<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
EIP MICROWAVE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
EIP MICROWAVE, INC.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 1996
------------------------
To the Stockholders of EIP MICROWAVE, INC.
The Annual Meeting of Stockholders of EIP MICROWAVE, INC. (the "Company")
will be held at One Big Canyon Drive, Newport Beach, CA 92660, on February 7,
1996, at 10:30 a.m., Pacific Standard Time for the following purposes:
1. To elect one director to Class II of the Company's Board of
Directors to serve until the 1999 Annual Meeting of Stockholders.
2. To approve the Company's Amended and Restated 1994 Stock Option
Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 18, 1995,
as the record date for the determination of the stockholders entitled to notice
of and to vote at the Annual Meeting of Stockholders and any adjournment
thereof.
By Order of the Board of Directors
J. F. Bishop
SECRETARY
Newport Beach, California
January 9, 1996
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE POSTAGE PREPAID RETURN ENVELOPE
PROVIDED FOR THAT PURPOSE. IF YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOU OWN
SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE
COMPLETED AND RETURNED. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY
AND VOTE IN PERSON IF YOU WISH.
<PAGE>
EIP MICROWAVE, INC.
3 CIVIC PLAZA
SUITE 265
NEWPORT BEACH, CALIFORNIA 92660
------------------------
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 1996
------------------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of EIP MICROWAVE, INC. (the "Company") to be
voted at its Annual Meeting of Stockholders to be held on February 7, 1996, and
at any adjournment thereof (the "Annual Meeting"). The Annual Meeting is to be
held at 10:30 a.m., Pacific Standard Time, at One Big Canyon Drive, Newport
Beach, California 92660. The approximate date on which this Proxy Statement and
the enclosed form of proxy are first being sent or given to stockholders is
January 9, 1996.
The Board of Directors of the Company (the "Board of Directors" or the
"Board") has fixed the close of business on December 18, 1995, as the record
date for the determination of stockholders entitled to receive notice of, and to
vote at, the Annual Meeting (the "Record Date"). The only outstanding class of
stock of the Company is its Common Stock, par value $.01 per share ("Common
Stock"), and, at the Record Date, 423,307 shares were issued and outstanding.
Each share of Common Stock entitles the record holder on the Record Date to one
vote on all matters.
As a Delaware corporation doing business in California, the Company is
subject to certain provisions of the California General Corporation Law (the
"California Law") if certain property, payroll, and sales factors are met and
more than 50% of the Common Stock is held of record by persons having addresses
in California (excluding shares held by broker-dealers, banks or other
nominees). The Company believes that it meets the statutory test for
applicability of certain provisions of California Law to the Company. One of
these provisions, Section 708 entitles a stockholder to cumulate his or her
votes at an election of directors. Accordingly, with respect to the election of
directors only (Proposal 1), if one or more stockholders give notice at the
Annual Meeting before the voting of their intention to cumulate their votes, all
stockholders entitled to vote shall have the right to so cumulate their votes
and to give one candidate, who has been nominated prior to the voting, a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which his or her shares are entitled, or to distribute such votes
among two or more such candidates on the same principle in such proportions as
each stockholder may determine. If such vote is not conducted by cumulative
voting, stockholders may vote in favor of all nominees, withhold their votes as
to all nominees, or vote in favor of specific nominees and withhold their votes
as to other nominees.
The Bylaws of the Company set forth certain procedures relating to the
nomination of directors (the "Nomination Bylaw") and no person shall be eligible
for election as a director unless nominated in accordance with the provisions of
the Nomination Bylaw.
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Nominations of persons for election to the Board of Directors may be made by
(i) the Board of Directors or a proxy committee appointed by the Board of
Directors or (ii) any stockholder entitled to vote in the election of directors
at the meeting and who complies with the notice procedures set forth in the
Nomination Bylaw.
Nominations by stockholders shall be made pursuant to timely notice in
proper written form to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not fewer than 90 days prior to the
meeting; provided, however, that in the event that less than 100 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received no
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
To be in proper written form, such stockholder's notice shall set forth (i) the
name and address of the stockholder who intends to make the nomination and of
the person or persons to be nominated, (ii) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote for
the election of directors on the date of such notice and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice, (iii) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder, (iv) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated or intended to be nominated, by the
Board of Directors, and (v) the consent of each nominee to serve as a director
of the Company if so elected. In the event that a person is validly designated
as a nominee in accordance with the Nomination Bylaw and shall thereafter become
unable or unwilling to stand for election to the Board of Directors, the Board
of Directors or the stockholder who proposed such nominee, as the case may be,
may designate a substitute nominee upon delivery, not fewer than 5 days prior to
the date of the meeting for the election of such nominee of a written notice to
the Secretary setting forth such information regarding such substitute nominee
as would have been required to be delivered to the Secretary pursuant to the
Nomination Bylaw had such substitute nominee been initially proposed as a
nominee. Such notice shall include a signed consent to serve as a director of
the Company, if elected, of each such substitute nominee. If the chairman of the
meeting for the election of directors determines that a nomination of any
candidate for election as a director at such meeting was not made in accordance
with the applicable provisions of the Nomination Bylaw, such nomination shall be
void.
A proxy may be revoked at any time prior to its exercise by filing with the
Secretary of the Company, J. F. Bishop, at the above address, a written
revocation of such proxy or a duly executed proxy bearing a later date or by the
stockholder attending the Annual Meeting and voting in person. Unless revoked,
the proxy will be voted as specified. If no instruction is specified on your
proxy with respect to any proposal to be acted upon, the shares represented by
your executed proxy will be voted "FOR" election of the Board of Directors'
nominee for director to Class II of the Company's Board of Directors and "FOR"
approval of the Company's Amended and Restated 1994 Stock Option Plan.
A majority of the outstanding shares of Common Stock entitled to vote must
be present in person or represented by proxy at the Annual Meeting in order to
constitute a quorum for the transaction of business. Abstentions and non-votes
will be counted for purposes of determining the existence of a
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<PAGE>
quorum at the Annual Meeting. The candidate for election as director will be
elected by the affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy, entitled to vote and actually voting
at the Annual Meeting. The affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy, entitled to vote and
actually voting on each other proposal is required for the adoption or
ratification for such proposal. Abstentions will be counted as votes against any
of the proposals as to which a stockholder abstains, but non-votes will have no
effect on the voting with respect to any proposal as to which there is a
non-vote. A non-vote may occur when a nominee holding shares of Common Stock for
a beneficial owner does not vote on a proposal because such nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.
The cost of solicitation of the Company's proxies is to be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by telephone, telegraph or personal contact by directors, officers and
other regular employees of the Company, without extra compensation. Brokerage
houses, nominees, fiduciaries and other custodians will be requested to either
(1) forward soliciting materials to the beneficial owners of shares, in which
case they will be reimbursed for their expenses, or (2) provide the Company with
an appropriate list of names, addresses and holdings of the beneficial owners of
shares and appropriate authorization, in which case the Company will forward
soliciting materials directly to the beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date, certain information as
to the Common Stock of the Company beneficially owned, directly or indirectly,
by each person who is known to the Company to beneficially own more than 5% of
the outstanding Common Stock, by each director, by each nominee for director, by
each executive officer named in the Summary Compensation Table, and by all
executive officers and directors of the Company as a group. The persons named
hold sole voting and investment power with respect to the shares shown opposite
their respective names, unless otherwise indicated. (Note -- "Direct" means
Common Stock held individually, or held in joint
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<PAGE>
tenancy or as community property with spouse. "Indirect" means Common Stock held
by spouse as separate property, or held of record by the stockholder for the
benefit of another person, or held of record by the stockholder as trustee of a
trust.)
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------------------------------------- ------------------------ -----------
<S> <C> <C> <C>
CEDE & Company..................................................... 161,163 Indirect(1) 38.07%
Depository Trust Company
7 Hanover Square
New York, New York 10004
John F. Bishop (2)................................................. 128,927 Indirect(3) 30.46%
J. Bradford Bishop (2)............................................. 62,473 Indirect(4) 14.76%
J. Sidney Webb (2)................................................. 800 Indirect(5) *
3,333 Direct(6)
Robert D. Johnson (2).............................................. 200 Indirect(7) *
3,333 Direct(6)
James J. Shelton (2)............................................... 3,333 Direct(6) *
John J. Ardizzone, Jr. (2)......................................... 2,000 Direct(6) *
Ivan Andres (2).................................................... 1,600 Direct(6) *
All Executive Officers and Directors as a Group
(7 persons) (8).................................................. 205,999 -- 48.66%
</TABLE>
- ------------------------
* Less than 1% of the class
(1) CEDE & Company is a nominee of the Depository Trust Company, which is a
wholly owned subsidiary of the New York Stock Exchange, Inc. CEDE disclaims
any beneficial interest in shares of the Company's Common Stock held in its
name.
(2) The mailing address for such individual is in care of EIP Microwave, Inc.,
1745 McCandless Drive, Milpitas, CA 95035.
(3) Consists of (i) 118,260 shares held by J.F.Bishop and his spouse as trustees
of the Bishop Family Trust, and (ii) 10,667 shares held by J.F.Bishop as
trustee for the benefit of certain of his children.
(4) Consists of (i) 22,473 shares held by J.B.Bishop and his spouse as trustees
of a revocable trust, and (ii) 40,000 shares held by J.B.Bishop and his
spouse as trustees of the Bishop 1993 Children's Trust.
(5) Held by J.S.Webb as trustee of the Webb Family Trust.
(6) Consists of shares for which the named individual has the right to acquire
beneficial ownership within 60 days after the Record Date by exercise of
options granted under the Company's 1994 Stock Option Plan.
(7) Held by R.D.Johnson and his spouse as trustees of the Robert D. Johnson and
Dorothy A. Johnson Trust.
(8) Total includes the shares indirectly held by Messrs. J.F.Bishop, J.B.Bishop,
J.S.Webb and R.D.Johnson as trustees, as noted above.
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<PAGE>
MATTERS TO BE ACTED UPON AT MEETING
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation in the State of Delaware provides
for a classified Board of Directors. The Board is divided into three classes
designated Class I, Class II and Class III; each Class consists of two
directors. The term of office of each director included in Class II expires at
this Annual Meeting. The directors whose term will expire at the Annual Meeting
are Mr. J. Sidney Webb and Mr. James J. Shelton.
Mr. Webb has been nominated by the Board of Directors for election as a
Class II Director to hold office until the Annual Meeting of Stockholders in
1999, until a successor is duly elected and qualified or until his earlier
resignation, removal from office or death. Mr. Shelton has advised the Board
that he will not seek reelection as a Class II Director, and the Board has not
nominated another candidate to fill the vacancy. The term of office for each
director in Class I will continue until the Annual Meeting of Stockholders in
1997, and the term of office for the director in Class III will continue until
the Annual Meeting of Stockholders in 1998.
Election of the nominee will require the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy and
entitled to vote on the election of directors. Unless otherwise indicated, the
proxies solicited by the Company will be voted for the election of the Class II
director nominee listed below, who has indicated to the Company his availability
for election and presently is a director. If for any reason the nominee is
unavailable as a candidate for director, an event which is not anticipated, the
persons named in the accompanying proxy may vote for another candidate nominated
by the Board of Directors.
INFORMATION WITH RESPECT TO THE CLASS II DIRECTOR NOMINEE
The following table sets forth information regarding the nominee, including
age on the date of the Annual Meeting, present position with the Company, period
served as a director and other business experience during the past five years.
<TABLE>
<S> <C>
J. SIDNEY WEBB, JR. (2)(3) Chairman of the Board, The Titan Corporation, manufacturer of
Age 76 defense and industrial products and systems; Director, Amdahl
Director since 1981 Corporation, large mainframe computer and communications
equipment manufacturer; Director, Plantronics, Inc., supplier
of communication headset products and services to users and
providers worldwide.
</TABLE>
5
<PAGE>
INFORMATION WITH RESPECT TO OTHER DIRECTORS
The following table sets forth similar information regarding the other
members of the Board of Directors.
CLASS II -- TERM EXPIRING AT THE 1996 ANNUAL MEETING
<TABLE>
<S> <C>
JAMES J. SHELTON (2)(3) Private Investor, Venture Capitalist; Director, Tuboscope,
Age 79 Inc., a company which provides inspection and coating
Director since 1984 services for drill pipe, casing and tubing used in oil and
gas exploration and production.
</TABLE>
CLASS I -- TERM EXPIRING AT THE 1997 ANNUAL MEETING
<TABLE>
<S> <C>
J. BRADFORD BISHOP (1)(4) Chairman of the Board and Chief Executive Officer of the
Age 44 Company. Chief Executive Officer, Carson Energy Group, a
Director since 1978 power plant development company; former President of the
Company; former Director, Cushman Electronics, Inc.; former
Director, EIP/ Cushman, Inc.
JOHN F. BISHOP (1)(4) Vice Chairman of the Board, President, Treasurer and
Age 72 Secretary of the Company; former Chairman of the Board,
Director since 1961 President, and Treasurer of Cushman Electronics, Inc., a
manufacturer of test instruments for telephone communication
systems; and former Chairman of the Board and President of
EIP/Cushman, Inc., a management company which was fifty
percent owned by the Company.
</TABLE>
CLASS III -- TERM EXPIRING AT THE 1998 ANNUAL MEETING
<TABLE>
<S> <C>
ROBERT D. JOHNSON (2)(3) Director, Analogy, Inc., a software engineering company;
Age 72 Director, Vielie Circuits, Inc., a circuit board
Director since 1978 manufacturer. Former Vice Chairman and Director, Cushman
Electronics, Inc., and former Director, EIP/Cushman, Inc.
</TABLE>
- ------------------------
(1) J. Bradford Bishop is the son of John F. Bishop.
(2) Member of Compensation Committee
(3) Member of Audit Committee.
(4) Member of Stock Option Committee
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Company's Board of Directors held three meetings and acted by written
consent two times during its fiscal year ended September 30, 1995 (the "Fiscal
Year"). Each incumbent who served as a Director during the Fiscal Year attended
at least 75% of the aggregate of all meetings of the Board of Directors and of
the committees of which he was a member. The Audit Committee of the Board is
comprised of Messrs. Shelton, Johnson and Webb and met two times during the
Fiscal Year. The Audit Committee is responsible for reviewing plans and
activities of outside auditors, reviewing financial reporting, conducting
internal financial reviews and evaluating the business ethics of the Company
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<PAGE>
and its officers and directors. The Compensation Committee of the Board is
comprised of Messrs. Webb, Johnson and Shelton and met one time and acted by
written consent one time during the Fiscal Year. The Compensation Committee is
responsible for reviewing and approving the compensation and benefits paid to
officers of the Company. The Stock Option Committee of the Board is comprised of
Messrs. J.B.Bishop and J.F.Bishop and met one time during the Fiscal Year. The
Stock Option Committee is responsible for administering the Company's 1994 Stock
Option Plan. The Company's Board of Directors has no nominating committee.
INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS
The following table sets forth information regarding the executive officers
of the Company, whose terms of office expire upon the election of a successor at
the organizational meeting of the Board of Directors following the Annual
Meeting.
<TABLE>
<CAPTION>
OFFICE AND PRIOR OFFICE OR YEAR APPOINTED TO
NAME AGE EMPLOYMENT DURING LAST FIVE YEARS PRESENT POSITION
- -------------------------- --- ---------------------------------------------------- --------------------------
<S> <C> <C> <C>
J. Bradford Bishop 44 Chairman of the Board and Chief Executive Officer. 1994
Mr. Bishop previously served as President of the
Company from 1990 to 1992.
John F. Bishop 72 Vice Chairman of the Board, President, Treasurer and 1995 (President)
Secretary. 1994 (Vice Chairman)
1990 (Secretary)
1985 (Treasurer)
John J. Ardizzone, Jr. 40 Vice President Operations and Chief Financial 1995 (Vice President
Officer. From 1991 until joining the Company in May Operations)
1993, Mr. Ardizzone served as Chief Financial 1993 (Chief Financial
Officer of Anametrix, an environmental testing Officer)
laboratory. From 1987 until 1991, Mr. Ardizzone
served as Controller of Symtron Corporation, a
manufacturer of high technology printed circuit
boards and back panels. Prior to 1987, Mr. Ardizzone
was with the international accounting firm of
Coopers and Lybrand. Mr. Ardizzone is a certified
public accountant.
Ivan Andres 47 Vice President, Marketing and Sales. From 1992 until 1994
joining the Company in August 1994, Mr. Andres
served as Director of Marketing of On-Demand
Environmental Systems, an air pollution control
company. From 1991 until 1992, Mr. Andres worked as
an independent consultant. Prior to 1991, Mr. Andres
served as Director of Marketing of Acurrel, a
microwave instrumentation company.
</TABLE>
7
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDED AND RESTATED 1994 STOCK OPTION PLAN
BACKGROUND
The EIP Microwave, Inc. 1994 Stock Option Plan (the "1994 Plan"), as
currently in effect, authorizes the grant of options to purchase 80,000 shares
of Common Stock to directors, officers, other key employees and non-employee
consultants of the Company (excluding John F. Bishop and J.Bradford Bishop). The
80,000 shares of Common Stock authorized to be issued under the 1994 Plan have
been registered on a Form S-8 Registration Statement filed with the Securities
and Exchange Commission. The Company has granted options to purchase 57,500
shares of Common Stock pursuant to the 1994 Plan.
The Board of Directors believes that the Company's objective of attracting,
retaining and motivating directors, officers, other key employees and
consultants of the Company will be facilitated by (a) increasing the number of
shares of Common Stock subject to the 1994 Plan to 100,000 and (b) allowing J.
Bradford Bishop to become eligible to receive awards of stock option grants
under the 1994 Plan.
PROPOSED AMENDED AND RESTATED 1994 STOCK OPTION PLAN
In view of the foregoing, the Board of Directors has adopted, subject to
stockholder approval, an Amended and Restated 1994 Stock Option Plan (the
"Amended Plan") which authorizes the grant of options for an additional 20,000
shares (to a maximum of 100,000 shares) of Common Stock to officers, directors
and non-employee consultants (excluding John F. Bishop) and allows J. Bradford
Bishop to become eligible to receive awards of stock option grants under the
1994 plan. The Board intends to cause the additional 20,000 shares of Common
Stock authorized for issuance under the Amended Plan to be registered on a Form
S-8 Registration Statement to be filed with the Securities and Exchange
Commission at the Company's expense.
Assuming the Proposal is approved, up to 100,000 shares of Common Stock will
be subject to issuance pursuant to the exercise of options granted or to be
granted under the Amended Plan. Accordingly, in addition to the
compensation-related aspect of the Amended Plan, it has a potentially dilutive
effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDED PLAN. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
OF COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY, ENTITLED TO VOTE AND
ACTUALLY VOTING FOR THE PROPOSAL IS REQUIRED FOR APPROVAL OF THIS PROPOSAL.
SUMMARY OF THE AMENDED PLAN
Set forth below is a summary of the Amended Plan.
SHARES SUBJECT TO THE AMENDED PLAN
Options may be granted covering a maximum of 100,000 shares of Common Stock.
Shares covered by options which terminate without exercise are available for
reissuance. The Amended Plan provides for appropriate adjustments in the number
of shares for which options may be granted and which are subject to options
previously granted in the event of a stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination, exchange of shares
or any similar change affecting the stock.
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ELIGIBLE PERSONS
All members of the Board of Directors, officers, other key employees and
non-employee consultants of the Company or any of its subsidiaries (excluding
John F. Bishop) shall be eligible to receive nonstatutory stock options. All
officers (including officers who are members of the Board of Directors) and
other key employees of the Company or any of its subsidiaries (excluding John F.
Bishop) shall be eligible to receive incentive stock options. As of the Record
Date, approximately ten directors, officers, key employees and non-employee
consultants of the Company were eligible to participate in the Amended Plan.
OPTION PRICE
The price per share at which an incentive stock option may be exercised
shall be at least equal to the fair market value per share at the time the
incentive stock option is granted; provided, however, that an officer or key
employee who beneficially owns more than 10% of the Common Stock may only be
granted an incentive stock option if the option price is at least 110% of the
fair market value of the Common Stock at the date of grant. The price per share
at which a nonstatutory stock option may be exercised shall be at least equal to
85% of the fair market value per share at the time the nonstatutory option is
granted. For these purposes, fair market value shall mean (i) if the Common
Stock is traded on an exchange, the price at which a share traded at the close
of business on the date of valuation; (ii) if the Common Stock is traded
over-the-counter on the NASDAQ System, the mean between the bid and asked prices
of a share on that system at the close of business on the date of valuation or,
if the Common Stock is designated a National Market System security, the price
at which a share trades at the close of business on the date of valuation; and
(iii) if neither (i) or (ii) applies, the fair market value as determined by the
Stock Option Committee. On the Record Date, the fair market value of a share of
Common Stock was $3.0625 per share.
CONSIDERATION FOR SHARES PURCHASED
Common Stock purchased upon the exercise of options shall be paid for by the
optionee (i) in cash or by check acceptable to the Company; (ii) at the
discretion of the Stock Option Committee, with previously acquired shares of
Common Stock having a fair market value equal to the option price; or (iii) by a
combination of such payments. The Stock Option Committee shall determine, in its
discretion, whether the requirement of payment in cash shall be deemed satisfied
if the optionee shall have made arrangements satisfactory to the Company with an
NASD broker to implement a cashless exercise and sale procedure.
TERM OF EXERCISE AND EXPIRATION OF OPTIONS
Options become exercisable at such times and in such installments as the
Stock Option Committee shall provide in the terms of the individual option
agreement.
Each option shall expire on the date established by the Stock Option
Committee which may not be later than the tenth anniversary of the date of
grant; provided, however, that no incentive stock option granted to an officer
or key employee who beneficially owns more than 10% of the Common Stock shall be
exercisable after the expiration of five years from the date granted. With
respect to options granted to employees, an option will expire on the earliest
of (i) the date on which the optionee ceases to be an employee of the Company
for any reason other than death or disability or in a manner described in (ii)
hereof; (ii) three months after the optionee ceases to be an employee by reason
of termination of employment for the "convenience of the Company," (iii) three
months after the date of a Qualified Domestic Relations Order; or (iv) one year
after the death or disability of the employee. With respect
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<PAGE>
to options granted to directors, an option will expire on the earliest of (i)
three months after the date on which the optionee ceases to be a director of the
Company for any reason other than death or disability; (ii) three months after
the date of a Qualified Domestic Relations Order; or (iii) one year after the
death or disability of the director. With respect to options granted to
non-employee consultants, the expiration date of the options will be determined
by the Stock Option Committee at its discretion.
NONTRANSFERABILITY OF OPTIONS
Options are not transferable by the optionee other than by will or the laws
of descent and distribution, or pursuant to a Qualified Domestic Relations
Order.
CERTAIN CORPORATE TRANSACTIONS
The Stock Option Committee may make or provide for such adjustments in the
option price and in the number or kind of shares of Common Stock or other
securities covered by outstanding options as the Stock Option Committee in its
sole discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of optionees that would otherwise
result from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company; (ii)
any merger, consolidation, reorganization, separation, partial or complete
liquidation, issuance of rights or warrants to purchase stock; or (iii) any
other corporate transaction or event having an effect similar to any of the
foregoing. Notwithstanding anything to the contrary, in the event of a merger or
consolidation in which the Company is not the surviving corporation and the
agreement of merger or consolidation provides for the assumption of options
granted (and the Company's obligations) under the Amended Plan in lieu of shares
of Common Stock, subject to the aforementioned adjustments which the Stock
Option Committee may determine are equitably required, such substitution of
securities shall not require the consent of any person who is granted options
pursuant to the Amended Plan. The Stock Option Committee may also make or
provide for such adjustments in the number or kind of shares of the Common Stock
or other securities (including, but not limited to, shares of a successor
referenced above) which may be sold under the Amended Plan as the Stock Option
Committee in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in the two preceding
sentences subject, however, in the case of incentive stock options, to the
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
ADMINISTRATION
The Amended Plan is administered by the Stock Option Committee of the Board
of Directors. The Stock Option Committee has full power to interpret the Amended
Plan and to establish and amend rules for its administration. The Stock Option
Committee is also authorized to determine who from the eligible class of persons
shall be granted options and the terms of the options. Action by the Stock
Option Committee is taken by vote or written consent.
The Board of Directors may at any time further amend the Amended Plan,
although no amendment may increase the number of shares that may be issued and
sold under the Amended Plan, change the class of employees eligible to receive
options or cause Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to cease to be applicable to the Amended
Plan, without stockholder approval.
10
<PAGE>
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the Amended Plan based on Federal
income tax laws in effect on December 31, 1995. This summary is not intended to
be exhaustive and does not describe state or local tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
NONSTATUTORY STOCK OPTIONS. In general, (i) no income will be recognized by
an optionee at the time a nonstatutory stock option is granted; (ii) at
exercise, ordinary income will be recognized by the optionee in an amount equal
to the difference between the option price paid for the shares and the fair
market value of the shares, if unrestricted, on the date of exercise; and (iii)
at sale, appreciation (or depreciation) after the date of exercise will be
treated as either short-term or long-term capital gain (or loss) depending on
how long the shares have been held.
INCENTIVE STOCK OPTIONS. No income generally will be recognized by an
optionee upon the grant or exercise of an incentive stock option. If shares of
Common Stock are issued to the optionee pursuant to the exercise of an incentive
stock option, and if no disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one year after the
transfer of such shares to the optionee, then upon sale of such shares, any
amount realized in excess of the option price will be taxed to the optionee as a
long-term capital gain and any loss sustained will be a long-term capital loss.
If shares of Common Stock acquired upon the exercise of an incentive stock
option are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to the excess (if any) of the fair market
value of such shares at the time of exercise (or, if less, the amount realized
on the disposition of such shares if a sale or exchange) over the option price
paid for such shares. Any further gain (or loss) realized by the participant
generally will be taxed as short-term or long-term capital gain (or loss)
depending on the holding period.
SPECIFIC RULES APPLICABLE TO OFFICERS AND DIRECTORS. In limited
circumstances where the sale of stock received as a result of a grant or award
could subject an officer or director to suit under Section 16(b) of the Exchange
Act, the tax consequences to the officer or director may differ from the tax
consequences described above. In these circumstances, unless a special election
has been made, the principal difference usually will be to postpone valuation
and taxation of the stock received so long as the sale of the stock received
could subject the officer or director to suit under Section 16(b) of the
Exchange Act, but no longer than six months.
TAX CONSEQUENCES TO PARTICIPANTS' EMPLOYER
To the extent that a participant recognizes ordinary income in the
circumstances described above, the participant's employer will be entitled to a
corresponding deduction, provided, among other things, that (i) the deduction
meets the test of reasonableness, is an ordinary and necessary business expense,
is not subject to the $1 million annual compensation limitation set forth in
Section 162(m) of the Code, and is not an "excess parachute payment" and (ii)
any applicable withholding obligations are satisfied.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
AND TRANSACTIONS WITH MANAGEMENT AND OTHERS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation for services in all
capacities accrued by the Company during the fiscal years ended September 30,
1995, 1994, and 1993, for the Company's Chief Executive Officer and certain of
its most highly compensated executive officers. The Company issued no restricted
stock awards and there were no long term incentive plan payouts.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION --------------
------------------------------------
(E) (F) (G)
OTHER ANNUAL SECURITIES ALL OTHER
(A) (C) (D) COMPENSATION UNDERLYING COMPENSATION
NAME AND (B) SALARY BONUS ($) OPTIONS/SARS ($)
PRINCIPAL POSITION YEAR ($) ($) (1) (#) (5)
- ----------------------------- --------- --------- --------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
J. Bradford Bishop 1995 $ 0 $ 0 $ 0 0 $ 0
Chairman, Chief Executive 1994 0 0 2,160(2) 0 0
Officer 1993 0 0 0 0 0
John F. Bishop 1995 75,000 0 25,677(3) 0 362
Vice Chairman, President, 1994 75,000 0 14,449(3) 0 283
Treasurer and Secretary 1993 75,000 0 9,383(3) 0 393
John J. Ardizzone, Jr. 1995 78,750 14,000 11,461(4) 10,000(6) 554
Vice President Operations 1994 71,542 0 8,713(4) 0 460
and Chief Financial Officer 1993 27,550 0 0 10,000(7) 171
Ivan Andres 1995 73,755 28,000 *(8) 8,000(6) 530
Vice President, Marketing 1994 9,232 0 *(8) 0 0
and Sales
</TABLE>
- ------------------------------
(1) Amounts in this column include compensation to officers from (a) the
Company's supplemental medical reimbursement plan in which all officers are
eligible to participate, (b) the Company's tax and financial counseling
reimbursement plan in which all officers are eligible to participate, (c)
the Company's legal services reimbursement plan in which the Vice Chairman
is eligible to participate, (d) the payment of car allowances to certain
officers in lieu of providing a company car, (e) the payment of private
club dues for certain officers and (f) contributions by the Company on
behalf of certain officers pursuant to its Retirement/Savings Plan which
qualifies as a thrift plan under Section 401(k) of the Internal Revenue
Code. The type and amount of each perquisite or other personal benefit
which exceeds 25% of the total perquisites and other personal benefits
reported for such officer are identified in a footnote.
(2) On behalf of Mr. J.B.Bishop, the Company paid $2,160 under the supplemental
medical reimbursement plan in fiscal 1994.
(3) On behalf of Mr. J.F.Bishop, the Company paid $12,776 under the legal
services reimbursement plan in fiscal 1995, $4,267 for private club dues in
fiscal 1994, and $9,383 under the supplemental medical reimbursement plan
and the legal services reimbursement plan in fiscal 1993. Amounts do not
include non-cash compensation to Mr. J.F.Bishop in the form of expenses
related to personal use of a Company-supplied automobile, which amount did
not exceed 10% of the cash compensation of Mr. J.F. Bishop.
(4) On behalf of Mr. Ardizzone, the Company paid $4,200 in car allowances and
contributed $2,956 under the Retirement/ Savings Plan in fiscal 1995, and
paid $4,200 in car allowances in fiscal 1994.
(5) Amounts in this column consist of payments by the Company of premiums for
term life insurance.
(6) Options to purchase common stock awarded under the Company's 1994 Stock
Option Plan.
12
<PAGE>
(7) Freestanding stock appreciation rights awarded under the Company's Stock
Appreciation Rights Plan.
(8) Personal benefits provided to the named executive officer under the various
Company programs did not exceed the disclosure thresholds established by
the Securities and Exchange Commission.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted under the
Company's 1994 Stock Option Plan in fiscal 1995 to the named executive officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL EXERCISE
UNDERLYING OPTIONS GRANTED OR BASE
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE
- -------------------------------------------------- ------------- --------------- --------- ----------
<S> <C> <C> <C> <C>
J. Bradford Bishop................................ -- -- -- --
John F. Bishop.................................... -- -- -- --
John J. Ardizzone, Jr............................. 10,000(2) 36.4% $ 2.375 12/31/04
Ivan Andres....................................... 8,000(2) 29.1% $ 2.375 12/31/04
</TABLE>
- ------------------------
(1) Percentage based on grants to employees during the last fiscal year of
options to purchase 27,500 shares of Common Stock.
(2) The options granted to the named individuals become exerciseable with
respect to 20% of such shares on December 31, 1995 and will become
exerciseable with respect to an additional 20% on December 31 of each of the
following four calendar years.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information regarding option and SAR exercises
in fiscal 1995 by the named executive officers and the value of such officers'
unexercised options at September 30, 1995:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/ IN- THE-MONEY OPTIONS/
SARS AT FY-END(#) SARS AT FY-END($) (1)
SHARES --------------------- ----------------------
ACQUIRED ON VALUE EXERCISABLE(E)/ EXERCISABLE(E)/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE(U) UNEXERCISABLE(U)
- ---------------------------------------- ------------- ----------- --------------------- ----------------------
<S> <C> <C> <C> <C>
J. Bradford Bishop...................... -- -- -- --
John F. Bishop.......................... -- -- -- --
John J. Ardizzone, Jr................... 2,000(2) $ 9,250 10,000 options(U) $33,750/options(U)
6,000 SARS(U) $18,000/SARS(U)
Ivan Andres............................. -- -- 8,000 options(U) $27,000/options(U)
</TABLE>
- ------------------------
(1) The options and SARs at fiscal year end were in-the-money based on a fair
market value per share of Common Stock of $5.75, which represents the mean
between the bid and asked prices of a share on the NASDAQ System at the
close of business on September 30, 1995.
(2) Represents SARs exercised by the named individual.
13
<PAGE>
EMPLOYMENT AGREEMENT
On October 1, 1995, the Company entered into an Employment Agreement with
John F. Bishop, Vice-Chairman of the Board, President, Treasurer and Secretary
of the Company. This Employment Agreement supersedes the prior Employment
Agreement dated March 1, 1994. Mr. Bishop will provide his services for a
monthly salary of $6,500 for an initial term of two years. On the first day of
each month, the initial term is automatically extended for an additional month,
unless either party notifies the other in writing of his or its desire not to
extend the term. In the event the Company elects not to extend the term or there
is a change in control of the Company, Mr. Bishop will continue to perform
services for the Company for a three month transition period and the Company
will maintain his compensation and other benefits for the three month transition
period and an additional twenty-one months. Should Mr. Bishop become permanently
disabled, the Company shall pay to him fifty percent (50%) of the agreed salary
for the remainder of the term. In addition to the foregoing compensation, the
Company will provide Mr. Bishop with a private office at 3 Civic Center Plaza,
Suite 265, Newport Beach, California (or a comparable location in the City of
Newport Beach), secretarial and administrative assistance, office equipment and
supplies and other facilities and services suitable to his position. Mr. Bishop
is also entitled to all employee benefits provided to senior management
personnel of the Company and to participate in the Company's medical
reimbursement plan which is supplemental to the medical plan covering all
employees, the tax and financial counseling reimbursement plan and the legal
reimbursement plan provided by the Company as well as Company paid life
insurance.
In addition to his monthly compensation, Mr. Bishop is entitled under the
Employment Agreement to the full and unrestricted use of the currently provided
1989 Mercedes Benz Model 560 automobile or its successor automobile if replaced
at any time prior to the end of his employment term. The Company provides all
gasoline, maintenance, repair and insurance with respect to the automobile
during the term of the Agreement. In consideration for Mr. Bishop's prior
agreement to reduce his monthly salary to $1 per month for the period from
February 1992 through July 1992 and the deduction of $217 per month from his
monthly salary for the period from August 1992 through October 1995, the Company
granted to Mr. Bishop the right to acquire the automobile with full credit for
the foregone salary totaling $56,846. Mr. Bishop has the right to acquire the
automobile at any time during the two months immediately preceding the end of
his employment term. If the automobile's Kelly Blue Book value is in excess of
$56,846, Mr. Bishop shall pay to the Company the difference at the time Mr.
Bishop acquires the automobile. If the value of the automobile is less than
$56,846, the Company shall pay the difference to Mr. Bishop at the time he
acquires the automobile. In the event that Mr. Bishop's employment is terminated
prior to the end of his employment term, he shall have the right to acquire the
automobile at that time. In the event of Mr. Bishop's death, the right to
acquire the automobile shall be exercisable by Mr. Bishop's widow or the
executor of his estate.
The Company may terminate the Employment Agreement only if Mr. Bishop were
to be convicted of a felony, if he willfully fails to fulfill his duties, if he
commits gross negligence in the performance of his duties, if he intentionally
misappropriates significant funds of the Company or if he dies. Mr. Bishop may
terminate the agreement at any time on thirty days notice to the Company.
Under the Employment Agreement, Mr. Bishop may not disclose confidential
information of the Company at any time. This provision survives termination of
the Employment Agreement. Mr. Bishop is further prohibited from soliciting
employees or customers of the Company for at least one (1) year following
termination of the Employment Agreement.
14
<PAGE>
COMPENSATION OF DIRECTORS
Non-management Directors are paid a monthly retainer of $600, and receive
$600 per day for attendance at Board Meetings. They also receive $200 per day
for committee meetings held on the same day as Board meetings and $400 per day
if held on a separate day. Committee chairmen receive $100 per day in addition
to the above. Directors who are officers of the Company receive no compensation
for service on the Board of Directors or committees thereof. Effective January
1, 1991, the Board of Directors deferred their compensation in order to improve
Company cash flow. Accrued but unpaid directors' fees totaled $72,500 at
December 31, 1992, (the "Accrued Directors Fees"). On February 10, 1993, the
Board of Directors authorized the issuance of Common Stock (valued at the fair
market value on the date of issuance) to the non-management directors in payment
of the Accrued Directors Fees (the "Directors' Shares"). Accordingly, Messrs. J.
Bradford Bishop, Robert D. Johnson, James J. Shelton and J. Sidney Webb received
2,561, 7,062, 7,605 and 7,644 shares, respectively. In addition, 3,260 shares
were issued to a former non-management director. Pursuant to a Board of
Directors resolution adopted on November 11, 1993, the respective current and
former non-management directors entered into separate Rescission and
Cancellation Agreements whereby the issuance of the Directors' Shares was
rescinded, the Directors' Shares were surrendered and canceled, and the Accrued
Directors Fees owed by the Company were forgiven by the directors. Such action
was taken in view of the Company's poor performance in 1993 and to eliminate the
dilutive effect the Directors' Shares would have on earnings if and when the
Company returned to profitability.
On December 31, 1994, Messrs. Johnson, Shelton and Webb were each granted
options to purchase 10,000 shares of Common Stock. As of December 31, 1995,
these options were exercisable only to the extent of one-third of the shares
subject to the options. The options will become exerciseable to the extent of an
additional one-third of such shares on December 31, 1996 and on December 31,
1997, provided that the optionee continues to serve as a Director of the Company
through the applicable date.
CERTAIN TRANSACTIONS
COMPANY LEASE AGREEMENTS
The Company and a general partnership (the "Partnership"), 50% controlled by
J. Bradford Bishop, a director and principal stockholder of the Company who is
also the son of the Company s Chairman, were co-tenants in a Lease Agreement
with a third party landlord for office space used by the Vice Chairman and which
served as the Company's headquarters (the "Lease Agreement"). The Lease
Agreement expired February 28, 1994, and was not renewed. Under the terms of the
Lease Agreement, each co-tenant was jointly and severally liable for all tenant
obligations; however, the Company and the Partnership had entered into a written
side agreement whereby the Company contributed approximately 39% and the
Partnership contributed approximately 61% of all rents and associated expenses
under the Lease Agreement. This allocation approximated the Company's and the
Partnership's usage of the office space. The Company has no future obligation
under the Lease Agreement at September 30, 1995. In the opinion of management,
the terms of this written side agreement were fair and reasonable and as
favorable to the Company as those which could have been obtained from unrelated
third parties at the time of their execution.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock, to file initial
15
<PAGE>
reports of ownership and reports of changes in ownership with the Securities and
Exchange Commission ("SEC"). Executive officers, directors and greater than ten
percent (10%) beneficial owners are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors relating to the past two fiscal years, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with, with the
exception of the following: Ivan Andres did not timely file a Form 3 following
his election as an officer of the Company in November 1995 but no transactions
or ownership were required to be reported on such Form 3.
INFORMATION RELATING TO INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has served as independent accountants for the Company
since its inception, including the fiscal year ended September 30, 1995, and has
no financial interest of any kind in the Company or its subsidiaries.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting and will have the opportunity to address the meeting, if they so desire,
and respond to appropriate questions.
The Company annually reviews the selection of its independent accountants,
however, no selection has yet been made for the current fiscal year.
OTHER MATTERS
Management is unaware of any other matters to be presented to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the proxy to vote the proxy in accordance with
their own judgment on such matters.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to the Company's Annual Meeting to be held in 1997,
proposals by stockholders intended to be presented at such Annual Meeting must
be received by the Company no later than September 4, 1996.
FINANCIAL STATEMENTS
The Company's 1995 Annual Report to Stockholders, which is being mailed to
stockholders with this Proxy Statement, contains audited consolidated financial
statements of the Company. Such Annual Report does not constitute a part of the
proxy material. If any stockholder of record did not receive such Annual Report,
we will immediately mail one upon receipt of a request from such stockholder.
16
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
THIS COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1995, INCLUDING THE FINANCIAL STATEMENTS, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE TO BENEFICIAL OWNERS OF THE
COMPANY'S COMMON STOCK WITHOUT CHARGE UPON WRITTEN REQUEST AT THE FOLLOWING
ADDRESS: EIP MICROWAVE, INC., 1745 MCCANDLESS DRIVE, MILPITAS, CA 95035, ATTN.:
MR. JOHN ARDIZZONE, VICE PRESIDENT OPERATIONS AND CHIEF FINANCIAL OFFICER.
COPIES OF EXHIBITS TO THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB ARE AVAILABLE,
BUT A REASONABLE FEE WILL BE CHARGED TO A STOCKHOLDER REQUESTING EXHIBITS.
By Order of the Board of Directors
J. F. Bishop
SECRETARY
Newport Beach, California
January 9, 1996
17
<PAGE>
EIP MICROWAVE, INC.
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. PURPOSE. The purpose of the EIP Microwave, Inc. Amended and
Restated 1994 Stock Option Plan is to provide a means whereby EIP Microwave,
Inc. (the "Company") may attract and retain persons of ability as directors,
employees and consultants and motivate such persons to exert their best
efforts on behalf of the Company and any of its subsidiaries.
2. BENEFITS AVAILABLE UNDER PLAN. The total number of shares which
may be issued and sold under options granted pursuant to this Stock Option
Plan shall not exceed 100,000 shares of the common stock, $.01 par value per
share (the "Common Stock"), of the Company except to the extent of
adjustments authorized by the last sentence of Paragraph 6 of this Stock
Option Plan. Such shares may be treasury shares of shares of original issue
or a combination of the foregoing. If any option terminates, expires or is
cancelled with respect to any shares of Common Stock, new options may
thereafter be granted covering such shares of Common Stock.
3. ADMINISTRATION. This Stock Option Plan shall be administered by a
committee (the "Committee") of two or more members of the Board of Directors,
appointed by and holding office at the pleasure of the Board. The members of
the Committee shall be disinterested persons within the meaning of that
term in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, or any successor rule to the same effect ("Rule 16b-3").
The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to members of the
Board of Directors, to officers, to other key employees and to non-employee
consultants of the Company or any of its subsidiaries (excluding John F.
Bishop) of options to buy from the Company shares of Common Stock and to fix
the number of shares to be covered by each such option. Successive options
may be granted to the same person whether or not the option or options first
granted to such person remain unexercised.
Subject to the express provisions of this Stock Option Plan, the
Committee shall have the authority to construe and interpret this Stock
Option Plan and, to the extent not otherwise defined herein, to define the
terms used in this Stock Option Plan; to prescribe, amend and rescind rules
and regulations relating to the administration of this Stock Option Plan; and
to make all other determinations necessary or advisable for the
administration of this Stock Option Plan. The determinations of the
Committee on all matters referred to in this Paragraph 3 shall be conclusive.
The Committee shall hold meetings at such times and places as it
may determine in accordance with the Bylaws of the Company. A majority of
the members of the committee shall constitute a quorum at any such meeting.
All determinations of the Committee shall be made by a majority of its
members at a meeting or by the unanimous written consent of all members of
the Committee. In the event action by the Committee is taken by unanimous
written consent, the action of the Committee shall be deemed to be at the
date the last Committee member signs the consent.
1
<PAGE>
4. ELIGIBILITY.
(a) All members of the Board of Directors, officers, other
key employees and non-employee consultants of the Company or any of its
subsidiaries (excluding John F. Bishop) shall be eligible to receive
Nonstatutory Options (as defined in Paragraph 5(a) below), and all officers
(including officers who are members of the Board of Directors) and other key
employees of the Company or any of its subsidiaries (excluding John F.
Bishop) shall be eligible to receive Incentive Options (as defined in
Paragraph 5(a) below).
(b) Any officer or key employee who owns more than ten
percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company or any of its subsidiaries shall not be
eligible to receive any Incentive Option (as defined in Section 5(a) hereof)
unless (i) the exercise price of the shares subject to such option is at
least one hundred ten percent (110%) of the Fair Market Value of such shares
on the date of grant and (ii) such option by its terms is not exercisable
after the expiration of five years from the date of grant.
5. NATURE, TERMS AND CONDITIONS OF OPTIONS.
(a) Options granted under this Stock Option Plan may be (i)
options which are intended to qualify under particular provisions of the
Internal Revenue Code (the "Code"), as in effect from time to time ("Incentive
Options"), (ii) options which are not intended to so qualify under
the Code ("Nonstatutory Options"), or (iii) combinations of the foregoing.
(b) No option shall run for more than ten years from the date
granted; provided, however, no Incentive Option granted to an optionee
described in Paragraph 4(b) hereof shall be exercisable after the expiration
of five years from the date granted.
(c) No option shall be transferrable by the optionee
otherwise than (i) by will or the laws of descent and distribution or (ii)
pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act or the rules
thereunder.
(d) Options shall be exercisable during the optionee's
lifetime only by him or, in the event of his legal incapacity to do so, by
his guardian or legal representative acting in a fiduciary capacity under
state law on behalf of the optionee and under court supervision.
(e) The option price shall be determined by the Committee at
or prior to the time the option is granted; provided, however, that in the
case of an Incentive Option, the option price shall be at least equal to the
Fair Market Value per share at the time the Incentive Option is granted, and
in the case of a Nonstatutory Option, the option price shall be at least
equal to eight five percent (85% ) of the Fair Market Value per share at the
time the Nonstatutory Option is granted. "Fair Market Value" shall mean: (a)
if the Common Stock is traded on an exchange, the closing price at which a
share of Common Stock traded on the date of valuation; (b) if the Common
Stock is traded over-the-counter on the NASDAQ System, the mean between the
bid and asked closing prices of a share of Common Stock on said System at the
close of
2
<PAGE>
business on the date of valuation or, if the Common Stock is designated a
National Market System security, the closing price at which a share of Common
Stock traded on the date of valuation; and (c) if neither (a) nor (b)
applies, the fair market value as determined by the Committee in good faith.
Such determination shall be conclusive and binding on all persons.
(f) In order to exercise options, the person or persons entitled
to exercise them shall give written notice to the Company specifying the
number of shares to be purchased pursuant to the exercise of options. This
notice shall be accompanied by payment for the shares as provided in
Paragraph 5(g). Options may be exercised at such time or times as may be
determined by the Committee at the time of grant.
(g) The option price shall be payable (i) in cash or by check
acceptable to the Company, (ii) at the discretion of the Committee, by the
transfer to the Company by the optionee of shares of Common Stock having a
Fair Market Value at the time of exercise equal to the total option price or
(iii) by a combination of such methods of payment. The Committee shall
determine, in its discretion, whether the requirement of payment in cash
shall be deemed satisfied if the optionee shall have made arrangements
satisfactory to the Company with a broker who is a member of the National
Association of Securities Dealers, Inc. to sell a sufficient number of shares
being purchased so that the net proceeds of the sale transaction will at
least equal the option exercise price and pursuant to which the broker
undertakes to promptly deliver the full option exercise price to the Company.
6. ADJUSTMENTS IN EVENT OF CHANGE IN STOCK. The Committee may make or
provide for such adjustments in the option price and in the number or kind of
shares of the Company's Common Stock or other securities covered by
outstanding options as such Committee in its sole discretion, exercised in
good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of optionees that would otherwise result from (a)
any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, or (b) any merger,
consolidation, reorganization, separation, partial or complete liquidation,
issuance of rights or warrants to purchase stock, or (c) any other corporate
transaction or event having an effect similar to any of the foregoing.
Notwithstanding anything to the contrary, in the event of a merger or
consolidation in which the Company is not the surviving corporation and the
agreement of merger or consolidation provides for the assumption of options
granted (and the Company's obligations) under this Plan, the shares of common
stock or securities of the successor corporation may be issued under this
Plan in lieu of shares of Common Stock, subject to the aforementioned
adjustments which the Committee may determine are equitably required, and
such substitution of securities shall not require the consent of any person
who is granted options pursuant to this Plan. The Committee may also make or
provide for such adjustments in the number or kind of shares of the Common
Stock or other securities (including, but not limited to, shares of a
successor referenced above) which may be sold under this Stock Option Plan as
such Committee in its sole discretion, exercised in good faith, may determine
is appropriate to reflect any transaction or event described in the two
preceding sentences (subject, however, in the case of Incentive Options, to
the provisions of the Code).
7. STOCK OPTION AGREEMENT. The form of each Stock Option Agreement
shall be prescribed, and any Stock Option Agreement evidencing an outstanding
option may with the
3
<PAGE>
concurrence of the affected optionee be amended, by the Committee, provided
that the terms and conditions of each such Stock Option Agreement and
amendment are not inconsistent with this Stock Option Plan.
8. CANCELLATION OF OPTION. The Committee may, with the concurrence of
the affected optionee, cancel any option granted under this Stock Option
Plan. In the event of any such cancellation, the Committee may authorize the
granting of new options (which may or may not cover the same number of shares
which had been the subject of any prior option) in such manner, at such
option price and subject to the same terms, conditions and discretions as,
under this Stock Option Plan, would have been applicable had the cancelled
options not been granted.
9. AMENDMENT. This Stock Option Plan may be amended from time to time
by the Board of Directors, but without further approval by the shareholders
of the Company no such amendment shall (a) increase the aggregate number of
shares of Common Stock that may be issued and sold under this Stock Option
Plan (except that adjustments authorized by the last sentence of Paragraph 6
shall not be limited by this provision) or (b) change the designation in
Paragraph 4 of the class of persons eligible to receive options or (c) cause
Rule 16b-3 to cease to be applicable to this Stock Option Plan.
4
<PAGE>
EIP MICROWAVE, INC.
3 CIVIC PLAZA, SUITE 265
NEWPORT BEACH, CALIFORNIA 92660
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned hereby appoints J. Bradford Bishop and John F. Bishop the
true and lawful proxy of the undersigned, each having full power of
substitution, and hereby authorizes either or both of them to represent the
undersigned and to vote, as designated below, all of the shares of Common
Stock, par value $.01, of EIP Microwave, Inc., (the "Company") held of record
by the undersigned on December 18, 1995, at the 1996 Annual Meeting of
Stockholders of the Company to be held at One Big Canyon Drive, Newport
Beach, California 92660, on Wednesday, February 7, 1996, at 10:30 a.m., local
time, and any postponement or adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEE LISTED ABOVE, FOR APPROVAL OF
THE AMENDED AND RESTATED 1994 STOCK OPTION PLAN, AND VOTED IN ACCORDANCE WITH
THE PROXIES' DISCRETION ON SUCH MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING.
CONTINUED AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
1. ELECTION OF DIRECTORS.
FOR the nominee listed below (except as indicated
to the contrary below) / /
WITHHOLD AUTHORITY to vote for the nominee listed below / /
NOMINEE: CLASS II - J. SIDNEY WEBB
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW)
____________________________________________________________
2. Proposal to approve Amended and Restated 1994 Stock Option Plan authorizing
the amendment of the existing 1994 Stock Option Plan to authorize the grant of
options for an additional 20,000 shares (to a maximum of 100,000 shares) of the
Company's stock to officers, directors and non-employee consultants (excluding
John F. Bishop) and to allow J. Bradford Bishop to become eligible to receive
awards of stock option grants thereunder.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any postponement or
adjournment thereof.
All other proxies heretofore given by the undersigned to vote shares of stock of
the Company which the undersigned would be entitled to vote if personally
present at the Annual Meeting or any postponement or adjournment thereof are
hereby expressly revoked.
Dated:____________________________________________
_________________________________________________
(Signature)
Dated:____________________________________________
_________________________________________________
(Signature if held jointly)
NOTE: Please date this proxy and sign it exactly as your name or names appear
hereon. When shares are held by joint tenants, both must sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give your
full title as such. If there is more than one trustee, all should sign. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. IF YOUR ADDRESS IS INCORRECTLY SHOWN, PLEASE PRINT CHANGES.
