the Optionee or the Participant in
connection with the option exercise or share purchase.

II.         TAX WITHHOLDING

A.       The Corporation's obligation to deliver shares of
Class A Common Stock upon the exercise of options or the issuance or vesting of
such shares under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements.

B.       The Plan Administrator may, in its discretion,
provide any or all holders of Nonstatutory Options or unvested shares of Class
A Common Stock under the Plan (other than the options granted or the shares
issued under the Automatic Option Grant Program) with the right to use shares
of Class A Common Stock in satisfaction of all or part of the Taxes incurred by
such holders in connection with the exercise of their options or the vesting of
their shares.  Such right may be provided to any such holder in either or both
of the following formats:

Stock Withholding:  The election to have the
Corporation withhold, from the shares of Class A Common Stock otherwise
issuable upon the exercise of such Nonstatutory Option or the vesting of such
shares, a portion of those shares with an aggregate Fair Market Value equal to
the percentage of the Taxes (not to exceed one hundred percent (100%))
designated by the holder.

Stock Delivery:  The election to deliver to the
Corporation, at the time the Nonstatutory Option is exercised or the shares
vest, one or more shares of Class A Common Stock previously acquired by such
holder (other than in connection with the option exercise or share vesting
triggering the Taxes) with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%)) designated
by the holder.

20.

49
III.        EFFECTIVE DATE AND TERM OF THE PLAN

A.       The Plan was adopted by the Board on July 25, 1997
and shall become effective upon approval by the Corporation's stockholders at
the 1997 Annual Meeting held on the Plan Effective Date.

B.       The Plan shall terminate upon the earliest to occur
of (i) September 4, 2007, (ii) the date on which all shares available for
issuance under the Plan shall have been issued as fully vested shares or (iii)
the termination of all outstanding options in connection with a Corporate
Transaction.  Upon such plan termination, all outstanding option grants and
unvested stock issuances shall thereafter continue to have force and effect in
accordance with the provisions of the documents evidencing those grants or
issuances.

IV.         AMENDMENT OF THE PLAN

A.       The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects.  However, no such
amendment or modification shall adversely affect the rights and obligations
with respect to stock options or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to
such amendment or modification. In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.

B.       Options to purchase shares of Class A Common Stock
may be granted under the Discretionary Option Grant Program and shares of Class
A Common Stock may be issued under the Stock Issuance Program that are in each
instance in excess of the number of shares then available for issuance under
the Plan, provided any excess shares actually issued under those programs shall
be held in escrow until there is obtained stockholder approval of an amendment
sufficiently increasing the number of shares of Class A Common Stock available
for issuance under the Plan.  If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess issuances are
made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Corporation
shall promptly refund to the Optionees and the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.

V.        USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
shares of Class A Common Stock under the Plan shall be used for general
corporate purposes.

21.

50
VI.         REGULATORY APPROVALS

A.       The implementation of the Plan, the granting of any
stock option under the Plan and the issuance of any shares of Class A Common
Stock (i) upon the exercise of any granted option or (ii) under the Stock
Issuance Program shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the stock options granted under it and the shares of Class A
Common Stock issued pursuant to it.

B.       No shares of Class A Common Stock or other assets
shall be issued or delivered under the Plan unless and until there shall have
been compliance with all applicable requirements of Federal and state
securities laws, including the filing and effectiveness of the Form S-8
registration statement for the shares of Class A Common Stock issuable under
the Plan, and all applicable listing requirements of any stock exchange (or the
Nasdaq National Market, if applicable) on which Class A Common Stock is then
listed for trading.

VII.        NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining such person) or
of the Optionee or the Participant, which rights are hereby expressly reserved
by each, to terminate such person's Service at any time for any reason, with or
without cause.

22.

51
APPENDIX

The following definitions shall be in effect under the Plan:

A.      AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under the Plan.

B.      BOARD shall mean the Corporation's Board of Directors.

C.      CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through either of the following transactions:

(i)         the acquisition, directly or indirectly by
any person or related group of persons (other than the Corporation or
a person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation's stockholders, or

(ii)        a change in the composition of the Board over
a period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at
the time the Board approved such election or nomination.

D.      CLASS A COMMON STOCK shall mean the Corporation's Class A
Common Stock, which shall be registered under Section 12(g) of the 1934 Act and
shall be entitled to one-tenth of (1) vote per share on all matters subject to
stockholder approval.

E.      CODE shall mean the Internal Revenue Code of 1986, as amended.

F.      CORPORATE TRANSACTION shall mean either of the following
stockholder approved transactions to which the Corporation is a party:

(i)         a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons

A-1.

52
different from the persons holding those securities immediately prior to such
transaction, or

(ii)        the sale, transfer or other disposition of
all or substantially all of the Corporation's assets  in complete
liquidation or dissolution of the Corporation.

G.      CORPORATION shall mean Odetics, Inc., a Delaware corporation,
and its successors.

H.      DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under the Plan.

I.      ELIGIBLE DIRECTOR shall mean a nonemployee Board member
eligible to participate in the Automatic Option Grant Program in accordance
with the eligibility provisions of Article One.

J.      EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

K.      EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.

L.      FAIR MARKET VALUE per share of Class A Common Stock on any
relevant date shall be determined in accordance with the following provisions:

(i)         If the Class A Common Stock is at the time
traded on the Nasdaq National Market, then the Fair Market Value shall
be deemed equal to the closing selling price per share of Class A
Common Stock on the date in question, as such price is reported on the
Nasdaq National Market or any successor system.  If there is no
closing selling price for the Class A Common Stock on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.

(ii)        If the Class A Common Stock is at the time
listed on any Stock Exchange, then the Fair Market Value shall be
deemed equal to the closing selling price per share of Class A Common
Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Class A Common
Stock, as such price is officially quoted in the composite tape of
transactions on such exchange.  If there is no closing selling price
for the Class A Common Stock on the date in question,

A-2.

53
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.

M.      HOSTILE TAKEOVER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities  pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept.

N.      INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

O.      INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:

(i)         such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or

(ii)        such individual's voluntary resignation
following (A) a change in his or her position with the Corporation
which materially reduces his or her duties and responsibilities or the
level of management to which he or she reports, (B) a reduction in his
or her level of compensation (including base salary, fringe benefits
and participation in any corporate performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation
is effected by the Corporation without the individual's consent.

P.      MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of
the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

Q.      1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.

A-3.

54
R.      NONSTATUTORY OPTION shall mean an option not intended to
satisfy  the requirements of Code Section 422.

S.      OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant or Automatic Option Grant Program.

T.      PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

U.      PARTICIPANT shall mean any person who is issued shares of
Class A Common Stock under the Stock Issuance Program.

V.      PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of
twelve (12) months or more.  However, solely for purposes of the Automatic
Option Grant Program, Permanent Disability or Permanently Disabled shall mean
the inability of the nonemployee Board member to perform his or her usual
duties as a Board member by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration
of twelve (12) months or more.

W.      PLAN shall mean the Corporation's 1997 Stock Incentive Plan, 
as set forth in this document.

X.      PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is
authorized to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction.

Y.      PLAN EFFECTIVE DATE shall mean September 4, 1997, the date of
the 1997 Annual Stockholders Meeting at which the Plan is approved by the
Corporation's stockholders.

Z.      PRIMARY COMMITTEE shall mean the committee of two (2) or more
nonemployee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders.

AA.     SECONDARY COMMITTEE shall mean a committee of one (1) or more
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.

A-4.

55
AB.     SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short swing profit liabilities of Section 16 of the
1934 Act.

AC.     SERVICE shall mean the performance of services for the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a nonemployee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in
the documents evidencing the option grant or stock issuance.

AD.     STOCK EXCHANGE shall mean either the American Stock Exchange
or the New York Stock Exchange.

AE.     STOCK ISSUANCE AGREEMENT shall mean the agreement entered into
by the Corporation and the Participant at the time of issuance of shares of
Class A Common Stock under the Stock Issuance Program.

AF.     STOCK ISSUANCE PROGRAM shall mean the stock issuance program
in effect under the Plan.

AG.     SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

AH.     TAKEOVER PRICE shall mean the greater of (i) the Fair Market
Value per share of Class A Common Stock on the date the option is surrendered
to the Corporation in connection with a Hostile Takeover or (ii) the highest
reported price per share of Class A Common Stock paid by the tender offeror in
effecting such Hostile Takeover.  However, if the surrendered option is an
Incentive Option, the Takeover Price shall not exceed the clause (i) price per
share.

AI.     TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Nonstatutory Options or
unvested shares of Class A Common Stock in connection with the exercise of
those options or the vesting of those shares.

AJ.     10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

A-5.

56
PROXY

ODETICS, INC.
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Class A Common Stock of ODETICS, INC.
(the "Company") hereby appoints TOM BARTHOLET and GORDON SCHULZ, and each of
them, proxies of the undersigned, each with full power to act without the other
and with power of substitution, to represent the undersigned at the Annual
Meeting of Stockholders of the Company to be held at 1515 South Manchester
Avenue, Anaheim, California on September 5, 1997 at 10:00 a.m. (Pacific Daylight
Time), and at any adjournments thereof, and to vote all shares of Class A Common
Stock of the Company held of record by the undersigned on August 1, 1997, with
all the powers the undersigned would possess if personally present, in
accordance with the instructions on the reverse hereof.

The undersigned hereby revokes any other proxy to vote at such Annual
Meeting of Stockholders and hereby ratifies and confirms all that said proxies,
and each of them, may lawfully do by virtue hereof. The undersigned also
acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held
September 5, 1997, the Proxy Statement and Annual Report to Stockholders for the
year ended March 31, 1997 furnished herewith.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

SEE REVERSE SIDE

57

[X]  Please mark votes as in this example.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3, AND AS THE NAMED PARTIES CONSIDER ADVISABLE IN
THEIR JUDGMENT WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT
THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

1.     Election of Directors

Nominees standing for election by holders of Class
B Common Stock: Joel Slutzky, Jerry F. Muench,
Ralph R. Mickelson, Stanley Molasky, Paul E.
Wright, Kevin C. Daly.

FOR  [_]         WITHHELD  [_]

[_] For all nominees except as noted above.

2.     Approval of the 1997 Stock Incentive Plan.

FOR  [_]           AGAINST [_]            ABSTAIN [_]

3.     Ratification of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending
March 31, 1998.

FOR  [_]           AGAINST [_]            ABSTAIN [_]

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT          [_]

MARK HERE IF YOU PLAN TO ATTEND THE MEETING            [_]

Signature:___________________________          Date:___________________________

Signature:___________________________          Date:___________________________

(This Proxy must be signed exactly as your name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the
stockholder is a corporation, a duly authorized officer should sign on behalf of
the corporation and should indicate his or her title.)

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.

58

PROXY

ODETICS, INC.
CLASS B COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Class B Common Stock of ODETICS, INC. (the
"Company") hereby appoints TOM BARTHOLET and GORDON SCHULZ, and each of them,
proxies of the undersigned, each with full power to act without the other and
with power of substitution, to represent the undersigned at the Annual Meeting
of Stockholders of the Company to be held at 1515 South Manchester Avenue,
Anaheim, California on September 5, 1997 at 10:00 a.m. (Pacific Daylight Time),
and at any adjournments thereof, and to vote all shares of Class B Common Stock
of the Company held of record by the undersigned on August 1, 1997, with all the
powers the undersigned would possess if personally present, in accordance with
the instructions on the reverse hereof.

The undersigned hereby revokes any other proxy to vote at such Annual
Meeting of Stockholders and hereby ratifies and confirms all that said proxies,
and each of them, may lawfully do by virtue hereof. The undersigned also
acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held
September 5, 1997, the Proxy Statement and Annual Report to Stockholders for the
year ended March 31, 1997 furnished herewith.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

SEE REVERSE SIDE

59

[X]  Please mark votes as in this example.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3, AND AS THE NAMED PROXIES CONSIDER ADVISABLE IN
THEIR JUDGMENT WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT
THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

1.     Election of Directors

Nominees standing for election by holders of Class
A Common Stock: Crandall Gudmundson and Leo
Wexler.

FOR  [_]         WITHHELD  [_]

[_] For all nominees except as noted above.

2.     Approval of the 1997 Stock Incentive Plan.

FOR  [_]           AGAINST [_]            ABSTAIN [_]

3.     Ratification of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending
March 31, 1998.

FOR  [_]           AGAINST [_]            ABSTAIN [_]

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT        [_]

MARK HERE IF YOU PLAN TO ATTEND THE MEETING          [_]

Signature:___________________________          Date:___________________________

Signature:___________________________          Date:___________________________

(This Proxy must be signed exactly as your name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the
stockholder is a corporation, a duly authorized officer should sign on behalf of
the corporation and should indicate his or her title.)

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.