<PAGE>
SCHEDULE 14A INFORMATION
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ADAPTIVE BROADBAND CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE>
[LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 27, 1999
------------------------
The Annual Meeting of Stockholders of Adaptive Broadband Corporation will be
held at the Company's headquarters at 1143 Borregas Avenue, Sunnyvale, CA 94089,
at 2:00 p.m. on October 27, 1999, for the following purposes.
1. To elect six directors.
2. To approve amendments to the Company's Certificate of Incorporation.
3. To approve amendments to the Company's 1992 Stock Option Plan.
4. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on September 1, 1999
are entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
[LOGO]
KENNETH J. WEES
SECRETARY
Sunnyvale, California
September 24, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTPAID ENVELOPE. IF YOU
ARE ABLE TO ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY
DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE>
ADAPTIVE BROADBAND CORPORATION
1143 BORREGAS AVENUE
SUNNYVALE, CALIFORNIA 94089
------------------------
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Adaptive Broadband Corporation, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held at the Company's headquarters
at 1143 Borregas Avenue, Sunnyvale, CA 94089, at 2:00 p.m. on October 27, 1999,
and at any adjournment or postponement thereof.
Any proxy given may be revoked by a stockholder at any time before it is
voted by filing with the Secretary of the Company a notice in writing revoking
it, or by duly executing a proxy bearing a later date. Proxies may also be
revoked by any stockholder present at the meeting who votes his or her shares in
person. Subject to any such revocation and the provisions under "Voting" below,
all shares represented by properly executed proxies which are received prior to
the meeting will be voted in accordance with the specifications on the proxy and
if no specification is made with regard to a proposal set forth on the proxy,
the shares will be voted for all listed nominees for director and in favor of
the proposals.
A copy of the Annual Report of the Company for its fiscal year ended June
30, 1999, is being mailed to stockholders with this proxy statement. The
approximate date on which this proxy statement and the accompanying proxy are
being sent to stockholders is September 27, 1999.
VOTING
Only stockholders of record on September 1, 1999 will be entitled to notice
of and to vote at the meeting. At the close of business on that date, the
Company had 14,812,646 shares of Common Stock outstanding. A majority of all
shares represented in person or by proxy at the Annual Meeting constitutes a
quorum for the transaction of business at the meeting. Abstentions are
considered as shares present and entitled to vote and therefore will have the
same effect as a vote against a matter presented at the meeting. Brokers who
hold shares in street name for customers have the authority to vote on the
election of directors. With respect to all matters other than the election of
directors, broker non-votes (shares as to which brokers do not have
discretionary authority to vote on the particular matter and have not received
voting instructions from their customers), if any, will have no effect on the
outcome of the vote. Broker non-votes are counted towards the establishment of a
quorum.
Holders of Common Stock are entitled to one vote for each share held. As
described below, in the election of directors all stockholders may cumulate
their votes for candidates placed in nomination. Cumulative voting rights
entitle a stockholder to as many votes as shall equal the number of votes
represented by shares of Common Stock held by such stockholder multiplied by the
number of directors to be elected, and all such votes may be cast for a single
candidate or may be distributed among any or all of the candidates. A
stockholder intending to cumulate votes for the election of directors must
notify the Company of such intention prior to the commencement of the voting for
directors. If any stockholder has given such notice, every stockholder may
cumulate votes for candidates placed in nomination prior to the voting. A vote
for nominees of the Board of Directors will give the persons named in the proxy
discretionary authority to cumulate all votes as to which the stockholder is
entitled and allocate such votes in favor of one or more nominees of the Board
voted for by the stockholder, as the proxyholders may determine. The persons
named in the proxy will exercise such discretion in order to assure the election
of as many of the nominees of the Board of Directors as possible. In such event,
the specific nominees for whom such votes will be cumulated will be decided by
the proxyholders.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Directors are elected to hold office until the next Annual Meeting of
Stockholders or until their successors have been elected. Unless otherwise
instructed by the stockholder, it is intended that the shares represented by the
enclosed proxy will be voted for the nominees named below. Although management
anticipates that all of the nominees will be able to serve, if any nominee is
unable or unwilling to serve at the time of the meeting, the proxy will be voted
for a substitute nominee chosen by management. Directors shall be elected by a
plurality of the votes of the shares in person or represented by proxy at the
meeting.
All of the nominees are presently directors of the Company. No nominee or
executive officer has any family relationship with any other nominee or
executive officer. The beneficial ownership of the Company's stock by the
nominees is set forth under "Certain Stockholders."
The following table and biographical paragraphs set forth the names and ages
of the nominees, their principal occupations at present, the positions and
offices held by each with the Company in addition to the position as a director,
and the period during which each has served as a director of the Company.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NOMINEE AGE OCCUPATION SINCE
- ----------------------------------------- --- -------------------------------------------------- ------------
<S> <C> <C> <C>
Frederick D. Lawrence(1)................. 51 Chairman of the Board, President and Chief 1997
Executive Officer
William B. Marx, Jr.(1)(2)(3)............ 60 Retired as Senior Executive Vice President of 1996
Lucent Technologies, Inc., a communications
systems and technology company
Terry W. Ward(3)(4)...................... 50 Vice President and Chief Financial Officer of W.S. 1996
Farish & Company, a private trust company
Frederick W. Whitridge, Jr.(2)(3)(4)..... 44 President of Archipelago Corporation, a private 1996
investment company
George A. Joulwan(1)..................... 59 Retired General, U.S. Army; former Supreme Allied 1998
Commander, Europe and Commander in Chief, United
States European Command.
Leslie G. Denend(1)(4)................... 58 Former Chief Executive Officer of Network General 1998
Corporation, a network management software
company and former Chief Executive Officer of
Vitalink Communications, a computer products
company.
</TABLE>
- ------------------------
(1) Member of Global Sales Committee
(2) Member of Governance Committee
(3) Member of Compensation Committee
(4) Member of Audit Committee
FREDERICK D. LAWRENCE joined the Company as Chairman of the Board, President
and Chief Executive Officer in July 1997. From May 1996 to July 1997, Mr.
Lawrence served as Chief Executive Officer of ComStream, Inc., an international
supplier of satellite communications networks and products and from February
1994 to April 1996, he served as President of the Transmission Group for ADC
Telecommunications, which included five independent business units producing
products for high speed
2
<PAGE>
video, voice, data and wireless communications. From 1982 to 1994, Mr. Lawrence
held executive positions in networks operations and engineering at Sprint
Corporation and its operating companies, dealing in local telephone, cellular
and long distance. Prior to this, Mr. Lawrence worked at AT&T from 1970 to 1982
in a variety of positions. He holds a B.S.E.E. degree from Western Michigan
University. Mr. Lawrence is a Director of Magnetek, Inc., a manufacturer of
integrated electrical products.
WILLIAM B. MARX, JR. served as Senior Executive Vice President of Lucent
Technologies, the communication systems and technology company created as a
result of AT&T's restructuring, from 1995 until he retired from Lucent
Technologies on October 1, 1996. From 1994 to 1995, he served as Executive Vice
President of AT&T and as Chief Executive Officer of its Multimedia Products
Group and from 1989 to 1994 he served as an Executive Vice President of AT&T and
as Chief Executive Officer of its Network Systems Group. Prior to 1989, he held
a number of key executive positions within the AT&T organization. Mr. Marx
received his Bachelor of Mechanical Engineering degree from Union College and
his Master of Science Degree in Management from Stanford University. He is a
Director of the Massachusetts Mutual Life Insurance Company and is a member of
the Stanford University Graduate School of Business Advisory Council and of the
National Board of Directors of Junior Achievement.
TERRY W. WARD has served since 1979 as a Director and the Vice President,
Chief Financial Officer and Chairman of the Investment Policy Committee of W.S.
Farish & Company, a private trust company, and as Treasurer of the William
Stamps Farish Fund, one of the 10 largest private foundations in Texas. He
served as a Director of Microwave Networks, Inc. from 1986 to 1995, Aprogenex,
Inc. from 1994 to 1997 and Foregront Group, Inc. (acquired by CBT Group p.l.c.)
from 1993 to 1998. He graduated cum laude from Rice University, holds a
Bachelor's Degree in economics from Rice University and is a certified public
accountant.
FREDERICK W. WHITRIDGE, JR. is the President, founder and majority
stockholder of Archipelago Corporation, which is in the business of making
investments in other companies and providing merger and acquisition services.
From 1988 to 1993, he held various positions with Investor International (U.S.,
Inc.), the North American office for Sweden's Wallenberg Group, Inc., including
the positions of President and Chief Investment Officer. Mr. Whitridge has been
nominated to serve as a director of Matthews Studio Equipment Group. Mr.
Whitridge holds a Bachelor's Degree from Yale University and a M.P.P.M. degree
from the Yale School of Management. He is a director of Crane & Company.
GENERAL GEORGE A. JOULWAN, U.S. Army (RET.) retired as Commander in Chief,
United States European Command and 11th Supreme Allied Commander Europe after
serving 36 years in uniform. During his military career he served two combat
tours of duty in Vietnam, held leadership positions spanning 18 years in Europe,
and served six years in Washington, D.C. While at the Pentagon, he was Executive
Assistant for the Vice Chief of Staff of the Army, and subsequently Executive
Officer for the Chairman, Joint Chiefs of Staff. He also served as Special
Assistant to the President of the United States (1973-74) and Special Assistant
to the Supreme Allied Commander Europe, General Alexander Haig (1974-75).
General Joulwan holds a Bachelor's Degree in Science from the United States
Military Academy and a Masters Degree in Political Science from Loyola
University. General Joulwan is a director of General Dynamics Corporation, a
supplier of defense systems to the United States and its allies.
LESLIE G. DENEND served as President of Network Associates (a merger of
Network General and McAfee Associates), a network security and management
software company, from December 1997 to May 1998, as President and Chief
Executive Officer of Network General Corporation, a network management software
company, from February 1993 to December 1997, as President, Chief Executive
Officer and Chairman of Vitalink Communications (acquired by Network Systems
Corporation), a computer products company, from October 1990 to December 1992,
as Executive Vice President-Corporate Development of 3Com, a data networking
company, and as Vice President and General Manager of 3Com's Federal Systems
unit from January 1989 to October 1990, and as a partner of and consultant to
McKinsey and Company from 1982 to 1989. He has held advisory positions with the
U.S. Government, including serving as an Advisor to the Chairman to the Joint
Chiefs of Staff and as an Assistant to the President for National Security
Affairs. He is currently on the Boards of Network Associates, Proxim, Inc.,
Rational Software Corporation and Informix Corporation. Mr. Denend holds a Ph.D
in economics and an MBA from Stanford University and a B.S. in Public Affairs
from the U.S. Air Force Academy.
3
<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
The total number of meetings of the Board of Directors (including regularly
scheduled and special meetings) during fiscal 1999 was eight. During fiscal
1999, each of the incumbent directors attended at least 75% of the aggregate of
(1) the total number of meetings of the Board held during the period for which
he was a director and (2) the total number of meetings of all committees of the
Board on which he served held during the period for which he served. The Company
has an Audit Committee, Compensation Committee, Governance Committee and Global
Sales Committee.
The responsibilities of the Audit Committee include the following:
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the company and its
divisions and subsidiaries.
- Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit and timely quarterly reviews for
the current year and the procedures to be utilized, the adequacy of the
independent auditor's compensation, and at the conclusion thereof review
such audit or review, including any comments or recommendations of the
independent auditors.
- Review with the independent auditors, the company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the company, and elicit any
recommendations for the improvement of such internal controls or
particular areas where new or more detailed controls or procedures are
desirable.
- Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related company compliance policies.
- Review the internal audit function of the company including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans with
the independent auditors.
- Inquire of management, the internal auditor, and the independent auditors
about significant risks or exposures and assess the steps management has
taken to minimize such risks to the Company.
- Review the quarterly financial statements with financial management and
the independent auditors prior to the filing of the Form 10-Q to determine
that the independent auditors do not take exception to the disclosure and
content of the financial statements, and discuss any other matters
required to be communicated to the committee by the auditors.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
- Review with financial management and the independent auditors the results
of their timely analysis of significant financial reporting issues and
practices, including changes in, or adoptions of, accounting principles
and disclosure practices, and discuss any other matters required to be
communicated to the committee by the auditors.
- Review with financial management and the independent auditors their
judgments about the quality, not just acceptability, of accounting
principles and the clarity of the financial disclosure practices used or
proposed to be used, and particularly, the degree of aggressiveness or
conservatism of the organization's accounting principles and underlying
estimates, and other significant decisions made in preparing the financial
statements.
The Audit Committee proactively reviewed the Report and Recommendations of
the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit
Committees, as published in 1999 by the
4
<PAGE>
New York Stock Exchange and the National Association of Securities Dealers, and
believes that the Company materially complies with the recommendations. The
present members of the Audit Committee, which met four times during fiscal 1999,
are Messrs. Ward (Chair), Denend and Whitridge.
The functions of the Compensation Committee are to review the Company's
compensation philosophy; to recommend to the Board of Directors the total
compensation to be paid to the Chief Executive Officer and the Company's other
officers; to approve the form and terms of all incentive and stock plans and
awards thereunder and to consider the dilutive impact of the stock plans; and to
prepare the Compensation Committee Report and approve the peer groups and stock
valuation methods for the Company's annual Proxy Statement. The present members
of the Compensation Committee, which met five times during fiscal 1999, are
Messrs. Marx (Chair), Ward and Whitridge.
The functions of the Governance Committee are to monitor the Company's
Corporate Governance Guidelines and to recommend to the Board a slate of
director candidates to be nominated for election to the Board and to fill
vacancies that occur on the Board. Nominees recommended by stockholders will be
considered, provided such recommendations are submitted in writing to the
Secretary of the Company, are timely, and contain sufficient background
information concerning the nominee to enable a proper judgment to be made as to
the proposed nominee's qualifications, and include a written consent of the
proposed nominee to stand for election if nominated and to serve if elected. The
present members of the Governance Committee, which met three times during fiscal
1999, are Messrs. Whitridge (Chair) and Marx.
In August 1998, the Board of Directors established the International
Committee of the Board. In January 1999, the committee's name was changed to the
Global Sales Committee. The function of the Global Sales Committee is to
consider and provide advice regarding policies, strategies and plans that
promote the business of the Company outside of the United States. The present
members of the Global Sales Committee, which met three times during fiscal 1999,
are Messrs. Joulwan (Chair), Denend, Lawrence and Marx.
PROPOSAL 2
APPROVAL OF CHARTER AMENDMENT TO PERMIT STOCKHOLDERS TO WITHDRAW THE RIGHTS
PLAN FOLLOWING CERTAIN TYPES OF OFFERS TO ACQUIRE THE COMPANY
AND TO AUTHORIZE THE USE OF PREFERRED STOCK IN
CONNECTION WITH THE RIGHTS PLAN
THE BOARD OF DIRECTORS HAS APPROVED, AND RECOMMENDS THAT THE STOCKHOLDERS
APPROVE, THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY
ATTACHED TO THIS PROXY STATEMENT AS EXHIBIT A (THE "CHARTER AMENDMENT"), THAT
WOULD (1) REQUIRE THE COMPANY TO REDEEM OR OTHERWISE RENDER THE SHARE PURCHASE
RIGHTS PLAN ADOPTED ON JUNE 17, 1999 (THE "RIGHTS PLAN") INAPPLICABLE IF THE
COMPANY RECEIVES CERTAIN TYPES OF OFFERS TO PURCHASE THE COMPANY, AND (2)
AUTHORIZE THE CREATION OF A NEW CLASS OF PREFERRED STOCK FOR USE IN CONNECTION
WITH THE RIGHTS PLAN OR ANY SUCCESSOR PLAN. EACH OF THESE ISSUES IS DISCUSSED
BELOW. APPROVAL OF THIS PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF
A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY
PROXY AT THE MEETING AND ENTITLED TO VOTE.
INTRODUCTION
In conjunction with the Rights Plan, the Charter Amendment is designed to
protect the value of the stockholders' investment in the Company and to give the
stockholders the right to determine, by vote, whether certain offers to acquire
the Company should be accepted, whether or not the Board of Directors believes
such an offer should be accepted. The Rights Plan and this stockholder
referendum provision (the "Referendum") are the result of in-depth consideration
by the Board of Directors, in consultation with its legal and financial
advisors, with the goal of adopting provisions that are consistent with the
Company's corporate governance policy of seeking stockholder input as
appropriate regarding corporate decisions.
5
<PAGE>
Under the Rights Plan, all stockholders were issued common share purchase
rights ("Rights") that, if triggered, entitle holders to acquire additional
shares at a considerable discount. The Rights would generally be triggered upon
the public announcement that any person or group has accumulated 20% or more of
the Company's Common Stock or 10 days following the commencement of, or the
public announcement of any person's intention to commence, a tender offer or
exchange offer for 20% or more of the Company's Common Stock.
The Rights Plan is designed to enable all stockholders to realize the full
value of their investment and to provide for fair and equal treatment for all
stockholders in the event that an unsolicited attempt is made to acquire the
Company. The Rights Plan improves the bargaining leverage and maneuvering room
of the Board of Directors in seeking to protect and maximize stockholder value
in the event that a hostile or unsolicited takeover bid is received. Maintaining
the Rights Plan does not prevent a takeover of the Company, but it may
discourage abusive and coercive takeover tactics that can result in a rapid,
forced sale of the Company at a lower price than might otherwise be obtainable.
It also may discourage unfair "back-end" treatment of stockholders who decline
to tender into a hostile offer.
The Board of Directors also believes that it is important to tailor a
stockholder-friendly plan. To this end, the Board has adopted two strategies
that it believes will place the Company at the forefront of good corporate
governance. First, the Rights Plan has a term of approximately three years,
compared with a 10-year term for the stockholder rights plan adopted in 1989
that it replaced. This shortened term will ensure more frequent review of the
Rights Plan than in prior years. Second, and more importantly, the proposed
Charter Amendment will add a "chewable" feature to the Rights Plan. Under the
Charter Amendment, the Rights Plan would be withdrawn if holders of 66 2/3% of
the outstanding Common Stock vote to do so after a set period of time following
a "Qualifying Offer." A Qualifying Offer is defined somewhat more broadly than
in chewable provisions adopted by other companies and includes (1) a bona fide
all-cash, all-shares tender offer that has firm financing and remains open for
60 days and (2) a bona fide all-shares exchange offer where the consideration is
freely tradeable listed common stock (or a combination of cash and stock) that
remains open for 60 days, and in each case that provides for prompt payment of
the same consideration to stockholders who do not tender their shares. Inclusion
of stock offers in the definition of Qualifying Offer is designed to help level
the playing field among bidders, although cash bidders would still have an
advantage as a result of their inherent ability to move more quickly than those
offering stock. Thus, the Charter Amendment permits stockholders to elect to
have a fully-financed tender or exchange offer to all stockholders proceed free
of any impediments from the Company's Rights Plan, even if the offer is opposed
by the Board. The Board of Directors believes this arrangement is desirable
because it permits the Board a reasonable but limited time period within which
to seek competing bids and/or negotiate with the initial bidder, but then allows
the stockholders to decide whether or not to continue using the Rights Plan.
The term of the Charter Amendment is limited to approximately three years in
order to make it coextensive with the 1999 Rights Plan. Thus, if and when a new
Rights Plan is adopted, a similar or modified chewable feature can be inserted
in the Charter again by Board and stockholder vote.
The foregoing introduction is not intended to be a complete discussion of
this proposal. Please read the following material for further details on this
proposal.
DESCRIPTION OF THE RIGHTS PLAN
The Board of Directors adopted the Rights Plan in June 1999 as a replacement
for the Company's previous Rights Agreement, which expired in July 1999 at the
end of its 10-year term. Although the adoption of the Rights Plan has already
occurred and does not require stockholder approval, the following summary of the
Rights Plan is included in this Proxy Statement in order to provide context for
an understanding of the proposed Charter Amendment.
6
<PAGE>
The Rights Plan provides for a dividend distribution of one Right for each
outstanding share of the Company's Common Stock (the "Common Shares"). The
dividend was paid on July 26, 1999 (the "Record Date") to the stockholders of
record on that date. The description and terms of the Rights are set forth in a
Rights Agreement dated as of July 21, 1999 (the "Rights Agreement"), between the
Company and BankBoston, N.A. The following summary of the provisions of the 1999
Rights Plan is qualified in its entirety by reference to the complete text of
the Rights Agreement (including the exhibits thereto).
RIGHTS TO PURCHASE COMMON STOCK. Each Right entitles the registered holder
to purchase from the Company, after an event which results in the occurrence of
a "Distribution Date" (described below), one Common Share at an initial exercise
price per share of $80.00 (the "Purchase Price"), subject to adjustment.
DETACHMENT AND TRANSFER OF RIGHTS. Initially, the Rights will be evidenced
by the stock certificates representing Common Shares then outstanding, and no
separate right certificates will be distributed. Until the earlier to occur of
(1) a public announcement that a person or group of affiliated or associated
persons, has become an "Acquiring Person" (as such term is defined in the Rights
Agreement) or (2) 10 business days (or such later date as the Board may
determine) following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer which would result in the beneficial
ownership by an Acquiring Person of 20% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate. In general,
an "Acquiring Person" is a person, the affiliates or associates of such person,
or a group, which has acquired beneficial ownership of 20% or more of the
outstanding Common Shares.
The Rights Plan provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferable with
and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights) the
surrender or transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of the Summary of Rights
attached as Exhibit B to the Rights Agreement being attached thereto, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
EXERCISABILITY OF RIGHTS. The Rights are not exercisable until the
Distribution Date. The Rights will expire on June 30, 2002 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, in each case as
described below. Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable or payable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution. The number of
outstanding Rights and the number of Common Shares issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in Common Shares,
or subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date. With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price. No fractional
Common Shares will be issued and in lieu thereof, an adjustment in cash will be
made based on the market price of the Common Shares on the last trading day
prior to the date of exercise.
7
<PAGE>
TRIGGER OF FLIP-IN AND FLIP-OVER RIGHTS. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person or any affiliate or associate thereof
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right. This right will commence on the date of public
announcement that a person has become an Acquiring Person (or the effective date
of a registration statement relating to distribution of the rights, if later)
and terminate 60 days later (subject to adjustment in the event exercise of the
rights is enjoined).
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its affiliates or associates or certain
other persons in which such persons have an interest, proper provision will be
made so that each such holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
REDEMPTION AND EXCHANGE OF RIGHTS. At any time prior to the earliest of (1)
the close of business on the day of the first public announcement that a person
has become an Acquiring Person, or (2) the Final Expiration Date, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). In general, the redemption of
the Rights may be made effective at such time on such basis with such conditions
as the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one Common Share, or, under circumstances
set forth in the Rights Agreement, cash, property or other securities of the
Company, per Right (with value equal to such Common Shares).
AMENDMENT OF RIGHTS. The terms of the Rights generally may be amended by
the Board of Directors of the Company without the consent of the holders of the
Rights, except that from and after such time as the Rights are distributed no
such amendment may adversely affect the interests of the holders of the Rights
(excluding the interest of any Acquiring Person).
DESCRIPTION OF THE CHARTER AMENDMENT
The proposed form of Amended and Restated Certificate of Incorporation
reflecting the Charter Amendment is attached to this Proxy Statement as Exhibit
A. The following summary of the provisions of the Charter Amendment is qualified
in its entirety by reference to the complete text of the proposed form of
Amended and Restated Certificate of Incorporation.
ADDITION OF "REFERENDUM" PROVISION PERMITTING STOCKHOLDERS TO REQUIRE WITHDRAWAL
OF THE RIGHTS PLAN FOLLOWING CERTAIN TYPES OF OFFERS TO ACQUIRE THE COMPANY
The proposed Charter Amendment adds to the Certificate of Incorporation a
"referendum" provision with respect to the Rights Plan. Under this provision, if
a Qualifying Offer (as defined below) is made to acquire all of the Company's
outstanding Common Stock, then, after the end of the 90th day after the offer is
first made, the holders of 10% or more of the outstanding shares of Common Stock
can request that a special meeting of the stockholders (the "Special Meeting")
be held in order to consider and vote whether to require the Company to withdraw
the Rights Plan. If the Special Meeting is not held within 60 days after the
request, the Company must withdraw the Rights Plan. However, the Company is not
required to hold the Special Meeting unless the Qualifying Offer has an
expiration date which is at least 10 business days
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after the date of the Special Meeting. If, at the Special Meeting, the holders
of 66 2/3% of the then-outstanding Common Stock vote to require the withdrawal
of the Rights Plan, then the Company must withdraw the Rights Plan as promptly
as practicable.
A "Qualifying Offer" includes:
- an all-cash tender offer for all of the outstanding Common Stock made by a
person or group who beneficially owns 1% or less of the outstanding Common
Stock as of the date the offer is delivered, provided that the person or
group making the tender offer must have firm financing; or
- an exchange offer for all of the outstanding Common Stock made by a person
or group who beneficially owns 1% or less of the Common Stock outstanding
as of the date the offer is delivered, provided that the consideration
offered in such exchange offer is (1) freely tradeable common stock of the
offeror that is approved for listing on the New York Stock Exchange or the
Nasdaq National Market or (2) a combination of common stock meeting the
requirements of clause (1) of this sentence and cash that is supported by
firm financing.
In addition, a Qualifying Offer must meet all of the following conditions:
- the person or group making the offer must own, after consummating the
offer, at least two-thirds of the then-outstanding Common Stock;
- the offer must remain open for at least 60 business days and at least 10
business days after the Special Meeting, and must be extended for at least
20 business days after the last increase in the price offered and after
any bona fide higher alternative offer is made, and must be subject only
to customary terms and conditions; and
- prior to or upon commencing the offer, the person or group making the
offer must irrevocably commit in writing:
-- to acquire all shares of Common Stock not tendered into the offer at
the same price per share and for the same consideration paid pursuant
to the offer,
-- not to materially amend the offer, except to increase the price
offered, and
-- not to make any offer for any equity securities of the Company for six
months after commencement of the original offer if the original offer
does not result in the tender of two-thirds of the outstanding Common
Stock of the Company, unless another Qualifying Offer with a per share
offer price at least 10% higher than the last price offered by the
original offeror is commenced by another person or persons not
affiliated or associated with the original offeror or with whom the
original offeror has any agreement, arrangement or understanding
relating to the Company.
AUTHORIZATION OF PREFERRED STOCK
The Charter Amendment authorizes a new class of preferred stock consisting
of 5,000,000 shares, each having a par value of $.10, that may be issued by the
Board of Directors from time to time in one or more series (the "Preferred
Stock"). The Board intends to use the Preferred Stock in connection with the
Rights Plan. If the Charter Amendment is approved, the Board intends to amend
the Rights Plan to reflect the issuance of Preferred Stock rather than Common
Stock upon exercise of the Rights. Thereafter, each Right will entitle the
holder to purchase one one-hundredth of a share of Preferred Stock of the
Company. The Board believes this structure is consistent with the structure of
the large majority of contemporary stockholder rights plans and has the
advantage of avoiding the necessity of keeping a large number of shares of
Common Stock reserved for possible future issuance upon exercise of the Rights.
If the Charter Amendment is approved, the Board of Directors will have the
authority, without the necessity of any further stockholder action, to issue up
to 5,000,000 shares of preferred stock in one or
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more series, to establish from time to time the number of shares to be included
in each series, to fix the rights, preferences and privileges of the shares of
each wholly unissued series and any qualifications, limitations or restrictions
thereon, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding). In
considering this proposal, stockholders should be aware that, although the Board
of Directors intends to use all of the authorized shares of Preferred Stock in
connection with the Rights Plan, the Board will have the authority to, among
other things, authorize the issuance of Preferred Stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of Common Stock or that could have the effect of delaying,
deferring or preventing a change in control of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT AND
RESTATEMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE 1992 STOCK OPTION PLAN
The Board of Directors has approved, and recommends that the stockholders
approve, amendments to the Company's 1992 Stock Option Plan (the "Option Plan")
for the purposes described below. Approval of this proposal requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy at the meeting and entitled to vote.
The following is a description of the proposed amendments to and material
features of the Option Plan.
DESCRIPTION OF PROPOSED AMENDMENTS
The Company proposes to amend the Option Plan to implement the following
changes:
- To increase the number of shares of Common Stock available for option
grants by 1,200,000;
- To change the provision of the Option Plan limiting to 100,000 the number
of shares covered by options that may be granted to any individual in any
single year to provide that such limit shall be 200,000 shares; and
- To increase the annual grants for non-employee directors from 3,000 to
6,000 shares of Common Stock in the case of directors who are not chairs
of committees and from 5,000 to 8,000 shares of Common Stock in the case
of directors who are chairs of committees; and
- To make other minor changes to the Option Plan, principally to conform
administrative provisions of the plan to changes in the law.
The Company's continued success depends heavily upon its ability to attract
and retain highly qualified and competent personnel. The Company is operating in
a high growth industry which is experiencing fierce competition for experienced
and talented personnel, and the ability to grant stock options at competitive
levels is essential to the Company's success in its recruiting and retention
efforts. Furthermore, the Company strongly believes that its officers and other
key employees should have a significant stake in the Company's stock price
performance under programs that link their compensation to stockholder return.
Accordingly, stock option grants are an integral part of the Company's
compensation program, enabling the Company to provide its employees with
appropriate equity-linked incentives to advance the interests of the Company and
its stockholders. Stock option grants also support the acquisition of Company
stock by those executives and key managers who participate in the Executive
Stock Ownership Program, a program requiring the participants (currently
approximately 42 persons) to acquire and hold outright Company stock equal in
value to a specified percentage of their base salaries. As a matter of policy,
to ensure that the interests of employees and stockholders remain aligned, the
Company does not re-price options.
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The Company currently relies solely on the Option Plan for stock option
grants, and currently there are fewer than 45,000 shares of Common Stock
remaining available under the Option Plan for future grants. Rather that
adopting a new stock option plan at the present time, the Company proposes to
increase the number of shares authorized for grant under the Option Plan from
3,100,000 shares to 4,300,000 shares of Common Stock, an increase of 1,200,000
shares. The Company believes this increase will be sufficient to meet its needs
until October 2001, at which time a replacement plan for the 1992 Stock Option
Plan (which will then be nearly expired) will be presented for stockholder
approval.
The proposed increases in the maximum number of shares that may be granted
to any individual in any one year and in the number of shares covered by annual
grants to non-employee directors are based on the Company's belief, reflecting
reviews of survey data and recent experiences in the recruiting marketplace,
that the increased amounts are necessary to ensure that the Company's
compensation packages are attractive to the high caliber individuals it seeks to
employ.
DESCRIPTION OF THE OPTION PLAN
The proposed form of Option Plan, as amended to date and reflecting the
proposed amendments, is attached to this Proxy Statement as Exhibit B. The
following summary of the amended Option Plan is qualified in its entirety by
reference to the complete text of the Option Plan.
The Option Plan, as amended to date, authorizes the Company to issue a
maximum of 3,100,000 shares of Common Stock upon the exercise of stock options
granted under the plan. As a result of options previously granted, the Company
has issued approximately 575,000 shares of Common Stock through option exercises
and has reserved approximately 2,480,000 shares of Common Stock for outstanding
options under the Option Plan. There were fewer than 92,000 shares of Common
Stock remaining under the plan as of June 30, 1999, for future option grants,
although additional shares may become available if outstanding options are
cancelled or expire unexercised. The amended Option Plan would increase the
maximum number of shares issuable by 1,200,000 shares to a total of 4,300,000
shares.
The Option Plan is administered by the Board of Directors or by a committee
designated by the Board. The Compensation Committee has been designated by the
Board to administer the Option Plan. As used herein with respect to the Option
Plan, the "Board" refers to any committee the Board appoints, as well as to the
Board itself.
Options to purchase Common Stock of the Company granted under the Option
Plan may be either "incentive stock options" within the meaning of that term as
used in Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. Under the Option Plan, the Board may grant options
to officers, other key employees, and consultants of the Company and its
subsidiaries, except that incentive stock options may only be granted to
employees of the Company or any of its subsidiaries. Currently, approximately
800 persons are eligible to participate in the Option Plan, including five
officers and five non-employee directors.
The purchase price of shares acquired upon exercise of stock options under
the Option Plan must be at least 100% of the fair market value of the shares on
the date the option is granted, except that in the case of incentive stock
options granted to stockholders who own 10% or more of the total combined voting
power of all classes of stock of the Company or any subsidiary of the Company (a
"10% stockholder"), the exercise price must be at least 110% of such fair market
value. Payment of the purchase price may be made in cash or in shares of Common
Stock or, in the discretion of the Board, by a promissory note or such other
form of legal consideration that may be acceptable to the Board. The aggregate
value (at the time the option is granted) of the stock with respect to which
incentive stock options are exercisable for the first time by any optionee
during any calendar year may not exceed $100,000. In addition, if the proposed
amendment is approved, no officer or key employee may receive options under the
Option Plan covering in excess of 200,000 shares in any fiscal year.
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The term of an option cannot exceed ten years (five years in the case of an
incentive stock option granted to a 10% stockholder). The Option Plan provides
for flexibility in vesting practices at the discretion of the Board. In 1997,
the Board sought to re-focus the attention of optionees on increasing
stockholder wealth by adopting a performance-based vesting practice. Since that
time, option grants for officers, key employees and consultants have vested at
the rate of 25% when each of four pre-established stock price points is
achieved. Any unvested options automatically vest on the five year anniversary
of the grant date.
Unless terminated earlier by reason of expiration of the option term,
options under the Option Plan will generally terminate three months after the
optionee terminates employment with the Company, or 12 months after the
termination of employment if the optionee dies or becomes disabled while an
employee of the Company. All options granted under the Option Plan will be
nontransferable by the optionee during the optionee's lifetime, although they
may be transferred by will or the laws of descent and distribution following the
optionee's death. The options may contain such other terms, provisions and
conditions not inconsistent with the Option Plan as may be determined by the
Board. If any option granted under the Option Plan terminates or expires
unexercised in whole or in part, the shares released from that option may be
made subject to additional options granted under the Option Plan.
In addition to the options the Board may grant under the Option Plan, each
non-employee director of the Company will automatically receive a non-qualified
stock option under the Option Plan immediately following each annual meeting of
stockholders of the Company. The first such option granted to a non-employee
director will cover 10,000 shares of Common Stock. If the proposed amendment is
approved, each option granted to a non-employee director under the Option Plan
thereafter shall cover 6,000 shares of Common Stock, in the case of directors
who are not chairs of committees, and 8,000 shares, in the case of directors who
are chairs of committees. Each such option will have an exercise price equal to
the fair market value of the Common Stock on the date of the Annual Meeting of
Stockholders to which it relates and is fully vested on the date of grant.
The Board may at any time terminate or amend the plan. Any amendment of the
Option Plan, however, which increases the number of shares which may be issued
thereunder, or changes the requirements as to eligibility for participation,
must be approved by the stockholders of the Company.
The grant of an incentive stock option should have no tax effect on the
Company or the optionee to whom it is granted, and there generally is no tax to
the optionee upon exercise of the option. If an optionee holds shares acquired
upon exercise of an incentive stock option for at least two years after the date
the option is granted and at least one year after the date the option is
exercised, any gain realized by the optionee on the subsequent sale of such
shares is treated as long-term capital gain for federal income tax purposes. If
the shares are sold prior to the expiration of such periods, the lesser of (a)
the difference between the exercise price and the fair market value of the stock
at the date of exercise and (b) the amount realized on disposition minus the
purchase price, is treated as compensation to the optionee and taxable as
ordinary income. The excess gain, if any, is treated as capital gain (which will
be short-term or long-term capital gain depending upon the length of time the
shares were held). The excess of the fair market value of the shares over the
option price at the time of exercise of an incentive stock option may subject
the recipient to the alternative minimum tax (which, generally speaking, will be
applied only if it produces a tax that is higher than the individual's regular
tax liability). The Company is allowed a deduction for tax purposes only to the
extent, and at the time, that the optionee receives ordinary income by reason of
the optionee's sale of shares.
The grant of a non-qualified stock option under the Option Plan also should
have no tax effect on the Company or the recipient of such option. The spread
between the exercise price and the market value of the Company's Common Stock on
the date of exercise of a non-qualified option is taxable as ordinary income to
the optionee. The optionee's tax basis in the shares will be equal to the
aggregate exercise price paid by the optionee plus the amount of taxable income
recognized upon the exercise of the option. Upon
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any subsequent disposition of the shares, any further gain or loss recognized by
the optionee will be treated as capital gain or loss and will be long-term
capital gain or loss if the shares are held for more than one year after
exercise. The Company will normally be allowed, at the time of recognition of
ordinary income by the optionee upon exercise, to take a deduction for federal
income tax purposes in an amount equal to such recognized income.
In 1996, the Internal Revenue Service finalized the regulation under Section
162(m) of the Internal Revenue Code of 1986 (the "Section 162(m) Regulations").
Section 162(m) limits the ability of publicly held companies to deduct
compensation expenses in excess of $1,000,000 paid to certain executive
officers. The term "compensation" generally includes all cash and non-cash
compensation deductible by the Company on its tax return, including the amounts
realized by executives (and normally deductible by the Company) upon the
exercise of non-qualified stock options. However, the $1,000,000 limit does not
apply to the amounts realized upon the exercise of stock options that qualify as
performance-based compensation under the Section 162(m) Regulations. The Company
believes that the exercise of stock options granted under the amended plan will
qualify for this exemption from the limit on deductibility.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENTS TO
THE 1992 STOCK OPTION PLAN.
CORPORATE GOVERNANCE
In September 1997, the Board of Directors of the Company adopted Corporate
Governance Guidelines. The guidelines, which are set forth below, establish
corporate governance standards, outline the respective responsibilities of
management and the Board and provide a process for evaluating the performance of
the Board, committees of the Board and the Chief Executive Officer.
CORPORATE GOVERNANCE STANDARDS
The corporate governance standards established by the Board, along with
statements regarding the Company's compliance with them since their adoption,
are set forth below:
1. THE BOARD WILL APPROVE THE NECESSARY POLICIES TO IMPLEMENT CORPORATE
STRATEGIES.
During fiscal 1999, the Board approved policies to review acquisitions,
divestitures and product technologies. The Board also approved policies related
to hiring the appropriate personnel in sales and marketing in order to implement
the corporate strategy of addressing and capturing market share in the wireless
broadband market. The Board approved compensation polices related to hiring and
retaining the personnel required to run the company. Overall, the Board was
centrally involved in reviewing and approving corporate strategies
2. THE BOARD WILL OPERATE IN ACCORDANCE WITH THE REQUIREMENTS SET FORTH
BELOW UNDER REQUIREMENTS OF MANAGEMENT AND DIRECTORS.
The Board has consistently acted in the manner called for by these
requirements.
3. THE PERFORMANCE OF THE CHIEF EXECUTIVE OFFICER WILL BE EVALUATED AT
LEAST ANNUALLY IN MEETINGS OF INDEPENDENT DIRECTORS THAT ARE NOT ATTENDED BY THE
CHIEF EXECUTIVE OFFICER. FOR THIS PURPOSE, AN "INDEPENDENT DIRECTOR" IS A
DIRECTOR WHO HAS NOT BEEN A PRESENT OR FORMER EMPLOYEE OF THE COMPANY AND HAS NO
SIGNIFICANT FINANCIAL OR PERSONAL TIE TO THE COMPANY OTHER THAN SHARE OWNERSHIP
AND ENTITLEMENT TO DIRECTOR COMPENSATION.
The Board believes that a full and impartial evaluation of the Chief
Executive Officer's effectiveness is a key element in determining accountability
for the Company's performance. A summary of the independent directors' most
recent evaluation is set forth below under "Chief Executive Officer Evaluation."
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4. WHEN THE CHIEF EXECUTIVE OFFICER ALSO HOLDS THE POSITION OF CHAIRPERSON
OF THE BOARD, THE BOARD WILL ELECT A NON-EXECUTIVE VICE CHAIR OR LEAD DIRECTOR.
At the time this Governance Standard was adopted, the Company had just
appointed a new Chief Executive Officer, who was also appointed Chairman of the
Board, after completing a seven-month search. The Board believed it was prudent
under those circumstances to obtain a second, outside view for a period of time
it would take the new Chief Executive Officer to become fully immersed in the
Company's operations, technologies and markets. In the intervening two years,
the Chief Executive Officer has led the Company in the implementation of a new
strategic plan that focused the Company on the wireless broadband market. The
Board does not believe the rationale behind the initial adoption of this
Governance Standard is applicable under the present circumstances.
5. EVERY YEAR THE BOARD WILL REVIEW AND APPROVE A THREE-YEAR STRATEGIC PLAN
AND AN ANNUAL OPERATING PLAN FOR THE COMPANY, AND CONDUCT PERIODIC REVIEWS OF
PROGRESS.
In April 1999, the Board devoted two days to meeting formally and informally
with the Company's product managers during which they received briefings on the
Company's planned future markets, technologies and products. At the conclusion
of the session, the Board was satisfied that it understood fully the related
strategies in order to approve a three-year strategic plan and an annual
operating plan for the Company. The Board was an active participant in the
development and review of the strategic plan for fiscal 1999, and operating
plans of the Company.
6. ALL DIRECTORS WILL STAND FOR ELECTION EVERY YEAR.
All current directors are standing for re-election, the Company does not
have a "staggered" Board, and no director has been elected to serve for more
than one year.
7. AS A GENERAL RULE, FORMER EXECUTIVES OF THE COMPANY WILL NOT SERVE ON
THE BOARD.
At the time this Governance Standard was adopted, former executives were
serving on the Board. Since the adoption of this standard, no former executives
have served on the Board.
8. THE AUDIT COMMITTEE, COMPENSATION COMMITTEE AND GOVERNANCE COMMITTEE
WILL CONSIST ENTIRELY OF INDEPENDENT DIRECTORS.
The Board has adhered to this Governance Standard, as demonstrate by the
committee composition described above under "Information About the Board of
Directors and Committees of the Board."
9. COMMITTEE MEMBERS WILL BE APPOINTED BY THE BOARD.
All committee members, including those serving on the Global Sales
Committee--Messrs. Denend, Joulwan, Lawrence and Marx--were appointed by the
Board.
10. THE GOVERNANCE COMMITTEE WILL ANNUALLY ASSESS BOARD AND COMMITTEE
EFFECTIVENESS AND THE RESULTS WILL BE REPORTED TO THE STOCKHOLDERS IN THE PROXY
STATEMENT, WITH THE FIRST SUCH REPORT TO BE GIVEN IN 1998.
Evaluations and processes used to assess the effectiveness of the committees
for fiscal 1999 are summarized below under "Board and Committee Evaluation."
11. WHENEVER FEASIBLE, DIRECTORS WILL RECEIVE MATERIALS WELL IN ADVANCE OF
MEETINGS FOR ITEMS TO BE ACTED UPON.
Relevant materials were delivered to all directors in advance of Board and
committee meetings so as to provide the directors adequate time to review
materials and to prepare for the meetings. The Company has been diligent in
finding committee members, wherever they are, to make sure they have all
materials in advance. In the case of certain committee members who travel
extensively, especially internationally,
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special briefing sessions have been arranged when necessary in order to
facilitate the directors' preparation for the meetings.
12. INTERLOCKING DIRECTORSHIPS WILL NOT BE ALLOWED, EXCEPT WITH RESPECT TO
JOINT VENTURES. (AN INTERLOCKING DIRECTORSHIP WOULD OCCUR IF AN OFFICER OR
DIRECTOR OF THE COMPANY SERVED ON THE BOARD OF COMPANY X AND AN OFFICER OR
DIRECTOR OF COMPANY X SERVED ON THE COMPANY'S BOARD, OR IF A MAJOR SUPPLIER OR
CUSTOMER SERVED ON THE COMPANY'S BOARD.)
There are no interlocking directorships.
13. DIRECTORS ARE REQUIRED TO OWN AT LEAST 2,000 SHARES OF THE COMPANY'S
STOCK WITHIN ONE YEAR OF ELECTION AND 5,000 SHARES WITHIN THREE YEARS OF
ELECTION.
As of June 30, 1999, all directors have met or exceeded their minimum stock
ownership obligations. The directors' stock ownership positions are described
below under "Certain Stockholders."
14. NO DIRECTOR SHALL STAND FOR RE-ELECTION AFTER THE ATTAINMENT OF AGE 70.
There are no directors standing for re-election who are past the age of 70.
15. SUCCESSION PLANNING AND MANAGEMENT DEVELOPMENT WILL BE REPORTED ANNUALLY
BY THE CHIEF EXECUTIVE OFFICER TO THE BOARD.
Succession planning, management development and incentive compensation plans
for fiscal 1999 have been reviewed and approved by the Board.
16. NO DIRECTOR SHALL BE A POTENTIAL OR ACTUAL REPRESENTATIVE OF, OR HOLD AN
EXECUTIVE POSITION OR DIRECTORSHIP WITH, INTERESTS THAT MAY HAVE REASON TO MAKE
AN UNSOLICITED OR HOSTILE ATTEMPT TO ACQUIRE A CONTROLLING INTEREST IN THE
COMPANY OR ITS SUBSIDIARIES. NEITHER SHALL ANY DIRECTOR HAVE VESTED INTERESTS IN
BENEFITS FROM EXTERNAL INTERVENTION IN THE COMPANY'S AFFAIRS.
Each of the directors has confirmed to the Company that he does not have any
such position or interest.
17. THE COMPANY WILL ADOPT POLICIES TO ALLOW FOR CONFIDENTIALITY OF VOTING
BY ITS STOCKHOLDERS AND ASSURE THOSE POLICIES ARE ADMINISTERED.
The Company has consistently complied with this Governance Standard since
its adoption.
18. THE GOVERNANCE COMMITTEE WILL ESTABLISH A DIRECTOR'S QUESTIONNAIRE
DESIGNED TO ASSURE THAT BOARD MEMBERS HAVE THE REQUISITE QUALIFICATIONS AND HAVE
NO CONFLICTS OF INTERESTS. IN ADDITION, EACH DIRECTOR WILL BE REQUIRED TO ADOPT
AND SUPPORT THE COMPANY'S ETHICS POLICY.
Directors are required to respond annually to the questionnaire, which was
expanded in fiscal 1999 to require more precise, detailed information,
especially pertaining to ethics.
19. ALL EXECUTIVES (CURRENTLY APPROXIMATELY 42 PERSONS) MUST, OVER PERIODS
TO BE SPECIFIED, BUY AND HOLD OUTRIGHT (WHICH WOULD NOT INCLUDE OPTIONS AND
UNVESTED RESTRICTED STOCK) STOCK OF THE COMPANY VALUED AT ONE-HALF TO TWO TIMES
BASE SALARY, DEPENDING ON THEIR POSITIONS. EXECUTIVES ARE DEFINED FOR THIS
PURPOSE AS ALL CORPORATE OFFICERS, DESIGNATED SALES EXECUTIVES, AND THOSE
EXECUTIVES WHO PARTICIPATE IN THE EXECUTIVE INCENTIVE PLAN.
Under the Company's Executive Stock Ownership Program, each of the 42
affected executives has signed a pledge stating that he or she will acquire the
required share ownership holding by the later of October 1, 2001 or three years
from the date of the pledge. Each executive's holdings are reviewed
semiannually. During approximately the past year, the aggregate market value of
the shares of Common Stock held by the executives in this program has increased
by approximately $2.5 million, based on the average price of the stock for 30
trading days ended August 4, 1999. On average, the executives in this program
currently hold approximately one-third of the shares necessary to meet their
commitments, based
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on the same average price. The aggregate market value, as of August 4, 1999, of
the Common Stock holdings reported by these executives was in excess of $4.0
million.
20. INCENTIVE COMPENSATION PLANS WILL LINK PAY DIRECTLY AND OBJECTIVELY TO
MEASURE FINANCIAL GOALS SET IN ADVANCE BY THE COMPENSATION COMMITTEE.
The Compensation Committee has thoroughly reviewed the theory and practice
of the Company's compensation plans, and in fiscal 1999 new plans were
introduced that affect all employees of the Company. For executives and key
managers, the bonus plan is based upon achievement of sustainable improvements
in Economic Value Added (EVA-Registered Trademark-), which is a financial
measure related to the achievement of returns in excess of the Company's cost of
capital. For the technical staff, the Company developed a technology incentive
plan that ties an upside earning opportunity to the revenue growth and
profitability of individual product groups. The remaining employees participate
in an EVA-sharing plan, with payments every six months based on improvements in
the Company's EVA. Notwithstanding the achievements of the company's executives
and key managers during the past year, no bonuses or raises were granted to this
group in 1999 due to the Company's failure to meet its EVA growth goals. Indeed,
the slippage in EVA has generated a bonus "debt" which must be recovered before
the Company's executives and key managers will be eligible to receive bonuses
under the EVA-sharing plan in any succeeding years.
21. STOCK OPTIONS WILL NOT BE REPRICED (THE EXERCISE PRICE FOR OPTIONS WILL
NOT BE LOWERED EVEN IF THE CURRENT MARKET PRICE OF THE STOCK IS BELOW THE
EXERCISE PRICE), AND WILL BE PRIMARILY PERFORMANCE BASED.
The Board believes strongly that the interests of the stockholders and the
management of the Company are best served when those interests are aligned.
Therefore, the Board adopted a policy of not re-pricing stock options even if
they are significantly "under water," meaning the exercise price is higher than
the current market price of the stock. This policy was adhered to in fiscal
1999, which was a particularly challenging year for the Company as it
implemented its strategic plan, reorganized and regrouped. Stock options are key
to hiring and retaining talented personnel in a technology company, and, in
fiscal 1999, the Company strengthened its technology, finance and sales and
marketing teams with the addition of many new skilled individuals. Stock options
are priced at 100% of the fair market value at the time of grant and vest only
at the end of a five-year period unless the average stock price, over 30
consecutive trading days, exceeds certain threshold price targets, with the
first 25% vesting target set generally at 17% above the higher of the market
price at time of grant or the prior year's average stock price. Although 100% of
the Company's outstanding options granted during fiscal 1999 were "under water"
for a significant portion of the year, the Company complied with its no
re-pricing policy.
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REQUIREMENTS OF MANAGEMENT AND DIRECTORS
The respective responsibilities of management and the Board are as follows:
<TABLE>
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MANAGEMENT REQUIREMENTS OF DIRECTORS
- --------------------------------------------- ---------------------------------------------
<S> <C>
Develop strategies to deliver strong market Act in the best interest of all stockholders
franchises and build stockholder wealth and fulfill fiduciary and legal
over the long term responsibilities.
Recommend appropriate strategic and operating Critique and approve strategic and operating
plans plans.
Maintain effective control of operations Select, motivate, evaluate and compensate the
Chief Executive Officer.
Measure performance against peers Develop a good understanding of strategies
and the businesses.
Provide strong, principled and ethical Review succession planning and management
leadership development.
Care for employees, customers and Advise and consult on key organizational
stockholders changes.
Assure sound succession planning and Carefully study Board materials and issues.
management development
Maintain sound organizational structure Participate actively, objectively and
constructively at Board and committee
meetings.
Inform the Board regularly regarding the Assist in representing the Company to the
status of key initiatives. Avoid surprises outside world. Counsel on corporate issues.
Be responsible for Board meetings which are Maintain confidentiality of Board proceedings
well planned, allow meaningful and company proprietary data.
participation and provide for timely
resolution of issues
Furnish Board with materials, which contain Maintain a good understanding of general
the right amount of information and are economic trends and corporate governance.
delivered sufficiently in advance of
meetings
</TABLE>
BOARD AND COMMITTEE EVALUATION
The process for evaluation of Board and committee performance and
effectiveness provided for in the corporate governance standards is led by the
Board's Governance Committee. It requires each director to complete an
evaluation questionnaire, to enter a number grade from 1 to 5 and, in most
cases, written comments addressing each of the following standards:
1. The Board knows and understands the Company's vision; strategic
precepts, strategic plan and operating plan and understands the corresponding
corporate policies.
2. The Board reflects its understanding of the Company's vision, strategic
precepts, strategic plan and operating plan in its discussion and actions on key
issues throughout the year.
3. Board meetings are conducted in a manner which ensures open
communication, meaningful participation, and timely resolution of issues. The
proceedings of meetings are held in strict confidence and not divulged to
outsiders.
4. Board materials contain the right amount of information.
5. Board members receive their materials sufficiently in advance of
meetings.
17
<PAGE>
6. Board members are diligent in preparing for meetings and have adequate
time available to perform their duties as directors.
7. The Board reviews and approves an annual operating plan and regularly
monitors performance against it throughout the year.
8. The Board regularly monitors the Company's income statement, balance
sheet and cash flow.
9. The Board reviews and approves an annual capital budget and receives
regular written or oral reports of performance against it throughout the year.
10. In tracking Company performance, the Board regularly considers the
performance of peer companies.
11. The Board regularly reviews the performance of the Chief Executive
Officer.
12. The Board and/or the Compensation Committee regularly review the
performance and ethics of the senior officers.
13. The correlation between executive pay and Company performance is
annually considered by the Board and/or the Compensation Committee.
14. The Board reviews the succession plan for the Chief Executive Officer.
The evaluation of the Board for fiscal 1999 was completed in July 1999. It
was concluded that there was satisfactory performance with respect to all of the
above-described standards, with the exception that it was the view of the Board
that there could be improvements with regard to the lead time on distribution of
agendas and materials for Board and committee review. The Board rated as its
greatest strengths (1) the quality and effectiveness of the Audit Committee, (2)
the quality and frequency of communication between the directors and the Chief
Executive Officer and among the directors, (3) the directors' understanding of
the Company's business, industry and strategy, (4) the directors' effectiveness
at staying informed with regard to issues and trends affecting the Company and
its industry and (5) the directors' alignment with the long-term interests of
the Company's stockholders.
CHIEF EXECUTIVE OFFICER EVALUATION
The evaluation of the Chief Executive Officer's performance and
effectiveness provided for in the Corporate Governance standards is led by the
Board's Governance Committee. It requires the CEO and directors to independently
complete a CEO evaluation questionnaire, to enter a grade of 1 to 5, and, in
most cases, to add written comments addressing each of the following standards:
1. Leadership: Leads the company and sets a philosophy that is well
understood, widely supported, consistently applied, and effectively
implemented.
2. Strategic Planning: Ensures the development of a long-term strategy;
establishes objectives and plans that meet the needs of stockholders,
customers, employees, and all corporate stakeholders; ensures consistent and
timely progress toward strategic objectives; obtains and allocates resources
consistent with strategic objectives.
3. Financial Results: Establishes appropriate annual and longer-term
financial objectives and manages to consistently achieve these goals;
ensures that appropriate systems are maintained to protect assets and
maintain effective control of operations.
4. Succession Planning: Develops, attracts, retains, motivates, and
supervises an effective top management team capable of achieving objectives;
provides for management succession.
5. Human Resources/EEO: Ensures the development of effective
recruitment, training, retention and personnel communications plans and
programs to provide and motivate the necessary human
18
<PAGE>
resources to achieve objectives; establishes and monitors programs to
provide equal opportunity employment for minority employees.
6. Communications: Serves as chief spokesperson, communicating
effectively with stockholders and all stakeholders.
7. External Relations: Ensures that the company and its operating units
contribute appropriately to the well being of their communities and
industries. Represents the company in community and industry affairs.
8. Board and Stockholder Relations: Works closely with the board of
directors and stockholders to keep them fully informed on all-important
aspects of the status and development of the company. Facilitates the
board's governance, composition, and committee structure. Implements board
policies and recommends policies for board consideration.
The evaluation of the CEO for fiscal 1999 was completed in July 1999. It was
concluded that there was satisfactory performance with respect to all of the
above standards, with the note that the Company's Strategic Plan is a complex
multiyear strategy that will continue to require very strong leadership and
execution. The Board rated the CEO's greatest strengths as (1) leadership in
development of an effective Strategic Plan and completion of key elements of the
Plan in its first year of implementation, including key growth business
acquisitions and divestiture transactions, (2) the recruitment and caliber of
key management, and (3) internal and external communications, especially the
articulation of the market potential for the AB-Access-TM- technology.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for their service as directors. During fiscal 1999, directors who
were not employees of the Company received compensation at the rate of $20,000
per year for their services as Board members, $750 per committee meeting
attended for the chair of a committee and $500 per meeting attended for other
members of the committee, and reimbursement for expenses incurred in attending
meetings of the Board or any committee of the Board. George A. Joulwan, who also
served as a marketing consultant to the Company in fiscal 1999, received
$160,000 for his services in that capacity. In fiscal 1999, as automatic grants
under the Company's 1992 Stock Option Plan, (i) Messrs. Joulwan, Marx, Ward and
Whitridge, as the chairs of committees, each received an option to purchase
5,000 shares of Common Stock, and (ii) Mr. Denend, not being a chair of a
committee, received an option to purchase 3,000 shares of Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows specific compensation information, for fiscal
1999, 1998 and 1997, awarded or paid to, or earned by, the Company's Chief
Executive Officer and the five other most highly compensated executive officers
as of June 30, 1999.
19
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR SALARY(2) BONUS(3) COMPENSATION(4) OPTIONS COMPENSATION(5)
- ---------------------------------------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Frederick D. Lawrence............................... 1999 $450,000 $409,767 $ -- 100,000 $5,562
Chairman, Chief Executive Officer and President 1998 420,577 635,558 174,172 500,000 1,570
George G. Arena..................................... 1999 250,016 28,513 75,000 9,047
Executive Vice President 1998 182,322 276,695 25,000 2,517
Donna S. Birks...................................... 1999 275,000 90,308 11,260 75,000 9,221
Executive Vice President and Chief Financial 1998 142,788 145,944 55,549 134,000 1,784
Officer
Daniel L. Scharre................................... 1999 194,615 21,906 85,000 8,772
Executive Vice President and Chief Technology 1998 120,000 7,800 38,159 35,000 2,123
Officer
Kenneth J. Wees..................................... 1999 200,755 44,223 53,479 41,000 5,587
Vice President, General Counsel and Secretary
Donald V. Anderson, Jr.............................. 1999 247,559 26,680 25,000 9,339
Former Executive Vice President 1998 186,164 21,356 25,000 2,188
</TABLE>
- ------------------------------
(1) Mr. Lawrence joined the Company in July 1997. Mr. Arena became an executive
officer of the Company in April 1998. Ms. Birks joined the Company in
December 1997. Dr. Scharre joined the Company in September 1997 and became
an executive officer in April 1998. Mr. Anderson became an executive officer
of the Company in April 1998 and his employment with the Company terminated
on June 30, 1999. Mr. Wees joined the Company in May 1998 and became an
executive officer in September 1998.
(2) Includes amounts earned but deferred at the election of the Named Executive
Officer under the Company's Tax-Deferred Savings 401(k) Plan and its
Supplemental Executive Deferred Compensation Plan.
(3) No executive incentive bonus compensation was earned in 1999 or, for certain
Named Executive Officers, in 1998. "Bonus" includes (a) executive incentive
bonus compensation earned in 1998 for Mr. Lawrence of $200,000, for Mr.
Arena of $238,262 and for Ms. Birks of $64,053, as well as a hiring bonus
for Ms. Birks of $40,000; (b) forgiveness of loans and related imputed
interest, including income tax gross-up payments, for Mr. Lawrence of
$344,271 in 1999 and $365,245 for 1998, and imputed interest on loans,
including income tax gross-up payments, to Ms. Birks of $56,208 in 1999 and
$23,420 in 1998 (see "Employment Arrangements"); (c) supplemental executive
compensation in lieu of perquisites for Mr. Lawrence of $67,500 in 1999 and
$67,500 in 1998, for Mr. Arena of $28,513 in 1999 and $17,530 in 1998, for
Ms. Birks of $34,100 in 1999 and $18,471 in 1998, for Dr. Scharre of $21,906
in 1999 and $7,800 in 1998, for Mr. Wees of $14,963 in 1999, and for Mr.
Anderson of $26,680 in 1999 and $21,356 in 1998; (d) payout of earned
vacation in 1998 for Mr. Arena of $20,903; and (e) mortgage assistance
allowance for Mr. Wees of $29,260 in 1999.
(4) Includes perquisites consisting of relocation expense reimbursements for Mr.
Lawrence of $174,172 in 1998, for Ms. Birks of $11,260 in 1999 and $55,549
in 1998, for Dr. Scharre of $38,159 in 1998 and for Mr. Wees of $53,479 in
1999.
(5) Includes (a) matching 401(k) contributions by the Company for Ms. Birks, Dr.
Scharre and Messrs. Arena, Wees, and Anderson for 1999 of $1,600 and for Ms.
Birks, Dr. Scharre and Messrs. Arena and Anderson for 1998 of $1,400; (b)
amounts paid by the Company for life insurance premiums for Mr. Lawrence of
$1,056 in 1999 and $1,570 in 1998, for Mr. Arena of $1,300 in 1999 and
$1,117 in 1998, for Ms. Birks of $1,452 in 1999 and $384 in 1998, for Dr.
Scharre of $1,200 in 1999 and $723 in 1998, for Mr. Wees of $1,056 in 1999,
and for Mr. Anderson of $1,176 in 1999 and $788 in 1998; and (c) matching
contributions to the Company's Supplemental Executive Deferred Compensation
Plan accrued for 1999 for Mr. Lawrence of $4,506, for Mr. Arena of $6,147,
for Ms. Birks of $6,169, for Dr. Scharre of $5,972, for Mr. Wees of $2,931,
and for Mr. Anderson of $6,563.
20
<PAGE>
STOCK OPTION TABLES
The following table shows information concerning stock options granted to
the individuals named in the Summary Compensation Table above during fiscal
1999.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES ASSUMED ANNUAL RATES OF STOCK
UNDERLYING % OF TOTAL PRICE APPRECIATION FOR OPTION
OPTIONS OPTIONS GRANTED EXERCISE TERM(2)(3)
GRANTED TO EMPLOYEES IN PRICE EXPIRATION -------------------------------
NAME (NUMBER)(1) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- ------------------------------------ ------------- --------------- ----------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Frederick D. Lawrence............... 100,000 7.2% $ 16.00 8/19/08 $1,006,400 $2,550,400
George G. Arena..................... 25,000 1.8% 16.00 8/19/08 251,600 637,600
50,000 3.6% 16.50 6/15/09 518,925 1,315,050
Donna S. Birks...................... 25,000 1.8% 16.00 8/19/08 251,600 637,600
50,000 3.6% 16.50 6/15/09 518,925 1,315,050
Daniel L. Scharre................... 35,000 2.5% 16.00 8/19/08 352,240 892,640
50,000 3.6% 16.50 6/15/09 518,925 1,315,050
Kenneth J. Wees..................... 30,000 2.2% 16.88 7/08/08 318,431 806,963
1,000 0.1% 16.00 8/19/08 10,064 25,504
10,000 0.7% 16.50 6/15/09 103,785 263,010
Donald V. Anderson, Jr.............. 25,000 1.8% 16.00 8/19/08 251,600 637,600
</TABLE>
- ------------------------------
(1) All options granted in fiscal 1999 were granted pursuant to the 1992 Stock
Option Plan. All of the options are incentive or nonqualified stock options
that were granted at 100% of the fair market value of the Common Stock on
the date of grant and expire 10 years from the date of grant, unless
otherwise earlier terminated as a result of certain events related to
termination of employment. The options listed above vest based upon
escalating stock prices, except that any unvested shares vest automatically
at the end of five years, and are subject to acceleration upon the
occurrence of certain events. Additional vesting of the right to exercise
the options ceases when the optionee's employment terminates. Options
granted effective September 1997 or later provide for vesting based upon
escalating stock prices, with four vesting points which are generally 15 -
20% greater than the prior vesting point. For example, the fiscal 1999
options listed above that were granted at $16.50 will vest 25% when the
stock reaches $19.25, 25% at $22.50, 25% at $26.50 and 25% at $30.75.
(2) The 5% and 10% assumed rates of appreciation applied to the option exercise
price over the 10-year option term are prescribed by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future price of Common Stock. The named
executive officers will receive benefit from the options only to the extent
that the Company's stock appreciates in value over the exercise price of the
options.
(3) At assumed annual rates of appreciation of 0%, 5% and 10%, the aggregate
potential realizable increase in value for shares held by all stockholders
as of June 30, 1999, for the 10-year period from July 1999 to July 2009,
would be $0, $200,856,000 and $509,004,000, respectively. The following
table shows information concerning the value of unexercised stock options
held by the individuals named in the Summary Compensation Table above as of
June 30, 1999.
21
<PAGE>
AGGREGATED OPTION EXERCISES(1) IN FISCAL 1999
AND JUNE 30, 1999 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 6/30/99 AT 6/30/99(2)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Frederick D. Lawrence.......................................... 125,000/475,000 $ 703,125/$2,696,875
George G. Arena................................................ 28,313/104,759 103,836/546,977
Donna S. Birks................................................. 0/209,000 0/834,375
Daniel L. Scharre.............................................. 0/120,000 0/623,125
Kenneth J. Wees................................................ 0/41,000 0/209,625
Donald V. Anderson, Jr......................................... 21,011/0 47,447/0
</TABLE>
- ------------------------
(1) No options were exercised during fiscal 1999 by the named individuals.
(2) The value of unexercised options is calculated by multiplying the number of
shares issuable upon exercise of outstanding options by the difference
between the option exercise price and the closing price of $21.88 per share
of the Company's Common Stock as reported on the Nasdaq National Market on
June 30, 1999.
EMPLOYMENT ARRANGEMENTS
In July 1997, the Company entered into a four-year employment agreement with
Frederick D. Lawrence, pursuant to which Mr. Lawrence will receive a base salary
at the annual rate of $450,000, a bonus targeted at 67% of base salary, with
multipliers up to 2.7 times the target bonus amount based upon meeting or
exceeding objectives approved by the Board of Directors and a minimum bonus of
$200,000 for the 1998 fiscal year. Mr. Lawrence was granted options to purchase
500,000 shares of the Company's Common Stock that will vest over a period of
four years at the rate of 25% at the end of each year and will be exercisable at
a price equal to the fair market value of the Company's Common Stock on July 16,
1997, namely, $16.25 per share; only 200,000 of the shares are covered by
options under the Company's 1992 Stock Option Plan, but all of the options are
subject to the same terms and conditions as are set forth in that Plan. In the
event Mr. Lawrence's employment terminates by reason of a change in control of
the Company or is terminated by the Company without cause, Mr. Lawrence would be
entitled to receive three years of his initial base salary payable over the
three years immediately following termination. Mr. Lawrence received loans in
principal amounts of $150,000 and $316,667 to replace loans of his former
employer, and a portion of those loans, as was true of the loans given by his
former employer, will be forgiven subject to his remaining in the employ of the
Company for the periods specified in his agreement. In August 1999, the Board
amended the terms of the $150,000 loan to extend its due date to July 2001 and
add a provision under which it will be forgiven upon a change in control of the
Company. The employment agreement with Mr. Lawrence provides for tax
reimbursement of taxes incurred by him in connection with loan forgiveness and
certain relocation assistance benefits.
In December 1997, the Company entered into an employment agreement with
Donna S. Birks, pursuant to which Ms. Birks will receive a base salary at the
annual rate of $275,000 and a bonus targeted at 55% of base salary. Ms. Birks
received a hiring bonus of $40,000 and also was granted an option to purchase
134,000 shares of the Company's Common Stock under the Company's 1992 Stock
Option Plan that will vest over a period of five years based upon attainment of
escalating stock prices as detailed in the Stock Option Tables, and will be
exercisable at a price equal to the fair market value of the Company's Common
Stock on December 15, 1997, namely, $18.75 per share. In the event Ms. Birks'
employment is terminated by the Company without cause within three years of the
date of commencement of her employment, she will be entitled to receive up to
two years of her base salary at the time of termination
22
<PAGE>
plus payments during such period equal to the Company's cost for her medical,
dental, vision, disability and life insurance premiums; such payments will cease
upon her acceptance of new employment commensurate with her skills. In
recognition of the higher housing costs in the Bay Area, Ms. Birks was loaned
$500,000, payable on the fifth anniversary of the commencement of her employment
or, if earlier, upon the voluntary termination of her employment or the
termination of her employment for cause (unless either such voluntary
termination or termination for cause occurs within one year following a change
in control of the Company). The loan is interest free, provided that if Ms.
Birks voluntarily terminates her employment or is terminated for cause within
two years of the date of commencement of her employment, an interest charge will
be due on the loan based on the period it was outstanding at the applicable
federal rate.
In July 1999, Mr. Arena, Dr. Scharre and Mr. Wees entered into Severance
Agreements under which each of them is entitled to severance compensation in the
event of termination of his employment other than for cause within 24 months
after any change in control of the Company (as defined in the agreements) that
occurs prior to December 31, 2000. The compensation in general would consist of
(1) monthly payments for a period ending 24 months after the termination equal
to the aggregate of the officer's monthly base salary at the time of
termination, (2) an additional amount equal to bonus compensation that could
have been earned, based on the Company's performance, under the applicable bonus
plan, and (3) the value of certain other compensation and benefits to which the
officer was entitled at the time of termination. If the officer becomes
reemployed prior to the expiration of the 24-month period, the payments would
cease as of the later of 12 months from termination of his employment with the
Company or the commencement date of his new employment. Under the agreements,
repayment of any existing Company loans would be extended, if necessary, to
delay repayment until the beginning of regular employment during the period of
monthly severance compensation. The agreements also provide for full vesting of
all stock options and restricted stock held by the officer in the event of a
termination covered by the agreements. Ms. Birks entered into a similar
agreement in July 1999, the only significant difference being that her agreement
affords her the opportunity to accept either these severance benefits or those
specified in her above-described employment agreement.
Mr. Anderson's employment with the Company terminated on June 30, 1999.
Under a separation agreement with the Company, Mr. Anderson is eligible to
receive severance benefits for a period of 12 months from the date of
termination, ceasing upon re-employment, which include salary continuation at
the rate of $4,423 per week and medical, dental, EAP and vision insurance
coverage. Mr. Anderson is also eligible under the agreement to receive
outplacement counseling for one year and "tail" coverage under the Company's
directors' and officers' liability insurance.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
All of the members of the Compensation Committee are outside directors. None
of the members of the committee is or was an officer of the Company.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors is
composed entirely of outside directors, none of whom is or was an officer or
employee of the Company or any of its subsidiaries. The Committee is responsible
for developing and making recommendations to the Board with respect to the
Company's executive compensation policies and has the sole responsibility for
determining the recipients of equity participation awards/grants, such as stock
options, and the number of options to be granted to each recipient. In addition,
the Committee is responsible for making annual recommendations to the Board for
the compensation to be paid to the Chief Executive Officer and each of the other
23
<PAGE>
executive officers of the Company. The Committee has engaged specialized
compensation and benefits consulting firms to assist the Committee and the
Company in reviewing the compensation program for the Company's executive
officers, gathering information on competitive compensation levels, trends and
practices and developing more effective methods of compensating the executive
officers of the Company.
The objective of the Company's executive compensation program is to provide
the following:
- Levels of total compensation that are competitive with those provided in
the various markets in which the Company competes for its executive
resources;
- Annual cash incentive compensation that varies with the short and
long-term financial performance of the Company, and as evidenced by
sustained growth in EVA; and
- Long-term (equity participation) incentives which further align the
interests of management with those of the stockholders.
The executive compensation program provides an overall level of
compensation, which is competitive relative to the high technology executive
labor market. The Committee develops its executive compensation program with
reference to current comprehensive data on the high technology labor market.
Actual compensation levels may be greater or less than average levels in
surveyed companies depending upon annual and long-term performance by the
Company and the individual. The Committee uses its discretion in recommending to
the Board executive compensation at levels that in its judgment are warranted by
external, internal and/or individual circumstances.
EXECUTIVE OFFICER TOTAL COMPENSATION PROGRAM
The Company's executive officer total compensation program is comprised of
base salary, annual cash incentive compensation, long-term incentive
compensation principally in the form of stock options, and various other common
employee benefits. For fiscal 1999, a new bonus plan was introduced for all
executives and selected senior managers providing bonuses based upon sustainable
EVA growth and individual performance. The payout under the Plan is not capped;
however, if the bonus amount exceeds 120% of target, a portion is deferred for
payout in successive years. Any deferred potential payouts remaining upon
termination are forfeited. The Executive Incentive Plan bonus targets as a
percentage of base salary have remained unchanged from what they were prior to
fiscal 1999. Fiscal 1999 and 2000 base salary rates of the current executive
officers, excluding those officers who had changes in responsibilities, remain
unchanged from their base salary rates in fiscal 1998. The Committee has
reviewed the total compensation of the six highest paid executive officers in
fiscal 1999 and has concluded that their compensation is or was reasonable and
consistent with the Company's compensation philosophy and industry practice.
BASE SALARY
Base salary levels for the Company's executive officers are competitively
set with reference to published labor market surveys. In determining particular
executives' salaries, the Committee also takes into account individual
experience and performance and specific factors particular to the Company.
ANNUAL INCENTIVE COMPENSATION
The Executive Incentive Plan ("EIP") is the Company's annual incentive
program for selected executive officers and other senior managers. The purpose
of the plan is to provide a direct financial incentive to executives (in the
form of an annual cash bonus) to achieve sustained EVA growth. The EVA growth
goal is set at the beginning of each year as a relatively constant increment
over the prior year's EVA. Achieving the EVA growth goal can result in earning
the executive's target bonus, although individual performance is also taken into
account in allocating monies from the bonus pool. Failure to achieve growth of
EVA over the prior year can result in a bonus "debt" which must be recovered by
24
<PAGE>
subsequent years' bonus results prior to being eligible for future bonuses.
Target bonus awards are set at competitive levels relative to executive labor
market data.
STOCK OPTION PROGRAM
The stock option program is the Company's principal long-term incentive plan
for executive officers and key managers. The objectives of the program are to
align executive and stockholder long-term interests by creating a strong and
direct link between executive compensation and stockholder return, and to enable
executives to develop and maintain a significant, long-term ownership position
in the Company's Common Stock. The Compensation Committee believes that stock
options, in conjunction with the EVA-based EIP and the Executive Stock Ownership
Program, create a strong mutuality of interest between the management and
stockholders.
To strengthen this connection still further and to communicate a commitment
to increasing stock prices, the Company adopted stock-price-based vesting in
September 1997. This practice requires that the stock price must reach
pre-established levels before stock-price-based vesting can occur. Shares not
vested by reaching the stock price thresholds will not vest until five years
after the option grant date. For example, options granted in August 1998 require
that the Company's stock price rise to $35.73 in order for the options to become
100% vested prior to the five-year cliff vesting.
Stock options are granted with an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant and have 10-year terms.
Each year the new grants for the next fiscal year will contain four escalating
vesting prices, each of which applies to 25% of the shares covered by the grant.
The vesting prices are computed by adding multiples of the Company's cost of
equity capital to the higher of (1) the closing stock price on the date that
annual vesting prices are set, (2) the average closing stock price for the
previous 30 days, (3) the average closing stock price for the previous year, or
(4) the closing stock price on the date of grant. In determining the size of
option grants for individual recipients, the Committee considered competitive
practices and prior option grants. Annual grants are typically given to
participants in the Executive Stock Ownership Program. Other grants are made to
secure acceptance of employment offers to individuals filling key positions and
to selected current employees positions of similar importance.
SUPPLEMENTAL EXECUTIVE DEFERRED COMPENSATION PLAN
The Company offers an Executive Deferred Compensation Plan whereby
participating executives may defer up to 70% of their salary and 80% of their
bonus until termination of their employment with the Company, thereafter
receiving a payout over a period of up to 10 years. Outside directors of the
Company may also be selected for participation in the Plan. The Plan is not
intended to be a tax-qualified plan under the Code or a funded plan under the
Employee Retirement Income Security Act (ERISA), and amounts deferred under the
Plan are general unsecured obligations of the Company. Plan participants may
direct the investment of their funds into various investment vehicles. In 1999,
the Company added a phantom stock investment vehicle, the investment performance
of which depends on the market price of the Company's Common Stock. The phantom
shares are valued at 100% of the market price of the Company's Common Stock at
the end of each month. The Company will match deferrals made by a participant
during the first three years of the participant's eligibility under the Plan if
those deferrals are used to purchase phantom shares. The Company will match the
first 400 phantom shares purchased by a participant in a calendar year at the
rate of one phantom share for each four phantom shares purchased by the
participant. The Company will match the next 400 phantom shares purchased by the
participant in the calendar year at the rate of one phantom share for each two
phantom shares purchased by the participant. No other matching contributions
will be made by the Company. All Company matching contributions will vest over a
period of two years. Phantom stock held in this Plan is credited toward
attainment of executive stock ownership requirements but confers no voting
rights or other rights of ownership.
25
<PAGE>
BENEFITS
The Company provides benefits to the executive officers that are generally
available to Company employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of Frederick D. Lawrence, the Company's Chief Executive
Officer, for fiscal 1999 was based upon the employment agreement with Mr.
Lawrence that is described under "Employment Arrangements" above. That agreement
was the result of negotiations with Mr. Lawrence conducted with the assistance
of the Company's outside compensation consultants and other advisors. For fiscal
1999, Frederick D. Lawrence received a stock option grant covering 100,000
shares, no increase in his base salary and no changes in his target bonus
percentage.
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits the
amount of compensation a corporation may deduct as a business expense. Section
162(m) generally disallows deductions for compensation in excess of $1 million
to a company's Chief Executive Officer or to any of its four other most highly
compensated executive officers. Compensation that is "performance-based" is not
subject to that limit if certain requirements are met. Based on fiscal 1999
compensation levels, no such levels on the deductibility of compensation applied
to any officer of the Company. The Company has not adopted a policy prohibiting
compensation at a level that would limit deductions.
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1993 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Acts.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
WILLIAM B. MARX, JR., CHAIRMAN
TERRY W. WARD
FREDERICK W. WHITRIDGE, JR.
26
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total returns
for the Company's Common Stock, the Nasdaq Stock Market (US) Index and the
Nasdaq Communications Equipment Index, each of which assumes reinvestment of
dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ADAPTIVE BROADBAND NASDAQ (US) INDEX NASDAQ COMMUNICATIONS EQUIPMENT INDEX
<S> <C> <C> <C>
1994 100.0 100.0 100.0
1995 110.2 132.2 116.0
1996 67.0 167.9 146.9
1997 61.5 204.3 162.4
1998 76.9 268.4 269.7
1999 96.2 380.5 427.9
</TABLE>
27
<PAGE>
CERTAIN STOCKHOLDERS
The following table sets forth information as of July 26, 1999 (except as
otherwise noted), regarding securities ownership by (i) each person who is known
by the Company to own beneficially more than 5% of the Company's Common Stock,
(ii) each of the directors individually, (iii) each of the current or former
executive officers named in the Summary Compensation Table, and (iv) all current
directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------
SHARES PERCENT
---------- -----------
<S> <C> <C>
Citigroup Inc.(2)....................................................... 1,864,561 12.0
153 East 53rd Street
New York, NY 10043
Frederick D. Lawrence(3)................................................ 407,923 2.6
William B. Marx, Jr.(4)................................................. 21,000 *
Terry W. Ward(5)........................................................ 525,147 3.4
Frederick W. Whitridge, Jr.(6).......................................... 36,000 *
George A. Joulwan(7).................................................... 12,000 *
Leslie G. Denend(8)..................................................... 10,000 *
George G. Arena(9)...................................................... 120,247 *
Donna S. Birks(10)...................................................... 143,850 *
Daniel L. Scharre(11)................................................... 97,140 *
Kenneth J. Wees(12)..................................................... 33,316 *
Donald V. Anderson, Jr.(13)............................................. 2,912 *
All Directors and Executive Officers as a Group (10 persons)(14)........ 1,406,623 9.0
</TABLE>
- ------------------------
(*) Less than 1% of the 14,753,852 shares of Common Stock outstanding as of
July 26, 1999.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission. Unless otherwise indicated in the footnotes to
this table and subject to community property laws where applicable, the
Company believes that all of the stockholders named in the table have sole
voting power and dispositive power with respect to all shares of stock
shown as beneficially owned by them. Amounts indicated for shares that a
person has an "option to acquire" are issuable upon exercise of outstanding
options that were exercisable on July 26, 1999 or within 60 days
thereafter.
(2) Beneficially owned indirectly by subsidiaries of Citigroup Inc. Citigroup
Inc. and its subsidiaries reported shared voting and dispositive power with
respect to all of such shares.
(3) Includes 375,000 shares of Common Stock which Mr. Lawrence has an option to
acquire.
(4) Includes 18,000 shares of Common Stock which Mr. Marx has an option to
acquire.
(5) Includes 20,000 shares of Common Stock which Mr. Ward has an option to
acquire. Also includes 484,935 shares owned by W.S. Farish & Company. Mr.
Ward serves as a director and the Vice President and Chief Financial
Officer of W.S. Farish & Company and may be deemed to share voting and
dispositive power with respect to the shares owned by W.S. Farish &
Company. He disclaims beneficial ownership of all shares held by W.S.
Farish & Company except to the extent of his pecuniary interest therein.
(6) Includes 20,000 shares of Common Stock which Mr. Whitridge has an option to
acquire.
28
<PAGE>
(7) Includes 10,000 shares of Common Stock which Mr. Joulwan has an option to
acquire.
(8) Includes 10,000 shares of Common Stock which Mr. Denend has an option to
acquire.
(9) Includes 110,572 shares of Common Stock which Mr. Arena has an option to
acquire.
(10) Of these shares, 7,100 are held by Ms. Birks and her husband as trustees
of a revocable family trust. Includes 135,750 shares of Common Stock which
Ms. Birks has an option to acquire.
(11) Includes 93,750 shares of Common Stock which Dr. Scharre has an option to
acquire.
(12) Includes 25,750 shares of Common Stock which Mr. Wees has an option to
acquire.
(13) Mr. Anderson's employment with the Company terminated in June 1999.
(14) Includes 818,822 shares of Common Stock which all current directors and
executive officers as a group have options to acquire. Also includes the
484,935 shares described in Note 5 and owned by a company of which Mr.
Ward serves as a director and officer. Mr. Ward disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest
therein.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors and
executive officers, and any persons holding more than 10 percent of the
Company's Common Stock, are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file by such dates of which it becomes aware during the fiscal
year. The Company believes that during the last fiscal year its directors and
officers filed on a timely basis all such reports required to be filed.
PROPOSALS BY STOCKHOLDERS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2000 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is May 27, 2000. Unless a stockholder who wishes to bring a matter
before the stockholders at the Company's 2000 annual meeting of stockholders
notifies the Company of such matter prior to August 10, 2000, management will
have discretionary authority to vote all shares for which it has proxies in
opposition to such matter.
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing the forms of
proxy and the material used in the solicitation of proxies will be paid by the
Company. Arrangements will be made for the forwarding of soliciting materials by
nominees, custodians and fiduciaries to their principals. Corporate Investor
Communications, Inc. will assist the Company in obtaining the return of proxies
at an estimated cost to the Company of $5,000.
29
<PAGE>
OTHER MATTERS
Management knows of no other matters which will be brought before the
meeting, but if such matters are properly presented the proxies solicited hereby
will be voted in accordance with the judgment of the persons holding such
proxies.
BY THE BOARD OF DIRECTORS
[LOGO]
KENNETH J. WEES
SECRETARY
Sunnyvale, California
September 24, 1999
30
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ADAPTIVE BROADBAND CORPORATION
I.
The name of this corporation is Adaptive Broadband Corporation.
II.
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, 19805, County of New Castle
and the name of the registered agent of the corporation in the State of Delaware
at such address is The Corporation Trust Company.
III.
The name and mailing address of the incorporator of the Corporation is:
George L. Spillane
990 Almanor Avenue
Sunnyvale, California 94086
IV.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
V.
This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Thirty-Five Million
(35,000,000) shares. Thirty Million (30,000,000) shares shall be Common Stock,
each having a par value of $.10. Five Million (5,000,000) shares shall be
Preferred Stock, each having a par value of $.10.
The Common Stock shall be issued in series. The first series of Common Stock
shall consist of Twenty-Nine Million Two Hundred Thousand (29,200,000) shares.
All other shares of Common Stock shall be designated, as a group, "Series A
Junior Common Stock" and shall consist in the aggregate of Eight Hundred
Thousand (800,000) shares.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
A-1
<PAGE>
A. The Common Stock and Series A Junior Common Stock shall have the rights,
preferences, privileges and restrictions set forth below:
1. VOTING RIGHTS. The holders of Common Stock and Series A Junior
Common Stock shall vote together as a single class. The holders of Common
Stock shall have one (1) vote for each share of Common Stock and the holders
of Series A Junior Common Stock shall have one-twentieth ( 1/20) of one vote
for each share of Series A Junior Common Stock on all matters submitted to a
vote of the holders of the common shares. The determination of a quorum
shall be based upon the presence of shares representing a majority of the
voting power of the entire class of common shares.
2. LIQUIDATION. In the event of any liquidation, dissolution, or
winding up of the Corporation, the holders of the Series A Junior Common
Stock shall receive one-twentieth ( 1/20) of the amount per share to be
received per share by the holders of Common Stock. Notwithstanding anything
in this subsection (2) to the contrary, the Corporation may repurchase
shares of Series A Junior Common Stock without further notifying or
obtaining the consent of the holders of Common Stock.
3. DIVIDENDS. In the event that any dividend is declared on Common
Stock, the holders of Series A Junior Common Stock shall concurrently
receive, out of any funds legally available therefor, a dividend in an
amount per share of Series A Junior Common Stock equal to one-twentieth
( 1/20) of the amount paid with respect to a share of Common Stock.
B. 1. DEFINITIONS. For purposes of this section (B), the following terms
shall have the meanings set forth below:
a. "Applicable accounting principles" shall mean generally accepted
accounting principles as consistently applied by the Corporation in the
preparation of its consolidated financial statements from time to time
and shall reflect changes in generally accepted accounting principles or
in the procedures or methodologies applied by the Corporation, except as
otherwise provided in this section (B) and except that in determining
Earnings Per Share, the shares of Common Stock into which the Series A
Junior Common Stock are then convertible shall be deemed issued and
outstanding during the applicable period.
b. "Earnings Per Share" shall mean the consolidated net income
(including any extraordinary gains or losses) per share of Common Stock
of the Corporation, on a fully diluted basis, computed in accordance with
applicable accounting principles.
c. "Cumulative Earnings Per Share" shall mean for any period of
quarters the sum of the earnings per share amounts for all quarters
included in such period.
d. "Sales" shall mean for any period the consolidated net sales of
the Corporation for such period computed in accordance with applicable
accounting principles.
2. CONVERSION EVENTS. Series A Junior Common Stock shall automatically
convert into Common Stock upon the earliest to occur of the following
conversion events ("Conversion Events"):
a. The attaining for any consecutive four (4) fiscal quarters of
Sales in the aggregate amount of Two Hundred Two Million Dollars
($202,000,000) and Earnings Per Share on a fully diluted basis in the
aggregate amount of One and 30/100 Dollars ($1.30), PROVIDED that the
Cumulative Earnings Per Share for such four fiscal quarter periods and
the immediately preceding eight (8) fiscal quarters is not less than Two
and 90/100 Dollars ($2.90).
b. The (i) merger of the Corporation with or into another
corporation or the sale of all or substantially all of the assets of the
Corporation to another person or entity, in which, in either case,
stockholders of the Corporation are to receive cash or other securities
or property in exchange for their shares of the Corporation; or (ii) the
acquisition by any person (directly or indirectly) in any transaction or
series of transactions of more than fifty percent (50%) of the
A-2
<PAGE>
voting power of the voting securities of the Corporation then outstanding
("person" shall mean any person, firm, association or company or
affiliates or subsidiaries thereof or other person or entity which
controls, is controlled by or is under common control with the designated
party; "control" shall mean ownership of voting securities entitled to
elect a majority of the authorized number of directors or majority in
interest in profits, as the case may be; "voting securities" shall mean
common shares and any other securities of the Corporation entitled to
vote generally for the election of directors).
3. CONVERSION RATIO. Each share of Series A Junior Common Stock shall
convert into Common Stock in accordance with the applicable ratio
("Conversion Ratio") set forth in this section:
a. If the Conversion Event is the event described in subsection
(2)(a), the Conversion Ratio shall be on a share-for-share basis if the
Conversion Event occurs by June 30, 1987 and shall be reduced by ten (10)
percentage points for each quarter that expires after June 30, 1987,
E.G., if the Conversion Event does not occur until December 31, 1987,
then the Conversion Ratio shall be .8 shares of Common Stock for each
share of Series A Junior Common Stock converted.
b. If the Conversion Event is as described under subsection (2)(b)
above, each share of Series A Junior Common Stock shall convert into one
(1) share of Common Stock.
4. CONVERSION DATE. The date of conversion ("Conversion Date") shall
be determined as follows:
(x) With respect to the Conversion Event provided for in subsection
(2)(a), the Conversion Date shall be the date on which the chief
financial officer of the Corporation presents to the Board of Directors a
certificate, detailing computations with respect to the Conversion Event
and specifying the Conversion Ratio, accompanied by a letter from the
Corporation's independent auditors, stating that based upon their review
of the computations and upon a reading of this Article V, nothing came to
their attention that caused them to believe that the computations were
not made in accordance with the provisions of subsections (1) through (3)
hereof.
(y) With respect to the Conversion Event provided for in subsection
(2)(b)(i), the Conversion Date shall be the date on which such merger or
sale of assets is consummated and the conversion shall be deemed to have
occurred immediately prior thereto.
(z) With respect to the Conversion Event provided for in subsection
(2)(b)(ii), the Conversion Date shall be the date immediately following
the date on which the acquisition of more than fifty percent (50%) of the
voting power of the voting securities occurs.
5. ADJUSTMENTS. In the case of a significant change in generally
accepted accounting principles that would in the opinion of the Board of
Directors render the use of "Applicable Accounting Principles" burdensome,
impractical or not meaningful, or in the case of a change in the
Corporation's fiscal year or other unusual significant non-recurring event,
the Board of Directors may in its discretion, acting upon the advice of such
professional advisors as the Board deems appropriate, make equitable
adjustments to one or more of the definitions in subsection (1), the
Conversion Events in subsection (2) or the Conversion Ratios set forth in
subsection (3).
6. SHARE CERTIFICATES; FRACTIONAL SHARES. A holder of Series A Junior
Common Stock shall not be entitled to the rights of a holder of Common Stock
until the Conversion Date and until he or she surrenders the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of
any transfer agent for Common Stock, in exchange for new certificates
representing shares of Common Stock. No fractional shares of Common Stock
shall be issued upon conversion of Series A Junior Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair
market value per share of Common Stock on the Conversion Date as determined
in good faith by the Board of Directors.
A-3
<PAGE>
C. In the event of any stock split, reverse stock split or other
subdivision or combination of the Common Stock, any stock dividend or other
distribution on the Common Stock payable in Common Stock, or any
recapitalization, a pro rata adjustment, if appropriate, shall be made in the
voting, liquidation and dividend rights set forth in section (A), and in the
Conversion Events and Conversion Ratios set forth in section (B), all as
determined by the Board of Directors in the exercise of its discretion, acting
upon the advice of such professional advisors as the Board deems appropriate.
VI.
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to adopt, amend or repeal from time
to time any or all of the Bylaws of this Corporation.
VII.
The number of directors which shall constitute the whole Board of Directors
of this Corporation shall be as specified in the Bylaws of this Corporation,
subject to the provisions of Article VI and this Article VII.
VIII.
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by the stockholders. Special meetings of the stockholders of this
Corporation for any purpose or purposes may be called at any time by the Board
of Directors, the President, the Chairman of the Board of Directors, by a
committee of the Board of Directors which has been duly designated by the Board
of Directors and whose powers and authority, as provided in resolution of the
Board of Directors or in the Bylaws of this Corporation, include the power to
call such meetings, and by stockholders of the Corporation owning, directly or
indirectly, shares possessing not less than ten percent (10%) of the votes
eligible to be cast for the election of directors at the time in question, but
such special meetings may not be called by any other person or persons.
IX.
A. In addition to any affirmative vote required by law or this Certificate
of Incorporation or a certificate filed under Section 151(g) of the General
Corporation Law of the State of Delaware or the Bylaws and except as otherwise
expressly permitted in paragraph (B) of this Article IX, a Business Combination
(as hereafter defined) with, for, or on behalf of, any Interested Stockholder
(as hereafter defined) or any Affiliate or Associate (as hereafter defined) of
such Interested Stockholder shall require the affirmative vote of at least
sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by
the holders of all the then outstanding Voting Stock (as hereafter defined),
voting together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage of a separate class vote may otherwise be specified, by law or by any
agreement between the Corporation and any national securities exchange or
otherwise.
B. The provisions of paragraph (A) of this Article IX shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such vote, if any, as is required by law or by any other
provisions of this Certificate of Incorporation or a certificate filed under
Section 151(g) of the General Corporation Law of the State of Delaware or the
Bylaws, or by any agreement between the Corporation and any national securities
exchange, if (i) such Business Combination shall have been specifically approved
by a majority of the Disinterested Directors (as hereafter
A-4
<PAGE>
defined) at the time or (ii) all the conditions specified in each of the
following Subparagraphs (1), (2), (3), (4), (5) and (6) are satisfied:
1. The aggregate amount of cash and the Fair Market Value (as hereafter
defined) as of the Consummation Date (as hereafter defined) of any
consideration other than cash to be received per share by holders of Voting
Stock in such Business Combination, shall be at least equal to the highest
amount determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by or on behalf of such Interested Stockholder for any share of Voting
Stock in connection with the acquisition by the Interested Stockholder of
Beneficial Ownership (as hereafter defined) of shares of Voting Stock (A)
within the five-year period immediately prior to the Announcement Date
(as hereafter defined) or (B) in the transaction or series of
transactions in which it became an Interested Stockholder, whichever is
higher, in either case adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to Voting Stock;
or
(ii) the Fair Market Value per share of Voting Stock on the
Announcement Date or the Determination Date (as hereafter defined),
whichever is higher, as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to Voting Stock.
2. The consideration to be received by holders of a particular class or
series of outstanding Voting Stock shall be in cash or in the same form as
previously has been paid by or on behalf of the Interested Stockholder in
connection with its direct or indirect acquisition of Beneficial Ownership
of shares of such class or series of Voting Stock. If the consideration so
paid for shares of any class or series of Voting Stock varied as to form,
the form of consideration for such class or series of Voting Stock shall
either be cash or the form used to acquire Beneficial Ownership of the
largest number of shares of such class or series of Voting Stock acquired by
the Interested Stockholder during the five (5) year period prior to the
Announcement Date. If non-cash consideration is to be paid, the Fair Market
Value of such non-cash consideration shall be determined on and as of the
Consummation Date.
3. After the Determination Date and prior to the Consummation Date
there shall have been (A) no failure to declare and pay at the regular date
therefor any full quarterly dividends (whether or not cumulative) payable in
accordance with the terms of any outstanding Voting Stock; (B) no reduction
in the annual rate of dividends paid on the Voting Stock (except as
necessary to reflect any split or subdivision of the Voting Stock), except
as approved by a majority of the Disinterested Directors; (C) an increase in
such annual rate of dividends (as necessary to prevent any such reduction)
in the event of any reclassification (including any reverse stock split or
combination of shares), recapitalization, reorganization or any similar
transaction that has the effect of reducing the number of outstanding shares
of the Voting Stock, unless the failure so to increase such annual rate is
approved by a majority of the Disinterested Directors; and (D) no
transaction by which such Interested Stockholder has become the Beneficial
Owner of any additional shares of Voting Stock except as part of the
transaction that results in the Interested Stockholder becoming an
Interested Stockholder and except in a transaction that, after giving effect
thereto, would not result in any increase in the Interested Stockholder's
percentage Beneficial Ownership of any class or series of Voting Stock.
4. After the Determination Date, such Interested Stockholder shall not
have received the benefit, directly or indirectly (except as a stockholder
of the Corporation, in proportion to its stockholding), of any loans,
advances, guarantees or similar financial assistance or any tax credits or
tax advantages provided by the Corporation (collectively, "Financial
Assistance"), whether in anticipation of or in connection with such Business
Combination or otherwise.
A-5
<PAGE>
5. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall be
mailed to stockholders of the Corporation at least thirty (30) days prior to
the consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act, rules
or regulations, or subsequent provisions). The proxy or information
statement shall contain on the first page thereof, in a prominent location,
any statement as to the advisability or inadvisability of the Business
Combination that the Disinterested Directors, or any of them, may desire to
make and, if deemed advisable by a majority of the Disinterested Directors,
the proxy or information statement shall contain the opinion of an
independent investment banking firm selected by a majority of the
Disinterested Directors as to the fairness or lack of fairness of the terms
of the Business Combination from a financial point of view to the holders of
the outstanding shares of Voting Stock other than the Interested Stockholder
and its Affiliates or Associates, such investment banking firm to be paid a
reasonable fee for its services by this Corporation.
6. Such Interested Stockholder shall not have made any major change in
this Corporation's business or equity capital structure without the approval
of a majority of the Disinterested Directors.
C. The following definitions shall apply with respect to this Article IX:
1. The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to those terms in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended, and as in effect on the date that this Certificate
of Incorporation is filed with the Secretary of State of the State of
Delaware (the term "registrant" in said Rule 12b-2 meaning in this case the
Corporation).
2. The term "Announcement Date" with respect to any Business
Combination means the date of the first public announcement of the proposal
of such Business Combination.
3. A person shall be a "Beneficial Owner" of, or have "Beneficial
Ownership" of, or "Beneficially Own," any Voting Stock over which such
person or any of its Affiliates or Associates, directly or indirectly,
through any contract, arrangement, understanding or relationship, has or
shares or, upon the exercise of any conversion right, exchange right,
warrant, option or similar interest (whether or not then exercisable) would
have or share, either (i) voting power (including the power to vote or to
direct the voting) of such security or (ii) investment power (including the
power to dispose or direct the disposition) of such security. For the
purposes of determining whether a person is an Interested Stockholder, the
number of shares of Voting Stock deemed to be outstanding shall include any
shares Beneficially Owned by such person even though not actually
outstanding, but shall not include any other shares of Voting Stock which
are not outstanding but which may be issuable to other persons pursuant to
any agreement, arrangement or understanding, or upon exercise of any
conversion right, exchange right, warrant, option or similar interest.
4. The term "Business Combination" shall mean:
(i) any merger or consolidation of this Corporation or any
Subsidiary (as hereafter defined) with (A) any Interested Stockholder (as
hereafter defined) or (B) any other corporation (whether or not itself an
Interested Stockholder) which after such merger or consolidation would be
an Affiliate or Associate of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition or security agreement, investment, loan, advance, guarantee,
agreement to purchase, agreement to pay, extension of credit, joint
venture participation or other arrangement (in one transaction or a
series of related transactions) with or for the benefit of any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder,
involving any assets, securities, or commitments of this Corporation, any
Subsidiary or any Interested Stockholder or any Affiliate or Associate of
any Interested Stockholder which, together with all other such
arrangements
A-6
<PAGE>
(including all contemplated future events) have an aggregate Fair Market
Value (as hereafter defined) and/or involve aggregate commitments of Five
Million Dollars ($5,000,000) or more; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) to an Interested
Stockholder or Associate or Affiliate of an Interested Stockholder of any
securities of the Corporation or any Subsidiary in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate Fair Market Value as of the Announcement Date of Five Million
Dollars ($5,000,000) or more, other than the issuance of securities upon
the conversion or exchange of securities of the Corporation or in
exchange for securities of any Subsidiary which were acquired by an
Interested Stockholder from the Corporation or a Subsidiary in a Business
Combination which was approved by a vote of the stockholders pursuant to
this Article IX: or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any Interested
Stockholder; or
(v) any reclassification of any securities of the Corporation
(including any reverse stock split), any recapitalization of the Voting
Stock of the Corporation, any merger or consolidation of the Corporation
with or into any of its Subsidiaries, or any other transaction (whether
or not with or otherwise involving any Interested Stockholder) that has
the effect, directly or indirectly, of increasing the proportionate share
of the outstanding shares of any class of Voting Stock or series thereof
of the Corporation or of any Subsidiary Beneficially Owned by any
Interested Stockholder or Associate or Affiliate of an Interested
Stockholder or as a result of which the stockholders of the Corporation
would cease to be stockholders of a corporation having, as part of its
certificate or articles of incorporation, provisions to the same effect
as this Article IX and the provisions of Article XIII of this Certificate
of Incorporation relating to the provisions of this Article IX; or
(vi) any agreement, contract or other arrangement providing for one
(1) or more of the actions specified in the foregoing paragraphs (i)
through (v), or any series of transactions which, if taken together,
would constitute one (1) or more of the actions specified in the
foregoing paragraphs (i) through (v).
5. The term "Consummation Date" means the date of the consummation of a
Business Combination.
6. The term "Determination Date" in respect to an Interested
Stockholder means the date on which such Interested Stockholder first became
an Interested Stockholder.
7. The term "Disinterested Director" with respect to a Business
Combination means any member of the Board of Directors of the Corporation
who is not an Interested Stockholder or an Affiliate or Associate of, and
was not directly or indirectly a nominee of, any Interested Stockholder
involved in such Business combination or any Affiliate or Associate of such
Interested Stockholder and who either (i) was a member of the Board of
Directors prior to the time that such Interested Stockholder became an
Interested Stockholder, or (ii) is a successor of a Disinterested Director
and was nominated to succeed a Disinterested Director by a majority of the
Disinterested Directors at the time of his nomination. Any reference to
"Disinterested Directors" shall refer to a single Disinterested Director if
there be but one. Any matter referred to as requiring or having the approval
of, or having been approved by, a majority of the Disinterested Directors
shall mean the matter requires the approval of, or has been approved by, the
Board without giving effect to the vote of any Director who is not a
Disinterested Director and with the affirmative vote of a majority of the
Disinterested Directors.
8. The term "Fair Market Value" as of any particular date means: (i) in
the case of cash, the amount of such cash; (ii) in the case of stock
(including Voting Stock), the highest closing price per
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share of such stock during the thirty (30) day period immediately preceding
the date in question on the largest United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on which
such stock is listed or, if such stock is not listed on any such exchange,
the highest last sales price as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") during the
thirty (30) day period immediately preceding the date in question if the
stock is a National Market System security, or, if such stock is not a
National Market System security, the highest reported closing bid quotation
for a share of such stock during the thirty (30) day period preceding the
date in question on NASDAQ or any successor quotation reporting system or,
if quotations are not available in such system, as furnished by the National
Quotation Bureau Incorporated or any similar organization furnishing
quotations, or if no such quotations are available, the fair market value on
the date in question of a share of such stock as determined by a majority of
the Disinterested Directors in good faith; and (iii) in the case of stock of
any class or series which is not traded on any securities exchange or in the
over-the-counter market, or in the case of property other than cash or
stock, or in the case of Financial Assistance, the fair market value of such
stock, property or Financial Assistance, as the case may be, on the date in
question as determined by a majority of the Disinterested Directors in good
faith.
9. The term "Interested Stockholder" shall mean any person, other than
this Corporation, any Subsidiary or any employee benefit plan of this
Corporation or any Subsidiary, who or which:
(i) is or has announced or publicly disclosed a plan or intention to
become the Beneficial Owner, directly or indirectly, of shares of Voting
Stock representing fifteen percent (15%) or more of the total votes which
all of the then outstanding shares of Voting Stock are entitled to cast
in the election of directors; or
(ii) is an Affiliate or Associate of any person described in clause
(i) of this subparagraph 9 at any time during the five (5) year period
immediately preceding the date in question; or
(iii) acts with any other person as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring,
holding or disposing of securities of the Corporation, and such group is
the Beneficial Owner, directly or indirectly, of shares of Voting Stock
representing fifteen percent (15%) or more of the total votes which all
of the then outstanding shares of Voting Stock are entitled to cast in
the election of directors.
Any reference to a particular Interested Stockholder involved in a
Business Combination shall also refer to any Affiliate or Associate
thereof, any predecessor thereto and any other person acting as a member
of a partnership, limited partnership, syndicate or group with such
particular Interested Stockholder within the meaning of the foregoing
clause (iii) of this subparagraph (9).
10. A "person" shall mean any individual, firm, company, corporation
(which shall include a business trust), partnership, joint venture, trust or
estate, association or other entity.
11. The term "Subsidiary" in respect of the Corporation means any
corporation or partnership of which a majority of any class of its equity
securities is owned, directly or indirectly, by the Corporation.
12. The term "Voting Stock" shall mean all shares of capital stock that
entitle the holder to vote for the election of directors, including, without
limitation, the Corporation's Common Stock and Series A Junior Common Stock.
D. A majority of the Disinterested Directors shall have the power and duty
to determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this Article IX,
including, without limitation (1) whether a person is an Interested Stockholder,
(2) the number of shares of Voting Stock Beneficially Owned by any person, (3)
whether a person is an Affiliate or
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Associate of another person, (4) whether the requirements of paragraph (B) of
this Article IX, have been met with respect to any Business Combination, (5)
whether the proposed transaction is with, or proposed by, or on behalf of an
Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder, and (6) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of Five Million Dollars
($5,000,000) or more. The good faith determination of a majority of the
Disinterested Directors on such matters shall be conclusive and binding for all
purposes of this Article IX.
E. Nothing contained in this Article IX shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
F. The fact that any Business Combination complies with paragraph (B) of
this Article IX shall not be construed to impose any fiduciary duty, obligation
or responsibility on the Board of Directors, or any member thereof, to approve
such Business Combination or recommend its adoption or approval to the
Stockholders of this Corporation, nor shall such compliance limit, prohibit or
otherwise restrict in any manner the Board, or any member thereof, with respect
to evaluations of or actions and responses taken with respect to such Business
Combination.
G. For purposes of this Article IX a Business Combination or any proposal
to amend, repeal or adopt any provision of the Certificate of Incorporation
inconsistent with this Article IX (collectively, "Proposed Action") is presumed
to have been proposed by, or on behalf of, an Interested Stockholder or an
Affiliate or Associate of an Interested Stockholder or a person who thereafter
would become such if (1) after the Interested Stockholder became such, the
Proposed Action is proposed following the election of any director of this
Corporation who, with respect to such Interested Stockholder, would not qualify
to serve as a Disinterested Director or (2) such Interested Stockholder,
Affiliate, Associate or person votes for or consents to the adoption of any such
Proposed Action, unless as to such Interested Stockholder, Affiliate, Associate
or person, a majority of the Disinterested Directors makes a good faith
determination that such Proposed Action is not proposed by or on behalf of such
Interested Stockholder, Affiliate, Associate or person, based on information
known to them after reasonable inquiry.
X.
A. If a Qualifying Offer (as defined below) is made to purchase all of the
outstanding Common Stock then, after the end of the ninetieth (90th) day after
such Qualifying Offer is first published or sent to securityholders, if holders
of ten percent (10%) or more of the then-outstanding shares of Common Stock
(other than shares held by any person or group making such Qualifying Offer or
such person's or group's affiliates or associates (each as defined in Rule 12b-2
of General Rules and Regulations under the Securities Exchange Act of 1934, as
amended)) request by notice to the Company in accordance with its By-laws (the
"Notice") that the Company call a special meeting of its stockholders (the
"Special Meeting") in order to consider and vote whether to require the Company
to Redeem the Rights Plan (as defined below), a Special Meeting shall be held on
a date selected by the Board of Directors, which date shall be not more than
sixty (60) days following the receipt of the Notice.
B. If at the Special Meeting, holders of sixty-six and two-thirds percent
(66 2/3%) of the then-outstanding Common Stock (other than shares held by any
person or group making such Qualifying Offer or such person's or group's
affiliates or associates (each as defined in Rule 12b-2 of General Rules and
Regulations under the Securities Exchange Act of 1934, as amended)) shall vote
to Redeem the Rights Plan, then the Company shall Redeem the Rights Plan as
promptly as practicable. In the event that the Special Meeting is not held on or
prior to the sixtieth (60th) day following receipt of the Notice, the Company
shall Redeem the Rights Plan. The record date for the Special Meeting shall be
selected by the Board of Directors. Notwithstanding the foregoing, the Company
shall not be required to hold the Special
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Meeting unless at such time such Qualifying Offer has an expiration date which
is at least ten (10) Business Days thereafter.
C. The Company shall not adopt or amend the Rights Agreement or similar
rights agreement unless the Rights Agreement or such other rights agreement
shall specifically state that its terms and conditions are subject to this
Article X.
The following definitions shall apply with respect to this Article X:
1. "Redeem the Rights Plan" shall mean redeem the outstanding Rights or
take other action so that the existence of the Rights does not interfere
with the consummation of a Qualifying Offer.
2. A "Qualifying Offer" shall mean:
(a) an all-cash tender offer for all outstanding Common Stock
made by a person or group who beneficially owns one percent (1%) or
less of the outstanding Common Stock as of the date the offer is
delivered, provided that the person or group making the tender offer
must, prior to or upon commencing such offer, have provided the
Company firm written commitments from responsible financial
institutions, which have been accepted by such person or group, to
provide, subject only to customary terms and conditions (which shall
in no event include conditions requiring access by such financial
institutions to non-public information to be provided by the Company,
conditions based on the accuracy of any information concerning the
Company other than such as would be the subject of representations
and warranties in a public financing by the Company or conditions
requiring the Company to make any representations, warranties or
covenants in connection with such financing), funds for such offer
which, when added to the amount of cash and cash equivalents which
such person or group then has available and has irrevocably committed
in writing to the Company to utilize for purposes of the offer if
consummated, and to set apart and maintain available for such
purposes until the offer is consummated or withdrawn, will be
sufficient to pay for all shares outstanding on a fully diluted basis
and all related expenses; or
(b) an exchange offer for all outstanding Common Stock made by a
person or group who beneficially owns one percent (1%) or less of the
outstanding Common Stock outstanding as of the date the offer is
delivered, provided that the consideration offered in such exchange
offer is (x) freely tradeable common stock (of the class carrying the
principal voting rights of the issuer) of the person or group making
such offer that is approved for listing or quotation upon notice of
issuance on the New York Stock Exchange or the Nasdaq National Market
and the issuer of such common stock is eligible to register its
securities for primary sales on Form S-3 under the Securities Act of
1933, as amended (or any successor form) or (y) a combination of
common stock meeting the requirements of clause (x) of this sentence
and cash meeting the requirements of the proviso of clause (a) of
this sentence.
In addition, such offer must meet all of the following additional
conditions:
(i) such person or group must own, after consummating such
offer, at least two-thirds of the then outstanding Common Stock;
(ii) such offer must remain open for at least sixty (60)
Business Days and at least ten (10) Business Days after the Special
Meeting, and must be extended for at least twenty (20) Business Days
after the last increase in the price offered and after any bona fide
higher alternative offer is made, and shall be subject only to
customary terms and conditions, which shall in no event include
satisfaction of any conditions relating to the business, financial
condition, results of operations or prospects of the Company other
than such as are based on
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information publicly disclosed by the Company or any conditions
relating to approval of the offeror's stockholders; and
(iii) prior to or upon commencing such offer, such person or
group must irrevocably commit in writing to the Company and in the
offer to purchase relating to the offer:
a. to consummate promptly upon completion of the offer a
transaction whereby all shares of Common Stock not tendered into
the offer will be acquired at the same price per share and for
the same consideration paid pursuant to the offer, and otherwise
not to purchase any Common Shares following completion of the
offer,
b. that such person or group will not materially amend such
offer, except to increase the price offered, and
c. that such person or group will not make any offer for any
equity securities of the Company for six months after
commencement of the original offer if the original offer does not
result in the tender of the number of shares required to be
purchased pursuant to subsection (i) above, unless another offer
with a per share offer price at least ten percent (10%) higher
than the last price offered by the person or group making the
original offer and which also meets the conditions for a
Qualifying Offer is commenced by another person or persons not
affiliated or associated with, acting in concert with, or
instigated or financed by, the person or group making the
original offer or with whom the person or group making the
original offer has any agreement, arrangement or understanding
relating to the Company or any assets or securities of it or any
of its subsidiaries.
3. "Rights" shall mean the Rights issued pursuant to the Rights
Agreement.
4. "Rights Agreement" shall mean the Rights Agreement, dated as of July
21, 1999, between the Company and BankBoston, N.A., as Rights Agent, as
amended from time to time.
5. "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of Massachusetts are
authorized or obligated by law or executive order to be closed.
This Article X shall apply to Qualifying Offers that are outstanding on the
date this Article X becomes effective, but the ninety (90)-day period provided
for in this Article X shall not begin to run until October 29, 1999. This
Article X shall expire at, and be of no further force or effect after, 5:00 p.m.
Pacific Time on June 30, 2002.
XI.
At all elections of directors of the Corporation, a holder of any class or
series of stock then entitled to vote in such election shall be entitled to as
many votes as shall equal the number of votes which (except for this Article as
to cumulative voting) he would be entitled to cast for the election of directors
with respect to his shares of stock multiplied by the number of directors to be
elected in the election in which his class or series of stock is entitled to
vote, and each stockholder may cast all of such votes for a single nominee for
director or may distribute them among the number to be voted for, or for any two
(2) or more of them as he may see fit. Elections of directors at an annual or
special meeting of stockholders need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
XII.
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good
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faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
Neither the amendment nor repeal of this certificate of incorporation or bylaws
or of any statute inconsistent with this Article XII, shall eliminate or reduce
the effect of this Article XII in respect of any acts or omissions occurring
prior to such amendment, repeal or adoption of an inconsistent provision.
XIII.
A. This Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provision contained herein, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted, in the manner now or hereafter prescribed by law, and
all rights, preferences, and privileges of whatsoever nature conferred upon
stockholders, directors, or any other person whosoever by or pursuant to the
Certificate of Incorporation in its present form or as hereafter are granted,
subject to the rights reserved in this Article XIII.
B. In addition to any requirements of law and any other provisions hereof
(and notwithstanding the fact that approval by a lesser vote may be permitted by
law or any other provision hereof), the affirmative vote of the holders of
sixty-six and two-thirds percent (66 2/3%) or more of the combined voting power
of the then-outstanding shares of the Voting Stock, voting together as a single
class, shall be required to amend alter or repeal, or adopt any provision
inconsistent with this Article XIII or Articles VIII and IX hereof.
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EXHIBIT B
1992 STOCK OPTION PLAN
OF
ADAPTIVE BROADBAND CORPORATION
(AS AMENDED THROUGH AUGUST 18, 1999)
1. PURPOSE.
The purpose of the 1992 Stock Option Plan (the "Plan") is to enable Adaptive
Broadband Corporation (the "Company") and its subsidiaries to attract and retain
officers and other key employees, directors, and consultants and to provide them
with additional incentive to advance the interests of the Company. Options
qualifying as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and non-qualified options may be granted
under the Plan.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the Company,
or by a committee (the "Committee") of two or more directors selected by the
Board. In the Board's discretion, the Committee may consist solely of two or
more outside directors in accordance with Section 162(m) of the Code and/or
solely of two or more non-employee directors in accordance with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended.
(b) The Board of Directors or the Committee shall have the power, subject to
the express provisions of the Plan:
(1) To determine the recipients of options under the Plan, the time of
grant of the options, and the number of shares covered by the grant.
(2) To prescribe the terms and provisions of each option granted (which
need not be identical).
(3) To construe and interpret the Plan and options, to establish, amend,
and revoke rules and regulations for the Plan's administration, and to make
all other determinations necessary or advisable for the administration of
the Plan.
3. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of Paragraph 7 (relating to the adjustment upon
changes in stock), the number of shares which may be sold pursuant to options
granted under the Plan shall not exceed in the aggregate 4,300,000 shares of
Common stock of the Company. Shares sold pursuant to options granted under the
Plan may be unissued shares or reacquired shares.
If any options granted under the Plan shall for any reason terminate or
expire without having been exercised in full, the shares not purchased under
such options shall be available again for the purposes of the Plan.
4. ELIGIBILITY.
(a) Options under this Plan may be granted to officers and other key
employees and consultants of the Company and/or of its subsidiaries, provided
that incentive stock options may be granted hereunder only to officers and other
key employees (including directors who are also officers or employees). No
officer or key employee may receive options under this Plan covering in excess
of 200,000 shares in any fiscal year of the Company (subject to adjustment in
accordance with the provisions of paragraph 7 of the Plan).
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(b) No consultant may receive options under this Plan if, at the time of
grant, a Form S-8 Registration Statement ("Form S-8") under the Securities Act
of 1933, as amended (the "Securities Act"), is not available to register either
the offer or the sale of the Company's securities to such consultant because of
the nature of the services that the consultant is providing to the Company, or
because the consultant is not a natural person, or as otherwise provided by the
rules governing the use of Form S-8, unless the Company determines both (i) that
such grant (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such grant complies with the
securities laws of all other relevant jurisdictions.
(c) Each director of the Company who is not an employee of the Company shall
receive a non-qualified stock option under the Plan immediately following each
annual meeting of shareholders of the Company. The first option received by a
director under this paragraph 4(c) shall cover 10,000 shares of common stock of
the Company and each option received by a director under this Plan thereafter
shall cover 8,000 shares of common stock, in the case of a director who is a
chair of a committee of the Board of Directors, and 6,000 shares, in the case of
a director who is not. Each such option shall have an exercise price equal to
the fair market value of the common stock of the Company on the date of the
annual meeting of shareholders to which it relates, determined in accordance
with the provisions of paragraph 5(a)(2) of this Plan. The number of options
that directors may receive pursuant to this paragraph 4(c) shall be
appropriately adjusted in accordance with the provisions of paragraph 7 of this
Plan. This paragraph 4(c) shall not be amended more than once every six months,
other than to comply with changes in the Code or the rules or regulations
thereunder.
(d) Persons to whom options to purchase shares are granted are hereinafter
referred to as "optionee(s)."
5. TERMS OF OPTION AGREEMENTS.
(a) Options granted pursuant to the Plan shall be evidenced by agreements
specifying the number of shares covered thereby, in such form as the Board of
Directors or Committee shall from time to time establish, which agreements may
incorporate all or any of the terms hereof by reference and shall comply with
and be subject to the following terms and conditions:
(1) The Board of Directors or Committee shall have the power to set the
time or times within which each option shall be exercisable and to at any
time accelerate the time or times of exercise (notwithstanding the terms of
the option). Unless the stock option agreement executed by the optionee
expressly otherwise provides, (i) an option granted to an officer or other
key employees or consultant shall become exercisable on a cumulative basis
as to one-quarter of the total number of shares covered thereby on each of
the first, second, third, and fourth anniversary dates of the date of grant
of the option, (ii) an option granted to a director who is not an employee
of the Company shall vest fully on the date of grant, and (iii) an option
shall not be exercisable after the expiration of ten years from the date of
grant.
(2) Except as provided in Paragraph 5(b) below, the exercise price of
any stock option granted under this Plan shall not be less than 100% of the
fair market value of the shares of common stock of the Company on the date
of the granting of the option. The fair market value per share shall be the
last sale price on the day the option is granted as reported on the National
Market System, or, if such stock is not then reported on the National Market
System but quotations are reported on the National Association of Securities
Dealers Automated Quotations System, the average of the bid and asked prices
on the day the option is granted, in either event as such price quotes are
listed in The Wall Street Journal, Western Edition (or if not so reported in
The Wall Street Journal, any other listing service or publication known to
the Board of Directors). If the stock is listed upon an established stock
exchange or exchanges, such fair market value shall be deemed to be the
closing price of the common
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stock on the largest such stock exchange upon which such stock is listed on
the day the option is granted.
(3) To the extent that the right to purchase shares has accrued
hereunder, options may be exercised from time to time by written notice to
the Company, stating the number of shares being purchased and accompanied by
the payment in full of the option price for such shares. Such payment shall
be made in cash or in shares of the outstanding common stock of the Company
which have been held by the optionee for at least six months or in a
combination of cash and such stock, except that the Board of Directors or
the Committee in its sole discretion may authorize payment by any optionee
(for all or part of his or her purchase price) by a promissory note or such
other from of legal consideration that may be acceptable to the Board or
Committee.
If shares of common stock are used in part or full payment for the
shares to be acquired upon exercise of the option, such shares shall be
valued for the purpose of such exchange as of the date of exercise of the
option in accordance with the provisions of Subparagraph (2) above. Any
certificates for shares of outstanding common stock used to pay the option
price shall be accompanied by stock powers duly endorsed in blank by the
registered holder of the certificate (with the signature thereon
guaranteed). In the event the certificates tendered by the optionee in such
payment cover more shares than are required for such payment, the
certificates shall also be accompanied by instructions from the optionee to
the Company's transfer agent with regard to disposition of the balance of
the shares covered thereby.
If payment by promissory note is authorized, the interest rate, term,
repayment schedule and other provisions of such note shall be as specified
by the Board of Directors or the Committee; provided, however, that such
note shall bear interest at a rate not less than the applicable test rate of
interest prescribed by Section 1.483-1(d)(1) of the Treasury Regulations, as
in effect at the time the stock is purchased. The Board of Directors or
Committee may require that the optionee pledge his or her stock to the
Company for the purpose of securing the payment of such note, and the
Company may hold the certificate(s) representing such stock in order to
perfect its security interest.
An option may be exercised by a securities broker acting on behalf of an
optionee pursuant to authorization instructions approved by the Company,
provided that the notice of exercise of such option shall be delivered, and
the exercise price of such option shall be paid in full, as specified above.
(4) The Company at all times shall keep available the number of shares
of stock required to satisfy options granted under the Plan.
(5) The Company may require any person to whom an option is granted, his
or her legal representative, heir, legatee, or distributee, as a condition
of exercising any option granted hereunder, to give written assurance
satisfactory to the Company to the effect that such person is acquiring the
shares subject to the option for his or her own account for investment and
not with any present intention of selling or otherwise distributing the
same. The Company reserves the right to place a legend on any share
certificate issued pursuant to this Plan to assure compliance with this
paragraph. No shares of common stock of the Company shall be required to be
distributed until the Company shall have taken such action, if any, as is
then required to comply with the provisions of the Securities Act or any
other then applicable securities law.
(6) Neither a person to whom an option is granted, nor such person's
legal representative, heir, legatee, or distributee, shall be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such option unless and until such person has exercised his
or her option pursuant to the terms thereof.
(7) Options shall be transferable only by will or by the laws of descent
and distribution, and during the lifetime of the person to whom they are
granted such person alone may exercise them.
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(8) An option granted to an employee or director shall terminate and may
not be exercised if the person to whom it is granted ceases to be employed
by the Company or by a subsidiary of the Company, or ceases to be a director
(unless such person continues as an employee), with the following
exceptions:
(i) If the employment or directorship is terminated for any reason other
than the person's death or disability, he or she may at any time
within not more than three months after such termination exercise
the option, but only to the extent that it was exercisable by such
person on the date of such termination, or
(ii) If such person dies or becomes disabled while in the employ of the
Company or of a subsidiary, or while a director, his or her option
may be exercised by his or her personal representatives, heirs or
legatees at any time within not more than twelve (12) months
following the date of death or disability, but only to the extent
such option was exercisable by such person on the date of death or
disability.
An option granted to a consultant shall terminate in accordance with the
terms specified in the option.
(9) In no event may an option be exercised by anyone after the
expiration of the term of the option established pursuant to Subparagraph
5(a)(1) hereof.
(10) Each option granted pursuant to this Plan shall specify whether it
is a non-qualified or an incentive stock option, provided that the Board of
Directors or Committee may give the optionee the right to elect to receive
either an incentive or a non-qualified stock option.
(11) An option granted pursuant to this Plan may have such other terms as
the Board of Directors or Committee in its discretion may deem necessary or
appropriate and shares issued upon exercise of any option hereunder may be
subject to such restrictions as the Board of Directors or Committee deems
appropriate.
(b) In addition to the terms and conditions specified above, incentive stock
options granted under this Plan shall be subject to the following terms and
conditions:
(1) The aggregate fair market value (determined as of the time the
option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by any optionee during any
calendar year (under all option plans of the Company or its parent and
subsidiary corporations) shall not exceed $100,000.
(2) As to individuals otherwise eligible under this Plan who own more
than 10 percent of the total combined voting power of all classes of stock
of the Company and its parent and subsidiary corporations, an incentive
option can be granted under this Plan to any such individual only if at the
time such option is granted the option price is at least 110 percent of the
fair market value of the stock subject to the option and such option by its
terms is not exercisable after the expiration of five years from the date
such option is granted.
6. USE OF PROCEEDS FROM SHARES.
Proceeds from the sale of Shares pursuant to options granted under the Plan
shall be used for general corporate purposes.
7. ADJUSTMENT UPON CHANGES IN SHARES.
(a) If any change is made in the shares subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), appropriate adjustments
shall be made by the Board of Directors or
B-4
<PAGE>
Committee in the maximum number of shares subject to the Plan and the number of
shares and price per share of stock subject to outstanding options.
(b) Other than in the case of a reincorporation of the Company in another
state, in the event of (i) dissolution or liquidation of the Company, (ii) a
transaction in which more than 50 percent of the shares of the Company that are
entitled to vote are exchanged, or (iii) any merger or consolidation or other
reorganization in which the Company is not the surviving corporation (or in
which the Company becomes a subsidiary of another corporation), outstanding
options under this Plan shall become fully exercisable immediately prior to any
such event.
8. RIGHTS AS AN EMPLOYEE.
Nothing in this Plan or in any options awarded hereunder shall confer upon
any employee any right to continue in the employ of the Company or of any of its
subsidiaries or interfere in any way with the right of the Company or any such
subsidiary to terminate such employee's employment at any time.
9. WITHHOLDING TAX.
There shall be deducted from the compensation of any employee holding
options under this Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Company to such governmental
authority for the account of the person with respect to such options. To the
extent provided in the stock option agreement executed by the optionee, the
optionee may satisfy any federal, state or local tax withholding obligation
arising with respect to the exercise of an option by authorizing the Company to
withhold shares of stock otherwise issuable to the optionee as a result of the
exercise of the option; provided that such shares shall not be withheld at rates
that exceed the minimum statutory withholding rates for federal, state and local
taxes, including payroll taxes.
10. TERMINATION AND AMENDMENT OF PLAN.
The Board of Directors may at any time terminate this Plan or make such
modifications of the Plan as it shall deem advisable. Any modification which
increases the number of shares which may be issued under the Plan (other than
pursuant to Paragraph 7 hereof), or changes the requirements as to eligibility
for participation in the Plan shall become effective only upon approval of the
holders of a majority of the securities of the Company present, or represented,
and entitled to vote at a meeting duly held in accordance with the laws of the
State of Delaware. Notwithstanding the foregoing, rights under any options
granted prior to an amendment of the Plan shall not be impaired by such
amendment unless the optionees holding such outstanding options consent in
writing.
11. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have as
directors, the members of the Board of Directors or Committee administering the
Plan shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by legal counsel selected by the Company)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such member is liable for negligence or
misconduct in the performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding, the member shall in writing
offer the Company the opportunity, at its own expense, to handle and defend the
same.
12. EFFECTIVE DATE AND DURATION OF THE PLAN.
The 1992 Stock Option Plan shall become effective on July 23, 1992. Any
rights granted under this Plan must be granted within ten (10) years of such
effective date.
B-5
<PAGE>
3250AMPS99
<PAGE>
PROXY
ADAPTIVE BROADBAND CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Frederick D. Lawrence and Kenneth J.
Wees, or either or them, each with power of substitution and revocation, as the
proxy or proxies of the undersigned to represent the undersigned and vote all
shares of the Common Stock, $.10 par value, of ADAPTIVE BROADBAND CORPORATION,
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders to be held at the Company's headquarters at 1143
Borregas Avenue, Sunnyvale, CA 94089, at 2:00 p.m. on October 27, 1999, and at
any adjournments or postponements thereof, upon the matters set forth on the
reverse side of this card.
The Annual Meeting may be held as scheduled only if a majority of the
shares outstanding are represented at the meeting by attendance or proxy.
Accordingly, please complete this proxy and return it promptly in the enclosed
envelope. Please date and sign exactly as your name(s) appears on your shares.
If signing for estates, trusts, or corporations, title or capacity should be
stated. If shares are held jointly, each holder should sign.
The shares covered by this proxy will be voted in accordance with the
choices made. When no choice is made, this proxy will be voted for all listed
nominees for directors and for proposals 2 and 3. In the event of cumulative
voting, a vote for nominees of the Board of directors will give the persons
named in the proxy discretionary authority to cumulate all votes as to which the
stockholder is entitled and allocate such votes in favor of one or more nominees
of the Board voted for by the stockholder, as the proxyholders may determine. If
additional persons are nominated for election as directors, the proxyholders may
vote this proxy in such manner on a cumulative voting basis as will ensure the
election of as many of the directors voted for by the stockholder as possible.
In such event, the specific nominees for whom such votes will be cumulated will
be determined by the proxyholders.
SEE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE
REVERSE REVERSE
SIDE SIDE
<PAGE>
September 27, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Adaptive Broadband Corporation to be held at the Company's headquarters at
1143 Borregas Avenue, Sunnyvale, CA 94089, at 2:00 p.m. on October 27, 1999.
Detailed information as to the business to be transacted at the meeting is
contained in the accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important
that your shares be voted. Accordingly, we ask that you sign and return your
proxy as soon as possible in the envelope provided. If you plan to attend the
meeting, please mark the appropriate box on the proxy.
You are invited to call our toll-free information line at
1-888-225-6789 for current information about your company or to be connected
free-of-charge to our Investor Relations department or to our Transfer Agent.
You are also invited to visit us at our Web site
(http://www.adaptivebroadband.com) for more information about Adaptive
Broadband's strategy, markets and products.
Best regards,
Frederick D. Lawrence Chairman and Chief Executive Officer
DETACH HERE
-----------
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. To elect six Directors, NOMINEES: Frederick D. Lawrence, William B.
Marx, Jr., Terry W. Ward, Frederick W. Whitridge, Jr., George A. Joulwan, Leslie
G. Denend
FOR WITHHELD
/ / / /
/ /
---------------------------------------------------
For all nominees except as noted above
2. To approve the amendment and restatement of the Company's
Certificate of Incorporation.
3. To approve an amendment to the Company's 1992 Stock Option Plan.
4. To transact such other business as may properly come before the
meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
NOTE: Please sign as your name(s) appear(s) hereon. If more than one name
appears, all must sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
Signature _________________ Date: _________ Signature: ___________ Date: _______
