<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant / /
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 Section240.14a-11(c) or
Section240.14a-12
</TABLE>
INTERSPEED, 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):
<TABLE>
<S> <C> <C>
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
INTERSPEED, INC.
39 HIGH STREET
NORTH ANDOVER, MA 01845
January 18, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting (the "Annual
Meeting") of Interspeed, Inc., a Delaware corporation (the "Company"), to be
held on February 15, 2000, at 1:00 p.m., local time, at Fleet Bank Building, One
Federal Street, Boston, MA 02110, 8th Floor, Room 4.
The Annual Meeting has been called for the purpose of (i) electing two
Class I Directors, each for three-year terms and (ii) considering and voting
upon such other business as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
The Board of Directors has fixed the close of business on January 7, 2000 as
the record date for determining stockholders entitled to notice of, and to vote
at, the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors of the Company recommends that you vote "FOR" the
election of the nominees of the Board of Directors as Directors of the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
Sincerely,
/s/ Stephen A. Ide
Stephen A. Ide
PRESIDENT
<PAGE>
INTERSPEED, INC.
39 HIGH STREET
NORTH ANDOVER, MA 01845
(978) 688-6164
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 15, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Interspeed, Inc. will be held on February 15, 2000, at 1:00 p.m., local time, at
Fleet Bank Building, One Federal Street, Boston, MA 02110, 8th Floor, Room 4
(the "Annual Meeting") for the purpose of considering and voting upon:
1. The election of two Class I Directors each for three-year terms expiring
at the Annual Meeting of Stockholders to be held in 2003; and
2. Such other business as may properly come before the Annual Meeting and
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on January 7, 2000 as
the record date for determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof. Only
holders of common stock of record at the close of business on that date will be
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof.
In the event there are not sufficient shares to be voted in favor of any of
the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies.
By Order of the Board of Directors
/s/ Rajeev Agarwal
Rajeev Agarwal
Secretary
North Andover, Massachusetts
January 18, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
INTERSPEED, INC.
39 HIGH STREET
NORTH ANDOVER, MA 01845
(978) 688-6164
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 15, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Interspeed, Inc. (the "Company") for use at
the Annual Meeting of Stockholders of the Company to be held on February 15,
2000 at 1:00 p.m., local time, at Fleet Bank Building, One Federal Street,
Boston, MA 02110, 8th Floor, Room 4, and any adjournments or postponements
thereof (the "Annual Meeting").
At the Annual Meeting, the stockholders of the Company will be asked to
consider and vote upon the following matters:
1. The election of two Class I Directors each for three-year terms, such
terms to continue until the annual meeting of stockholders in 2003
and until such Directors' successor are duly elected and qualified;
and
2. Such other business as may properly come before the meeting and any
adjournments or postponements thereof.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are first being
mailed to stockholders of the Company on or about January 18, 2000 in connection
with the solicitation of proxies for the Annual Meeting. The Board of Directors
has fixed the close of business on January 7, 2000 as the record date for the
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting (the "Record Date"). Only holders of common stock of record at the close
of business on the Record Date will be entitled to notice of, and to vote at,
the Annual Meeting. As of the Record Date, there were approximately 10,749,194
shares of common stock outstanding and entitled to vote at the Annual Meeting
and approximately sixty-four (64) stockholders of record. Each holder of a share
of common stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held of record with respect to each
matter submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the total number of
outstanding shares of common stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the votes cast is necessary to elect a
nominee as a Director of the Company.
Shares that reflect abstentions or "broker non-votes" (i.e., shares
represented at the meeting held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
such shares and with respect to which the broker or nominee does not have
discretionary voting power to vote such shares) will be counted for purposes of
determining whether a quorum is present for the transaction of business at the
meeting. With respect to the election of Directors, votes may be cast in favor
of or withheld from a particular nominee. Broker non-votes will also have no
effect on the outcome of the election of the Director.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. COMMON STOCK REPRESENTED
BY PROPERLY EXECUTED PROXIES RECEIVED BY THE COMPANY AND NOT REVOKED WILL BE
VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED
THEREIN. IF INSTRUCTIONS ARE NOT GIVEN THEREIN, PROPERLY EXECUTED PROXIES WILL
BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN THIS PROXY
STATEMENT. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THE ELECTION OF
DIRECTORS, WILL BE PRESENTED AT THE ANNUAL
<PAGE>
MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE
WITH THE DISCRETION OF THE PROXY HOLDERS.
Any properly completed proxy may be revoked at any time before it is voted
on any matter (without, however, affecting any vote taken prior to such
revocation) by giving written notice of such revocation to the Secretary of the
Company, or by signing and duly delivering a proxy bearing a later date, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not, by itself, revoke a proxy.
The Annual Report of the Company, including financial statements for the
fiscal year ended September 30, 1999 ("Fiscal 1999") is being mailed to
stockholders of the Company concurrently with this Proxy Statement. The Annual
Report, however, is not a part of the proxy solicitation material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of five members and is
divided into three classes, with two Directors in Class I, two Directors in
Class II and one Director in Class III. Directors serve for three-year terms
with one class of Directors being elected by the Company's stockholders at each
annual meeting.
At the Annual Meeting, two Class I Directors will be elected, each to serve
until the annual meeting of stockholders held in 2003 and until such Director's
successors are duly elected and qualified. The Board of Directors has nominated
Eric R. Giler and Rajeev Agarwal for re-election as Class I Directors. Unless
otherwise specified in the proxy, it is the intention of the persons named in
the proxy to vote the shares represented by each properly executed proxy for the
re-election of Eric R. Giler and Rajeev Agarwal as Directors. The nominees have
agreed to stand for re-election and to serve, if elected, as Directors. However,
if the person nominated by the Board of Directors fails to stand for election or
is unable to accept election, the proxies will be voted for the election of such
other person or persons as the Board of Directors may recommend.
VOTE REQUIRED FOR APPROVAL
A quorum being present, the affirmative vote of a plurality of the votes
cast is necessary to elect a nominee as Director of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES OF THE BOARD OF DIRECTORS AS DIRECTORS OF THE COMPANY.
INFORMATION REGARDING DIRECTORS
The Board of Directors of the Company held three (3) meetings during Fiscal
1999. During Fiscal 1999, each of the incumbent Directors attended at least 75%
of the total number of meetings of the Board and of the committees of which he
was a member. The Board of Directors has established an Audit Committee and a
Compensation Committee. The Audit Committee recommends the firm to be appointed
as independent accountants to audit financial statements and to perform services
related to the audit, reviews the scope and results of the audit with the
independent accountants, reviews with management and the independent accountants
the Company's annual operating results, considers the adequacy of the internal
accounting procedures, and considers the effect of such procedures on the
accountants' independence. The Compensation Committee reviews and recommends the
compensation arrangements for officers and other senior level employees, reviews
general compensation levels for other employees as a group, determines the
options or stock to be granted to eligible persons under the Company's 1999
Stock Option and Grant Plan (the "1999 Stock Option Plan") and Employee
2
<PAGE>
Stock Purchase Plan (the "Employee Stock Purchase Plan") and takes such other
action as may be required in connection with the Company's compensation and
incentive plans. The Audit Committee consists of Messrs. Barrett, Giler and
Severino and held no meetings during Fiscal 1999. The Compensation Committee
consists of Messrs. Barrett, Giler and Severino and held two (2) meetings during
Fiscal 1999. The Board of Directors does not maintain a nominating committee.
Instead, its functions are carried out by the entire Board of Directors.
On the fifth day following their election to the Board of Directors, Robert
G. Barrett received a non-qualified option under the 1997 Stock Option Plan for
20,000 shares that vested immediately and received a non-qualified option under
the 1999 Stock Option Plan for 30,000 shares, of which 22,500 vested upon grant
and 7,500 will vest quarterly over the final two quarters of his two year term,
and Paul J. Severino received a non-qualified option under the 1997 Stock Option
Plan for 60,000 shares that vested immediately and received a non-qualified
option under the 1999 Stock Option Plan for 45,000 shares, of which 22,500
shares vested upon grant and 22,500 will vest quarterly over the final six
quarters of his three year term. In the future, each Director, who is neither an
employee of the Company nor Brooktrout, Inc. ("Brooktrout"), the Company's
majority stockholder, will receive, upon election to the Board of Directors, an
option under the 1999 Stock Option Plan for 45,000 shares that will vest
quarterly during each Director's three year term.
Set forth below is certain information regarding the Directors of the
Company, including the Class I Directors who have been nominated for the
election at the Annual Meeting, based on information furnished by him to the
Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- - ---- -------- --------
<S> <C> <C>
CLASS I--TERM EXPIRES AT THE ANNUAL MEETING HELD IN 2000
Eric R. Giler(1)(2)*........................................ 44 1996
Rajeev Agarwal*............................................. 40 1997
CLASS II--TERM EXPIRES AT THE ANNUAL MEETING HELD IN 2001
Robert G. Barrett(1)(2)..................................... 55 1999
Stephen A. Ide.............................................. 56 1996
CLASS III--TERM EXPIRES AT THE ANNUAL MEETING HELD IN 2002
Paul J. Severino(1)(2)...................................... 53 1999
</TABLE>
- - ------------------------
* Nominee for re-election.
(1) Member of Audit Committee.
(2) Member of the Compensation Committee.
The principal occupation and business experience for at least the last five
years for each Director of the Company is set forth below.
STEPHEN A. IDE has served as our President since January 1997. Mr. Ide has
served as a Director since October 1996. Mr. Ide served as Senior Vice President
of Brooktrout, from January 1993 to December 1996. From January 1993 to
December 1996, Mr. Ide was Senior Vice President of Sales and Marketing for
Brooktrout and was Vice President of Sales and Marketing from 1987 to
December 1992. Prior to joining Brooktrout, Mr. Ide was co-founder and President
of Computer Telephone Corp., currently CTC Communications, Inc., a publicly
traded competitive local exchange carrier. Mr. Ide also served as Vice President
of Operations for Rolm of New England Corporation.
3
<PAGE>
RAJEEV AGARWAL has served as our Chief Technology Officer and Senior Vice
President, Research and Development since 1997. Mr. Agarwal has served as a
Director since March 1997. Prior to co-founding Interspeed, Mr. Agarwal worked
at Cabletron Systems from July 1987 to March 1997 where he established several
research and development programs to deliver new products including cable modems
and products incorporating 10BaseT, FDDI and ATM technologies.
ERIC R. GILER has served as a Director since October 1996. Mr. Giler
co-founded Brooktrout in 1984 and has served as President and a director of
Brooktrout since Brooktrout's inception. Mr. Giler is a member of the board of
directors and past Chairman of the Massachusetts Telecommunications Council.
Mr. Giler also serves as a director of Netegrity, Inc. and of various
privately-held technology companies.
ROBERT G. BARRETT has served as a Director since June 1999. Mr. Barrett has
been a general partner of Battery Ventures, L.P. since 1984. Mr. Barrett
currently serves as a director of Brooktrout and Peerless Systems Corp.
Mr. Barrett also serves as a director of various privately held technology
companies.
PAUL J. SEVERINO has served as a Director since June 1999. Mr. Severino has
been Chairman of the Board of Netcentric Corp. since 1998. From 1994 to 1998,
Mr. Severino was Chairman of the Board of Networks. From 1986 to 1994,
Mr. Severino was President and Chief Executive Officer of Wellfleet
Communications. Mr. Severino also serves as a director of Media 100, Inc. and
SilverStream, Inc.
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company and the
principal occupation and business experience of those executive officers who are
also not Directors of the Company for at least the last five years for each are
set forth below as of December 30, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---- -------- ------------------------------------------
<S> <C> <C>
Stephen A. Ide............................ 56 President and Director
William J. Burke.......................... 54 Chief Financial Officer, Senior Vice
President--Finance and Treasurer
Rajeev Agarwal............................ 40 Chief Technology Officer, Senior Vice
President--Research and Development and
Director
Arthur A. Goodwin......................... 39 Senior Vice President--World Wide Sales
Kenneth M. Osowski........................ 47 Vice President--Marketing
Christopher P. Whalen..................... 37 Vice President--Sales
</TABLE>
WILLIAM J. BURKE has served as our Chief Financial Officer, Senior Vice
President--Finance and Treasurer since May 1999. Prior to joining the Company,
from August 1998 to May 1999, Mr. Burke was the Vice President of Finance and
Administration and Chief Financial Officer of Teloquent Communications
Corporation, a privately held company and provider of software, hardware and
services for network-independent virtual call centers. From 1996 to 1998,
Mr. Burke was the Director of Telecommunications Banking at Tucker Anthony
Cleary Gull. From 1988 to 1996, Mr. Burke was at Boston Technology, a worldwide
provider of voice messaging and telecommunications equipment for enhanced
service and network based providers. He was Boston Technology's first Vice
President of Finance and Chief Financial Officer and helped manage its global
expansion and 1990 public offering. Mr. Burke is a member of the Board of
Directors and the Executive Committee of the Massachusetts Telecommunications
Council.
ARTHUR A. GOODWIN has served as our Senior Vice President, World Wide Sales
since December 1999. Prior to joining the Company, Mr. Goodwin was the Area Vice
President at Comverse
4
<PAGE>
Network Systems ("Comverse") from June 1997 to September 1999. From
February 1995 to May 1997, he served in several management positions at Comverse
including Director of Americas West and Account Manager.
KENNETH M. OSOWSKI has served as our Vice President, Marketing since
December 1999. Prior to joining the Company, Mr. Osowski has been Vice President
of Marketing and Business Development at IPeria, Inc. from November 1997 to
November 1999. Before joining IPeria, he served as Senior Product Marketing
Manager and Regional Director at Boston Technology, Inc. (now part of Comverse
Network Systems) from February 1993 to November 1997.
CHRISTOPHER P. WHALEN has served as our Vice President, Sales since
December, 1999. He previously served as our Vice President, Sales and Marketing
from January 1999 through November 1999. He had previously been National Sales
Manager since January 1998. Prior to joining the Company, Mr. Whalen worked in
numerous sales and sales management positions at Brooktrout from 1990 to 1998,
including Western Regional Sales Manager from 1995 to 1997 and Major Account
Sales Manager from 1992 to 1995.
Each of the officers holds his respective office until the regular annual
meeting of the Board of Directors following the annual meeting of stockholders
and until his successor is elected and qualified or until his or her earlier
resignation or removal.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
SUMMARY COMPENSATION. The following table sets forth for the fiscal years
ended September 30, 1999, September 30, 1998 and September 30, 1997, the
information concerning compensation for services rendered in all capacities
awarded to, earned by or paid to the Company's President and the two other most
highly compensated executive officers (the "Named Executive Officers") who
earned in excess of $100,000 during Fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
-------------------- ------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
- - --------------------------- -------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Stephen A. Ide........................ 1999 $177,500 $161,600 300,000 $ 1,900
President 1998 $167,500 $113,000 -- $ 2,300
1997(2) $ 66,700 $ 6,300 -- $ --
Rajeev Agarwal, Chief Technology...... 1999 $137,500 $ 30,000 60,000 $ 2,100
Officer and Senior Vice President-- 1998 $110,000 $ 32,500 20,000 $ 2,400
Research and Development 1997(3) $ 55,400 $ 6,250 400,000 --
Christopher P. Whalen................. 1999 $129,200 -- 40,000 $26,800(4)
Vice President--Sales 1998(5) $112,500 -- 40,000 $ 2,400
1997 -- -- -- --
</TABLE>
- - ------------------------
(1) Includes a matching contribution under our 401(k) plan.
(2) Includes the period from January 1997, the date of first employment at the
Company, to September 1997.
5
<PAGE>
(3) Includes the period from March 1997, the date of first employment at the
Company, to September 1997.
(4) In the case of Mr. Whalen, Fiscal 1999 compensation includes $25,000 in
sales commission payments and a $1,800 matching contribution under our
401(k) plan.
(5) Includes the period from January 1998, the first date of employment at the
Company, to September 1998.
OPTION GRANTS. The following table sets forth certain information
concerning the individual grant of options to purchase common stock of the
Company to the Named Executive Officers of the Company who received such grants
during Fiscal 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENT VALUE AT ASSUMED ANNUAL
SECURITIES OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION FOR OPTION
OPTIONS GRANTED OR BASE TERM(3)
GRANTED TO EMPLOYEES PRICE PER EXPIRATION -----------------------
NAME (#)(1) IN FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- - ---- ---------- -------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Ide..................... 300,000 37.9% $0.13 05/14/09 $4,530,000 $7,236,400
Rajeev Agarwal..................... 20,000 2.5% $0.13 10/01/08 $ 187,300 $ 229,800
20,000 2.5% $0.13 12/30/08 $ 187,300 $ 229,800
20,000 2.5% $0.67 3/31/09 $ 291,200 $ 471,100
Christopher P. Whalen.............. 40,000 5.1% $0.13 12/30/08 $ 374,700 $ 599,700
</TABLE>
- - ------------------------
(1) Vesting of options is subject to the continuation of such employee's service
relationship with the Company. The options terminate ten years after the
grant date, subject to earlier termination in accordance with the 1999
Option Plan and the applicable option agreement.
(2) The exercise price equals the fair market value of the stock as of the grant
date as determined by the Board of Directors after consideration of a number
of factors, including, but not limited to, the Company's financial
performance, the Company's status as a private company at the time of
grants, the minority interests represented by the option shares and the
price of shares of equity securities sold to or purchased by outside
investors.
(3) This column shows the hypothetical gain or option spreads of the options
granted based on assumed annual compound stock appreciation rates of 5% and
10% over the full 10-year term of the options. The 5% and 10% assumed rates
of appreciation are mandated by the rules of the Securities and Exchange
Commission the ("SEC") and do not represent the Company's estimate or
projection of future common stock prices. The gains shown are net of the
option exercise price, but do not include deductions for taxes or other
expenses associated with the exercise of the option or the sale of the
underlying shares, or reflect nontransferability, vesting or termination
provisions. The actual gains, if any, on the exercises of stock options will
depend on the future performance of the common stock.
OPTION EXERCISES AND OPTION VALUES. The following table sets forth
information concerning the number and value of each exercise of options and the
fiscal year-end values of unexercised options to purchase common stock of the
Company held by the Named Executive Officers of the Company who held such
options at September 30, 1999.
6
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND VALUE OF UNEXERCISED OPTIONS AT
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
HELD AT SEPTEMBER 30, HELD AT SEPTEMBER 30,
1999 (#) 1999($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- --------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Ide............... 120,000 $1,106,400 -- 180,000 -- $3,149,100
Rajeev Agarwal............... 188,600 $1,738,900 18,067 273,333 $315,000 $4,772,200
Christopher P. Whalen........ 18,666 $ 172,100 667 60,667 $ 11,700 $1,061,400
</TABLE>
- - ------------------------
(1) Based on the last reported sale price on the Nasdaq National Market System
on September 30, 1999 of $17.625 less the option exercise price.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Company's compensation program is administered by the Compensation
Committee. The Compensation Committee was formed by the Board of Directors in
June 1999 and currently consists of Messrs. Barrett, Giler and Severino, all of
whom are non-employee Directors of the Company. The responsibilities of the
Compensation Committee are to (a) establish the total compensation package of
the President, (b) review and approve the compensation of the executive officers
including salary, bonus, stock options and other compensation, and (c) review
and approve the grants of stock option for all employees of the Company.
COMPENSATION PHILOSOPHY
The Company's executive compensation program is structured to attract,
retain and reward executive officers and other employees for meeting the
Company's goals and objectives for each individual fiscal year, as well as to
achieve its long-term strategies. In determining executive compensation, input
is received from the President and the Human Resources Department. In
establishing overall compensation for its executives, the Company reviews
compensation surveys of growth companies in the high technology industry. In
order to attract and retain executives who are qualified to undertake multiple
responsibilities in a dynamic company, the Board of Directors also considers the
experience and background of the individual executive and the breadth of
responsibilities that he or she is expected to assume with the Company. The
Compensation Committee believes that all executives, including the President,
must be familiar with all aspects of the business in order for the Company to
identify and implement, through its executive officer team, the necessary vision
to allow the Company to grow its business and reward stockholders through
increased value of their holdings.
EXECUTIVE COMPENSATION STRUCTURE
The compensation of the executive officers consists of a base salary, an
annual bonus, which is based on a percentage of the executive's base salary, and
grant of stock options through the new 1999 Stock Option Plan.
BASE SALARY: In determining salary, the Compensation Committee's goal is to
assure a base salary level sufficient to attract and retain key executives, and
to balance that goal with significant bonus and
7
<PAGE>
long-term incentives which insure that a significant portion of compensation is
dependent upon the financial performance of the Company.
BONUSES: Generally, the annual bonus is allocated at fifty percent (50%)
for achievement of the Company's financial goals and the resulting increase in
stockholder value, and fifty percent (50%) for the achievement of the
individual's personal performance goals.
STOCK OPTIONS: In June 1999, the stockholders of the Company approved the
1999 Stock Option Plan which allows the Company the flexibility to grant stock
options and/or issue common stock to executives and employees, as determined by
the Compensation Committee. It is the judgment of the Compensation Committee
that stock options are important incentives for executives officers to remain
with the Company, and to align their interests with those of the stockholders.
Stock options are granted to executive officers on the same terms as other
employees of the Company, without any discount in the exercise price, which is
fixed at the fair market value on the date of grant. Furthermore, executive
officers' stock options generally vest over a period of four or more years,
providing an incentive for continued employment with the Company.
The Compensation Committee considers the grant of stock options to executive
officers on an annual basis, in order to permit the regular valuation of
management participation and to monitor the corresponding impact on equity
dilution to stockholders. In granting options, the Compensation Committee
considers current equity ownership and anticipated contributions to the Company.
OTHER BENEFITS: Executive officers also participate in various other
benefit programs, such as health, dental and life insurance programs, the
Interspeed Retirement Savings Plan (401(k) plan), and the Employee Stock
Purchase Plan. These benefits are available to executive officers on the same
terms and conditions as they are available to all employees. The Employee Stock
Purchase Plan, for example allows participants to purchase shares in the Company
at a discount of approximately 15% of the fair market value at the beginning or
end of the applicable purchase period. This provides an additional incentive for
executives and other employees to participate in the long-tem success of the
Company through further investment in the Company's common stock. The Company
does not have a defined benefit or actuarial plan.
COMPENSATION OF THE PRESIDENT
Because the Compensation Committee was not formed until June 1999, the terms
of Mr. Ide's Fiscal 1999 compensation were established by direct negotiation
between Mr. Ide and Brooktrout, the Company's parent company and current
majority stockholder. Mr. Ide's base salary was fixed at a level commensurate to
other experienced presidents at similar development stage company situations.
Mr. Ide was awarded a cash bonus equal to $161,600 for Fiscal 1999, which was
based on the achievement of various goals, including the general release of the
Company's first products, sales goals and operational goals. In addition, in
Fiscal 1999, Mr. Ide received an initial grant of stock options to purchase
400,000 of the Company's common stock under the 1997 Stock Option Plan. This
grant was made to align the interests of Mr. Ide with those of the stockholders,
and to provide incentive to build the Company and to increase shareholder value.
Compensation Committee
Robert G. Barrett
Eric R. Giler
Paul J. Severino
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since June 1999, all executive officer compensation decisions have been made
by the Compensation Committee. The responsibilities of the Compensation
Committee are to (a) establish the total compensation package of the President,
(b) review and approve the compensation of the executive officers including
salary, bonus, stock options and other compensation, and (c) review and approve
the grants of stock option for all employees of the Company. The members of the
Compensation Committee during Fiscal 1999 were Messrs. Barrett, Giler and
Severino. The current members of the Compensation Committee are
Messrs. Barrett, Giler and Severino, none of whom was during Fiscal 1999, or is
currently, an officer or employee of the Company and, except as otherwise
described herein, have never had any other reportable relationship with the
Company other than his position as a Director of the Company.
9
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's common stock, based on
the market price of the Company's common stock with the total return of
companies included within the Nasdaq Stock Market Index and a peer group of
companies with a SIC code of 366 trading on the Nasdaq Stock Market for the
period commencing September 24, 1999 and ending September 30, 1999. The
calculation of total cumulative return assumes a $100 investment in the
Company's common stock, the Nasdaq Stock Market Index and the companies
comprising the SIC code 366 peer group on September 24, 1999, the date of the
Company's initial public offering, and the reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURNS
<S> <C> <C>
Performance Graph for
Interspeed, Inc.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 01/11/2000 including data to 09/30/1999
LEGEND
Symbol CRSP Total Returns Index for:
Interspeed, Inc Nasdaq Stock Market (US Companies)
09/1999 100.0 100.0
09/1999 125.6 100.8
09/1999 116.7 100.6
09/1999 99.0 99.7
09/1999 96.2 100.2
NOTES:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is
not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on
09/24/1999.
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURNS
<S> <C>
Performance Graph for
Interspeed, Inc.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 01/11/2000 including data to 09/30/1999
LEGEND
Symbol
NASDAQ Stocks (SIC 3660 US+Foreign)
Communications Equipment
09/1999 100.0
09/1999 102.4
09/1999 101.1
09/1999 99.2
09/1999 99.8
NOTES:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is
not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on
09/24/1999.
</TABLE>
10
<PAGE>
CERTAIN TRANSACTIONS WITH RELATED PARTIES
Brooktrout has provided various services to us, including, but not limited
to, payroll, data processing, information technology and telecommunications,
tax, legal, treasury, human resources, accounts receivable management, order
entry, employee benefits administration, marketing, financial accounting,
executive services and insurance administration. Amounts reflected in the
Company's financial statements for Fiscal 1999 as fees charged by Brooktrout
reflect the cost of these services.
On the effective date of the Company's initial public offering, the Company
entered into a transition services agreement with Brooktrout for the purposes of
defining an ongoing relationship. Under the transition services agreement, upon
consummation of the initial public offering, Brooktrout made available to the
Company generally until December 31, 1999 many of the same services that were
provided to the Company by Brooktrout prior to the Company's initial public
offering. In the second fiscal quarter ending March 31, 2000, the Company will
pay Brooktrout a variable fee for such services based on the amount and type of
services used, estimated not to exceed $100,000. This fee has been determined by
Brooktrout and the Company to be consistent with the historical costs of
providing these services and adjusted to recognize certain additional services
provided by Brooktrout to the Company after the initial public offering and
certain other services historically provided by Brooktrout which are now the
Company's responsibility to provide. In general, payments to third parties for
insurance, employee benefits and similar out-of-pocket costs are reimbursable by
the Company, but were not otherwise included within the monthly services fee
payable to Brooktrout. The Company believes that the fees charged by Brooktrout
were substantially equivalent to those charged by third parties or the cost of
providing the services internally. As of December 31, 1999, the Company has
successfully transitioned all services provided by Brooktrout, and such services
are now being provided internally or through third party agreements.
11
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of common stock as of December 30, 1999:
- the President and each of the Directors and Named Executive Officers;
- all Directors and Named Executive Officers as a group; and
- each person who is known by the Company to own beneficially more than 5%
of the outstanding shares of the common stock.
Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of common stock beneficially owned
by such stockholder. The address of Brooktrout, Inc. is 410 First Avenue,
Needham, MA 02494. The address of all other listed stockholders is c/o
Interspeed, Inc., 39 High Street, North Andover, MA 01845.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
------------------------
NAME OF BENEFICIAL OWNER NUMBER (1) PERCENT (2)
- - ------------------------ ---------- -----------
<S> <C> <C>
Brooktrout, Inc............................................. 6,075,000 56.73%
Rajeev Agarwal (3).......................................... 245,999 2.29%
Robert G. Barrett (4)....................................... 42,500 *
Eric R. Giler............................................... 0 0
Stephen A. Ide (5).......................................... 186,150 1.73%
Paul J. Severino (6)........................................ 82,500 *
Christopher P. Whalen (7)................................... 25,334 *
All Current Executive Officers and Directors as a group
(nine persons) (8)........................................ 609,484 5.58%
</TABLE>
- - ------------------------
* Less than 1%.
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Exchange Act. Accordingly, a beneficial owner of a security includes any
person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares the power to vote
such security or the power to dispose of such security. The amounts set
forth above as beneficially owned include shares owned, if any, by spouses
and relatives living in the same home as to which beneficial ownership may
be disclaimed. The amounts set forth as beneficially owned include shares of
common stock which such persons had the right to acquire within 60 days of
December 30, 1999, pursuant to stock options.
(2) Percentages are calculated on the basis of 10,707,926 shares of common stock
outstanding as of December 30, 1999.
(3) Includes 57,399 shares of common stock deemed to be beneficially owned by
Mr. Agarwal which are subject to options previously granted.
(4) Represents 42,500 shares of common stock deemed to be beneficially owned by
Mr. Barrett which are subject to options previously granted.
(5) Includes 60,000 shares of common stock deemed to be beneficially owned by
Mr. Ide which are subject to options previously granted.
(6) Includes 22,500 shares of common stock deemed to be beneficially owned by
Mr. Severino which are subject to options previously granted.
(7) Includes 6,668 shares of common stock deemed to be beneficially owned by
Mr. Whalen which are subject to options previously granted.
(8) Includes William J. Burke who is deemed to beneficially own 20,750 shares of
common stock, Arthur A. Goodwin who is deemed to beneficially own 6,251
shares of common stock and Kenneth M. Osowski who currently owns no common
stock of the Company.
12
<PAGE>
EXPENSES OF SOLICITATION
The Company will pay the entire expense of soliciting proxies for the Annual
Meeting. In addition to solicitations by mail, certain Directors, officers and
regular employees of the Company (who will receive no compensation for their
services other than their regular compensation) may solicit proxies by
telephone, telegram or personal interview. Banks, brokerage houses, custodians,
nominees and other fiduciaries have been requested to forward proxy materials to
the beneficial owners of shares held of record by them and such custodians will
be reimbursed for their expenses.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at the Company's 2000 annual
meeting of stockholders must be received by the Company on or before
September 20, 2000 in order to be considered for inclusion in the Company's
proxy statement and form of proxy for that meeting. These proposals must comply
with the rules of the SEC governing the form and content of proposals in order
to be included in the Company's proxy statement and form of proxy. Any such
proposal should be mailed to: Secretary, Interspeed, Inc., 39 High Street, North
Andover, Massachusetts 01845.
The Company's By-laws provide that any stockholder of record wishing to have
a stockholder proposal considered at an annual meeting, other than a proposal to
be considered for inclusion in the Company's proxy statement described above,
must provide written notice of such proposal and appropriate supporting
documentation, as set forth in the By-laws, to the Company at its principal
executive office not less than 75 days or more than 120 days prior to the first
anniversary of the date of the preceding year's annual meeting. In the event,
however, that the annual meeting is scheduled to be held more than 30 days
before such anniversary date or more than 60 days after such anniversary date,
notice must be so delivered not later than (i) the 15th day after the date of
public disclosure of the date of such meeting or (ii) the 75th day prior to the
scheduled date of such meeting. Any such proposal should be mailed to:
Secretary, Interspeed, Inc., 39 High Street, North Andover, Massachusetts 01845.
INDEPENDENT ACCOUNTANTS
The Company has selected Deloitte & Touche LLP as the independent public
accountants for the Company for the fiscal year ending September 30, 2000. The
firm of Deloitte & Touche LLP has served as the Company's independent public
accountants since 1997. A representative of Deloitte & Touche LLP will be
present at the Annual Meeting and will be given the opportunity to make a
statement if he or she so desires. The representative will be available to
respond to appropriate questions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and Directors, and persons who own more than 10% of the
Company's outstanding shares of common stock (collectively, "Section 16
Persons"), to file initial reports of ownership and reports of changes in
ownership with the SEC and Nasdaq. Section 16 Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain Section 16 Persons that no Section 16(a)
reports were required for such persons, the Company believes that during Fiscal
1999, the Section 16 Persons complied with all Section 16(a) filing requirements
applicable to them.
13
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are duly presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
14
<PAGE>
IS107B DETACH HERE
PROXY
INTERSPEED, INC.
39 HIGH STREET
NORTH ANDOVER, MA 01845
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Stephen A. Ide and William J. Burke, each
with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated on the reverse side, all shares of
common stock of Interspeed, Inc. (the "Company") held of record by the
undersigned on January 7, 2000 at the Annual Meeting of Stockholders to be
held on February 15, 2000 and any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO SUCH
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- - ------------ ------------
|SEE REVERSE| |SEE REVERSE|
| SIDE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SIDE |
- - ------------ ------------
<PAGE>
Dear Shareholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the operation of the Company that require
your immediate attention.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
INTERSPEED, INC.
IS107A DETACH HERE
----
|
|
- - ----- Please mark
| X | votes as in
- - ----- this example.
<TABLE>
<S> <C>
1. Election of Directors 2. In their discretion, the proxies are authorized to vote
upon any other business that may properly come before
NOMINEES: (01) Eric R. Giler and (02) Rajeev Agarwal the meeting.
FOR WITHHELD
----- -----
| | | |
----- -----
- - -----
| |
- - ----- ---------------------------------------
For both nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT -----
| |
-----
Please sign exactly as name appears hereon. Joint owners
should each sign. Executors, administrators, trustees,
guardians or other fiduciaries should give full title as
such. If signing for a corporation, please sign in full
corporate name by a duly authorized officer.
Signature: ___________________________ Date: _______________ Signature: ___________________________ Date: _______________
</TABLE>
