<PAGE> 1
[LOGO]
To Our Shareholders:
You are cordially invited to attend the Annual General Meeting of
Shareholders of Madge Networks N.V. ("Madge") to be held at 12:30 p.m.,
Netherlands Time, on 29th of June 2000, at the offices of Madge's Dutch counsel,
Houthoff Buruma situated at Parnassusweg 126, 1070 AM Amsterdam, The
Netherlands. At this meeting, you will be asked to consider and vote upon a
number of matters detailed in the enclosed Notice of Meeting and Proxy
Statement.
In 1999, Madge made significant progress in building its business as a
Europe-based provider of rich digital content applications and managed network
services. These services are delivered via our Overnet, by-passing the public
Internet to more than 30 countries around the world. In February 1999, Madge
announced the acquisition of the Gains International network and the
establishment of a new Managed Network Services division that was subsequently
named Madge.web. At year-end we reported a total annualized run-rate of
installed contracts and uninstalled backlog of $34 million for this business. In
our traditional networking products operation, Madge.connect, we continued our
efforts to streamline and regain the financial strength of the business. In the
third quarter, Madge.connect acquired the Token Ring business of Olicom A/S and
moved ahead of IBM and Cisco to become the market leader in Token Ring.
Madge.web forged pivotal strategic alliances in 1999 with two US
technology companies, RealNetworks and Engage Technologies. Madge.web and
RealNetworks have partnered to build, operate and market a pan-European managed
network for streaming media. The new network, known as the Madge Broadcast
Network (MBN), is the European equivalent of, and is tethered to, the Real
Broadcast Network (RBN) in the US. MBN, which is due to be launched in June
2000, gives European and US content providers the performance, scalability,
reliability and flexibility required for the highest quality media streaming
experience available on the Internet. Madge.web has an exclusive, three-year
agreement with Engage Technologies to host and manage the European Engage
AdBureau, a turnkey service for the scheduling, targeting, delivery and
reporting of Internet advertising in Europe. In the third quarter of 2000,
Madge.web plans to combine the advanced profiling capabilities of Engage with
the streaming technology of RealNetworks, offering customers the management and
delivery of streamed advertising over the MBN.
In the fourth quarter of 1999, Madge completed the formation of a new
company structure to support its strategy to become a leading provider of
managed network and hosting services as well as advanced networking product
solutions. Madge.web and Madge.connect now operate autonomously as separate
legal companies under Madge Networks N.V. This allows focused management effort
and facilitates different financial and ownership structures for each business.
Primarily to fund the expansion of Madge.web, we raised $29 million through the
public issuance of common shares in the first quarter of 2000.
Madge.web expanded its customer base to 371 during the first quarter of
2000, an increase of 20% over the previous quarter. In February Madge.web
launched its New York City data and network operations center, which serves
domestic customers and is a gateway to Madge.web's pan-European operation. Now
that we have our key foundations in place, our emphasis during 2000 is on
further order momentum, an aggressive further deployment of sales and support
personnel across Europe, and a broadening of the range of our rich digital
content application services.
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In the first quarter of 2000, Madge.connect announced its initiative to
address the Gigabit IP needs of Token Ring customers with a high performance
Gigabit backbone switch which, together with our 100Mbps product and our
existing product portfolio, will provide the industry's most comprehensive set
of solutions. As part of its long-term business diversification strategy,
Madge.connect is developing a series of Internet-centric connectivity products
that it aims to start shipping by the end of 2000. We are looking forward to the
coming year and on behalf of the Board of Madge, thank you for your support.
Sincerely,
Robert H. Madge
Chairman of the Board
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MADGE NETWORKS N.V.
TRANSPOLIS SCHIPHOL AIRPORT
POLARIS AVENUE 23
2132 JH HOOFDDORP, THE NETHERLANDS
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 29, 2000 AT 12:30 P.M.
To the Shareholders of MADGE NETWORKS N.V.:
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of MADGE
NETWORKS N.V. ("Madge" or the "Company") will be held at the offices of the
Company's Dutch counsel, Houthoff Buruma, Parnassusweg 126, 1070 AM Amsterdam,
The Netherlands, on June 29, 2000 at 12:30 p.m., local time, for the following
purposes:
1. To elect one managing director to hold office until the next Annual
General Meeting and until his successor is duly elected and qualified;
2. To elect one member of the Supervisory Board for a term of three years;
3. To acknowledge the retirement of Charles Lynch from the Supervisory
Board with effect from the date of the last Annual General Meeting,
June 23, 1999, and the resignation of Denis Pomroy from the Supervisory
Board with effect from this Annual General Meeting, and to grant
Messrs. Lynch and Pomroy discharge for their services as members of the
Supervisory Board;
4. To amend the Articles of Association of the Company in accordance with
the draft Deed of Amendment annexed hereto and to authorise each lawyer
of Houthoff Buruma in Amsterdam to apply for the approval of the Dutch
Ministry of Justice and to execute the deed of amendment of the
Articles of Association;
5. To adopt the Annual Accounts of Madge for the year ended December 31,
1999 and to discuss the annual report;
6. To approve the appointment of Ernst & Young as the Company's
Netherlands and worldwide auditors for the year ending December 31,
2000;
7. To approve the designation of the Management Board for a period of five
years from the date of the Annual General Meeting as the body
authorised to issue all common and preferred shares to the extent
permitted by law and to grant options to purchase such shares; and
8. To authorise the Management Board, for a period of five years from the
date of the Annual General Meeting, to limit or exclude the pre-emptive
rights provided for in the Articles of Association of the Company or by
law.
Only holders of record of common shares of the Company at the close of business
on June 2, 2000 will receive notice of the meeting. In accordance with Dutch
Law, the Management Board has determined that only holders of record of common
shares at the close of business (New York time) on June 22, 2000 will be
entitled to vote at the meeting.
The accompanying Proxy Statement solicits proxies with respect to the matters
identified in Items 1 through 8 above for use at the Annual General Meeting or
at any adjournment thereof. Holders of common shares are encouraged to attend
the meeting and vote on all matters.
By Order of the Management Board,
Christopher Bradley
Chief Financial Officer
June 5, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL GENERAL MEETING OF SHAREHOLDERS,
PLEASE SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE
ACCOMPANYING ENVELOPE.
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MADGE NETWORKS N.V.
TRANSPOLIS SCHIPHOL AIRPORT
POLARIS AVENUE 23
2132 JH HOOFDDORP, THE NETHERLANDS
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
The accompanying proxy is solicited on behalf of the Management Board of MADGE
NETWORKS N.V. ("Madge" or the "Company"), a Netherlands corporation, for use at
the Annual General Meeting of Shareholders of Madge (the "Annual General
Meeting") to be held at the offices of the Company's Dutch counsel, Houthoff
Buruma, Parnassusweg 126, 1070 AM Amsterdam, The Netherlands, on Thursday June
29, 2000 at 12:30 p.m., local time, and any adjournment thereof, for the limited
purpose of voting with respect to (1) the election of one managing director; (2)
the election of one supervisory director for a term of three years; (3) the
acknowledgement of the retirement of Charles Lynch as supervisory director and
the resignation of Denis Pomroy as supervisory director and the granting to
Messrs. Lynch and Pomroy of discharge for their services as members of the
Supervisory Board; (4) the amendment of the Articles of Association of the
Company in accordance with the draft Deed of Amendment annexed hereto; (5) the
adoption of the Annual Accounts of Madge for the fiscal year ended December 31,
1999; (6) the approval of the appointment of Ernst & Young as the Company's
Netherlands and world-wide auditors for fiscal year 2000; (7) the approval of
the designation of the Management Board for a five-year period from the date of
the Annual General Meeting as the body authorized to issue all common and
preferred shares and to grant options to purchase such shares; and (8) the
authorization of the Management Board during such five-year period to limit or
exclude the preemptive rights provided for in the Articles of Association of the
Company or by law. Only holders of record of common shares at the close of
business on June 2, 2000 will receive notice of the meeting. In accordance with
Dutch Law, the Management Board has determined that only holders of record of
common shares at the close of business (New York time) on June 22, 2000 (the
"Record Date") will be entitled to vote at the meeting. Holders of common shares
on the Record Date are entitled to vote at the Annual General Meeting and are
entitled to one vote for each common share held. Holders of common shares as of
the Record Date are encouraged to attend the Annual General Meeting and to cast
their votes on all matters. In the event of an adjournment of the Annual General
Meeting the Management Board will set a new record date for the adjourned
meeting as of a date not earlier than one week before the date of such meeting.
The vote required to approve any of the matters to be voted upon at the Annual
General Meeting (or any adjournment thereof) is a majority of the votes cast. At
the close of business on March 31, 2000, Madge had outstanding 44,180,172 common
shares.
Any holder of common shares giving a proxy in the form accompanying this Proxy
Statement has the power to revoke the proxy prior to its use. A proxy can be
revoked (i) by an instrument of revocation which is delivered prior to the
Annual General Meeting (or any adjournment thereof) to the Management Board of
Madge at the address set forth at the beginning of this Proxy Statement; (ii) by
a duly executed proxy bearing a later date or time than the date or time of the
proxy being revoked if such proxy is delivered to the Management Board of Madge
before the Annual General Meeting (or any adjournment thereof) at the address
set forth at the beginning of this Proxy Statement; or (iii) at the Annual
General Meeting and any adjournment thereof, if the shareholder is present and
elects to vote in person. Mere attendance at the Annual General Meeting or any
adjournment thereof will not serve to revoke a proxy. A person who is not a
shareholder of the Company as of the Record Date, or as of the record date for
any adjournment of the Annual General Meeting, as the case may be, will be
ineligible to vote at the meeting
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or to submit or revoke a proxy for the meeting and any proxies previously
granted by such person will be invalid and no longer of any force or effect.
This Proxy Statement and the accompanying proxy card are being mailed to Madge
shareholders as of June 2, 2000. The managing director, supervisory directors,
officers and other employees of Madge may solicit proxies with respect to
proposals included in Items 1 through 8 of the Notice of Annual General Meeting,
which are discussed in this Proxy Statement, by personal interview, telephone,
telegraph, e-mail or facsimile without special compensation. Any costs of
solicitation will be borne by Madge.
Unless otherwise instructed all proxies returned to the Company will be voted
FOR the election of Robert Madge as managing director and Alex Vieux as
supervisory director (Items 1 and 2), FOR proposals 3 and 4 and 6 through 8, and
FOR the adoption of the 1999 Annual Accounts in the form proposed by management
(Item 5).
A copy of the Company's Annual Report on Form 20-F for the year ended December
31, 1999 (the "1999 Annual Report") is being mailed to shareholders of Madge as
of June 2, 2000 together with this Proxy Statement. Each document filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), subsequent to the date of
this Proxy Statement and prior to the date of the Annual General Meeting shall
be deemed to be incorporated by reference in this Proxy Statement and to be part
hereof from the date of filing such document. The Company is under no obligation
to provide this Proxy Statement or other materials to persons who become
shareholders after June 2, 2000 and prior to the Record Date.
Certain of the statements included in this Proxy Statement and the 1999 Annual
Report or in any document incorporated herein by reference that express the
Company's "anticipation," "belief," "commitment," "expectation," "intention,"
"goals," "plans" or similar terms, and statements regarding, among other things,
the Company and its products and services, the success and growth of its
Madge.web business, the adequacy of its financial resources, as well as other
statements that are not historical fact, are forward-looking statements within
the meaning of the United States Private Securities Litigation Reform Act of
1995 and involve risks and uncertainties referred to under "Item 1 - Description
of Business - Risk Factors" in the 1999 Annual Report and elsewhere herein and
therein, including any such incorporated document, that could cause actual
results to differ materially. Shareholders are urged to read the 1999 Annual
Report, including the "Risk Factors" set forth therein.
ITEMS 1, 2 AND 3 -- ELECTION OF MANAGING AND SUPERVISORY DIRECTORS;
DISCHARGE OF RETIRING SUPERVISORY DIRECTORS
GENERAL
The Company's Board consists of both a Supervisory Board composed of supervisory
directors and a Management Board, presently composed of one managing director.
Under the laws of The Netherlands, supervisory directors are required to be
independent directors and managing directors are required to be corporate
executives. The Supervisory Board has the primary responsibility for supervising
the general course of corporate affairs as conducted by the Management Board and
recommending for adoption by the shareholders the annual financial statements of
the Company. The Management Board is responsible for the day-to-day operations
of the Company. References in this Proxy Statement to the "Board" refer to the
combined Supervisory and Management Boards.
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The Company's Articles of Association provide for one or more managing directors
and one or more supervisory directors, but do not provide for a maximum number
of directors. The Company presently has one managing director and two
supervisory directors, Michael Fischer and Denis Pomroy, as Charles Lynch
effectively retired at the 1999 Annual General Meeting (Item 3). Under the
Company's present Articles of Association, each member of the Board holds office
until the expiration of such member's term of office or the member's
resignation, death or removal, with or without cause, by the shareholders. Under
the Company's Articles of Association as proposed to be amended (see Item 4
below), the members of the Supervisory Board will be elected by the general
meeting of shareholders; provided that up to one-third of the total number of
members may be elected by the Supervisory Board. If the proposed amendment to
the Company's Articles is adopted, each managing and supervisory director will
hold office until the expiration of such director's term or until such
director's death, resignation or removal, with or without cause, by the body
that elected such director.
The Company's Supervisory Board has a rotation plan that effectively divides the
Supervisory Board into three classes with staggered three-year terms. As a
result, only one supervisory director stands for election at each Annual General
Meeting of shareholders, with the other supervisory directors continuing for the
remainder of their respective terms. However, if the proposed amendment to the
Company's Articles of Association is adopted (see Item 4 below), shareholders
will not be able to vote at all with respect to the election of supervisory
directors appointed by the Supervisory Board, and any such supervisory director
will only serve until the next general meeting of shareholders.
The Company's Management Board has agreed to stand for election at this Annual
General Meeting of shareholders.
ITEM 1. NOMINEE FOR MANAGEMENT BOARD
The following information is furnished with respect to the person proposed by
the Supervisory Board for election as the sole member of the Company's
Management Board.
THE SUPERVISORY BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEE IDENTIFIED
BELOW. THE ACCOMPANYING PROXY WILL BE VOTED FOR THE ELECTION OF THE FOLLOWING
NOMINEE UNLESS INSTRUCTIONS ARE OTHERWISE PROVIDED.
Robert H. Madge has served as the Chairman of the Board, Managing Director,
Chief Executive Officer and President of Madge since 1993. He has also served as
the Chief Executive of Madge's wholly owned subsidiary Madge.web Holdings B.V.
(together with the predecessor division of Madge, "Madge.web") since its
incorporation in November 1999. Mr. Madge has played a leading role in the
development of the networking-based technology industry in Europe. In 1986 he
founded our predecessor Madge Networks Limited. Previously, Mr. Madge was
Technical Director of Intelligent Software, a developer of computer programs and
products, and General Manager of Enterprise Computers, a British manufacturer of
personal computers. Mr. Madge has served as a member of our Management Board
since 1993.
ITEM 2. NOMINEE FOR SUPERVISORY BOARD
The following information is furnished with respect to the person proposed by
the Board for election to the Company's Supervisory Board.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEE IDENTIFIED BELOW. THE
ACCOMPANYING PROXY WILL BE VOTED FOR THE ELECTION OF THE FOLLOWING NOMINEE
UNLESS INSTRUCTIONS ARE OTHERWISE PROVIDED.
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Alex Serge Vieux, 42, is the founder and chairman of DASAR Brothers, Inc., a
leading source for IT industry information and interaction in the global market.
Mr. Vieux is experienced in all aspects of the IT sector, having built two
successful software companies. He has also taught Economics at the Universite de
Paris-La Sorbonne, worked as a consultant for Andersen Consulting, and was the
U.S. business correspondent for the French daily newspaper Le Monde. He is a
director of Lernout & Hauspie Speech Products and a number of private and public
companies. In addition, Mr. Vieux serves as senior advisor to the French
Minister of Industry, Finance and Economics, and is the chairman of Infotech,
the French IT commission.
The term of office of the person elected by shareholders to fill the vacancy on
the Supervisory Board will expire at the earlier of June 29, 2003 or the 2003
Annual General Meeting.
INCUMBENT MEMBER OF THE SUPERVISORY BOARD
The following information is furnished with respect to the incumbent member of
the Supervisory Board whose term extends beyond the 2000 Annual General Meeting.
Michael D. Fischer was initially elected as supervisory director of the Company
at the Annual General Meeting held in June 1993. In 1999 he was reelected to the
Supervisory Board for a term ending with the Annual General Meeting to be held
in 2002. Mr. Fischer served as a director of Madge Networks Limited from 1988
until June 1993. Mr. Fischer is a non-executive president of Research Machines,
a U.K. personal computer company that he co-founded in 1973.
ITEM 3. ACKNOWLEDGEMENT OF THE RETIREMENT OF CHARLES LYNCH AND THE RESIGNATION
OF DENIS POMROY FROM THE SUPERVISORY BOARD AND GRANTING OF FULL DISCHARGE TO
THEM FOR THEIR SERVICES AS MEMBERS OF THE SUPERVISORY BOARD.
On June 23, 1999 (the date of the 1999 Annual General Meeting) Charles Lynch
retired as a member of the Supervisory Board as he had during the twelve-month
period preceding the 1999 Annual General Meeting reached the age of 72, which is
the maximum age allowed for members of the Supervisory Board by Dutch law. Denis
Pomroy has resigned his position on the Supervisory Board effective as of the
date of the 2000 Annual General Meeting.
Under Dutch law a shareholders' vote granting discharge to the retiring
Supervisory Board members for their service as supervisory directors will extend
to all matters that are apparent to shareholders from the annual accounts
adopted from time to time by the general meeting of shareholders through the
date of discharge, subject to certain exceptions in the case of bankruptcy.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THIS ITEM.
MEETINGS AND COMMITTEES OF THE BOARD
The Board met four times during 1999. Each incumbent director attended more than
75% of the meetings of the full Board and 75% of the meetings of all committees
of the Board on which he served. The Board has two standing committees, the
Compensation Committee and the Audit Committee. The members of the Compensation
Committee since the last Annual General Meeting are Robert H. Madge, Michael D.
Fischer and Denis Pomroy. The Compensation Committee, which met three times
during 1999, administers the Company's stock option plan and employee stock
purchase plan and provides recommendations concerning salaries and incentive
compensation for employees of and consultants to the Company. The members of the
Audit Committee since the last Annual General Meeting are Robert H.
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<PAGE> 8
Madge, Michael D. Fischer and Denis Pomroy. The Audit Committee met twice during
1999. The Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent auditors. The Supervisory Board
has adopted an Audit Committee Charter which sets out the Audit Committee's
responsibilities.
Following this Annual General Meeting, if the Board's recommended new member is
elected to the Supervisory Board, both the Audit and the Compensation Committees
will consist of Robert H. Madge, Michael Fischer and Alex Vieux.
Madge has no standing nominating committee. Under the Company's present Articles
of Association, managing directors and supervisory directors must be elected at
a meeting of shareholders. If the proposed amendment to the Company's Articles
is adopted (see Item 4 below), the Company's managing directors and supervisory
directors will be elected by the general meeting of shareholders; provided that
up to one-third of the total number of supervisory directors may be elected by
the remaining members of the Supervisory Board.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1999, Managing Director Robert H. Madge
received cash compensation for serving as Chairman of the Board, Managing
Director, Chief Executive Officer and President of the Company. Each managing
director and supervisory director receives an annual fee of $25,000 and is paid
$1,000 per meeting of the Board attended in person and $500 per meeting of the
Board attended by conference telephone. The Company reimburses its managing
director and the supervisory directors for any expenses incurred in attending
meetings of the Board.
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MANAGEMENT
The following table sets forth the names and positions of our present executive
officers and continuing supervisory directors, and such persons' ages as of
December 31, 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Robert H. Madge 47 Chairman of the Board and President of Madge; Chief
Executive Officer of Madge.web.
Christopher Bradley 38 Chief Financial Officer of Madge; Chief Financial
Officer of Madge.web
Michael F. Keilty 48 Senior Vice President of Madge; Senior Vice
President, Sales and Operations of Madge.web
Michael D. Wilson 42 Senior Vice President of Madge; Chief Executive
Officer of Madge.connect
Michael D. Fischer 49 Supervisory Director
</TABLE>
See page 3 for biographical information regarding Mr. Madge.
Christopher Bradley joined in September 1996 as Finance Director, becoming Vice
President, Finance in November 1998 and Chief Financial Officer in March 1999.
Prior to joining Madge, Mr. Bradley served seven years at Nortel as Finance
Director in the United Kingdom, North America and Asia. Prior to that time, Mr.
Bradley held financial management positions with COMAG, a subsidiary of Hearst
Corporation, Digital Equipment and 3M. Mr. Bradley is also Chief Financial
Officer of Madge.web.
Michael F. Keilty joined Madge as Vice President and General Manager of Madge's
former Video Networking Division in October 1998 and has most recently been
appointed Senior Vice President, Sales and Operations of Madge.web. Prior to
joining Madge, Mr. Keilty served eleven years at British Telecom North America,
the U.S.-based subsidiary of British Telecom, most recently as Senior Vice
President, Sales & Marketing. Previously he served as Vice President of Product
Sales, where his role encompassed a domestic and international focus. Mr. Keilty
joined British Telecom North America in 1988 from FTCC, an international record
carrier, where he held the position of Vice President of Sales.
Michael D. Wilson joined Madge in January 1994 as Vice President, Manufacturing
and Logistics and has most recently been appointed Chief Executive Officer of
Madge.connect. Prior to joining Madge in 1994, Mr. Wilson served as Engineering
Software and Service Business Manager for Manufacturing Systems Portfolio Ltd.,
a subsidiary of International Computers Limited from May 1993 to January 1994.
See page 4 for biographical information regarding Mr. Fischer.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of common shares as of March 31, 2000 by (i) each person who is known
by Madge to have beneficially owned more than 5% of its outstanding common
shares as of such date; (ii) each continuing and nominated member of the
Supervisory Board of Madge; (iii) each of the executive officers of Madge; (iv)
all of such directors and executive officers together as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP (1) OF CLASS
<S> <C> <C>
Robert H. Madge (2) 19,678,333 44.03%
Madge Networks N.V.
Schiphol Airport
Polaris Avenue 23
2132 JH Hoofddorp
The Netherlands
Michael D. Wilson (3) 196,137 *
Michael D. Fischer (4) 113,878 *
Michael F. Keilty (5) 112,484 *
Christopher Bradley (6) 41,718 *
Alex S. Vieux -- --
Management and
Supervisory Board members as a
group (6 persons) 20,142,550 44.73%
</TABLE>
----------
* Less than one percent.
(1) The stock ownership information has been furnished to us by the named
persons. Except as described below, each person has sole voting power and
investment power with respect to the common shares listed in the table.
Percentages in the table are based on 44,180,172 common shares issued and
outstanding as of March 31, 2000, plus such number of common shares as
the indicated person or group had the right to purchase pursuant to
outstanding options exercisable within 60 days after such date.
(2) Includes (i) 80,750 shares owned by a registered U.K. charitable trust,
the income and assets of which may only be used for charitable purposes,
established by Mr. Madge who serves as a trustee, and (ii) 19,083,000
shares owned directly or indirectly by trusts established by Mr. Madge
for the direct or indirect benefit of, among others, members of Mr.
Madge's immediate family and for which trusts Mr. Madge does not act as a
trustee. Mr. Madge disclaims beneficial ownership of all such shares.
Includes 514,583 shares that may be acquired pursuant to the exercise of
fully vested options that were currently exercisable as of March 31, 2000
or were exercisable within 60 days after that date.
(3) Includes 174,373 shares that may be acquired pursuant to the exercise of
fully vested options that were currently exercisable as of March 31, 2000
or were exercisable within 60 days after that date.
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<PAGE> 11
(4) Includes 20,000 shares that may be acquired pursuant to the exercise of
fully vested options that were currently exercisable as of March 31, 2000
or were exercisable within 60 days after that date.
(5) Includes 104,166 shares that may be acquired pursuant to the exercise of
fully vested options that were currently exercisable as of March 31, 2000
or were exercisable within 60 days that date.
(6) All these shares may be acquired pursuant to the exercise of fully vested
options that were currently exercisable as of March 31, 2000 or were
exercisable within 60 days after that date.
CERTAIN RELATIONSHIPS
Until March 1998 Madge occupied a facility located in Chalfont St. Giles, United
Kingdom owned by Hartland Holdings Ltd. ("HHL"), a private limited company
beneficially owned by family trusts established by Robert Madge. In June 1995
Madge entered into a written lease covering the lease of this property. The
lease for this property terminated in March 1998, and Madge no longer occupies
this facility. In April 1999, Madge paid HHL $121,000 to settle reinstatement
and other obligations relating to Madge's withdrawal from the property after
termination of the lease.
Madge has entered into indemnification agreements with each of its executive
officers and directors. In general these agreements require Madge to indemnify
such persons against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding, whether
actual or threatened, to which any such person may be made a party by reason of
the fact that such person is, or was, a director or an executive officer of
Madge or any of its affiliated enterprises. In the opinion of the Securities and
Exchange Commission, indemnification against violations of the Securities Act of
1933, as amended, is against public policy.
Madge has also entered into agreements with certain of its senior executive
officers that provide for payments, benefits and vesting of options for periods
of time ranging from six months to a year following the termination of their
employment in certain circumstances.
Madge believes that all related-party transactions described above were on terms
no less favorable than would be obtained from unrelated third parties. Any
future transactions between Madge and its officers, directors and affiliates
will be on terms no less favorable to Madge than can be obtained from
unaffiliated third parties, and any material transactions with such persons will
be approved by a majority of its disinterested directors.
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<PAGE> 12
ITEM 4 -- AMEND ARTICLES OF THE COMPANY
The Board proposes to amend the Articles of Association of the Company pursuant
to the draft Deed of Amendment annexed hereto. If this proposal is adopted, the
Company's Articles of Association will be amended as follows:
(1) Amendment of the Company's corporate objects clause to allow guarantees of
and security for the obligations of third parties:
The Board proposes to amend the corporate objects clause of the Company's
Articles of Association to facilitate the issuance of guarantees of, and
the pledging of the Company's assets as security for, the indebtedness of
unrelated third parties. The Company's objects clause does not presently
explicitly permit the issuance of such guarantees or the granting of such
security. While the Company presently does not anticipate that it will
issue guarantees of, or provide security for, indebtedness of unrelated
third parties, the Company may in future be required to provide such
guarantees or security as a condition to entering into future financing
transactions involving special purpose vehicles that are not subsidiaries
of the Company. The proposed amendment to the Articles of Association makes
it clear that the Company has the corporate power to provide such
guarantees or other security in the context of future financing involving
special purpose vehicles or in such other contexts as the Company in its
sole discretion deems appropriate.
(2) Amendment of the clause that provides that the management board may adopt
resolutions without holding a meeting.
The current Articles already contain such a clause. The Board proposes to
amend this clause for the sole purpose of allowing adoption of resolutions
by email.
(3) Amendment of the Company's Articles to provide for the possibility of
election by the Supervisory Board of up to one-third of the supervisory
directors.
The Company's Articles of Association presently provide that all of the
Company's supervisory directors are elected by the general meeting of
shareholders. The general meeting of shareholders also presently determines
the number of supervisory directors. In addition, the general meeting of
shareholders presently has the right to remove or suspend all of the
members of the Supervisory Board.
The Board proposes to amend the Company's Articles of Association to
provide that the members of the Supervisory Board will be elected by the
general meeting of shareholders, provided that up to one-third of the total
members of the Supervisory Board may but are not required to be elected by
the Supervisory Board. A member elected by the Supervisory Board will only
serve until the next annual or special general meeting of shareholders of
the Company. The Articles will also be amended to provide that the general
meeting of shareholders will not have the right to remove or suspend a
supervisory director elected by the Supervisory Board; only the Supervisory
Board itself by a majority vote of all members will have the authority to
remove or suspend such supervisory director. The general meeting of
shareholders will continue to have the right to remove and suspend the
supervisory directors elected by shareholders.
The Board proposes to amend this provision to give added flexibility to the
Supervisory Board to more closely reflect typical U.S. corporate governance
provisions and to reduce the need to call a general meeting of shareholders
if a Supervisory Board member leaves mid-term.
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(4) Amendment of the Company's Articles to allow the Management Board to fix a
record date for all future shareholder meetings.
Under recent amendments to Dutch law the Management Board may, if it is
authorized to do so in a company's Articles of Association, fix a record
date for attendance of and exercise of voting rights at shareholders'
meetings. The record date for shareholders' meetings may not be earlier
than one week before the date on which the meeting is to be held. The
Management Board is not required to fix a record date for any future
shareholders' meeting. If the Management Board elects not to fix a record
date for a shareholders' meeting, only persons who are shareholders of
Madge at the time of the relevant shareholders' meeting may attend and vote
at the meeting. The Board proposes to amend the Company's Articles of
Association to give the Management Board the flexibility to fix a record
date for all future shareholders' meetings.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF ITEM 4.
ITEMS 5 THROUGH 9 -- CERTAIN OTHER MATTERS TO BE VOTED ON AT THE
ANNUAL GENERAL MEETING
ITEM 5. ADOPTION OF ANNUAL ACCOUNTS. Section 101 of Volume 2 of The Netherlands
Civil Code provides that the Annual Accounts of the Company prepared in
accordance with Netherlands generally accepted accounting principles ("Dutch
GAAP") shall be presented to and adopted by the Company's shareholders at the
Annual General Meeting. If the Dutch GAAP Annual Accounts as prepared by
management are not adopted, the specific changes sought by those voting against
adoption must be specified. A copy of the Dutch GAAP Annual Accounts as prepared
by management is available for review at the Company's offices listed at the
beginning of this Proxy Statement and will be mailed to shareholders upon
request. The Company's ability to pay dividends and to repurchase shares
depends, among other things, on its shareholders' equity as shown on its Dutch
GAAP Annual Accounts.
A copy of the Company's audited financial statements prepared in accordance with
United States generally accepted accounting principles ("U.S. GAAP") is included
in the Company's 1999 Annual Report accompanying this Proxy Statement.
Shareholders will not be requested to vote with respect to the Company's U.S.
GAAP financial statements.
The Company's Articles of Association provide that by adopting the 1999 Dutch
GAAP Annual Accounts the general meeting of shareholders will be deemed to have
granted full discharge to all of the members of the Management and Supervisory
Boards for all matters apparent to shareholders from such Annual Accounts,
subject to certain exceptions in the case of the Company's bankruptcy. Adoption
of the Dutch GAAP Annual Accounts as prepared by management constitutes approval
of the presentation of such Annual Accounts in the English language.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THIS ITEM.
ITEM 6. APPOINTMENT OF AUDITORS. The Board has selected Ernst & Young as
independent auditors to audit the financial statements of Madge for the year
ending December 31, 2000. Ernst & Young has acted as the Company's worldwide
auditors since 1989 and acted as the Company's Netherlands auditors since 1993.
A representative of Ernst & Young will be present at the Annual General Meeting,
will be given an opportunity to make a statement if he or she desires to do so,
and will also be available to respond to appropriate questions.
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THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THIS ITEM.
ITEM 7. AUTHORIZATION TO ISSUE COMMON AND PREFERRED SHARES. Section 96 of the
Netherlands Civil Code and Article 6 of the Company's Articles of Association
provide that the Board may be authorized to issue Common and Preferred Shares,
and to grant options or other rights to acquire Common and Preferred Shares, for
a fixed period not to exceed five years pursuant to a resolution duly adopted at
an Annual General Meeting. Such authorization was granted by the 1999 Annual
General Meeting of Shareholders for a period of five years. The Board proposes
that the authorization to issue shares be extended to five years from the date
of the 2000 Annual General Meeting. Pursuant to such authorization the Board
will be authorized to issue shares, and to grant the right to acquire shares,
within the limits of the Company's authorized and unissued shares as in effect
from time to time. Shareholders may not subsequently vote to revoke the
authorization granted to the Board.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THIS ITEM.
ITEM 8. LIMITATION OF EXCLUSION OF PREEMPTIVE RIGHTS. Section 96a of the
Netherlands Civil Code and Article 6 of the Company's Articles of Association
provide that the Board may limit or exclude the shareholders' preemptive rights
with respect to the issuance of Common and Preferred Shares, and with respect to
the grant of options or other rights to acquire Common and Preferred Shares, for
a fixed period not to exceed five years if such authority has been granted to
the Board pursuant to a resolution of an Annual General Meeting and if the
authority to issue shares has also been granted to the Board for the same fixed
period. Authorization to exclude preemptive rights was granted by the 1999
Annual General Meeting of Shareholders for a period of five years. The Board
proposes that the authorization to exclude preemptive rights be extended to five
years from the date of the 2000 Annual General Meeting. Shareholders may not
subsequently vote to revoke the authorization granted to the Board to exclude
preemptive rights.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THIS ITEM.
ANNUAL REPORT TO SHAREHOLDERS
Madge's Form 20-F containing its 1999 Annual Report for the year ended December
31, 1999 includes the audited consolidated balance sheets as of December 31,
1999 and 1998 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 31, 1999, prepared in accordance with U.S. GAAP. The Form
20-F has been mailed to shareholders entitled to notice of the Annual General
Meeting.
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SHAREHOLDER PROPOSALS
Madge will, in future Proxy Statements of the Board, include shareholder
proposals required to be included under Netherlands law. In order for a proposal
by a shareholder to be included in the Proxy Statement of the Board relating to
the Annual General Meeting of Shareholders to be held in 2001, that proposal
must be received in writing by the Management Board of Madge at the address set
forth at the beginning of this Proxy Statement by no later than January 31,
2001. Any shareholder representing at least ten percent of the Company's issued
capital may submit proposals for inclusion in future Proxy Statements in
accordance with Article 33 of the Company's Articles of Association and Section
110 of Book 2 of The Netherlands Civil Code.
By Order of the Management Board,
Christopher Bradley
Chief Financial Officer
June 5, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
SIGN AND RETURN THE ACCOMPANYING PROXY CARD IN THE ACCOMPANYING ENVELOPE AS SOON
AS POSSIBLE.
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ANNEX
AMENDMENT OF THE ARTICLES OF ASSOCIATION.
DRAFT DATED 30 MAY 2000
On **
two thousand, appeared before me,
Martinus Adrianus Jurjen Marie Scholtens, civil law notary in Amsterdam:
**
The person appearing declared:
- the latest amendment to the articles of association of the public
company: MADGE NETWORKS N.V., with registered office in Amsterdam has
been executed on the ninth day of August nineteen ninety-six before Mr
G.W.Ch. Visser, civil law notary in Amsterdam, on the draft of which
deed the ministerial declaration of no-objection has been granted on **
under number N.V. **
- that the general meeting of shareholders of said company has resolved
to amend the Articles of Association;
- furthermore it is resolved to authorize the person appearing to sign
the deed of amendment of the Articles of Association;
- evidence of said resolutions is by means of the minutes of the general
meeting of shareholders of the company to be attached to this
instrument.
In order to carry out said resolutions the person appearing subsequently
declared to amend the Articles of Association as follows:
Article 3, sixth item shall read:
- to issue guarantees and to charge and pledge its assets for obligations
and commitments of itself or affiliated companies and third parties;
Article 18, paragraph 4 shall read:
3. The management board may also take resolutions without recourse to a
meeting, provided the text of the proposed resolution is sent to all
members of the management board and they all agree in writing, by
facsimile transmission or e-mail, upon this way of taking resolutions.
The management board shall draw up a record of a resolution of this
sort with the received answers attached.
Article 20 shall read:
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Article 20. Number of members.
The company shall have a supervisory board, consisting of one or more members to
be determined by the supervisory board.
Article 21 shall read:
Article 21. Appointment.
1. Members of the supervisory board shall be appointed by the general meeting,
with due regard to the following sentence. The supervisory board shall
furthermore be authorised to appoint one or several members provided that
the number of members appointed by the supervisory board may never exceed
one third of the total number of members of the supervisory board. A member
of the supervisory board appointed by the supervisory board shall serve for
a period ending on the day of the next general meeting of shareholders held
after the appointment.
2. No person who has reached the age of seventy-two (or such higher or lower
maximum age as may from time to time be established by law) may be
appointed as a supervisory board member.
3. When the appointment of a supervisory board member to be appointed by the
general meeting is proposed the candidate's age and profession shall be
stated as well as the number of shares held by him in the company and the
offices he holds or has held insofar as they are of importance in
connection with the performance of the duties of a member of the
supervisory board. Furthermore it shall be stated which companies he is
already associated with as supervisory board member; if they include
companies belonging to one and the same group, an indication of the group
shall suffice. The proposal for the appointment shall state the reasons.
Article 22 shall read:
Article 22. Suspension and dismissal. Retirement.
1. Every member of the supervisory board appointed by the general meeting may
be suspended or dismissed by the general meeting at any time. A member of
the supervisory board appointed by the supervisory board may be suspended
or dismissed by the supervisory board at any time.
2. Every member of the supervisory board shall retire no later than on the day
on which the annual meeting is held in the financial year in which he
reaches the age of seventy-two (or such higher or lower maximum age as may
from time to time be established by law).
3. The supervisory board members shall retire periodically in accordance with
a rotation plan to be drawn up by the supervisory board. Every member thus
retiring may be re-elected as long as he has not reached the maximum age
limit established by law.
A new paragraph 5 shall be added to article 35, which reads:
The management board shall be authorised to fix a record date for attendance of
and exercise of voting rights at general meetings of shareholders in
accordance with Article 119 Book 2 of the Civil Code.
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FINAL STATEMENTS.
Finally the person appearing declared that according to a ministerial order
which is to be attached to this instrument, the ministerial declaration of
no-objection has been granted on the ** under number N.V. **
I, civil-law notary, know the person appearing before me and have established
from the above-mentioned document submitted for this purpose the identity of the
person appearing before me in connection with this deed.
THIS DEED,
is executed in Amsterdam on the date stated at the head of the deed.
After the substance of this deed, and thereupon an explanation, had been
communicated to the person appearing before me, he declared that he had taken
cognizance of its contents and was in agreement therewith.
The person appearing before me and I, civil law notary, subsequently signed the
deed after its limited reading, according to law.
A-3
