SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant |_|
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|_| 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 ss.240.14a-11(c) or ss.240.14a-12
COMTECH TELECOMMUNICATIONS CORP.
________________________________________________________________________________
(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):
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<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
November 6, 2000
To Our Stockholders:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Stockholders of Comtech Telecommunications Corp.
The meeting will be held at 10:00 a.m. on December 12, 2000 at the Marriott
Hotel, 1350 Old Walt Whitman Road, Melville, New York 11747. Copies of the
Notice of Annual Meeting of Stockholders, Proxy Statement and proxy card are
enclosed.
I believe that the annual meeting provides an excellent opportunity for
stockholders to become better acquainted with Comtech and its directors and
officers. I hope that you will be able to attend and I look forward to greeting
as many stockholders as possible.
It is important that your shares are voted at this meeting. Whether or not you
are able to attend in person, the prompt execution and return of your enclosed
proxy card in the envelope provided will both assure that your shares are
represented at the meeting and minimize the cost of proxy solicitations. If you
later decide to attend the annual meeting, you may revoke your proxy and vote in
person.
Sincerely,
FRED KORNBERG
Chairman, Chief
Executive Officer
and President
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 2000
The annual meeting of Stockholders of COMTECH TELECOMMUNICATIONS CORP. (the
"Company") will be held at the Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747, on Tuesday, December 12, 2000 at 10:00 a.m., local
time, for the following purposes:
1. To elect two directors;
2. To approve an amendment to the Company's 2000 Stock Incentive Plan
increasing the number of shares of the Company's Common Stock
subject to awards under the Plan or with respect to which awards may
be granted;
3. To approve the 2001 Employee Stock Purchase Plan;
4. To ratify the selection of auditors for the current fiscal year; and
5. To transact such other business as may properly come before the
meeting.
The Board of Directors unanimously recommends that the Stockholders vote "for"
Proposals 1, 2, 3 and 4 to be presented to Stockholders at the Annual Meeting.
All shareholders are invited to attend the meeting. Stockholders of record at
the close of business on October 13, 2000, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Gail Segui
Secretary
November 6, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD IN ORDER THAT WE HAVE A QUORUM, WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING IN PERSON. PLEASE COMPLETE, SIGN, DATE AND
MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE (TO WHICH THE SENDER NEED
AFFIX NO POSTAGE IF MAILED WITHIN THE UNITED STATES). IF YOU RECEIVE MORE THAN
ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES,
YOU SHOULD SIGN AND RETURN EACH SUCH PROXY TO ASSURE THAT YOU VOTE ALL OF YOUR
SHARES. ALL REGISTERED HOLDERS SHOULD SIGN THE PROXY EXACTLY AS THE STOCK IS
REGISTERED.
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Comtech
Telecommunications Corp. (the "Company") for use at the Annual Meeting of
Stockholders to be held on December 12, 2000, and at any adjournment thereof
(the "Annual Meeting"). It may be revoked at any time before exercise by
delivering a written notice of revocation to the Secretary of the Company, by
executing a subsequent proxy and presenting it to the Secretary of the Company,
or by attending the Annual Meeting and voting in person. All proxies will be
voted in accordance with the stockholders' instructions. If no directions are
specified, the proxies will be voted for the nominees for election as directors
and in favor of the matters set forth in the accompanying Notice of Annual
Meeting. A stockholder may choose to strike the names of the proxy holders named
in the enclosed proxy and may insert other names.
Only stockholders of record of the Company's Common Stock, par value $.10 (the
"Common Stock"), at the close of business on October 13, 2000 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting, or any
adjournment thereof, with each holder having one vote per share. The Annual
Meeting may be adjourned from time to time without notice other than by
announcement at the Annual Meeting. A list of stockholders entitled to vote at
the Annual Meeting will be available for inspection by any stockholder, for any
reason germane to the Annual Meeting, during ordinary business hours during the
ten days prior to the Annual Meeting at the Company's offices, 105 Baylis Road,
Melville, New York 11747. As of the Record Date, approximately 7,268,476 shares
of Common Stock were outstanding. It is anticipated that the mailing to
Stockholders of this Proxy Statement and the enclosed proxy will commence by
November 6, 2000.
The presence, in person or by proxy, of the holders of record at the close of
business on the Record Date of a majority of the outstanding shares of Common
Stock will constitute a quorum at the Annual Meeting. Directors will be elected
by a plurality of the votes cast (i.e., the two nominees receiving the greatest
number of votes will be elected as directors). Stockholder approval of the
amendment to the Company's 2000 Stock Incentive Plan, the approval of the
Company's 2001 Employee Stock Purchase Plan, and the ratification of the
selection of auditors will require the affirmative vote of a majority of the
shares present at the Annual Meeting and entitled to vote on such proposal.
Abstentions and broker non-votes with respect to any proposal (which occur when
a nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner) will be counted for purposes of determining the presence or absence of a
quorum. Abstentions also will be counted in determining the number of shares
present and entitled to vote on such proposal, but broker non-votes are not
counted as entitled to vote thereon.
1
<PAGE>
PRINCIPAL STOCKHOLDERS OF COMTECH TELECOMMUNICATIONS CORP.
To the Company's knowledge, the following persons individually, or as a group,
beneficially own more than 5% of the Company's outstanding Common Stock (its
only outstanding class of voting securities) as of October 13, 2000. Unless
otherwise indicated, each person has sole voting and investment power with
respect to such person's shares.
Amount of
Name of Beneficial Owner Beneficial Ownership Percent of Class
------------------------ -------------------- ----------------
Fred Kornberg (1) 366,000 5.0
105 Baylis Road
Melville, NY 11747
Lord Abbett & Company (2) 751,940 10.3
767 Fifth Avenue
New York, NY 10153-0203
S Squared Technology Corp. (2) 370,900 5.1
515 Madison Avenue
Suite 4200
New York, NY 10022
----------
(1) Includes 115,500 shares that Mr. Kornberg may acquire by the exercise of
vested stock options. Does not include the unvested portion of options
described elsewhere in this proxy statement. Does not include 3,000 shares
held in a Family Limited Partnership for which Mr. Kornberg is a General
Partner, and has a 1% ownership in, and for which he disclaims beneficial
ownership.
(2) The information presented in the table for Lord Abbett & Company and S
Squared Technology Corp. is based upon a Schedule 13F, filed by each of
them with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with each class
having two members. Members of the Board are elected for three-year terms, with
the term of office of one class expiring at each Annual Meeting of Comtech's
stockholders. Mr. Goldberg and Dr. Bugliarello are in the class whose term of
office expires in 2000. Mr. Kornberg and Mr. Weiner are in the class whose term
of office expires in 2001 and Mr. Nocita and Dr. Payne are in the class whose
term expires in 2002.
Certain information concerning the directors who are being nominated for
reelection at the meeting and the incumbent directors whose terms of office
continue after the Annual Meeting and executive officers of the Company named in
the section "Executive Compensation" and all directors and executive officers as
a group, is set forth below.
While the Board of Directors has no reason to believe that either Mr. Goldberg
or Dr. Bugliarello will not be available as a candidate for election, should
such a situation arise, the enclosed proxy may be voted for the election of
another nominee or nominees in the discretion of the persons acting pursuant to
the proxy.
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<PAGE>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
Shares
Beneficially
For Term Served As Owned Percent
Expiring Director October 13, of
Name Principal Occupation Age In Since 2000 Class
---- -------------------- --- -- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Richard L .Goldberg(1)(2)(5) Partner, Proskauer 64 3 years 1983 28,177 *
Rose LLP
George Bugliarello(1)(4)(5) Chancellor, 73 3 years 1977 30,600 *
Polytechnic
University of NY
</TABLE>
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
AND CERTAIN EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Shares
Beneficially
Term Served As Owned Percent
Expires Director October 13, of
Name Principal Occupation Age In Since 2000 Class
---- -------------------- --- -- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg (1)(2) Chairman, Chief 64 1 year 1971 366,000 5.0
Executive Officer
and President of the
Company
Sol S. Weiner (1)(3)(4) President, Sol S. 81 1 year 1980 48,000 *
Weiner Investments,
Inc.
Gerard R. Nocita (1)(3)(4)(5) Private Investor 64 2 years 1993 1,500 *
John B. Payne(1)(2)(3) President and CEO of 65 2 years 1993 43,050 *
Nucomm, Inc.
Richard L. Burt (1) Senior Vice 59 -- -- 117,396 1.6
President; President
of Comtech Systems,
Inc.
J. Preston Windus, Jr. (1) Senior Vice 57 -- -- 90,000 1.2
President, Chief
Financial Officer;
President of Comtech
PST Corp.
Robert L. McCollum(1) Senior Vice 51 -- -- 106,500 1.5
President; President
of Comtech EF Data
Corp.
Gail Segui (1) Secretary and 54 -- -- 11,400 *
Treasurer of the
Company
All directors and executive 842,623 11.1
officers as a group (10 persons)
</TABLE>
----------
* Less than one percent (Footnotes on next page)
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<PAGE>
(1) Includes the following shares of Common Stock with respect to which such
persons have the right to acquire beneficial ownership within sixty days
from such date: Mr. Kornberg 115,500 shares; Mr. Nocita 1,500 shares; Mr.
Weiner 1,500 shares; Mr. Goldberg 3,000 shares; Dr. Bugliarello 1,500
shares; Dr. Payne 3,000 shares; Mr. Burt 91,488 shares; Mr. McCollum
30,000 shares; Ms. Segui 7,650 shares; Mr. Windus 50,250 shares; and all
directors and officers as a group 305,388 shares. These respective shares
were deemed to be outstanding for purposes of calculating the respective
percentages owned.
(2) Member of Executive Committee
(3) Member of Audit Committee
(4) Member of Executive Compensation Committee
(5) Member of Nominating Committee
Mr. Goldberg has been a director of the Company since 1983. He has also
been a partner since 1990 in the law firm of Proskauer Rose LLP, which renders
legal services to the Company. Prior to 1990, Mr. Goldberg was a partner since
1966 of the firm Botein Hays & Sklar.
Dr. Bugliarello has been a director of the Company since 1977. He has also
been Chancellor of the Polytechnic University since 1994 and was President of
the University from 1973 to 1994. He is also a director of KeySpan Energy, The
Lord Corporation, and Symbol Technologies Inc.
Mr. Kornberg has been Chief Executive Officer and President of the Company
since 1976. Prior to that, he was the Executive Vice President of the Company
from 1971 to 1976 and the General Manager of the telecommunications transmission
segment.
Mr. Weiner has been a director of the Company since 1980. He is President
of Sol S. Weiner Investments, Inc. Previously he was Managing Director of
Stenhouse, Weiner, Sherman, Ltd., commodity pool managers, from 1982 to 1994. He
is also a director of Universal Automotive Industries, Inc.
Mr. Nocita has been a director of the Company since 1993. He is a private
investor. He was Treasurer of the Incorporated Village of Patchogue from 1993 to
1996. He was affiliated with the Company from our inception in 1967 until 1993.
Dr. Payne has been a director of the Company since 1993. He has also been
the President and Chief Executive Officer of Nucomm, Inc. since 1990. Nucomm,
Inc. produces products for satellite news gathering services. From 1973 through
1990 he was President and Chief Executive Officer of Communications
Technologies, Inc.
Mr. Burt has been President of Comtech Systems since 1989 and Vice
President since its founding in 1984. He became a Senior Vice President of
Comtech Telecommunications in 1998 and had been a Vice President since 1992. Mr.
Burt first joined Comtech in 1979.
Mr. Windus has been a Senior Vice President since 1998. He has served as
Chief Financial Officer of Comtech Telecommunications since 1993. From 1993 to
1998, he also served as a Vice President of Comtech Telecommunications. He
became President of Comtech PST in 1995. Mr. Windus was President of Fairchild
Data Corp., a satellite modem manufacturer, from 1989 to 1993.
Mr. McCollum was appointed Senior Vice President of Comtech
Telecommunications in April 2000 and had been a Vice President since 1996. He
founded Comtech Communications Corp. in 1994 and had been its President since
its formation until July 2000. At that time, the Company acquired the EF Data
business, combined it with Comtech Communications Corp. to form Comtech EF Data
Corp., and appointed Mr. McCollum its President.
4
<PAGE>
Ms. Segui has been the Secretary and Treasurer of Comtech since 1998 and
the Corporate Controller of Comtech since 1990. She joined Comtech in 1987 as
Accounting Manager. Prior to joining Comtech, Ms. Segui served as Accounting
Manager of Photronics from 1984 to 1987.
During the past fiscal year, the Audit Committee of the Board of Directors held
three meetings. The functions of the Committee include recommending to the Board
the engagement of independent auditors, directing investigations into matters
relating to audit functions, reviewing the plan and results of audits with the
Company's auditors, reviewing the Company's internal accounting controls and
approving services to be performed by the Company's auditors and related fees.
The Board of Directors has determined that all members of the Audit Committee
are "independent" as defined in the applicable standards of the Nasdaq National
Market. The Board of Directors has adopted a written charter for the Audit
Committee. A copy of the current charter is attached hereto as Appendix C.
The Executive Compensation Committee of the Board of Directors considers and
authorizes remuneration arrangements for senior management; the Committee also
constitutes the Stock Option Committee of the Board of Directors, which
administers the Company's stock option plans. The Committee held three meetings
during the past fiscal year.
The Executive Committee of the Board of Directors did not hold any meetings
during the past fiscal year. Except as limited by law, the Executive Committee
has the authority to act upon all matters requiring Board approval.
The Nominating Committee identifies and evaluates candidates for election as
members of the Board of Directors and reports its findings to the full Board.
The Nominating committee held one meeting during the past fiscal year.
The Board of Directors held twelve meetings during the past fiscal year.
The Board of Directors recommends a vote FOR the reelection of Richard L.
Goldberg and George Bugliarello to the Board of Directors.
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
2000 STOCK INCENTIVE PLAN
The Company's stockholders are being asked to approve the adoption of an
amendment to the Comtech Telecommunications Corp. 2000 Stock Incentive Plan (the
"Plan").
On October 19, 2000, the Company's Board of Directors approved the amendment to
the Plan, subject to stockholder approval, to provide that the aggregate number
of shares of the Company's Common Stock subject to awards under the Plan or with
respect to which awards may be granted be increased by 350,000 shares.
The Board of Directors believes the amendment to the Plan is in the best
interests of the Company and its stockholders and is intended to enhance the
profitability and value of the Company for the benefit of its stockholders. The
increase in the number of shares of Common Stock under the Plan is necessary due
to the substantial increase in the Company's workforce, primarily as a result of
the acquisition in July 2000 of the EF Data business of Adaptive Broadband
Corporation. That acquisition has nearly doubled the Company's total workforce
and brought to the Company many employees who enjoyed participation in the
stock-based compensation plans of Adaptive Broadband, a publicly-held company.
Moreover, the Board of Directors believes that in an increasingly competitive
environment for qualified technical, sales, marketing and other personnel, the
ability of the Company to make equity-based awards will continue to be a key
factor in the recruitment and retention of such personnel.
On October 19, 2000 the Company's Board of Directors also adopted amendments to
the Plan for which stockholder approval is not required or being sought at the
Annual Meeting, to (a) provide for forfeiture of any award under the Plan of any
(i) Stock Option; (ii) Stock Appreciation Right; (iii) Restricted Stock; (iv)
Performance Share; (v) Performance Unit; or (vi) Other Stock-Based Award if a
recipient engages in any detrimental activity as described below; (b) commencing
August 1, 2001, increase the number of shares of Common Stock subject to a stock
option granted to a non-employee director each August 1 from 1,500 shares to
3,500 shares, authorize the grant, on November 6, 2000, to each non-employee
director of a stock option to purchase 2,000 shares of Common Stock and
eliminate the 15,000 shares limit on total option grants to any non-employee
director; (c) eliminate the thirty day period during which a recipient (other
than a non-employee director) may exercise his or her options following a
5
<PAGE>
voluntary termination; (d) provide for full vesting of stock options granted to
a non-employee director upon death; and (e) except in the case of a termination
of directorship due to cause (as defined in the Plan), provide that stock
options granted to non-employee directors will no longer expire within one year
following their termination of directorship and, instead, will expire at the end
of the option's stated term.
Examples of detrimental activity include disclosing confidential information
about the Company, soliciting employees or customers, disparaging the Company,
or engaging in competitive activities. If a recipient engages in detrimental
activity (as defined in the Plan) prior to, or during the one year period
following the later of the recipient's termination of employment or exercise or
vesting of an award, all awards will be immediately forfeited and the Company
shall be entitled to recover from the recipient at any time within one year
after the later of termination of employment or exercise (or vesting) of an
award, any gain realized as a result of the exercise (or vesting) of the award.
The Board of Directors recommends approval of the amendment to the Plan
increasing the number of shares thereunder. The following description of the
Plan is a summary and is qualified in its entirety by reference to the Plan and
the amendment. A copy of the amendment is attached hereto as Appendix A to this
proxy statement and a copy of the Plan is available from Investor Relations at
the Corporate Offices, 105 Baylis Road, Melville, NY 11747.
Administration
The Plan is administered and interpreted by a committee or subcommittee of the
Board appointed from time to time by the Board (the "Committee"), consisting of
two or more non-employee directors, each of whom is intended to be a
non-employee director as defined in Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, and an outside director as defined under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). Currently, the Stock
Option Committee serves as the Committee for the Plan. With respect to awards to
non-employee directors, the Plan is administered by the Board of Directors and
all references to the Committee are deemed to refer to the Board of Directors
for this purpose.
The Committee has the full authority to administer and interpret the Plan to
grant discretionary awards under the Plan, to determine the persons to whom
awards will be granted, to determine the types of awards to be granted, to
determine the terms and conditions of each award, to determine the number of
shares of Common Stock to be covered by each award and to make all other
determinations in connection with the Plan and the awards thereunder as the
Committee, in its sole discretion, deems necessary or desirable.
The terms and conditions of individual awards are set forth in written
agreements which are consistent with the terms of the Plan. Awards under the
Plan may not be made on or after the tenth anniversary of the earlier of the
adoption of the Plan or the date of stockholder approval, but awards granted
prior to such date may extend beyond that date.
Eligibility and Types of Awards
All employees and consultants of the Company and its affiliates (including
prospective employees and consultants) are eligible to be granted nonqualified
stock options, stock appreciation rights, restricted stock, performance shares,
performance units, other stock-based awards and awards providing benefits
similar to those listed above which are designed to meet the requirements of non
U.S. jurisdictions under the Plan. In addition, employees of the Company and its
affiliates that qualify as subsidiaries or parent corporations (within the
meaning of Section 424 of the Code) are eligible to be granted incentive stock
options ("ISOs") under the Plan. Non-employee directors of the Company are
eligible to receive nondiscretionary grants of nonqualified stock options.
Available Shares
Under the Plan, as amended, the aggregate number of shares of Common Stock which
may be issued or used for reference purposes under the Plan or with respect to
which awards may be granted may not exceed 850,000 shares of Common Stock plus
882,935 shares of Common Stock relating to outstanding awards that were
previously granted under the 1982 Incentive Stock Option Plan and the 1993
Incentive Stock Option Plan, as amended (the "Existing Option Plans") which have
been transferred to the Plan, for a total share limit of 1,732,935 shares of
Common Stock. The terms applicable to these awards in effect prior to the Plan's
assumption of these awards continue to apply.
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<PAGE>
The maximum number of shares of Common Stock with respect to which any option,
stock appreciation right or award of performance shares or award or restricted
stock for which the grant of such award or lapse of the relevant restriction
period is subject to attainment of pre-established performance goals (in
accordance with Code Section 162 (m)) which may be granted under the Plan during
any fiscal year of the Company to any individual will be 100,000 shares per type
of award, provided that the maximum number of shares of Common Stock for all
types of awards does not exceed 100,000 during any fiscal year. The maximum
value at grant of performance units which may be granted under the Plan during
any fiscal year of the Company to any individual will be $100,000. To the extent
that shares of Common Stock for which awards are permitted to be granted to an
individual during a fiscal year are not covered by an award in a fiscal year,
the number of shares of Common Stock available for awards to such individual
will automatically increase in subsequent fiscal years until used.
The aggregate number of shares of Common Stock available under the Plan as well
as the maximum number of shares that may be granted are subject to appropriate
adjustment by the Committee in the event of changes in the Company's capital
structure or business by reason of certain corporate transactions or events.
Awards Under the Plan
Stock Options. The Committee may grant nonqualified stock options and ISOs to
purchase shares of Common Stock. The Committee will determine the number of
shares of Common Stock subject to each option, the term of each option (which
may not exceed 10 years (or five years in the case of an ISO granted to a 10%
shareholder)), the exercise price, the vesting schedule (if any), and the other
material terms of each option. No ISO or nonqualified stock option which is
intended to be performance based for purposes of Code Section 162(m) may have an
exercise price less than the fair market value of the Common Stock at the time
of grant (or, in the case of an ISO granted to a 10% shareholder, 110% of fair
market value).
Options will be exercisable at such time or times and subject to such terms and
conditions as determined by the Committee at grant and the exercisability of
such options may be accelerated by the Committee in its sole discretion. Payment
of an option's exercise price may be made: (i) in cash or by check, bank draft
or money order, (ii) through a "cashless exercise" procedure whereby the
recipient delivers irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price, or (iii) on such other terms
and conditions as may be acceptable to the Committee.
Stock Appreciation Rights. The Committee may grant stock appreciation rights
("SARs") either with a stock option which may be exercised only at such times
and to the extent the related option is exercisable ("Tandem SAR") or
independent of a stock option ("Non-Tandem SARs"). An SAR is a right to receive
a payment either in cash or common stock, as the Committee may determine, equal
in value to the excess of the fair market value of one share of Common Stock on
the date of exercise over the exercise price per share established in connection
with the grant of the SAR. The exercise price per share covered by a SAR will be
the exercise price per share of the related option in the case of a Tandem SAR
and will be the fair market value of the Common Stock on the date of grant in
the case of a Non-Tandem SAR.
Restricted Stock. The Committee may award "restricted" shares of Common Stock.
Upon the award of restricted stock, the recipient has all rights of a
stockholder with respect to the shares, including the right to receive
dividends, the right to vote the shares of restricted stock and, conditioned
upon full vesting of shares of restricted stock, the right to tender such
shares, subject to the conditions and restrictions generally applicable to
restricted stock or specifically set forth in the recipient's restricted stock
agreement. The Committee may, in its sole discretion, determine at grant, that
the payment of dividends, if any, shall be deferred until the expiration of the
applicable restriction period. Recipients of restricted stock are required to
enter into a restricted stock agreement with the Company which states the
restrictions to which the shares are subject and the criteria or date or dates
on which such restrictions will lapse.
If the grant of restricted stock or the lapse of the relevant restriction is
based on the attainment of objective performance goals, the Committee shall
establish the performance goals, formulae or standards and the applicable
vesting percentage for the restricted stock award applicable to each recipient
while the outcome of the performance goals are substantially uncertain. Such
performance goals may incorporate provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar events or
circumstances. Section 162(m) of the Code requires that performance awards be
based upon objective performance measures. The performance goals will be based
on one or more of the
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following criteria ("Performance Criteria"): (i) revenues, income before income
taxes and extraordinary income, net income, earnings before income tax, earnings
before interest, taxes, depreciation and amortization or a combination of any or
all of the foregoing; (ii) after-tax or pre-tax profits; (iii) operational cash
flow; (iv) level of, reduction of, or other specified objectives with regard to
the Company's bank debt or other long-term or short-term public or private debt
or other similar financial obligations; (v) earnings per share or earnings per
share from continuing operations; (vi) return on capital employed or return on
invested capital; (vii) after-tax or pre-tax return on stockholders' equity;
(viii) economic value added targets; (ix) fair market value of the shares of
Common Stock; and (x) the growth in the value of an investment in Common Stock
assuming the reinvestment of dividends. In addition, such performance goals may
be based upon the attainment of specified levels of Company (or a subsidiary,
division or other operational unit of the Company) performance under one or more
of the measures described relative to the performance of other corporations. To
the extent permitted under the Code, the Committee may: (i) designate additional
business criteria on which the performance goals may be based; or (ii) adjust,
modify or amend the aforementioned business criteria.
Performance Units and Performance Shares. The Committee may grant performance
shares entitling recipients to receive a fixed number of shares of Common Stock
or the cash equivalent thereof, as determined by the Committee in its sole
discretion, upon the attainment of performance goals established by the
Committee (based on the Performance Criteria), based on a specified performance
period. The Committee may also grant performance units entitling recipients to
receive a value payable in cash or shares of Common Stock, as determined by the
Committee, upon the attainment of performance goals established by the Committee
(based on the Performance Criteria), for a specified performance cycle. The
Committee may subject such grants of performance shares and performance units to
such vesting and forfeiture conditions as it deems appropriate.
Other Stock-Based Awards. The Committee may grant awards of Common Stock and
other awards that are valued in whole or in part by reference to, or are payable
in or otherwise based on, Common Stock and may be granted either alone or in
addition to or in tandem with stock options, stock appreciation rights,
restricted stock, performance shares or performance units.
The Committee also determines the purchase price to be paid, if any, by a
recipient to purchase other stock-based awards (including, without limitation,
shares of Common Stock). The purchase of shares of Common Stock or other
stock-based awards may be made on either an after-tax or pre-tax basis, as
determined by the Committee; provided, however, that if the purchase is made on
a pre-tax basis, such purchase will be made pursuant to a deferred compensation
program established by the Committee, which will be deemed to be part of the
Plan.
Change in Control
Unless determined otherwise by the Committee at the time of grant, and except to
the extent provided in the applicable award agreement, the recipient's
employment agreement or other agreement approved by the Committee, accelerated
vesting or lapsing of restrictions of awards will occur upon a change in control
of the Company (as defined in the Plan). Upon a change in control of the
Company, options granted to non-employee directors will be subject to the rules
described below.
Non-Employee Director Stock Option Grants
The Plan authorizes the automatic grant of nonqualified stock options to each
non-employee director, without further action by the Board or the stockholders,
as follows: (i) options to purchase 3,000 shares of Common Stock will be granted
to each non-employee director as of the date he or she begins service as a
non-employee director on the Board, provided that such service begins after the
Plan's effective date; and (ii) options to purchase 3,500 shares of Common Stock
commencing on August 1, 2001 will be granted to each non-employee director as of
each August 1, provided that the non-employee director has served as a director
for at least 6 months; and (iii) options to purchase 2,000 shares of Common
Stock will be granted to each non-employee director serving on the Board as of
November 6, 2000. The exercise price per share of such options will be the fair
market value of the Common Stock at the time of grant. The term of each such
option will be 10 years. Options granted to non-employee directors will vest and
become exercisable one year after the date of grant, provided that the option
may be vested only during the continuance of his or her service as a director of
the Company. All options granted to non-employee directors and not previously
exercisable will become fully exercisable upon death and immediately upon a
change in control of the Company (as defined in the Plan).
8
<PAGE>
Amendment and Termination
The Board or Committee may at any time, amend any or all of the provisions of
the Plan, or suspend or terminate it entirely, retroactively or otherwise.
However, no amendment may be made without the approval of the Company's
stockholders in accordance with the laws of the State of Delaware, to the extent
required under Section 162(m) of the Code, or to the extent applicable to ISOs,
Section 422 of the Code, which would: (i) increase the aggregate number of
shares of Common Stock that may be issued; (ii) increase the maximum individual
participant share limitations for a fiscal year; (iii) change the classification
of employees or consultants eligible to receive awards; (iv) decrease the
minimum exercise price of any stock option or SAR; (v) extend the maximum option
term; (vi) materially alter the Performance Criteria; or (vii) require
stockholder approval in order for the Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent applicable
to ISOs, Section 422 of the Code.
Miscellaneous
Awards granted under the Plan are generally nontransferable, except that the
Committee may provide for the transferability of nonqualified stock options to a
recipient's family member (as defined in the Plan) at the time of grant or
thereafter. The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan is not,
nor is it intended to be, qualified under Section 401(a) of the Code.
Certain Federal Income Tax Consequences Relating to the Plan
The following discussion of the principal U.S. federal income tax consequences
with respect to options under the Plan is based on statutory authority and
judicial and administrative interpretations as of the date of this proxy
statement, which are subject to change at any time (possibly with retroactive
effect) and may vary in individual circumstances. Therefore, the following is
designed to provide only a general understanding of the material federal income
tax consequences (state, local, estate and social security tax consequences are
not addressed below). This discussion is limited to the U.S. federal income tax
consequences to individuals who are citizens or residents of the U.S., other
than those individuals who are taxed on a residence basis in a foreign country.
Incentive Stock Options. In general, an employee will not realize taxable income
upon either the grant or the exercise of an ISO and the Company will not realize
an income tax deduction at either time. If the employee does not sell the Common
Stock received pursuant to the exercise of an ISO within either (1) two years
after the date of the grant of the ISO or (2) one year after the date of
exercise, a subsequent sale of the Common Stock will result in long-term capital
gain or loss to the employee and will not result in a tax deduction to the
Company. Capital gains rates may be reduced in the case of a longer holding
period.
If the employee disposes of the Common Stock acquired upon exercise of the ISO
within either of the above-mentioned time periods, the employee will generally
realize as ordinary income an amount equal to the lesser of: (1) the fair market
value of the Common Stock on the date of exercise over the option's exercise
price, or (2) the amount realized upon disposition over the exercise price. In
this event, the Company generally will be entitled to an income tax deduction
equal to the amount recognized as ordinary income. Any gain in excess of the
amount realized by the employee as ordinary income will be taxed at the rates
applicable to short-term or long-term capital gains, depending on the holding
period.
Nonqualified Stock Options. A recipient (i.e., an employee, consultant or
director) will not realize any taxable income upon the grant of a nonqualified
stock option and the Company will not receive a deduction at the time of grant
unless the option has a readily ascertainable fair market value (as determined
under applicable tax law) at the time of grant. Upon the exercise of a
nonqualified stock option, the recipient generally will realize ordinary income
in an amount equal to the excess of the fair market value of the Common Stock on
the date of exercise over the option's exercise price. Upon a subsequent sale of
the Common Stock by the recipient, the recipient will recognize short-term or
long-term capital gain or loss depending upon his or her holding period for the
Common Stock. The Company will generally be allowed a deduction equal to the
amount recognized by the recipient as ordinary income.
Other Tax Consequences. In addition, (i) any officers and directors of the
Company subject to Section 16(b) of the Exchange Act may also be subject to
special tax rules regarding the income tax consequences concerning their
options, (ii) any entitlement to a tax deduction on the part of the Company is
subject to the applicable tax rules
9
<PAGE>
(including, without limitation, Section 162(m) of the Code regarding a
$1,000,000 limitation on deductible compensation), (iii) the exercise of an ISO
may have implications in the computation of alternative minimum taxable income,
and (iv) in the event that the exercisability or vesting of any option is
accelerated because of a change of control, payments relating to the option,
either alone or together with certain other payments, may constitute parachute
payments under Section 280G of the Code, which excess amounts may be subject to
excise taxes.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any recipient during a specified
period and the plan under which the options are granted is approved by
stockholders and is administered by a Committee comprised of outside directors.
The Plan is intended to satisfy these requirements with respect to options.
Vote Required and Board Recommendation
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present in person or represented by proxy at the Annual Meeting of
Stockholders and entitled to vote on the Plan will be required for approval of
the Plan.
The Board of Directors recommends that the stockholders vote FOR approval of the
Amendment to the Company's 2000 Stock Incentive Plan.
APPROVAL OF THE COMPANY'S 2001 EMPLOYEE STOCK PURCHASE PLAN
General
The Board of Directors has adopted the Comtech Telecommunications Corp. 2001
Employee Stock Purchase Plan (the "Purchase Plan"), subject to stockholder
approval. The Plan is intended to provide eligible employees of the Company and
subsidiaries with the opportunity to purchase shares of the Company's Common
Stock through payroll deductions. The Board of Directors believes that this will
give employees the opportunity to acquire an additional interest in, and a
further incentive to promote, the growth of the Company.
A maximum of 300,000 shares of the Company's authorized and unissued Common
Stock will be reserved for offering under the Purchase Plan. Participation in
the Purchase Plan will be open to employees of the Company and its subsidiaries,
other than officers and directors, who have been employed for at least one year
and meet other minimum eligibility requirements.
At the beginning of each three-month period, commencing with the first business
day of January, 2001, eligible employees will be granted the right to purchase
up to 100 shares at a price equal to 85% of the fair market value of the Common
Stock at either the beginning or end of the period, whichever is lower.
Employees electing to participate in the Purchase Plan may purchase stock by
executing a subscription agreement and authorizing payroll deductions in an
amount not less than $5.00 per week and not more than 20% of their gross basic
compensation per payroll period. In no event shall an employee purchase Common
Stock under the Purchase Plan and under all other employee stock purchase plans
of the Company or its subsidiaries at a rate which exceeds $25,000 of the fair
market value of such stock for each calendar year. Payroll deductions to
purchase Common Stock shall continue to be made until the purchase date, which
shall be the last business day of each applicable three-month period. Rights
with respect to any shares not purchased on such date will automatically lapse.
Funds paid under the Purchase Plan by participants will be deposited in a
special bank account. Such funds will be applied in accordance with the
provisions of the Purchase Plan and will bear no interest. Any amount paid into
the Purchase Plan in excess of the purchase price as determined on a purchase
date will be credited to the employee's account for the next succeeding
offering. Any participating employee may cancel his participation in the
Purchase Plan at any time up to ten business days prior to a purchase date by
giving written notice of cancellation to the Company, in which event the amount
then held for the employee in the special account will be refunded without
interest.
10
<PAGE>
The Purchase Plan contains provisions to prevent dilution in case of stock
dividends, stock splits, and changes in the structure of shares of the Common
Stock of the Company. The Purchase Plan may be amended, modified or discontinued
at any time by the Board of Directors, except that existing rights of employees
may not be adversely affected, the number of shares reserved under the Purchase
Plan may not be increased, and the formula for determining the purchase price of
shares may not be changed.
The foregoing summary of the Purchase Plan is qualified in its entirety by
reference to the Purchase Plan, a copy of which is annexed to this Proxy
Statement as Appendix B.
Certain Federal Income Tax Consequences Relating to the Plan
The following discussion of the principal U.S. federal income tax consequences
with respect to the purchase of Common Stock under the Purchase Plan is based on
statutory authority and judicial and administrative interpretations as of the
date of this proxy statement, which are subject to change at any time (possibly
with retroactive effect) and may vary in individual circumstances. Therefore,
the following is designed to provide only a general understanding of the
material federal income tax consequences (state, local, estate and social
security tax consequences are not addressed below). This discussion is limited
to the U.S. federal income tax consequences to individuals who are citizens or
residents of the U.S., other than those individuals who are taxed on a residence
basis in a foreign country.
The Purchase Plan is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. Neither the
grant of a right to purchase shares under the Purchase Plan nor the purchase of
such shares will have any immediate tax consequence for a participating
employee. If he makes no disposition of the shares within two years from the
date the right to purchase was granted to him nor within one year from the date
the shares were purchased, upon subsequent disposition of the shares he will
realize ordinary income to the extent of the lesser of (a) the amount by which
the fair market, value of the shares at the time the right to purchase was
granted exceeded an amount equal to 85% of such fair market value (the purchase
price if determined at such time) or (b) the amount by which the fair market
value of the shares on the date of the disposition exceeded the price paid by
the employee. Any further gain will be taxed at capital gains rates. No income
tax deduction will be allowed to the Company with respect to shares purchased
under the Purchase Plan by a participating employee provided such shares are
held for the required periods. The earlier disposition of the shares will result
in any excess of the fair market value of the shares at the time of purchase
over the purchase price being treated as income in the nature of compensation
taxable to the employee at ordinary income tax rates in the year in which the
disposition occurred, in which case the Company will be entitled to a
corresponding deduction.
Vote Required and Board Recommendation
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present in person or represented by Proxy at the Annual Meeting of
Stockholders and entitled to vote on the Plan will be required for approval of
the Plan.
The Board of Directors recommends that the stockholders vote FOR the approval of
the Company's 2001 Employee Stock Purchase Plan.
SELECTION OF AUDITORS
The Board of Directors has selected KPMG LLP as the Company's auditors for the
current fiscal year, subject to ratification by the stockholders. If the
stockholders do not ratify such selection, it will be reconsidered by the Board.
Representatives of KPMG LLP are expected to be present at the Annual Meeting of
Stockholders, with the opportunity to make a statement, should they so desire,
and to be available to respond to appropriate questions.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon will be
required to ratify the selection of KPMG LLP as the Company's auditors for the
current fiscal year.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of KPMG LLP as the Company's auditors.
11
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table for the Fiscal Years Ended
July 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
Long Term
Compensation
Annual -----------------------------------
Compensation Options Restricted
Fiscal --------------------- No. Of Stock LTIP
Name and Principal Position Year Salary Bonus Other Shares Awards Payouts
--------------------------- ---- ------ ----- ----- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fred Kornberg (1) 2000 $302,000 $250,000 * -- --
Chairman, Chief Executive 1999 265,000 95,445 * 30,000 --
Officer and President 1998 240,000 44,940 * 150,000(4) --
J. Preston Windus, Jr. (2) 2000 195,000 $ 50,000 * -- --
Senior Vice President, Chief 1999 170,000 29,200 * 15,000 --
Financial Officer and 1998 150,000 56,700 * 60,000(4) --
President of
Comtech PST Corp.
Richard L. Burt (2) 2000 195,000 $211,500 * -- --
Senior Vice President; 1999 160,000 69,600 * 15,000 --
President of Comtech Systems, Inc. 1998 150,000 19,600 * 60,000(4) --
Robert L. McCollum (2) 2000 145,000 $ 20,800 * -- -- $856,800(5)
Senior Vice President; 1999 135,000 -- * -- --
President Comtech EF Data Corp. 1998 135,000 -- * 60,000(4) --
Gail Segui (3) 2000 102,000 $ 25,000 * -- --
Secretary and Treasurer 1999 80,000 6,300 * -- --
</TABLE>
----------
* Less than 10% of the total salary and bonus reported for such officer.
(1) Mr. Kornberg is employed pursuant to an agreement which was amended and
restated in January 1998 and which provides, among other things, for his
employment until 2003; provided, however, that the employment period shall
be automatically extended for successive two year periods unless either
party gives notice of non- extension to the other at least six months in
advance of the then scheduled termination date; at a current basic
compensation of $332,000 per annum plus such additional amounts, if any,
as the Board of Directors may from time to time determine and incentive
compensation, not to exceed his basic compensation, equal to 3.5% of the
Company's pre-tax income plus such additional amounts as the Board of
Directors may from time to time determine. Fifty percent of any such
incentive compensation is payable to Mr. Kornberg in the November
following the fiscal year to which such compensation relates, the balance
is payable on the first anniversary of the initial 50% payment. If Mr.
Kornberg voluntarily terminates his employment with the Company other than
after a Change in Control (as defined in his employment agreement), or if
the Company terminates his employment due to disability or for cause, he
will forfeit his right to receive accrued but unpaid incentive
compensation. If a Change in Control of the Company occurs, Mr. Kornberg
is entitled to terminate his employment and receive a lump sum payment
(subject to possible adjustments to avoid the characterization of the
payment as excess parachute payments and the consequent imposition of
taxes under Section 280G of the Code) equal to the sum of (i) his then
basic compensation for the balance of the employment period or three times
his basic compensation, whichever is greater, (ii) accrued but unpaid
incentive compensation with respect to prior fiscal years and (iii) if he
so elects, the market value less the applicable exercise price, of any
stock option then held by him. The aggregate of (i), (ii) and (iii), as of
October 13, 2000, would have been $2,884,000. Mr. Kornberg would also be
entitled to
12
<PAGE>
receive benefits under the Company's benefit plans, or substantially equal
benefits, for the remainder of the employment period.
(2) Mr. Windus, Mr. Burt, and Mr. McCollum are eligible to receive, in
addition to their respective base compensation amounts, a percentage of
the relevant subsidiary's pre-tax profits based principally upon the
attainment of various goals plus such additional amounts, if any, as the
Board of Directors may from time to time determine. These goals, which may
include target levels of sales, pre-tax profits, customer orders or cash
flow, are developed by senior management and submitted to the Executive
Compensation Committee for annual approval.
(3) Ms. Segui is eligible to receive incentive compensation based upon the
attainment of certain corporate goals and personal performance targets
plus such additional amounts, if any, as the Board of Directors may from
time to time determine. These goals and targets are developed by senior
management and submitted to the Executive Compensation Committee for
annual approval.
(4) On January 14, 1998, the Company granted Mr. Kornberg, Mr. Windus, Mr.
Burt, Mr. McCollum and Ms. Segui options of 150,000; 60,000; 60,000;
60,000 and 9,000 respectively. The options granted to Mr. Kornberg and Ms.
Segui will expire on January 14, 2008, subject to earlier expiration in
the event their employment with the Company terminates, and may not be
exercised unless they have vested. The options will vest on December 15,
2007, subject to accelerated vesting, in 37,500 and 2,250 share
increments, respectively, if prior to March 31, 2001, the market value of
the Company's Common Stock for any 20 consecutive day trading period
exceeds successive thresholds of $6.34, $6.67, $13.33 and $20. The options
granted to each of Mr. Windus, Mr. Burt, and Mr. McCollum will expire on
January 14, 2008, subject to earlier expiration in the event an
individual's employment with the Company terminates, and may not be
exercised unless they have vested. These options will vest on December 15,
2007, subject to accelerated vesting based upon the achievement of net
income and cash flow targets for the subsidiary headed by the recipient
during 1998, 1999 and 2000 fiscal years. Pursuant to such accelerated
vesting, 112,500 of the options granted to Mr. Kornberg, 6,750 of the
options granted to Ms. Segui, 36,000 of the options granted to Mr. Windus
and 60,000 of the options granted to Mr. Burt and 30,000 of the options
granted to Mr. McCollum have vested to date.
(5) Comprises the value of restricted stock granted to Mr. McCollum in 1994
that was subject to performance-based vesting and lapse of time, each of
which conditions was waived by the Company in the fiscal year covered by
the table.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED JULY 31, 2000
AND OPTION VALUES AS OF JULY 31, 2000
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised Options In-the-Money Options at
Shares at July 31, 2000 July 31, 2000(2)
Acquired Value --------------------------- ----------------------------
Name on Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg 3,000 $ 24,939 115,500 61,500 $1,286,813 $591,513
J. Preston Windus, Jr 39,750 624,600 50,250 37,500 569,719 463,313
Richard L. Burt 13,452 209,367 91,488 13,500 1,018,034 100,313
Robert L. McCollum -- -- 30,000 30,000 341,250 341,250
Gail Segui -- -- 7,650 3,150 87,883 36,434
</TABLE>
----------
(1) "Value Realized" is calculated by determining the difference between the
fair market value of the Common Stock on the date the options are
exercised and the exercise price of the options.
(2) "In-the-Money Options" would be options outstanding at the end of July 31,
2000 for which the fair market value of the Common Stock on such date
($14.38) exceeded the exercise price of the options.
13
<PAGE>
The Executive Compensation Committee has furnished the following report which
describes the Committee's compensation policies applicable to the Company's
executive officers and provides specific information regarding the compensation
of the Company's Chief Executive Officer. (The information contained in the
"Executive Compensation Committee Report" is not to be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor is
such information to be incorporated by reference into any future filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates it
by reference into such filing.)
Executive Compensation Committee Report
Compensation Policies. The principal goal of the Company's compensation program
as administered by the Executive Compensation Committee is to help the Company
attract, motivate and retain the executive talent required to develop and
achieve the Company's strategic and operating goals with a view to maximizing
shareholder value. The key elements of this program and the objectives of each
element are as follows:
Base Salary. Base salaries paid to the Company's executive officers are intended
to be competitive with those paid to executives holding comparable positions in
the marketplace. Individual performance and the performance of the Company or
the applicable operating subsidiary are considered when setting salaries within
the range for each position. Annual reviews are held and adjustments are made
based on attainment of individual goals in a manner consistent with operating
and financial performance.
Bonuses. Annual cash bonuses are intended to motivate performance by creating
the potential to earn annual incentive awards that are contingent upon personal
and business performance. Excluding the Chief Executive Officer, bonuses are
paid to the Company's executive officers pursuant to the Company's Incentive
Compensation Plan for Subsidiary Presidents and Key Employees (the "Incentive
Compensation Plan"). Each of the Company's executive officers other than the
Chief Executive Officer and the Secretary, Treasurer is a President of one of
the Company's operating subsidiaries. Under the Incentive Compensation Plan, the
President of each of these subsidiaries is entitled to receive a bonus of up to
a fixed percentage of each subsidiary's pre-tax profit each year, subject to the
attainment of subsidiary pre-tax profit, new order, and cash flow targets and
personal performance targets that are proposed by senior management and
established by the Executive Compensation Committee, plus such additional
amounts, if any, as the Board of Directors may from time to time determine. The
Secretary and Treasurer's incentive compensation is subject to attainment of
certain corporate goals and personal performance targets that are proposed by
senior management and established by the Executive Compensation Committee, plus
such additional amounts, if any, as the Board of Directors may from time to time
determine.
Long Term Incentives. The Company provides its executive officers with long-term
incentive compensation through grants of stock options under the Company's stock
option plan. The grant of stock options aligns the executive's interests with
those of the Company's stockholders by providing the executive with an
opportunity to purchase and maintain an equity interest in the Company and to
share in the appreciation of the value of the Company's Common Stock. In fiscal
2000, no options to purchase shares of the Company's Common Stock were granted
to the Company's four executive officers other than the Chief Executive Officer.
CEO's Compensation. Pursuant to Mr. Kornberg's employment agreement referred to
in Note (1) to the Summary Compensation Table in "Executive Compensation," Mr.
Kornberg received a base salary of $302,000 for fiscal 2000. Under his
agreement, the non-recurring charges aggregating $10.4 million in fiscal 2000,
which resulted in a $3.9 million loss, are not excluded in calculating his
contractual bonus which is based on pre-tax income. However, for fiscal 2000 the
Company reported that revenues increased by 75% to $66.4 million, and that,
excluding non-recurring items, net income from continuing operations increased
by 139% to $4.2 million and diluted earnings per share increased by 74% to
$0.68, each reaching record levels. After considering, among other things, Mr.
Kornberg's leadership in achieving these results and in the decision and
negotiations resulting in the acquisition of EF Data, the Committee exercised
its discretion under Mr. Kornberg's agreement and granted him a bonus of
$250,000.
The Executive Compensation Committee
George Bugliarello, Chairman
Gerard R. Nocita
Sol S. Weiner
14
<PAGE>
The Audit Committee has furnished the following report. The information
contained in the "Audit Committee Report" is not to be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor is
such information to be incorporated by reference into any future filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates it
by reference into such filing.
Audit Committee Report
The Audit Committee reviews the Company's financial reporting process on behalf
of the Board of Directors. Management is responsible for the financial
statements and the reporting process, including the system of internal controls.
The independent auditors are responsible for expressing an opinion on the
conformity of the audited financial statements with accounting principles
generally accepted in the United States.
In fulfilling its responsibilities:
o The Audit Committee reviewed and discussed the audited financial
statement contained in the 2000 Annual Report on SEC Form 10-K with
the Company's management and the independent auditors.
o The Audit Committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees).
o The Audit Committee received from the independent auditors written
disclosures regarding the auditors' independence, as required by
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and discussed with the auditors their independence from
the Company and its management.
In reliance on the reviews and discussions noted above, the Audit Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Company's Annual Report on SEC
Form 10-K for the year ended July 31, 2000, for filing with the Securities and
Exchange Commission.
Audit Committee of the Board of Directors
Sol S. Weiner, Chairman
Gerard R. Nocita
John B. Payne
15
<PAGE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG COMTECH TELECOMMUNICATIONS CORP., THE S & P 500 INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
[The following table was depicted as a line graph in the printed material.]
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------------------
7/95 7/96 7/97 7/98 7/99 7/00
<S> <C> <C> <C> <C> <C> <C>
COMTECH TELECOMMUNICATIONS CORP. 100.00 158.33 147.22 288.89 791.67 958.33
S & P 500 100.00 116.57 177.35 211.55 254.29 277.12
NASDAQ TELECOMMUNICATIONS 100.00 99.47 132.71 219.84 338.10 344.64
</TABLE>
* $100 invested on 7/31/95 in stock or index -- including reinvestment of
dividends, fiscal year ending July 31.
COMPENSATION OF DIRECTORS
Each Director who is not a salaried employee of the Company receives an annual
retainer of $10,000. Under the Company's 2000 Stock Incentive Plan, each
director who is not already an employee of the Company receives an option grant
to purchase: (i) 3,000 shares of Common Stock as of the date the director begins
service on the Board; (ii) 3,500 shares of Common Stock on each August 1st,
commencing August 1, 2001 (before such date, 1,500 shares) during the term of
the Plan and (iii) 2,000 shares of Common Stock as of November 6, 2000. The
options are exercisable one year after the date of grant. The exercise price of
all such options is equal to the stock's fair market value on the date of grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its facilities in Melville, New York from a partnership
controlled by the Company's Chairman and Chief Executive Officer. The lease, as
amended, provides for the Company's exclusive use of the premises as they now
exist for an initial term of ten years. The Company has the option to extend the
term of the lease for an additional ten-year period, and a right of first
refusal in the event of a sale of the facility. The annual rental under the
lease ($456,000 in fiscal 2000) is subject to adjustments.
The Company leases its St. Cloud, Florida facility from a partnership in which
J. Preston Windus, Jr., Senior Vice President and Chief Financial Officer of the
Company, is a general partner. The annual rental under the lease ($207,000 in
fiscal 2000) is subject to adjustments.
VOTING OF PROXIES AND OTHER MATTERS
The Board of Directors does not know of any other matters to be presented at the
meeting. If other matters do come before the meeting, the persons acting
pursuant to the proxy will vote on them in their discretion.
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Proxies may be solicited by mail, telephone, telegram, and personally by
directors, officers and other employees of the Company. The cost of soliciting
proxies will be borne by the Company. A complete list of stockholders entitled
to vote at the Annual Meeting will be available for inspection beginning
December 3, 2000 at the Company's headquarters located at 105 Baylis Road,
Melville, New York 11747.
SECTION 16(a) BENEFICIAL OWNERSHIP VOTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, if any, to
file with the Securities and Exchange Commission ("SEC") reports of ownership,
and reports of changes in ownership, of equity securities of the Company. Such
persons are also required to furnish the Company with copies of all such reports
that they file. Based solely on such reports and written representations of the
Company's directors and executive officers, the Company believes that during the
two fiscal year period ended July 31, 2000, the Company's executive officers and
directors complied with all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Eligible stockholders wishing to have a proposal for action by the stockholders
at the 2001 Annual Meeting included in the Company's proxy statement must submit
such proposal at the principal offices of the Company not later than July 9,
2001. It is suggested that any such proposals be submitted by certified mail,
return receipt requested. Under the Company's By-Laws, a stockholder nomination
for election to the Board of Directors may not be made at the 2001 Annual
Meeting unless notice (including all information that would be required in
connection with such nomination under the Securities and Exchange Commission's
proxy rules if such nomination were the subject of a proxy solicitation and the
written consent of each nominee for election to the Board of Directors named
therein to serve if elected) and the name, address and number of shares of
Common Stock held of record or beneficially by the person proposing to make such
nomination is delivered in person or mailed to the Company and received by it
not earlier than August 14, 2001 or later than September 13, 2001; provided,
however, that such notice must be received not more than 90 days prior to the
2001 Annual Meeting or less than 60 days prior to the 2001 Annual Meeting if the
2001 Annual Meeting is not held within 30 days before or after the anniversary
date of the 2000 Annual Meeting. Under the Securities and Exchange Commission's
proxy rules, proxies solicited by the Board of Directors for the 2001 Annual
Meeting may be voted at the discretion of the persons named in such proxies (or
their substitutes) with respect to any shareholder proposal not included in the
Company's proxy statement if the Company does not receive notice of such
proposal on or before September 23, 2001, unless the 2001 Annual Meeting is not
held within 30 days before or after the anniversary date of the 2000 Annual
Meeting.
By order of the Board of Directors
Gail Segui
Secretary
Date: November 6, 2000
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Appendix A
AMENDMENT NUMBER ONE
TO THE
COMTECH TELECOMMUNICATIONS CORP.
2000 STOCK INCENTIVE PLAN
WHEREAS, Comtech Telecommunications Corp. (the "Company") maintains
The Comtech Telecommunications Corp. 2000 Stock Incentive Plan (the "Plan");
WHEREAS, pursuant to Section 15 of the Plan, the Board of Directors
of the Company (the "Board") may at any time, and from time to time, amend the
Plan, subject to stockholder approval if required pursuant to the terms of the
Plan and applicable law; and
WHEREAS, the Board desires to amend the Plan, effective
October 19, 2000.
NOW, THEREFORE, the Plan is amended as follows:
1. Section 2 of the Plan is amended by adding the following
new subsection after existing subsection 2.11 which shall cause the remainder of
the subsections under Section 2 to be redesignated accordingly:
"2.12 "Detrimental Activity" means (a) the disclosure to anyone outside
the Company or its Affiliates, or the use in any manner other than in
the furtherance of the Company's or its Affiliate's business, without
written authorization from the Company, of any confidential information
or proprietary information, relating to the business of the Company or
its Affiliates, acquired by a Participant prior to the Participant's
Termination; (b) activity while employed that results, or if known
could result, in the Participant's Termination that is classified by
the Company as a Termination for Cause; (c) any attempt, directly or
indirectly, to solicit, induce or hire (or the identification for
solicitation, inducement or hire) any non-clerical employee of the
Company or its Affiliates to be employed by, or to perform services
for, the Participant or any person or entity with which the Participant
is associated (including, but not limited to, due to the Participant's
employment by, consultancy for, equity interest in, or creditor
relationship with such person or entity) or any person or entity from
which the Participant receives direct or indirect compensation or fees
as a result of such solicitation, inducement or hire (or the
identification for solicitation, inducement or hire) without, in all
cases, written authorization from the Company; (d) any attempt,
directly or indirectly, to solicit in a competitive manner any current
or prospective customer of the Company or its Affiliates without, in
all cases, written authorization from the Company; (e) the
Participant's Disparagement, or inducement of others to do so, of the
Company or its Affiliates or their past and present officers,
directors, employees or products; (f) without written authorization
from the Company, the rendering of services for any organization, or
engaging, directly or indirectly, in any business, which is competitive
with the Company or its Affiliates, or which organization or business,
or the rendering of services to such organization or business, is
otherwise prejudicial to or in conflict with the interests of the
Company or its Affiliates, or (g) breach of any agreement between the
Participant and the Company or an Affiliate (including, without
limitation, any employment agreement or non-competition or
non-solicitation agreement). Unless otherwise determined by the
Committee at grant, Detrimental Activity shall not be deemed to occur
after the end of the one-year period following the Participant's
Termination. For purposes
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of subsections (a), (c), (d) and (f) above, the Chief Executive Officer
and the General Counsel of the Company shall each have authority to
provide the Participant with written authorization to engage in the
activities contemplated thereby and no other person shall have authority
to provide the Participant with such authorization."
2. Section 2 of the Plan is further amended by adding the following
new subsection after existing subsection 2.12 which shall cause the remainder of
the subsections under Section 2 to be redesignated accordingly:
"2.13 "Disparagement" means making comments or statements to the press,
the Company's or its Affiliates' employees, consultants or any individual
or entity with whom the Company or its Affiliates has a business
relationship which would adversely affect in any manner: the conduct of
the business of the Company or its Affiliates (including, without
limitation, any products or business plans or prospects), or the business
reputation of the Company or its Affiliates, or any of their products, or
their past or present officers, directors or employees."
3. The first sentence of Section 4.1(a) of the Plan is amended,
subject to the approval of the stockholders of the Company, to read as follows:
"The aggregate number of shares of Common Stock which may be issued or
used for reference purposes under this Plan or with respect to which
Awards may be granted shall not exceed 850,000 shares of Common Stock
(subject to any increase or decrease pursuant to Section 4.2) with respect
to all types of Awards, plus 882,935 shares of Common Stock relating to
outstanding awards assumed by this Plan under Section 4.4 for a total of
1,732,935 shares of Common Stock."
4. Section 6.3 of the Plan is amended by adding the following at the
end thereof:
"(h) Detrimental Activity. Unless otherwise determined by the Committee at
grant, (i) in the event the Participant engages in Detrimental Activity
prior to any exercise of the Stock Option, all Stock Options (whether
vested or unvested) held by the Participant shall thereupon terminate and
expire, (ii) as a condition of the exercise of a Stock Option, the
Participant shall be required to certify (or shall be deemed to have
certified) at the time of exercise in a manner acceptable to the Company
that the Participant is in compliance with the terms and conditions of the
Plan and that the Participant has not engaged in, and does not intend to
engage in, any Detrimental Activity, and (iii) in the event the
Participant engages in Detrimental Activity during the one year period
following the later of (x) Participant's Termination of Employment or (y)
the date the Stock Option is exercised, that any Stock Options shall be
immediately forfeited (whether or not then vested) and the Company shall
be entitled to recover from the Participant at any time within one year
after the later of (x) or (y), and the Participant shall pay over to the
Company, an amount equal to any gain realized as a result of the exercise
of any Stock Options (whether at the time of exercise or thereafter)."
5. Section 7.2 of the Plan is amended by adding the following at the
end thereof:
"(f) Detrimental Activity. Unless otherwise determined by the Committee at
grant, (i) in the event the Participant engages in Detrimental Activity
prior to any exercise of Tandem Stock Appreciation Rights, all Tandem
Stock Appreciation Rights (whether vested or unvested) held by the
Participant shall thereupon terminate and expire, (ii) as a condition of
the exercise of a Tandem Stock Appreciation Right, the Participant shall
be required to certify (or shall be deemed to have certified) at the time
of exercise in a manner acceptable to the Company that the Participant is
in compliance with the terms and conditions of the Plan and that the
Participant has not engaged in, and does not intend to engage in, any
Detrimental Activity, and (iii) in the event the Participant engages in
Detrimental Activity during the one year period following the later of (x)
Participant's Termination of Employment or (y) the date the Tandem Stock
Appreciation
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Right is exercised, that any Tandem Stock Appreciation Rights shall be
immediately forfeited (whether or not then vested) and the Company shall
be entitled to recover from the Participant at any time within one year
after the later of (x) or (y), and the Participant shall pay over to the
Company, an amount equal to any gain realized as a result of the exercise
(whether at the time of exercise or thereafter)."
6. Section 7.4 of the Plan is amended by adding the following at the
end thereof:
"(e) Detrimental Activity. Unless otherwise determined by the Committee at
grant, (i) in the event the Participant engages in Detrimental Activity
prior to any exercise of Non-Tandem Stock Appreciation Rights, all
Non-Tandem Stock Appreciation Rights (whether vested or unvested) held by
the Participant shall thereupon terminate and expire, (ii) as a condition
of the exercise of a Tandem Stock Appreciation Right, the Participant
shall be required to certify (or shall be deemed to have certified) at the
time of exercise in a manner acceptable to the Company that the
Participant is in compliance with the terms and conditions of the Plan and
that the Participant has not engaged in, and does not intend to engage in,
any Detrimental Activity, and (iii) in the event the Participant engages
in Detrimental Activity during the one year period following the later of
(x) Participant's Termination of Employment or (y) the date the Non-Tandem
Stock Appreciation Right is exercised, that any Non-Tandem Stock
Appreciation Rights shall be immediately forfeited (whether or not then
vested) and the Company shall be entitled to recover from the Participant
at any time within one year after the later of (x) or (y), and the
Participant shall pay over to the Company, an amount equal to any gain
realized as a result of the exercise (whether at the time of exercise or
thereafter)."
7. Section 8.3 of the Plan is amended by adding the following at the
end thereof:
"(d) Detrimental Activity. Unless otherwise determined by the Committee at
grant, each Award of Restricted Stock shall provide that in the event the
Participant engages in Detrimental Activity prior to, or during the one
year period following the later of Termination of Employment or any
vesting of Restricted Stock, the Committee may direct (at any time within
one year thereafter) that all unvested Restricted Stock shall be
immediately forfeited to the Company and that the Participant shall pay
over to the Company an amount equal to the gain realized at the time of
vesting of any Restricted Stock."
8. Section 9.2 of the Plan is amended by adding the following at the
end thereof:
"(e) Detrimental Activity. Unless otherwise determined by the Committee at
grant, each Award of Performance Shares shall provide that in the event
the Participant engages in Detrimental Activity prior to, or during the
one year period following the later of Termination of Employment or any
vesting of Performance Shares, the Committee may direct (at any time
within one year thereafter) that all unvested Performance Shares shall be
immediately forfeited to the Company and that the Participant shall pay
over to the Company an amount equal to the gain realized at the time of
vesting of any Performance Shares."
9. Section 10.2 of the Plan is amended by adding the following at
the end thereof:
"(f) Detrimental Activity. Unless otherwise determined by the Committee at
grant, each Award of Performance Units shall provide that in the event the
Participant engages in Detrimental Activity prior to, or during the one
year period following the later of Termination of Employment or any
vesting of Performance Units, the Committee may direct (at any time within
one year thereafter) that all unvested Performance Units shall be
immediately forfeited to the Company and that the Participant shall pay
over to the Company an amount equal to the gain realized at the time of
vesting of any Performance Units which had vested in the period referred
to above."
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10. Section 11.2 of the Plan is amended by adding the following at
the end thereof:
"(f) Detrimental Activity. Other Stock-Based Awards under this Article XI
and any Common Stock covered by any such Award shall be forfeited in the
event the Participant engages in Detrimental Activity under such
conditions set forth by the Committee in the Award agreement."
11. Section 12.2(a)(iii) of the Plan is amended by adding the
following at the end thereof:
"Notwithstanding the foregoing, effective for Stock Options and Stock
Appreciation Rights granted on or after October 19, 2000, if a
Participant's Termination of Employment or Termination of Consultancy is
voluntary, all Stock Options and Stock Appreciation Rights held by such
Participant shall thereupon terminate and expire as of the date of such
Termination of Employment or Termination of Consultancy."
12. Section 13.2(b) of the Plan is amended in its entirety to read
as follows:
"(b) In addition to Stock Options granted pursuant to (a) above, Stock
Options; (i) to purchase 3,500 shares of Common Stock as of the August 1
of each year, commencing August 1, 2001, provided he or she has not, as of
such day, experienced a Termination of Directorship and provided further
that he or she has been a Non-Employee Director for at least six months as
of such August 1 date; and (ii) to purchase 2,000 shares of Common Stock
as of November 6, 2000."
13. Section 13.5(a) of the Plan is amended in its entirety to read
as follows:
"(a) Termination of Directorship by Reason of Death, Disability or
Otherwise Ceasing to be a Director. Except as otherwise provided herein,
upon the Termination of Directorship by reason of death, disability,
resignation, failure to stand for reelection or failure to be reelected or
otherwise, all outstanding Stock Options exercisable and not exercised
shall remain exercisable to the extent exercisable on such date of
Termination of Directorship by the Participant or, in the case of death,
by the Participant's estate or by the person given authority to exercise
such Stock Options by his or her will or by operations of law, at any time
prior to the expiration of the stated term of such Stock Options."
14. The introductory clause to the first sentence of Section 13.5(b)
is amended to read "Except as provided in Section 13.6" in lieu of "Except as
provided in (a) above."
15. Section 13.6 of the Plan is amended in its entirety to read as
follows:
"13.6 Acceleration of Exercisability. All Stock Options granted to a
Non-Employee Director and not previously exercisable shall become fully
exercisable upon such Director's death, and all Stock Options granted to
Non-Employee Directors and not previously exercisable shall become fully
exercisable upon a Change in Control (as defined in Section 14.2)."
IN WITNESS WHEREOF, this amendment has been executed on the 19th day of
October 2000.
COMTECH TELECOMMUNICATIONS CORP
By: /s/ J. Preston Windus, Jr
-------------------------------------
Title: Senior Vice President and
Chief Financial Officer
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Appendix B
COMTECH TELECOMMUNICATIONS CORP.
2001 EMPLOYEE STOCK PURCHASE PLAN
(1) Purpose Of The Plan
The purpose of the Plan is to provide a method by which eligible employees
may purchase shares of common stock of Comtech Telecommunications Corp. (the
"Company"), $.10 par value per share (the "Common Stock") by payroll deductions
and at discounted prices. By this means, eligible employees will be given an
opportunity to acquire an additional interest in the economic progress of the
Company and a further incentive to promote the best interests of the Company.
It is the intention of the Company that the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Plan shall be construed in accordance with such
purpose. The Plan is effective January 1, 2001, subject to the approval of the
Company's stockholders.
(2) Eligible Employees
All persons who as of any Offering Date, as hereinafter defined, are
employees of the Company or any of its subsidiaries and who have been
continuously in the employ of the Company or any of its subsidiaries for at
least one year at such date will be eligible to participate in this Plan, except
for the following who shall not be eligible:
(a) Any employee whose customary employment is 20 hours or less per week
or not more than 5 months during a calendar year;
(b) Any employee who, immediately after any Offering Date would own (as
determined under Section 424(d) of the Code), stock, and/or hold
outstanding options to purchase stock, possessing 5 percent or more of the
total combined voting power or value of all classes of stock of the
Company, any subsidiary, as defined under Section 424(f) of the Code or
any parent corporation, as defined under Section 424(e) of the Code;
(c) Any employee to whom grant of an option hereunder would permit his
rights to purchase stock under the Plan and under all other employee stock
purchase plans, if any, of the Company or its subsidiaries to accrue at a
rate which exceeds $25,000 of the fair market value of such stock
(determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time; and
(d) Any officer or director of the Company.
(3) Number of Shares to be Offered
A maximum of 300,000 shares will be offered for subscription, subject to
adjustment as provided under Section 17. Purchases of Common Stock may be made
on the open market or through the delivery of treasury shares or newly-issued
and authorized shares, as determined by the Company.
(4) Offering And Purchase Dates
A separate offering will be made on the first business day of January,
April, July and October in each year commencing with 2001, each such date being
herein referred to as an "Offering Date." A "Purchase Date" is the last business
day in the succeeding March for offerings made in January, the last business day
in the succeeding June for offerings in April, the last business day in the
succeeding September for offerings made in July and the last business day in the
succeeding December for offerings made in October.
The offering will be reduced on a pro rata basis to the extent that the
authorized shares remaining are not sufficient to enable the number of
anticipated subscribers to subscribe to purchase at least 100 shares each.
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(5) Purchase Price
The purchase price per share with respect to each offering shall be 85% of
the fair market value of the Common Stock on (i) the Offering Date, or (ii) the
Purchase Date, which ever date produces the lower price
"Fair market value" shall mean the average of the closing bid and asked
prices of the Common Stock on the applicable date, as reported on the principal
national securities exchange in which it is then traded or the Nasdaq Stock
Market, Inc. or if not traded on such principal national securities exchange or
the Nasdaq Stock Market, Inc., as quoted on an automated quotation system
sponsored by the National Association of Securities Dealers, Inc.
(6) Method Of Payment
Payment will be made through payroll deductions authorized as provided in
Section 7 hereof, which shall not be less than $5.00 per week ($10.00
bi-weekly), nor more than 20 percent of the employee's gross base salary
(including payroll deductions under Sections 401(k) and 125 of the Code but
excluding any overtime, bonuses, or other extra compensation) per payroll
period.
If, as of any Purchase Date, any participant has made an overpayment for
the amount of shares for which the participant has subscribed, either due to the
operation of Section 5 hereof, or otherwise, such overpayment shall be credited
to his account for the next succeeding offering.
(7) How And When To Subscribe
Subscription agreements will be made available to all eligible employees. To
subscribe to the first offering under the Plan, an eligible employee must sign
and deliver a payroll deduction authorization/subscription form to the Company
on or before January 1, 2001.
Employees who are eligible to participate in the first offering under the
Plan, but who choose not to participate, employees who subsequently become
eligible to participate, and employees who have canceled their participation in
the Plan may subscribe to any subsequent offering for which they are eligible by
signing and delivering a payroll deduction authorization/subscription form to
the Company not less than 30 days prior to the applicable Offering Date.
A payroll deduction authorization/subscription form once filed by an
employee shall remain effective for all subsequent offerings under the Plan,
subject to an employee's right to cancel participation as provided in Section
11.
(8) Limit On Number of Shares Subscribed
The subscription by an eligible employee in any offering may not exceed
100 shares of Common Stock, subject to adjustment as provided in Section 17.
(9) Date Of Granting Option And Exercising Option And Life Of Option
Options to purchase 100 shares of Common Stock shall be deemed granted to
each participating employee as of the respective Offering Dates. As of the
applicable Purchase Date, a participant's option shall be exercised
automatically for the purchase of that number of full shares of Common Stock
which the accumulated payroll deductions credited to his account at that time
will purchase at the applicable price specified in Section 5 hereof. Options not
exercised as of the applicable Purchase Date shall automatically lapse.
(10) Method of Handling Employees' Money
Funds paid into the Plan by participants will be deposited in a special
bank account to be know as Comtech Employee Stock Purchase Plan Account. Such
funds will be applied in accordance with the provisions of the Plan and will
bear no interest. Stock certificates representing shares purchased by
participants will be issued as soon as practicable after the Purchase Date.
Simultaneously with the issuance of the certificates, the funds will be paid
over to the Company.
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(11) Cancellation of Participation
Any participating employee may cancel his participation in the Plan at any
time by giving written notice of cancellation to the Company not less than 10
business days prior to any Purchase Date. In such event the amount then held for
such employee in the Comtech Employee Stock Purchase Plan Account will be
refunded.
Any employee who cancels his participation in the Plan may subscribe in
the manner prescribed in Section 7 hereof to subsequent offerings which commence
at least six months after such cancellation.
(12) Interest
No interest will be paid or allowed under any circumstances on any money
paid under the Plan by participating employees.
(13) Rights Not Transferable
An employee's rights under the Plan belong to the employee and may not be
transferred or assigned to or availed of for any purpose by any other person
during the employee's lifetime.
(14) Termination of Rights
Upon termination of employment for any reason other than retirement,
disability or death, the participating employee or his estate will be refunded
the amount then held for such employee in the Comtech Employee Stock Purchase
Plan Account. In the case of retirement, disability or death, the participating
employee or his estate may elect within thirty days after the happening of such
event to (i) receive in cash the amount then held for the employee in the
Comtech Employee Stock Purchase Plan Account, or (ii) have the amount then held
for the employee applied to the purchase of as many full shares as such amount
will purchase at the applicable purchase price determined as of the Offering
Date, and any remaining balance refunded. A failure to make such election within
the said thirty-day period will be treated as notice of cancellation and the
amount then held for the employee will be refunded.
(15) Persons to Whom Shares Will be Issued
Unless otherwise directed, the shares will be issued in the name of the
participating employee. However, the employee may direct registration of the
shares in his name and in the name of one other person, but only as tenants by
the entireties or joint tenants with right of survivorship.
(16) Amendment or Discontinuance of Plan
The Board of Directors of the Company shall have the right to amend,
modify or terminate the Plan at any time without notice, provided that no
employee's then existing rights are adversely affected, and provided further
that no such amendment of the Plan shall, except as provided in Section 17: (i)
increase above 300,000 the total number of shares of Common Stock to be offered
(subject to adjustment under Section 17), (ii) change the formula for
determining the price at which the shares will be paid, (iii) increase the
maximum number of shares which an eligible employee may purchase, or (iv) extend
the duration of the Plan.
(17) Adjustment of Subscription
In the event of reorganization, recapitalization, stock split, stock
dividend, merger, consolidation or any other change in the structure of shares
of the Common Stock of the Company, the Board of Directors of the Company may
make such adjustment as it may deem appropriate in the number, kind and
subscription price of shares available for purchase under the Plan.
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(18) Coordination with 401(k) Plan
In the event a participant makes a hardship withdrawal of employee
deferral (401(k)) contributions under a 401(k) profit sharing plan of the
Company or a subsidiary or any other plan qualified under Section 401(a) of the
Code that contains a Code Section 401(k) feature, such participant's payroll
deductions and the purchase of shares of Common Stock under the Plan shall be
suspended until the first payroll period following the Offering Date commencing
after the twelve (12) month period after such hardship withdrawal. If a
participant who elects a hardship withdrawal under such a 401(k) profit sharing
plan or such other plan has a cash balance accumulated in the Comtech Employee
Stock Purchase Plan Account at the time of withdrawal that has not already been
applied to purchase shares of Common Stock, such cash balance shall be returned
to the participant as soon as administratively practicable.
(19) Administration
The Plan shall be administered by a committee appointed by the Board (or
if no Committee is appointed by the Board, the Board) (the "Committee"), and the
Committee may select an administrator to whom its duties and responsibilities
hereunder may be delegated. The Committee shall have full power and authority,
subject to the provisions of the Plan, to promulgate such rules and regulations
as it deems necessary for the proper administration of the Plan, to interpret
the provisions and supervise the administration of the Plan, and to take all
action in connection therewith or in relation thereto as it deems necessary or
advisable. The Committee may adopt special guidelines and provisions for persons
who are residing in, or subject to, the laws of, countries other than the United
States to comply with applicable tax and securities laws. All interpretations
and determinations of the Committee shall be made in its sole and absolute
discretion based on the Plan document and shall be final, conclusive and binding
on all parties.
The Committee may employ such legal counsel, consultants, brokers and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant, broker or agent. The Committee
may, in its sole discretion, designate an agent to administer the Plan, purchase
and sell shares of Common Stock in accordance with the Plan, keep records, send
statements of account to employees and to perform other duties relating to the
Plan, as the Committee may request from time to time. The Committee may adopt,
amend or repeal any guidelines or requirements necessary for the custody and
delivery of the Common Stock, including, without limitation, guidelines
regarding the imposition of reasonable fees in certain circumstances.
(20) Use of Funds
Notwithstanding anything herein to the contrary, all payroll deductions
received or held by the Company under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.
(21) Regulations and Other Approvals
The obligation of the Company to sell or deliver shares of Common Stock
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
To the extent required, the Plan is intended to comply with Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934, as amended
("Rule 16b-3") and the Committee shall interpret and administer the provisions
of the Plan in a manner consistent therewith. Any provisions inconsistent with
Rule 16b-3 shall be inoperative and shall not affect the validity of the Plan.
(22) Withholding of Taxes
If a participant makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any share or shares
issued to such participant pursuant to such participant's exercise of an option,
and such disposition occurs within the two-year period commencing on the day
after the Offering Date or
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within the one-year period commencing on the day after the Purchase Date, such
participant shall immediately, or as soon as practicable thereafter, notify the
Company thereof and thereafter immediately deliver to the Company any amount of
federal, state or local income taxes and other amounts which the Company informs
the participant the Company is required to withhold.
Notwithstanding anything herein to the contrary, the Company and each
subsidiary shall have the right to make such provisions as it deems necessary to
satisfy any obligations to withhold federal, state, or local income taxes or
other taxes incurred by reason of the issuance of Common Stock pursuant to the
Plan. Notwithstanding anything herein to the contrary, the Company or any
subsidiary may require a participant to remit an amount equal to the required
withholding amount and may invalidate any election if the participant does not
remit applicable withholding taxes.
(23) No Employment Rights
The establishment and operation of this Plan shall not confer any legal
rights upon any participant or other person for a continuation of employment,
nor shall it interfere with the rights of the Company or a subsidiary to
discharge any employee and to treat him without regard to the effect which that
treatment might have upon him as a participant or potential participant under
the Plan.
(24) Severability of Provisions
If any provision of the Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof, and
the Plan shall be construed and enforced as if such provisions had not been
included.
(25) Construction
The use of a masculine pronoun shall include the feminine, and the
singular form shall include the plural form, unless the context clearly
indicates otherwise. The headings and captions herein are provided for reference
and convenience only, shall not be considered part of the Plan, and shall not be
employed in the construction of the Plan.
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Appendix C
COMTECH TELECOMMUNICATIONS CORP.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its oversight
responsibilities related to corporate accounting, financial reporting
practices, quality and integrity of financial reports. Key components of
fulfilling this charge include:
o Facilitating and maintaining an open avenue of communication among
the Board, the Committee, the senior management, the independent
accountants.
o Serving as an independent and objective party to monitor the
company's financial reporting process and internal control system.
o Reviewing and appraising the efforts of the independent accountants.
II. ORGANIZATION/COMPOSITION
The Committee shall be comprised of three or more directors, each of whom
shall be independent directors as defined by the SEC and NASDAQ. The
members shall be free from any financial, family or other personal and
professional relationships that, in the opinion of the Board or the
Committee, would interfere with the exercise of his or her independence
from management and the company. All members of the Committee shall have a
working familiarity with basic finance and accounting practices and at
least one member should have accounting or related financial management
expertise.
III. MEETINGS
The Committee should meet quarterly, or more frequently as circumstances
dictate. The Committee shall meet with the independent accountants in the
planning phase of their audit and after the audit is completed. The
Committee shall request legal updates from outside legal resources as it
determines that the need exists. The Committee shall have sole discretion
in determining the meeting attendees and agenda.
IV. RESPONSIBILITIES AND DUTIES
The Committee believes its policies and procedures should remain flexible
in order to best react to changing conditions and provide reasonable
assurance to the Board that the accounting and reporting practices of the
company are in accordance with generally accepted requirements.
The Committee shall fulfill its duties and responsibilities as follows:
A. General
o Adopt a formal written charter that is approved by the Board
that specifies scope of responsibility, process, membership,
etc. The charter shall be reviewed as necessary, but at least
annually.
o Prepare a report for inclusion in the proxy statement as
required by the SEC.
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o Maintain minutes or other records of meetings and activities.
o Report the Committee's actions to the Board with such
recommendations as the Committee may deem appropriate.
o As part of executing its responsibility to foster open
communication, the Committee shall meet, without members of
the senior management present, in separate executive sessions
with the independent accountants, and others as appropriate,
to discuss matters that the Committee believes should be
discussed privately.
o Conduct or authorize investigations into any matters within
the Committee's scope of responsibilities. The Committee shall
be empowered to retain counsel, accountants, or others to
assist it in the conduct of any investigation.
B. Independent Accountants
The independent accountants are ultimately accountable to the Committee
and the Board, and the Committee and the Board have the ultimate authority
and responsibility to select, evaluate and where appropriate, replace the
independent accountants.
o Based on the Committee's review and discussions, recommend to
the Board the selection of the independent accountants,
considering, among other things, independence and
effectiveness, and approve the fees to be paid to the
independent accountants. Annually, the Committee shall ensure
that a formal statement delineating all relationships between
the independent accountants and the company is received from
the independent accountants. The Committee shall discuss with
the independent accountants any and all significant
relationships between the independent accountants and the
company to determine the accountants' independence in
accordance with the Independence Standards Board Statement No.
1.
o Approve any replacement of the independent accountants.
o Consult with the independent accountants out of management's
presence about internal controls and the fullness/fairness of
the financial statements.
o Meet with the independent accountants and financial management
of the company to review the scope of the proposed external
audit for the current year. The external audit scope shall
include a requirement that the independent accountants inform
the Committee of any significant changes in the independent
accountants' original audit plan and that the independent
accountants conduct a review of interim financial information
prior to the company's filing of each quarterly report to
shareholders (Form 10-Q).
C. Financial Statements/Internal Controls
o Review annual financial statements with management and the
independent accountants to determine that the independent
accountants are satisfied with the disclosure and content of
the financial statements, including the nature and extent of
any significant changes in accounting principles. Recommend to
the Board that the financial statements be included in the
Annual Report on Form 10-K for the last fiscal year for filing
with the SEC.
o Consider the independent accountants' judgments regarding the
quality and appropriateness of the company's financial
statements.
o Make inquiries of management and independent accountants
concerning the adequacy of the company's system of internal
controls.
o Advise financial management and the independent accountants
that they are expected to provide a timely analysis of
significant current financial reporting issues and practices.
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o Review interim period financial statements to be filed with
the SEC, with corporate financial management and the
independent accountants, prior to filing such statements or
releasing earnings information to the public.
o Advise financial management and the independent accountants to
discuss with the Committee their qualitative judgments about
the appropriateness, not just the acceptability, of accounting
principles and financial disclosure practices used or proposed
to be adopted by the company.
C-3
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COMTECH TELECOMMUNICATIONS CORP.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Fred Kornberg and J. Preston Windus, Jr.
and each of them full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Comtech Telecommunications Corp. (the "Company") to
be held at the Marriott Hotel, 1350 Old Walt Whitman Road, Melville, New York
11747 on December 12, 2000, at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of Common Stock of the Company held or owned by the undersigned as
directed on the reverse side of this proxy card, and in their discretion upon
such other matters as may come before the meeting.
This proxy will be voted as specified and, unless otherwise specified in
the spaces provided, this proxy will be voted FOR the election of directors and
FOR the proposals referred to in items 2, 3, and 4 hereon.
(To be Signed on Reverse Side.)
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COMTECH TELECOMMUNICATIONS CORP.
PROPOSAL 1.
1. Election of Directors FOR WITHHOLD FOR ALL
Nominees: 01) Richard L. Goldberg ALL ALL EXCEPT
02) George Bugllarello |_| |_| |_|
To withhold authority to vote, mark "For All Except" and write the nominee's
number in the line below.
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This proxy will be voted or withheld from being voted in accordance with the
Instructions specified. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED FOR THE NOMINEES LISTED AT ABOVE LEFT
AND FOR APPROVAL OF PROPOSALS 2, 3, AND 4.
PROPOSAL 2. For Against Abstain
2. Approval of amendment to the Company's
2000 Stock Incentive Plan. |_| |_| |_|
PROPOSAL 3.
3. Approval of 2001 Employee Stock Purchase
Plan. |_| |_| |_|
PROPOSAL 4.
4. Ratification of selection of KPMG LLP as
auditors. |_| |_| |_|
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears hereon. When signing as executor,
administrator, attorney, trustee, or guardian, please give your full
title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If a joint tenancy, please have
both tenants sign.
-------------------------------- ----------------------------------
Please SIGN HERE Date SIGNATURE (IF HELD JOINTLY) Date
