<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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
GENERAL INSTRUMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $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>
[LOGO]
General Instrument Corporation Richard S. Friedland
8770 West Bryn Mawr Avenue Chairman and
Chicago, Illinois 60631 Chief Executive Officer
March 15, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of General Instrument Corporation to be held on Wednesday, April 24, 1996, at
3:00 p.m., Central Time, at the Hyatt Regency - O'Hare, 9300 West Bryn Mawr
Avenue, Rosemont, Illinois.
The Secretary's formal notice of the meeting and the Proxy Statement appear
on the following pages and describe the matters to be acted upon at the meeting.
During the meeting, we will also review General Instrument's activities over the
past year and items of general interest about the Company.
We hope that you will be able to attend the meeting in person. However,
whether or not you plan to be present, please sign and return your proxy as soon
as possible so that your vote will be counted.
Sincerely,
/s/ Richard S. Friedland
Richard S. Friedland
Chairman of the Board and
Chief Executive Officer
<PAGE>
GENERAL INSTRUMENT CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
The Annual Meeting of Stockholders of General Instrument Corporation will be
held at the Hyatt Regency - O'Hare, 9300 West Bryn Mawr Avenue, Rosemont,
Illinois, on Wednesday, April 24, 1996 at 3:00 p.m., Central Time, for the
following purposes:
1. To elect four directors for terms ending at the 1999 annual meeting
of stockholders;
2. To consider and vote on a proposal to amend the Amended and Restated
General Instrument Corporation 1993 Long-Term Incentive Plan;
3. To consider and vote on a stockholder proposal relating to the
declassification of the Board of Directors; and
4. To transact such other business as may properly come before the
meeting.
Stockholders of record as of the close of business on February 28, 1996 will
be entitled to vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ACCOMPANYING ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY REVOKE YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERY TO GENERAL INSTRUMENT
CORPORATION OF A SUBSEQUENTLY EXECUTED PROXY OR A WRITTEN NOTICE OF REVOCATION
OR BY VOTING IN PERSON AT THE MEETING.
By order of the Board of Directors,
/s/ Susan M. Meyer
Susan M. Meyer
Secretary
March 15, 1996
<PAGE>
GENERAL INSTRUMENT CORPORATION
8770 WEST BRYN MAWR AVENUE, CHICAGO, ILLINOIS 60631
------------------------
PROXY STATEMENT
---------------------
This proxy statement is furnished to stockholders of General Instrument
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board" or
"Board of Directors") for use at the Annual Meeting of Stockholders to be held
at 3:00 p.m., Central Time, on Wednesday, April 24, 1996, at the Hyatt Regency -
O'Hare, 9300 West Bryn Mawr Avenue, Rosemont, Illinois, and any adjournments
thereof.
Stockholders of record as of the close of business on February 28, 1996,
will be entitled to vote at the meeting or any adjournments thereof. As of the
record date, February 28, 1996, the Company had outstanding 125,823,154 shares
of Common Stock, each entitled to one vote on all matters to be voted upon. This
proxy statement, the accompanying form of proxy and the Company's annual report
to stockholders for the year ended December 31, 1995 are being mailed on or
about March 18, 1996, to each stockholder entitled to vote at the meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is executed and returned in time and not revoked, all
shares represented thereby will be voted. Each proxy will be voted in accordance
with the stockholder's instructions. If no such instructions are specified,
signed proxies will be voted FOR the election of each person nominated for
election as a director, FOR the approval of the amendment to the Amended and
Restated General Instrument Corporation 1993 Long-Term Incentive Plan (the "1993
Long-Term Incentive Plan"), and FOR the approval of the stockholder proposal
(the "Stockholder Proposal") described in this proxy statement.
The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitute a quorum. Assuming a
quorum is present, the affirmative vote of a plurality of the votes cast at the
meeting will be required for the election of directors; the affirmative vote of
a majority of the shares present in person or by proxy and entitled to vote
thereon will be required to act on all other matters to come before the Annual
Meeting, including the approval of the amendment to the 1993 Long-Term Incentive
Plan and the Stockholder Proposal. An automated system administered by the
Company's transfer agent tabulates the votes. For purposes of determining the
number of votes cast with respect to any voting matter, only those cast "for" or
"against" are included; abstentions and broker non-votes are excluded.
Accordingly, with respect to the election of directors, abstentions and broker
non-votes will have no effect on the outcome. For purposes of determining
whether the affirmative vote of a majority of the shares present at the meeting
and entitled to vote has been obtained, abstentions will be included in, and
broker non-votes will be excluded from, the number of shares present and
entitled to vote. Accordingly, with respect to all matters other than the
election of directors, abstentions will have the effect of a vote "against" the
matter and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve the majority vote.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is voted by
delivery to the Company of a subsequently executed proxy or a written notice of
revocation. In addition, returning your completed proxy will not prevent you
from voting in person at the meeting should you be present and wish to do so.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors consists of three classes. Directors hold office for
staggered terms of three years and until their successors have been duly elected
and qualified. One of the three classes will be elected each year at the Annual
Meeting of Stockholders to succeed the directors whose terms are ending. The
directors in Class II and Class III are serving terms ending at the Annual
Meeting of Stockholders in 1997 and 1998, respectively.
Directors in Class I, which currently is comprised of five directors, are to
be elected at the 1996 Annual Meeting. Mr. Paul G. Stern, who currently is a
director in Class I, has decided not to stand for re-election to the Board of
Directors. Upon the expiration of Mr. Stern's term at the 1996 Annual Meeting,
the size of the Board of Directors will be decreased to twelve, subject to
subsequent increase or decrease in accordance with the Company's bylaws.
Accordingly, four directors in Class I are to be elected at the 1996 Annual
Meeting; and proxies cannot be voted for more than four nominees. The directors
so elected will hold office as directors until the 1999 Annual Meeting of
Stockholders and until their respective successors have been duly elected and
qualified. The Board of Directors intends to submit to stockholders at the 1997
Annual Meeting, and to recommend approval of, a proposal to amend the Company's
certificate of incorporation to declassify the Board of Directors. Approval of
such an amendment to the certificate of incorporation will require the
affirmative vote of a majority of the outstanding shares of Common Stock,
assuming a quorum is present.
Unless otherwise directed, proxies in the accompanying form will be voted
FOR the nominees listed below. If any one or more of the nominees is unable to
serve for any reason or withdraws from nomination, proxies will be voted for the
substitute nominee or nominees, if any, proposed by the Board of Directors. The
Board has no knowledge that any nominee will or may be unable to serve or will
or may withdraw from nomination. All of the following nominees are present
directors of the Company whose terms end at the 1996 Annual Meeting. Information
concerning nominees for terms ending at the 1999 Annual Meeting of Stockholders
and for directors in Class II and Class III is set forth below.
NOMINEES FOR TERMS ENDING AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
DANIEL F. AKERSON, age 47, has served as a director of the Company since
July 1993. He served as Chairman of the Board of Directors of the Company from
August 1993 to December 1995, Chief Executive Officer of the Company from August
1993 to August 1995 and President of the Company from August 1993 to October
1993. Mr. Akerson has served as Chairman and Chief Executive Officer of Nextel
Communications, Inc., a wireless communications company, since March 1996. He
served as Chief Operating Officer and President of MCI Communications
Corporation ("MCI") from 1992 to August 1993. He served as Executive Vice
President and Group Executive of MCI from 1990 to 1992, Executive Vice President
and Chief Financial Officer of MCI from 1987 to 1990, and Senior Vice President
of MCI from 1987 to 1988, and held various positions within MCI since 1983. Mr.
Akerson is a director of American Express Company.
FRANK M. DRENDEL, age 51, served as a director of General Instrument
Corporation of Delaware ("GI Delaware"), the Company's sole direct subsidiary,
and its predecessors from 1987 to March 1992, when he was elected to serve as a
director of the Company. He has served as Chairman and President of CommScope,
Inc., a subsidiary of the Company ("CommScope"), since 1986 and has served as
Chief Executive Officer of CommScope since 1976. Mr. Drendel was Executive Vice
President of the predecessor to the Company from September 1986 to November
1988. From February 1981 to September 1986, Mr. Drendel was Executive Vice
President and, from July 1982 to September 1986, he was Vice Chairman of the
Board of M/A-COM, Inc.
STEVEN B. KLINSKY, age 39, served as a director of GI Delaware from August
1990 to March 1992, when he was elected to serve as a director of the Company.
He has been a General Partner of FLC Partnership, L.P., the General Partner of
Forstmann Little & Co., since December 1986.
2
<PAGE>
ROBERT S. STRAUSS, age 77, has been a director of the Company since December
1992. He was a director of GI Delaware from August 1990 to September 1991. Mr.
Strauss, a founder of and partner in the law firm of Akin, Gump, Strauss, Hauer
& Feld, served as United States Special Trade Representative from 1977 to 1979
and as U.S. Ambassador to the Soviet Union and, upon its dissolution, to the
Russian Federation from August 1991 to November 1992. Mr. Strauss is a director
of Archer Daniels Midland Co.
DIRECTORS WHOSE TERMS END AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
LYNN FORESTER, age 40, has been a director of the Company since February
1995. She has been President and Chief Executive Officer of FirstMark Holdings,
Inc., a telecommunications company, since 1984. From 1989 to December 1994, she
was also Chairman and Chief Executive Officer of TPI Communications
International, Inc., a radio common carrier and paging company. She is a member
of the U.S. Advisory Council on the National Information Infrastructure.
NICHOLAS C. FORSTMANN, age 49, served as a director of GI Delaware from
August 1990 to March 1992, when he was elected to serve as a director of the
Company. He has been a General Partner of FLC Partnership, L.P., the General
Partner of Forstmann Little & Co., since he co-founded Forstmann Little & Co. in
1978. He is a director of Department 56, Inc.
RICHARD S. FRIEDLAND, age 45, has been a director of the Company since
October 1993. He became President and Chief Operating Officer of the Company in
October 1993, Chief Executive Officer of the Company in August 1995 and Chairman
of the Board of Directors of the Company in December 1995. He was Chief
Financial Officer of the Company and GI Delaware from March 1992 to January 1994
and Vice President, Finance of the Company from May 1991 to October 1993. He was
Vice President-Finance and Assistant Secretary of GI Delaware from October 1990
to October 1993 and Vice President and Controller of GI Delaware from November
1988 to January 1994. He is a director of Department 56, Inc.
J. TRACY O'ROURKE, age 61, served as a director of GI Delaware from
September 1990 to March 1992, when he was elected to serve as a director of the
Company. He has been Chairman and Chief Executive Officer of Varian Associates,
Inc., a manufacturer of electronic devices, semiconductor manufacturing
equipment and analytical instruments, since early 1990. Mr. O'Rourke was
Executive Vice President and Chief Operating Officer of Rockwell International
from 1989 to 1990 and President of Allen-Bradley Inc., an electrical equipment
manufacturer, from 1981 to 1989. He is a director of National Semiconductor
Corp.
DIRECTORS WHOSE TERMS END AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS
JOHN SEELY BROWN, age 55, has been a director of the Company since July
1993. He has been Chief Scientist of Xerox Corporation since 1992 and corporate
vice president of Xerox Corporation since 1990. From 1986 to 1990 he was Vice
President, Advanced Research, Palo Alto Research Center, of Xerox Corporation
and Associate Director of the Institute for Research on Learning. He is also the
director of the Xerox Palo Alto Research Center. He is a Fellow of the American
Association for Artificial Intelligence and a member of the National Academy of
Education.
THEODORE J. FORSTMANN, age 56, served as a director of GI Delaware from
August 1990 to March 1992, when he was elected to serve as a director of the
Company. He has been a General Partner of FLC Partnership, L.P., the General
Partner of Forstmann Little & Co., since he co-founded Forstmann Little & Co. in
1978. He is a director of The Topps Company, Inc. and Department 56, Inc.
MORTON H. MEYERSON, age 57, has been a director of the Company since July
1993. Since 1992, he has served as Chairman and Chief Executive Officer of Perot
Systems Corporation, a computer and communication services company. From 1989 to
1992, he was a private investor. He was President from 1979 to 1986, and Vice
Chairman in 1986, of Electronic Data Systems Corp., a company which designs,
installs and operates business information and communication systems. He serves
on a number of corporate and advisory boards, including Energy Service Company
International, Inc. and the National Park Foundation.
3
<PAGE>
FELIX G. ROHATYN, age 67, has been a director of the Company since October
1993. He has been a managing director of Lazard Freres & Co. LLC, Investment
Bankers, since 1960 and served as Chairman of the Municipal Assistance
Corporation for the City of New York from 1975 to October 1993. He is a director
of Pfizer Inc.
FURTHER INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the business
and affairs of the Company, as provided by Delaware law, and conducts its
business through meetings of the Board and three standing committees: Executive,
Audit and Compensation. In addition, from time to time, special committees may
be established under the direction of the Board when necessary to address
specific issues. The Company has no nominating or similar committee.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors of the Company held eight meetings in 1995. Each
incumbent director attended 75% or more of the aggregate of (i) meetings of the
Board held during the period for which he served as a director and (ii) meetings
of all committees held during the period for which he served on those
committees, other than Felix G. Rohatyn and Paul G. Stern. Average attendance at
all such meetings of the Board and committees was approximately 90%.
The EXECUTIVE COMMITTEE of the Board has the authority, between meetings of
the Board of Directors, to exercise all powers and authority of the Board in the
management of the business and affairs of the Company that may be lawfully
delegated to it under Delaware law. The Executive Committee consists of Richard
S. Friedland, Theodore J. Forstmann and Steven B. Klinsky. The Executive
Committee held four meetings in 1995.
The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent auditors, review the annual
financial statements of the Company and the related audit report of the Company
as prepared by the independent auditors, recommend the selection of independent
auditors each year and review audit and any non-audit fees paid to the Company's
independent auditors. The audit reports of the Internal Audit Department are
also available for review by the Audit Committee, and the head of that
department attends Audit Committee meetings and gives reports to and answers
inquiries from the Audit Committee. The Audit Committee reports its findings and
recommendations to the Board for appropriate action. The Audit Committee is
composed of three non-employee directors: J. Tracy O'Rourke, Chairman; John
Seely Brown; and Felix G. Rohatyn. The Audit Committee held three meetings in
1995.
The COMPENSATION COMMITTEE is responsible for executive compensation,
including recommending to the Board of Directors the compensation to be paid to
the Chief Executive Officer and determining the compensation for all other
executive officers. The Compensation Committee is composed of three non-employee
directors: Nicholas C. Forstmann, Chairman; Morton H. Meyerson; and Robert S.
Strauss. The Compensation Committee held four meetings in 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In connection with the Company's initial public offering in June 1992, the
Company's Board of Directors established a Compensation Committee composed of
three non-employee directors. Messrs. Nicholas C. Forstmann, Morton H. Meyerson
and Robert S. Strauss served as members of the Compensation Committee during
1995.
Nicholas C. Forstmann served as President of the Company from June 30, 1990
through March 30, 1992, which was prior to the Company's initial public offering
in June 1992. Nicholas C. Forstmann received no compensation from the Company
for services rendered in such capacity.
An affiliate of Forstmann Little & Co. provides aircraft maintenance
services to the Company and charged the Company $2.2 million for services in
1995.
4
<PAGE>
DIRECTOR COMPENSATION
Prior to July 1993, directors did not receive any fees for serving on the
Company's Board of Directors, or any committees thereof, but were reimbursed for
their out-of-pocket expenses arising from attendance at meetings of the
Company's Board of Directors or committees thereof. In addition, each director
who is neither a partner in FLC Partnership, L.P., the general partner of
Forstmann Little & Co., nor a current or former officer of the Company or its
subsidiaries, was granted an option to purchase 80,000 shares of Common Stock in
connection with his election to the board of directors of GI Delaware or, after
the Company's initial public offering in June 1992, the Board of Directors of
the Company.
Effective as of July 28, 1993 (as adjusted on February 15, 1995 to reflect
the two-for-one split of Common Stock in August 1994), the Board of Directors
approved the following standard compensation arrangements for non-employee
directors: (i) each non-employee director receives $1,000 for attending, whether
in person or by telephone, each meeting of the Board of Directors or any
committees thereof of which he or she is a member and is reimbursed for all
actual expenses in connection with attending any meeting of the Board of
Directors or any committees thereof of which he or she is a member (limited to
the cost of first class travel on a commercial airline with respect to air
travel expenses); (ii) the Company provides, for the benefit of each
non-employee director, an insurance policy in the face amount of $200,000,
payable in the event of accidental death or dismemberment of the director while
in attendance at, or traveling in connection with, a meeting of the Board of
Directors or any committee thereof, or while engaged in or traveling in
connection with other business of the Company; and (iii) each non-employee
director elected on or after July 28, 1993 receives, effective as of the date of
such election, a grant of an option to purchase 80,000 shares of Common Stock
pursuant to the 1993 Long-Term Incentive Plan at an exercise price per share
equal to the fair market value of a share of Common Stock on the date of grant,
which option becomes exercisable with respect to one-third of the underlying
shares on each of the first three anniversaries of the date of grant. The
Company also requests that each non-employee director directly or indirectly own
at least 1,000 shares of Common Stock while a director of the Company. The
non-employee directors of the Company who are partners of Forstmann Little & Co.
have declined to receive any of the foregoing compensation.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Company's Common Stock, par value $.01
per share ("Common Stock"), as of February 28, 1996, by each beneficial owner of
more than five percent of the outstanding Common Stock, by each of the Company's
directors, by each of the executives named in the Summary Compensation Table and
by all current directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY PERCENTAGE OF
NAME OWNED (1) CLASS (1)
- ------------------------------------------------------- --------------- -------------
<S> <C> <C>
MBO-IV (2) 10,161,657 8.1%
Instrument Partners (2) 11,547,008 9.2
AXA/Equitable (3) 17,204,432 13.4
Capital Group (4) 14,690,424 11.6
J.P. Morgan & Co. Incorporated (5) 7,337,040 5.8
Daniel F. Akerson (2)(6)(9) 760,990 *
John Seely Brown (7) 18,333 *
Frank M. Drendel (8) 328,510 *
Thomas A. Dumit (9)(10) 103,047 *
Lynn Forester (11) 27,666 *
Nicholas C. Forstmann (2) 21,708,665 17.3
Theodore J. Forstmann (2) 21,708,665 17.3
Richard S. Friedland (9)(12) 316,987 *
Winston W. Hutchins (2) 21,708,665 17.3
Steven B. Klinsky (2) 21,708,665 17.3
Wm. Brian Little (2) 11,547,008 9.2
Morton H. Meyerson (13) 77,333 *
Ronald A. Ostertag (9)(14) 83,602 *
Laurence L. Osterwise (9)(15) 53,239 *
J. Tracy O'Rourke (16) 22,210 *
Felix G. Rohatyn (13) 55,333 *
John A. Sprague (2) 11,547,008 9.2
Paul G. Stern (13) 53,333 *
Robert S. Strauss (17) 32,605 *
All current directors and officers of the
Company as a group (22 persons) (2)(10)(14)(18) 23,857,818 18.7 %
</TABLE>
- ------------------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.
(1)For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following February 28, 1996. For
purposes of computing the percentage of outstanding shares of Common Stock
held by each person or group of persons named above, any security which such
person or persons has or have the right to acquire within 60 days following
February 28, 1996 is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(2)The general partner of Instrument Partners, a New York limited partnership
("Instrument Partners"), is FLC XXII Partnership, a general partnership of
which Messrs. Wm. Brian Little, Nicholas C. Forstmann, John A. Sprague,
Steven B. Klinsky and Winston W. Hutchins, and TJ/JA L.P., a Delaware
limited partnership ("TJ/JA L.P."), are general partners. The general
partner of TJ/JA L.P. is Theodore J. Forstmann. The general partner of
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-IV, a New York limited partnership
6
<PAGE>
("MBO-IV"), is FLC Partnership, L.P., a limited partnership of which Messrs.
Theodore J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky and Winston
W. Hutchins and Ms. Sandra J. Horbach are general partners. Although as of
February 28, 1996, the date as of which information is presented in the
table, Daniel F. Akerson was a general partner of FLC Partnership, L.P., Mr.
Akerson has since ceased to be a general partner. Accordingly, each of such
individuals and partnerships (other than Mr. Akerson and Ms. Horbach, for
the reasons described below) may be deemed the beneficial owners as of
February 28, 1996 of shares owned by MBO-IV and Instrument Partners in which
such individual or partnership is a general partner and, for purposes of
this table, such beneficial ownership is included. Mr. Akerson did not have
and Ms. Horbach does not have any voting or investment power with respect
to, or any economic interest in, the shares of Common Stock held by MBO-IV;
and, accordingly, Mr. Akerson and Ms. Horbach are not deemed to be the
beneficial owners thereof. Theodore J. Forstmann and Nicholas C. Forstmann
are brothers. Mr. Little is a special limited partner in FLC Partnership,
L.P. and each of FLC Partnership, L.P. and FLC XXII Partnership is a limited
partner of Instrument Partners. None of the other limited partners in each
of MBO-IV and Instrument Partners is otherwise affiliated with the Company,
GI Delaware or Forstmann Little & Co. The address of MBO-IV and Instrument
Partners is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New York
10153.
(3) This information is obtained from a Schedule 13G filed with the Securities
and Exchange Commission, dated February 9, 1996, jointly by AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha Assurances I.A.R.D.
Mutuelle, Alpha Assurances Vie Mutuelle and Uni Europe Assurances Mutuelle
as a group (collectively, the "Mutuelles AXA"), AXA, and The Equitable
Companies Incorporated ("Equitable"). Equitable and its subsidiaries report
beneficial ownership of 17,185,132 shares of Common Stock as follows:
14,924,884 shares and 2,260,248 shares issuable upon conversion of 5%
Convertible Junior Subordinated Notes of the Company. Equitable and its
subsidiaries claim sole voting power with respect to 16,150,232 shares,
shared voting power with respect to 199,000 shares, sole dispositive power
with respect to 17,184,632 shares and shared dispositive power with respect
to 500 shares. The Mutuelles AXA and AXA report beneficial ownership of
17,204,432 shares, including all the shares beneficially owned by Equitable,
and claim sole voting and dispositive power with respect to 19,300 shares in
addition to the shares reported by Equitable. The addresses of the principal
business offices of each of the Mutuelles AXA, AXA, and Equitable are as
follows: Alpha Assurances I.A.R.D. Mutuelle and Alpha Assurances Vie
Mutuelle, 101-100 Terrase Boieldieu, 92042 Paris La Defense, France; AXA
Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle, La Grand
Arche, Pardi Nord, 92044 Paris La Defense, France; Uni-Europe Assurance
Mutuelle, 24 Rue Drouot, 75009 Paris, France; AXA, 23, Avenue Matignon,
75008 Paris, France; The Equitable Companies Incorporated, 787 Seventh
Avenue, New York, NY 10019.
(4) This information is obtained from a Schedule 13G filed with the Securities
and Exchange Commission, dated March 8, 1996, jointly by The Capital Group
Companies, Inc. and Capital Guardian Trust Company. The Capital Group
Companies, Inc. reports beneficial ownership of 14,690,424 shares of Common
Stock. The Capital Group Companies, Inc. claim sole voting power with
respect to 6,173,300 shares and sole dispositive power with respect to
14,690,424 shares. Capital Guardian Trust Company, a bank, and an operating
company of The Capital Group Companies, Inc., reports beneficial ownership
of, and exercises investment discretion over, 7,429,987 of such shares.
Capital Guardian Trust Company claims sole voting power with respect to
4,171,000 shares and sole dispositive power with respect to 7,429,987
shares. Capital Research and Management Company and Capital International,
Inc. (registered investment advisers of which The Capital Group Companies,
Inc. is the parent) and Capital International Limited, Capital
International, S.A. and Capital International K.K. (other operating
subsidiaries of The Capital Group Companies, Inc.) had investment discretion
with respect to 5,207,400, 75,036, 1,442,300, 505,489 and 30,000 shares,
respectively. The aggregate number of shares held as indicated includes
1,124,924 shares issuable upon conversion of $26,717,000 principal amount of
7
<PAGE>
5% Convertible Junior Subordinated Notes of the Company. The address of the
principal business offices of each of The Capital Group Companies and
Capital Guardian Trust Company is 333 South Hope Street, Los Angeles, CA
90071.
(5) This information is obtained from a Schedule 13G filed with the Securities
and Exchange Commission in February 1996 by J.P. Morgan & Co. Incorporated.
J.P. Morgan & Co. Incorporated reports beneficial ownership of 7,377,040
shares as follows: 7,198,187 shares and 178,853 shares where there is a
right to acquire. J.P. Morgan & Co. Incorporated claims sole voting power
with respect to 4,664,438 shares, shared voting power with respect to 57,040
shares, sole dispositive power with respect to 7,272,210 shares and shared
dispositive power with respect to 99,630 shares.
(6) Includes 745,668 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(7) Includes 17,333 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(8) Includes 73,000 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996. Includes 472 shares which were held
by the trustee of the CommScope, Inc. Employees Profit Sharing and Savings
Plan (the "CommScope Savings Plan") and were allocated to Frank M. Drendel's
account under the CommScope Savings Plan as of February 28, 1996.
(9) Includes the number of shares which were held by the trustee of the General
Instrument Corporation Savings Plan (the "Savings Plan") and were allocated
to the individual's respective account under the Savings Plan as of February
28, 1996 as follows: Daniel F. Akerson, 322 shares; Thomas A. Dumit, 2,559
shares; Richard S. Friedland, 10,525 shares; Ronald A. Ostertag, 10,592
shares; and Laurence L. Osterwise, 739 shares.
(10) Includes 10,032 shares held by the Thomas A. Dumit Charitable Remainder
Trust, dated April 27, 1994, of which Mr. Dumit is the trustee and a
beneficiary. Also includes 27,956 shares held by Barbara K. Dumit, the
spouse of Thomas A. Dumit, as to which shares Mr. Dumit disclaims beneficial
ownership. Includes 62,500 shares subject to options which are exercisable
currently or within 60 days of February 28, 1996.
(11) Includes 26,666 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(12) Includes 227,000 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(13) Includes 53,333 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(14) Includes 72,000 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996. Also includes 900 shares held by the
spouse of Ronald A. Ostertag.
(15) Includes 40,000 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(16) Includes 20,210 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(17) Includes 22,605 shares subject to options which are exercisable currently
or within 60 days of February 28, 1996.
(18) Includes 1,616,063 shares subject to options exercisable currently or
within 60 days of February 28, 1996. Includes an aggregate of 43,340 shares
which were held by the trustees of the Savings Plan and the CommScope
Savings Plan and were allocated to the current officers' respective accounts
under the Savings Plan or the CommScope Savings Plan as of February 28,
1996.
8
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers and holders of more than
10% of the Company's Common Stock to file with the Securities and Exchange
Commission reports of ownership and changes in ownership of Common Stock and
other equity securities of the Company on Forms 3, 4 and 5. The Company
undertakes to make such filings on behalf of its directors and officers. Based
on written representations of reporting persons and a review of those reports,
the Company believes that during the year ended December 31, 1995, its officers
and directors and holders of more than 10% of the Company's Common Stock
complied with all applicable Section 16(a) filing requirements.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation information for all
services rendered in all capacities during the periods described below for the
individuals who served as Chief Executive Officer during 1995 and the four most
highly compensated executive officers (other than the Chief Executive Officer)
who were serving as executive officers at December 31, 1995. The following table
sets forth compensation information for each of those individuals for the years
ended December 31, 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------------
-------------------------------------------------- RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK AWARD(S) UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (A) COMPENSATION (B) ($) OPTIONS(#)(C) COMPENSATION
- ------------------------------- ---- ----------- ----------- ---------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard S. Friedland........... 1995 $589,583(d) $214,445(d) $-- $-- 560,000 $5,460(e)
Chairman of the 1994 420,000 327,600 -- -- 270,000 5,460
Board of Directors, 1993 327,340 67,840 -- -- 236,000 5,457
President, and Chief
Executive Officer
Daniel F. Akerson.............. 1995 858,330 385,824 26,808(f) -- 200,000 5,460(e)
Director and former 1994 838,367 728,000 66,365(f) -- 150,000 18,190
Chairman of the Board 1993 306,119(g) 560,000(g) 22,553(f) -- 800,000 49,901
of Directors and Chief
Executive Officer
Frank M. Drendel............... 1995 410,016 114,185 -- -- 24,000 19,937(h)
Chairman, 1994 398,808 163,757 -- -- 72,000 17,154
President and 1993 398,808 81,385 -- -- 34,000 22,314
Chief Executive Officer of
CommScope and Director of
the Company
Thomas A. Dumit................ 1995 320,000 89,120 -- -- 24,000 5,460(e)
Vice President, General 1994 310,999 134,753 -- -- 48,000 5,460
Counsel and Chief 1993 299,000 49,351 -- -- 30,000 5,457
Administrative Officer
Ronald A. Ostertag............. 1995 305,000 195,810 -- -- 24,000 5,460(e)
Vice President and 1994 280,000 110,122 -- -- 72,000 6,516
President, Power 1993 265,154 50,081 -- -- 32,000 6,405
Semiconductor Division
Laurence L. Osterwise.......... 1995 335,000 93,298 190,819(i) -- 31,000 4,623(e)
Former Vice 1994 50,894(j) -- -- 479,850(k) 120,000 197
President and 1993 -- -- -- -- -- --
President, GI Communications
Division
</TABLE>
- ------------------------------
(a) Amounts reported for 1995 reflect cash bonus awards paid pursuant to the
Annual Incentive Plan in 1996 with respect to performance in 1995. With
respect to Mr. Akerson, the amount reported for 1995 also reflects an
additional one-time cash
9
<PAGE>
bonus of $34,914 paid in 1995. Amounts reported for 1994 reflect cash bonus
awards paid pursuant to the Annual Incentive Plan in 1995 with respect to
performance in 1994. Amounts reported for 1993 reflect cash bonus awards
paid pursuant to the Annual Incentive Plan in 1993 or 1994 with respect to
performance in 1993.
(b) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits, securities or property was less than either $50,000 or 10% of the
total annual salary and bonus reported for the named executive officer.
(c) Reflects the number of shares of Common Stock underlying options granted.
All of the options were granted pursuant to the 1993 Long-Term Incentive
Plan. Each grant set forth for 1994 was made in connection with the
cancellation of an option to purchase the same number of shares, previously
granted in 1994, except the grant set forth to Mr. Friedland, with respect
to which an option to purchase 70,000 shares had previously been granted in
1994 and the remainder had been granted in 1993. Those options granted, and
subsequently cancelled, in 1994 are not reflected in the table for any
named individual. Options granted to Mr. Friedland and reflected in the
table for 1993 include an option to purchase 200,000 shares which was
cancelled in connection with the regrant in 1994 of an option to purchase
the same number of shares. In connection with Mr. Osterwise's resignation
from the Company, the option to purchase 31,000 shares granted in 1995
terminated.
(d) Reflects compensation of Mr. Friedland for the full year 1995. Effective
August 1995, Mr. Friedland was promoted to Chief Executive Officer. Prior
to that date Mr. Friedland was President and Chief Operating Officer. In
December 1995, Mr. Friedland also became Chairman of the Board.
(e) Reflects payment by the Company in 1995 of (i) premiums for term life
insurance of $960 on behalf of each of Messrs. Friedland, Akerson,
Osterwise, Dumit and Ostertag, and (ii) the matching contribution for 1995
by the Company under the Savings Plan in the amount of $4,500 for each of
Messrs. Friedland, Akerson, Dumit and Ostertag and $3,663 for Mr.
Osterwise.
(f) Reflects cost and tax reimbursement for expenses incurred by Mr. Akerson
for travel to Chicago, the location of the Company's executive offices,
during the period that he was Chief Executive Officer of the Company.
(g) Reflects compensation of Mr. Akerson from August 13, 1993, when Mr. Akerson
joined the Company as an executive officer, through December 31, 1993.
(h) Reflects (i) the matching contribution under the CommScope Savings Plan in
the amount of $4,620 for 1995, (ii) the allocation of $14,357 to Mr.
Drendel's account under the CommScope Savings Plan for 1995, and (iii)
payment by CommScope in 1995 of premiums of $960 for term life insurance on
behalf of Mr. Drendel.
(i) Reflects cost and tax reimbursement for relocation expenses incurred by Mr.
Osterwise in connection with his terms of employment by the Company.
(j) Reflects compensation of Mr. Osterwise from November 7, 1994, when Mr.
Osterwise joined the Company as Vice President, through December 31, 1994.
(k) The restricted stock award is valued at the closing market price of Common
Stock on the date of grant. At December 31, 1995, Mr. Osterwise held 12,500
shares of restricted stock valued at $292,188 based on the closing price of
$23.375 per share of Common Stock at December 29, 1995, as reported on the
New York Stock Exchange Composite Tape. In connection with Mr. Osterwise's
termination of employment, the vesting of the then unvested shares of
restricted stock was accelerated. The shares of restricted stock are
entitled to dividends at the same rate payable to all stockholders.
OPTION GRANTS IN FISCAL YEAR 1995
The following table sets forth further information with respect to grants of
stock options during the year ended December 31, 1995 to the executives listed
in the Summary Compensation Table. These grants were made pursuant to the 1993
Long-Term Incentive Plan and are reflected in the Summary Compensation Table.
The per share exercise price of each option equals the closing market price per
share of the Common Stock on the date of grant. No stock appreciation rights
were granted during 1995.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------------------------------------------------------------- ------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE PRICE
NAME GRANTED FISCAL YEAR (A) ($/SHARE) EXPIRATION DATE 5%($) 10%($)
- --------------------- ------------------ --------------- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Friedland 60,000(b) 0.9% $ 29.50 2/15/2005 $ 1,113,000 $ 2,820,900
500,000(c) 7.9% 36.75 7/26/2005 11,555,900 29,285,000
Daniel F. Akerson 200,000(d) 3.1% 29.50 12/31/1997(d) 890,000 1,864,000
Frank M. Drendel 24,000(b) 0.4% 29.50 2/15/2005 445,300 1,128,370
Thomas A. Dumit 24,000(b) 0.4% 29.50 2/15/2005 445,300 1,128,370
Ronald A. Ostertag 24,000(b) 0.4% 29.50 2/15/2005 445,300 1,128,370
Laurence L. Osterwise 0(e) -- -- -- (e) -- --
</TABLE>
- ------------------------------
(a) Total options granted to employees in 1995 do not include 2.5 million
options which were granted in September 1995 and subsequently cancelled in
November 1995, but do include the 2.5 million options granted in November
1995 in connection with such cancellation. None of such options were
granted to executive officers or directors.
(b) The option becomes exercisable with respect to one-third of the shares
covered thereby on February 15 in each of 1996, 1997 and 1998.
(c) This option becomes exercisable with respect to one-third of the shares
covered thereby on July 26 in each of 1996, 1997 and 1998.
(d) In connection with Mr. Akerson's resignation as Chief Executive Officer of
the Company, the exercisability of this option was accelerated. The option
is exercisable until December 31, 1997.
(e) Mr. Osterwise was granted an option for 31,000 shares with an exercise
price of $29.50 per share in 1995. In connection with his resignation from
the Company, this option terminated. The potential realizable values of
this option over a ten-year term, assuming 5% and 10% annual rates of stock
price appreciation, would have been $575,124 and $1,457,477, respectively.
OPTION EXERCISES AND VALUES FOR FISCAL YEAR 1995
The following table sets forth as of December 31, 1995, for each of the
executives listed in the Summary Compensation Table (i) the total number of
shares received upon exercise of options during 1995, (ii) the value realized
upon such exercise, (iii) the total number of unexercised options to purchase
Common Stock (exercisable and unexercisable) held and (iv) the value of such
options which were in-the-money at December 31, 1995 (based on the difference
between the closing price of Common Stock at December 31, 1995 and the exercise
price of the option). None of the executive officers holds SARs.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE- MONEY OPTIONS AT
ACQUIRED ON FISCAL YEAR-END (#) FISCAL YEAR-END ($)(A)
EXERCISE VALUE REALIZED -------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Friedland 0 -- 108,000 758,000 $ 135,000 $ 135,000
Daniel F. Akerson 362,665 $ 4,848,562 745,668 26,667 9,375 50,000
Frank M. Drendel 0 -- 32,500 89,000 63,750 127,500
Thomas A. Dumit 0 -- 31,000 71,000 112,500 112,500
Ronald A. Ostertag 0 -- 32,000 88,000 60,000 120,000
Laurence L. Osterwise 0 -- 40,000 111,000 0 0
</TABLE>
- ------------------------
(a) Based on the difference between the closing price of $23.375 per share at
December 29, 1995, as reported on the New York Stock Exchange Composite
Tape, and the exercise price of the option.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF
EXECUTIVE OFFICERS OF THE COMPANY
The Compensation Committee of the Board of Directors is comprised entirely
of non-employee directors. The Compensation Committee considers and recommends
to the Board of Directors the compensation to be paid to the Chief Executive
Officer, determines the compensation for all other executive officers, makes
decisions regarding grants under the 1993 Long-Term Incentive Plan, administers
the General Instrument Corporation Annual Incentive Plan (the "Annual Incentive
Plan") with respect to executive officers, makes recommendations to the Board
with respect to the Company's overall compensation policies, and performs such
other duties as the Board may from time to time request.
The basic objective of the Compensation Committee is to formulate
compensation policies and programs intended to attract, retain, and motivate
highly qualified key employees, including executive officers. Compensation of
executive officers and other key employees, including the Chief Executive
Officer, is comprised of three principal elements: (i) stock ownership, (ii)
base salary, and (iii) annual bonuses.
STOCK OWNERSHIP
The Compensation Committee believes that executive officers and other key
employees, who are in a position to make a substantial contribution to the
long-term success of the Company and to build stockholder value, should have a
significant stake in the Company's on-going success. This focuses attention on
managing the Company as an owner with an equity position in the business and
seeks to align these employees' interests with the long-term interests of
stockholders. Accordingly, one of the Company's principal methods to motivate
executive officers and other key employees has been through a broad and deep
stock option program.
During 1995, the Company awarded options to purchase an aggregate of
approximately 1 million shares of Common Stock to 11 executive officers
(including executive officers named in the Summary Compensation Table). The
exercise price of each of these options is the closing market price per share of
Common Stock on the date of grant.
Management recommends to the Compensation Committee those executive officers
and other key employees to whom options should be granted and the number of
options to be granted to them. The recommendations are based on a review of each
employee's individual performance, position and level of responsibility in the
Company, long-term potential contribution to the Company and the number of
options previously granted to the employee. Neither management nor the
Compensation Committee assigned specific weights to these factors, although the
executive's position and a subjective evaluation of his performance were
considered most important. Generally, the number of options granted to an
executive reflects his level of responsibility and position in the Company.
To encourage key employees to remain in the employ of the Company, options
generally vest and become exercisable over a three- or four-year period and are
not exercisable until one year after the date of grant. It is expected that
awards under the 1993 Long-Term Incentive Plan will be made periodically in
furtherance of goals described above.
After giving effect to the options granted prior to February 28, 1996, there
are less than 100,000 shares available under the 1993 Long-Term Incentive Plan.
To ensure that there are sufficient shares available for option grants and other
awards, the Company is seeking stockholder approval to amend the 1993 Long-Term
Incentive Plan to increase the total number of shares which may be subject to
awards by 6,000,000. Of these 6,000,000 shares, the Company has made conditional
grants with respect to approximately 500,000 shares to officers (including
officers named in the Summary Compensation Table, one of whom is also a
director), which are subject to stockholder approval of the amendment to the
1993 Long-Term Incentive Plan. The 1993 Long-Term Incentive Plan and the
proposed amendments are more fully described later in this Proxy Statement.
BASE SALARY
The Compensation Committee believes that it is important to pay reasonable
and competitive salaries. Salaries paid to executive officers are based on the
Chief Executive Officer's recommendations to the Compensation Committee, which
is responsible for reviewing and approving or disapproving those
recommendations. The recommendations and the Compensation Committee's response
are
12
<PAGE>
based on a review of the same factors reviewed in connection with determining
option grants and a review of two surveys of the range of salaries paid for
comparable positions at approximately 100 other companies with comparable
revenues. (This survey information was provided by independent benefits
consulting firms on an aggregate basis, and the Compensation Committee did not
study the salaries or compensation practices of any particular company. Any
overlap of the companies included in these surveys and those included in the
Standard & Poor's Communication Equipment Manufacturers Index used in the graph
of cumulative shareholder return included in this Proxy Statement is
coincidental.) Neither management nor the Compensation Committee assigned
specific weights to these factors, although the executive's position and a
subjective evaluation of his performance were considered most important.
Generally, an executive's base salary reflects his level of responsibility and
position in the Company. Moreover, the Compensation Committee did not target
executives' cash compensation (or any element thereof) to any particular level
in the group of companies, but rather reviewed the surveys to confirm that
executive officers' cash compensation was within the middle of the range of cash
compensation paid by companies with comparable revenues.
In connection with the acquisition of the predecessor to the Company by
affiliates of Forstmann Little & Co., the Company generally imposed a two-year
moratorium on salary increases for executive officers. After the salary increase
moratorium expired in 1993, the Compensation Committee, based on recommendations
from the Chief Executive Officer, approved salary increases for 1993 for most
executive officers. In addition, Richard S. Friedland received a salary increase
in 1993 in connection with his promotion. Following these increases in 1993,
four executive officers, including Thomas A. Dumit, received increases in 1994
averaging approximately 4%. In addition, one executive officer received a 12%
increase in 1994 in connection with a promotion. These salary increases were
based on the Chief Executive Officer's recommendations and the Compensation
Committee's consideration of the factors discussed above as well as prior salary
increases. Mr. Friedland and Frank M. Drendel received no salary increase in
1994. In 1995, based on the Chief Executive Officer's recommendations and the
Compensation Committee's consideration of the factors discussed above, as well
as prior salary increases, all executive officers, other than Laurence L.
Osterwise, who joined the Company in November 1994, received increases averaging
approximately 8%.
ANNUAL INCENTIVE BONUS
In 1993, the Compensation Committee adopted the Annual Incentive Plan, which
was approved by stockholders at the 1994 Annual Meeting of Stockholders, was
amended and restated by the Compensation Committee in February 1995 and approved
by stockholders at the 1995 Annual Meeting of Stockholders. The Annual Incentive
Plan is intended to provide a means of annually rewarding certain key employees,
including the executives listed in the Summary Compensation Table, based on the
performance of the Company and its divisions. This approach allows management to
focus on key business objectives in the short-term, and to support the long-term
performance orientation of stock ownership.
Under the Annual Incentive Plan, in 1995 management recommended, and the
Compensation Committee established, for each officer a bonus target percentage
of the officer's salary. That percentage was based on the officer's position in
the Company and was the percentage of the officer's salary that would be paid if
the performance targets were met. The target award percentage for executive
officers for 1995 ranged from 35% to 70% for the Chief Executive Officer. All
executive officers of the Company participated in the Annual Incentive Plan in
1995.
Bonuses for officers, other than those employed at an operating division,
are a function of the Company's achievement of its earnings per share target
(which constitutes 60% of the bonus payment determination) and its consolidated
operating income target (which constitutes the remaining 40% of the bonus
payment determination). For the presidents of the Company's operating divisions,
bonuses are a function of the Company's achievement of its earnings per share
target and the division's achievement of its operating income target and may be
adjusted to reflect the division's quality performance. The weighting of the
financial targets in calculating individual bonus amounts for the division
presidents depends upon their division.
Under the Annual Incentive Plan, if a financial target is exceeded, the
portion of the bonus based on that target is increased above the target level,
but may not exceed 130% of the target level. In 1995, one division exceeded its
financial target, the Company and the other divisions did not achieve all of
their financial targets and, in the case of each division, targets were adjusted
to reflect an assessment
13
<PAGE>
of its quality performance. As a result, a bonus in excess of the target bonus
was paid to Ronald A. Ostertag, while bonuses less than the target bonuses were
paid to each other officer who participated in the Annual Incentive Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
Richard S. Friedland was elected Chief Executive Officer in August 1995,
after having served the Company as President and Chief Operating Officer since
October 1993, as Vice President and Chief Financial Officer from March 1992 to
January 1994, and before that in increasingly responsible management and
executive capacities since joining the Company in 1978. In determining Mr.
Friedland's compensation as Chief Executive Officer, the Compensation Committee,
while not assigning specific weights to the following factors, considered Mr.
Friedland's extensive experience with the Company; his individual performance,
including his instrumental role in the Company becoming a public company in
1992; and the Company's financial performance during his tenure as Chief
Financial Officer, President and Chief Operating Officer, including significant
overall growth in operating income and net income. Based on these
considerations, the Compensation Committee approved a compensation package
consisting substantially of the following: (i) an annual base salary of
$750,000; (ii) an option to purchase an aggregate of 500,000 shares of Common
Stock, at an exercise price of $36.75, the closing market price per share of
Common Stock on the date of the grant, to become exercisable over three years;
and (iii) a target award percentage of 70% under the Annual Incentive Plan.
Daniel F. Akerson was Chairman and Chief Executive Officer of the Company
through July 1995, and remained Chairman until December 1995 in order to ensure
a smooth transition. In connection with his resignation as Chief Executive
Officer, Mr. Akerson's annual salary for the remainder of 1995 was reduced from
$900,000 to $800,000, his target award percentage under the Annual Incentive
Plan remained at 70% for 1995, and the exercisability of options to purchase
300,000 shares of Common Stock was accelerated.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), which was enacted in 1993, generally disallows a
federal income tax deduction to any publicly-held corporation for compensation
paid in excess of $1 million in any taxable year to the chief executive officer
or any of the four other most highly compensated executive officers who are
employed by the Company on the last day of the taxable year. Section 162(m),
however, does not disallow a federal income tax deduction for qualified
"performance-based compensation," the material terms of which are disclosed to
and approved by stockholders.
The Compensation Committee has considered the tax deductibility of
compensation awarded under the 1993 Long-Term Incentive Plan and the Annual
Incentive Plan in light of Section 162(m). The Company structured and intends to
administer the stock option and stock appreciation rights portions of the 1993
Long-Term Incentive Plan with the intention that the compensation resulting from
that plan would be qualified "performance-based compensation" and would be
deductible. The Company has structured and intends to administer the annual cash
bonus paid to the Chief Executive Officer with the intention that it would be
qualified "performance-based" compensation and would be deductible. Only one
executive officer's compensation (the former Chief Executive Officer) in 1995
exceeded $1 million. However, the full amount of such Chief Executive Officer's
compensation, including the amount in excess of $1 million, was deductible after
giving effect to Section 162(m). It is not expected that any executive officer's
compensation will be non-deductible in 1996 by reason of the application of
Section 162(m).
Respectfully submitted,
COMPENSATION COMMITTEE
<TABLE>
<S> <C> <C>
Nicholas C. Forstmann Morton H. Meyerson Robert S. Strauss
</TABLE>
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100 invested on
June 30, 1992 in each of Common Stock of the Company, Standard & Poor's 500
Index and Standard & Poor's Communication Equipment Manufacturers Index. The
return of the Standard & Poor's indices is calculated assuming reinvestment of
dividends. The Company has not paid any dividends. The graph covers a period
commencing June 1992, when the Company's Common Stock was first publicly traded.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
GENERAL INSTRUMENT CORPORATION, S&P 500 INDEX AND
S&P COMMUNICATION EQUIPMENT MANUFACTURERS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CEMI S&P 500 GIC
<S> <C> <C> <C>
6/30/1992 100.00 100.00 100.00
12/31/1992 127.61 108.35 177.41
6/30/1993 105.57 113.64 270.47
12/31/1993 122.77 119.27 393.12
6/30/1994 100.02 115.24 396.60
12/31/1994 140.05 120.85 417.46
6/30/1995 179.27 145.27 532.24
12/31/1995 209.59 166.26 325.26
</TABLE>
<TABLE>
<S> <C> <C>
CEMI = STANDARD & POOR'S COMMUNICATION
EQUIPMENT MANUFACTURERS INDEX
S&P 500 = STANDARD & POOR'S 500 INDEX
GIC = GENERAL INSTRUMENT CORPORATION
</TABLE>
<TABLE>
<CAPTION>
6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/31/94 6/30/95 12/31/95
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CEMI.................... 100.00 127.61 105.57 122.77 100.02 140.05 179.27 209.59
S&P 500................. 100.00 108.35 113.64 119.27 115.24 120.85 145.27 166.26
GIC..................... 100.00 177.41 270.47 393.12 396.60 417.46 532.24 325.26
<CAPTION>
<S> <C>
CEMI....................
S&P 500.................
GIC.....................
</TABLE>
15
<PAGE>
EMPLOYMENT ARRANGEMENTS
In November 1988, Frank M. Drendel entered into an employment agreement with
GI Delaware and CommScope, providing for his employment as President and Chief
Executive Officer of CommScope for an initial term ending on November 28, 1991.
The agreement provides for a minimum salary, which is less than Mr. Drendel's
current salary, and provides that Mr. Drendel will participate, on a
substantially similar basis as the presidents of the other broadband divisions
of the Company, in any management incentive compensation plan for executive
officers that the Company maintains. Commencing on November 29, 1989 (subject to
early termination by reason of death or disability or for cause), the agreement
extends automatically so that the remaining term is always two years, unless
either party gives notice of termination, in which case the agreement will
terminate two years from the date of such notice. As of the date of this Proxy
Statement, neither party has given notice of termination. Pursuant to the
agreement, Mr. Drendel is eligible to participate in all benefit plans available
to CommScope senior executives. The agreement prohibits Mr. Drendel, for a
period of five years following the term of the agreement, from engaging in any
business in competition with the business of CommScope or the other broadband
communications businesses of GI Delaware, in any country where CommScope or GI
Delaware's other broadband communications divisions then conduct business.
The Company and Laurence L. Osterwise entered into an agreement in
connection with Mr. Osterwise's resignation as Vice President of the Company and
President of the GI Communications division in February 1996. The agreement
provides substantially that: (i) Mr. Osterwise will receive up to one year's
severance pay, or $335,000; (ii) the remaining 7,500 shares of unvested
restricted Common Stock held by Mr. Osterwise have been vested; (iii) Mr.
Osterwise was entitled to receive an award under the Annual Incentive Plan for
1995; (iv) Mr. Osterwise will receive up to 12 months' continuation of medical,
dental and life insurance benefits; and (v) Mr. Osterwise agreed not to engage
in activities adverse to the Company's best interests.
The Company currently does not have a formal severance policy for executive
officers. In October 1993, the Compensation Committee delegated to the Chief
Executive Officer the authority to determine severance, on a case-by-case basis,
for eligible corporate officers within specified guidelines. These guidelines
are as follows: (i) base salary continuation for up to twelve months; (ii)
payment of a prorated portion of his target bonus for the year in which the
officer is terminated (based on the number of days of employment for that year);
and (iii) continuation of medical, dental and life insurance until the earlier
of the end of the period of base salary continuation or the individual's
eligibility for coverage under another employer's plan. The Chief Executive
Officer will, on a case-by-case basis, determine whether terminated officers
should receive severance and, if so, will determine, within the guidelines set
forth above, severance packages based on his subjective assessment of various
factors, including the officer's contribution to the Company, years of service
and prior compensation from the Company.
Except for the General Instrument Corporation Pension Plan for Salaried and
Hourly Paid Non-Union Employees (the "GI Pension Plan"), the General Instrument
Corporation Supplemental Executive Retirement Plan (the "GI SERP") and the
CommScope, Inc. Supplemental Executive Retirement Plan (the "CommScope SERP")
described below, the Savings Plan, the CommScope Savings Plan, the 1993
Long-Term Incentive Plan, and the Annual Incentive Plan, and as described above,
there are no compensatory plans or arrangements with respect to any of the
executive officers named in the Summary Compensation Table which are triggered
by, or result from, the resignation, retirement or any other termination of such
executive's employment, a change-in-control of the Company or a change in such
executive's responsibilities following a change-in-control.
16
<PAGE>
GI PENSION PLAN AND GI SERP
The following table shows, as of December 31, 1995, estimated aggregate
annual benefits payable upon retirement at age 65 under the GI Pension Plan and
the GI SERP.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
UPON RETIREMENT, WITH
AVERAGE ANNUAL BASIC REMUNERATION YEARS OF SERVICE INDICATED
DURING SIXTY CONSECUTIVE CALENDAR --------------------------------------------
MONTHS PRIOR TO RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ------------------------------------------------------------------ --------- --------- --------- -----------
<S> <C> <C> <C> <C>
$125,000.......................................................... $ 26,181 $ 34,908 $ 43,635 $ 52,362
150,000.......................................................... 31,806 42,408 53,010 63,612
175,000.......................................................... 37,431 49,908 62,385 74,862
200,000.......................................................... 43,056 57,408 71,760 86,112
225,000.......................................................... 48,681 64,908 81,135 97,362
245,000.......................................................... 53,181 70,908 88,635 106,362
250,000.......................................................... 53,181 70,908 88,635 106,362
300,000.......................................................... 53,181 70,908 88,635 106,362
</TABLE>
The compensation covered by the GI Pension Plan and the GI SERP is
substantially that described under the "Salary" column of the Summary
Compensation Table. However, pursuant to Section 401(a)(17) of the Internal
Revenue Code, the maximum amount of compensation that can be considered in
computing benefits under the GI Pension Plan for 1995 was $150,000. Under the GI
SERP, compensation for 1995 in excess of $150,000, but not exceeding $245,000,
is considered in computing benefits. Accordingly, the total compensation covered
by the GI Pension Plan and the GI SERP for the calendar year 1995 for each of
Messrs. Friedland, Akerson, Dumit, Ostertag and Osterwise was $245,000. Credited
years of service under both the GI Pension Plan and the GI SERP as of December
31, 1995 are as follows: Mr. Friedland, 17 years; Mr. Akerson, 2 years; Mr.
Dumit, 4 years; Mr. Ostertag, 17 years; and Mr. Osterwise, 1 year. Mr. Drendel
does not participate in the GI Pension Plan or the GI SERP because he is an
employee of CommScope. Estimated benefits set forth in the Pension Plan Table
were calculated on the basis of a single life annuity and Social Security
covered compensation as in effect during 1995. Such estimated benefits are not
subject to any deduction for Social Security or other offset amounts.
COMMSCOPE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
CommScope maintains the CommScope SERP for the benefit of certain executives
of CommScope and its subsidiaries. The CommScope SERP provides for the payment
of a monthly retirement (or early retirement) benefit to participants who retire
from CommScope on or after age 65 (or, for early retirement benefits, on or
after age 55 with 10 years of service). Frank M. Drendel is the only executive
named in the Summary Compensation Table who participates in the CommScope SERP.
Mr. Drendel, as well as all other individuals who were participants in the
CommScope SERP on August 22, 1990, is fully vested in his benefits under the
CommScope SERP and, thus, could retire prior to attaining age 65 (or age 55 in
the case of early retirement) and receive a deferred benefit.
The monthly benefits provided under the CommScope SERP are payable over 15
years and are equal to one-twelfth of a specified percentage, which does not
exceed 50%, of the participant's highest consecutive 12 months earnings during
the participant's final 60 months of employment. Early retirement benefits are
subject to actuarial reductions. Based on compensation earned for the calendar
year which ended December 31, 1995, the estimated annual benefit payable to Mr.
Drendel on or after attaining age 65 is $132,936.
17
<PAGE>
OTHER RELATED PARTY TRANSACTIONS
An affiliate of Forstmann Little & Co. provides aircraft maintenance
services to the Company and charged the Company $2.2 million in 1995 for those
services. The Company believes that the terms of these transactions were no less
favorable to the Company than the terms which could be obtained from an
unrelated third party.
CERTAIN LEGAL PROCEEDINGS
Between October 10 and October 27, 1995, five purported class action
complaints were filed in the United States District Court for the Eastern
District of Pennsylvania and seven purported class action complaints were filed
in the United States Court for the Northern District of Illinois. These
complaints name as defendants the Company, certain officers and directors of the
Company and, in some cases, Forstmann Little & Co. Plaintiffs allege that the
defendants violated federal securities laws by, among other things, making
misrepresentations and omitting material facts in statements to the public,
thereby allegedly causing the Company's stock price to be artificially inflated.
Plaintiffs seek, among other things, unspecified monetary damages and attorneys'
fees and costs, on behalf of all shareholders who purchased shares during
various periods generally extending from March 21, 1995 through October 18,
1995.
On October 24, 1995, a purported derivative complaint on behalf of the
Company was filed in the United States District Court for the Eastern District
of Pennsylvania by Seymour Lazar against each of the Company's current
directors, a former executive officer, Forstmann Little & Co., MBO-IV and
Instrument Partners. The conduct complained of generally related to the same
matters alleged in the class actions described above and to the sale by
directors Daniel F. Akerson, John Seely Brown, J. Tracy O'Rourke and Robert S.
Strauss, as well as by MBO-IV, Instrument Partners and a former officer of the
Company, of shares of the Company's stock while they were allegedly in
possession of material non-public information. Plaintiff seeks, among other
things, unspecified monetary damages and attorneys' fees and costs.
On February 20, 1996, an order was issued by the Judicial Panel on
Multidistrict Litigation transferring the class and derivative actions described
above to the United States Court for the Northern District of Illinois. These
actions are in an early stage, with only limited discovery having been
commenced.
On February 9, 1996, a complaint was filed in the United States Court for
the Northern District of California captioned BKP PARTNERS, L.P. ET AL. V.
GENERAL INSTRUMENT CORPORATION, NLC ACQUISITION CORP. AND NEXT LEVEL
COMMUNICATIONS, INC. Plaintiffs, who are some of the former holders of preferred
stock of Next Level Communications ("Next Level"), allege, among other things,
that the defendants violated federal securities laws by making
misrepresentations and omissions and breached fiduciary duties to Next Level in
connection with the acquisition by the Company of Next Level in September 1995.
Plaintiffs seek, among other things, unspecified compensatory and punitive
damages and attorneys' fees and costs. The Company has requested that this
action be transferred to the United States District Court for the Northern
District of Illinois because of its relationship to the other cases which have
been transferred to that court.
The defendants intend to defend the above-described actions vigorously.
APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED
GENERAL INSTRUMENT CORPORATION
1993 LONG-TERM INCENTIVE PLAN
1993 LONG-TERM INCENTIVE PLAN -- GENERAL
The General Instrument Corporation 1993 Long-Term Incentive Plan was
originally adopted by the Board of Directors on February 2, 1993, and approved
by stockholders at the 1993 Annual
18
<PAGE>
Meeting. The Amended and Restated General Instrument Corporation 1993 Long-Term
Incentive Plan (the "1993 Long-Term Incentive Plan") was approved by the Board
of Directors on February 3, 1994 and approved by the stockholders at the 1994
Annual Meeting. The 1993 Long-Term Incentive Plan provides for granting of
options, stock appreciation rights, restricted stock, performance units,
performance shares and phantom stock to employees of the Company and its
subsidiaries and granting of options to non-employee directors of the Company
(collectively or individually, "Awards"). As of the date of this Proxy
Statement, the Company has granted, and the Company's current intention is to
grant, only nonqualified stock options and shares of restricted stock pursuant
to the 1993 Long-Term Incentive Plan.
At the 1996 Annual Meeting, stockholders will be asked to consider and vote
on a proposal to amend the 1993 Long-Term Incentive Plan.
PROPOSED AMENDMENT
The Company's Board of Directors and Compensation Committee approved,
subject to the approval of the stockholders at the 1996 Annual Meeting, an
amendment to the 1993 Long-Term Incentive Plan to increase by 6,000,000 the
number of shares of Common Stock which may from time to time be made the subject
of awards thereunder. If the amendment to the 1993 Long-Term Incentive Plan is
approved, the total number of shares of Common Stock which may be made the
subject of awards thereunder will be increased to 16,880,000 and, based on that
number of shares, the maximum number of shares of Common Stock with respect to
which stock options and stock appreciation rights may be granted to any
individual during the term of the Plan would be 3,376,000.
One of the Company's principal methods to attract and retain key employees
is the grant of Options pursuant to the 1993 Long-Term Incentive Plan. The
Company believes that it is in the best interests of the Company to increase the
maximum number of shares that may be made subject to Awards under the 1993
Long-Term Incentive Plan in order (i) to continue to attract and retain key
employees and (ii) to provide additional incentive and reward opportunities to
current employees to encourage them to enhance the profitable growth of the
Company. Less than 100,000 shares remain available under the 1993 Long-Term
Incentive Plan as of February 28, 1996. If the amendment to the 1993 Long-Term
Incentive Plan is approved, an additional 6,000,000 shares of Common Stock would
be made available for awards thereunder, of which options to purchase
approximately 500,000 shares were granted in February 1996 to certain officers
(one of whom is also a director) subject to stockholder approval of such
amendment.
The foregoing amendment will become effective upon approval by the Company's
stockholders, and that approval will be a condition to the grant of awards in
respect of the additional 6,000,000 shares under the 1993 Long-Term Incentive
Plan, including the conditional grants with respect to approximately 500,000 of
such shares awarded in February 1996. Although such approval will not
necessarily result immediately in the grant of additional options or the grant
of stock appreciation rights or performance awards, it is expected the
Compensation Committee will make periodic grants of nonqualified stock options
in furtherance of the goals described in the "Compensation Committee Report on
Compensation of Executive Officers of the Company."
The principal provisions of the 1993 Long-Term Incentive Plan, as proposed
to be amended, are summarized below. This summary, however, does not purport to
be complete and is qualified in its entirety by the terms of the 1993 Long-Term
Incentive Plan, including the proposed amendment, the entire text of which is
attached as Exhibit A and incorporated by reference. All defined terms used
below have the meaning set forth in the 1993 Long-Term Incentive Plan, unless
otherwise indicated.
PURPOSE OF THE 1993 LONG-TERM INCENTIVE PLAN
The Board of Directors believes that the Awards provide a means by which key
employees and directors of the Company and its Subsidiaries can acquire and
maintain stock ownership, thereby strengthening their commitment to the success
of the Company and its Subsidiaries and their desire
19
<PAGE>
to remain employed by the Company and its Subsidiaries, focusing their attention
on managing the Company as an equity owner, and aligning their interests with
those of the Company's stockholders. The Plan also is intended to attract and
retain key employees and to provide those employees with additional incentive
and reward opportunities designed to encourage them to enhance the profitable
growth of the Company and its Subsidiaries.
DESCRIPTION OF THE 1993 LONG-TERM INCENTIVE PLAN
The 1993 Long-Term Incentive Plan is administered by the plan Committee
initially consisting of at least three directors of the Company who are
"disinterested persons" within the meaning of Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act, but the number of directors on the Committee
may be changed in accordance with law. In addition, with respect to Awards
granted or to be granted to participants who are not subject to Section 16 of
the Exchange Act, the authority of the Committee may be exercised by the full
Board or by a committee, consisting of at least one director, appointed by the
Board. The Committee will (i) select those employees to whom Awards will be
granted, and (ii) determine the type, the size and the terms and conditions of
Awards, including the per share purchase price of restricted stock and Options,
the vesting provisions of restricted stock, phantom stock and Options, and the
restrictions or performance criteria relating to restricted stock, phantom
stock, performance units and performance shares. The Committee will also
construe and interpret the 1993 Long-Term Incentive Plan. The Committee has the
authority to cancel outstanding Awards and make adjustments to outstanding
Awards with the consent of the Grantee and to accelerate the exercisability of
Awards or to waive the restrictions and conditions applicable to Awards. In
November 1995, the "repricing" of 2.5 million options granted in September 1995
to certain employees (none of whom are executive officers) in connection with
the acquisition of Next Level was authorized by authorizing the cancellation of
such outstanding options, the exercise price per share of which was $30.625 per
share, and the grant of the same number of new options at an exercise price of
$20.75 per share, the closing market price on the effective date of grant.
The maximum number of shares of Common Stock with respect to which Options
and stock appreciation rights may be granted to any individual over the term of
the plan is one-fifth of the maximum number of shares of Common Stock that may
be made the subject of Awards under the 1993 Long-Term Incentive Plan. The
maximum number of shares of Common Stock that may be made the subject of Awards
granted under the 1993 Long-Term Incentive Plan, as proposed to be amended, is
16,880,000 and, based on that number of shares, the maximum number of shares of
Common Stock with respect to which Options and stock appreciation rights may be
granted to any individual is 3,376,000. In the event of any Change in
Capitalization, however, the Committee may adjust the maximum number and class
of shares with respect to which Awards may be granted, the number and class of
shares which are subject to outstanding Awards and the purchase price therefor.
In addition, if any Award is cancelled or expires or terminates without having
been exercised, the shares of Common Stock subject to that Award again become
available for grant under the 1993 Long-Term Incentive Plan. Of the total number
of shares allotted under the Plan, not more than one-third may be used for
restricted stock and phantom stock Awards.
ELIGIBILITY. Any of the Company's and its Subsidiaries' approximately
12,000 employees and any of the Company's non-employee directors is eligible to
participate in the 1993 Long-Term Incentive Plan. In July 1993 (as adjusted on
February 15, 1995 to reflect the two-for-one split of the Common Stock in August
1994), the Company formally adopted its policy that each non-employee director
will be granted Nonqualified Stock Options to purchase 80,000 shares of Common
Stock pursuant to the 1993 Long-Term Incentive Plan in connection with their
initial election to the Board.
OPTIONS. Under the Company's policy and pursuant to the 1993 Long-Term
Incentive Plan, the Committee grants to each non-employee director of the
Company Nonqualified Stock Options to purchase 80,000 shares of Common Stock. In
addition, the Committee may grant Nonqualified Stock Options and Incentive Stock
Options to any eligible employee of the Company or its Subsidiaries. The
20
<PAGE>
per share exercise price of the Options is fixed by the Committee when the
Options are granted and must be at least 100% of the Fair Market Value of the
Common Stock on the Option Grant Date (110% in the case of an Incentive Stock
Option granted to a 10% Owner).
Each Option will be exercisable at the times and in the installments
determined by the Committee, commencing not earlier than the first anniversary
of the Option Grant Date. All outstanding Options will become fully exercisable
upon a Change of Control. In addition, the Committee reserves the authority to
accelerate the exercisability of any Option. Each Option terminates at the time
determined by the Committee, except that the term of each Option may not exceed
ten years (five years in the case of an Incentive Stock Option granted to a 10%
Owner). Options are not transferable by the Grantee other than as permitted
pursuant to Rule 16b-3 and may be exercised during the Grantee's lifetime only
by the Grantee or the Grantee's guardian or legal representative. In the
discretion of the Committee, the purchase price for shares acquired pursuant to
the exercise of an Option may be paid (i) in cash, (ii) by transferring shares
of restricted or unrestricted Common Stock to the Company, or (iii) by a
combination of the foregoing.
STOCK APPRECIATION RIGHTS. The 1993 Long-Term Incentive Plan permits the
granting of stock appreciation rights to employees of the Company or a
Subsidiary in connection with an Option or other Award or as a freestanding
right. A stock appreciation right permits the Grantee to receive, upon exercise
of the stock appreciation right, cash and/or shares, at the discretion of the
Committee, equal in value to the excess, if any, of the then per share Fair
Market Value over the per share Fair Market Value on the Grant Date of the stock
appreciation right, multiplied by the number of shares as to which the stock
appreciation right is being exercised. When a stock appreciation right is
granted, however, the Committee may establish a limit on the maximum amount the
Grantee may receive upon exercise of the stock appreciation right. The Committee
will decide when each stock appreciation right is granted the time or times when
the stock appreciation right will be exercisable, commencing not earlier than
the first anniversary of the Grant Date. However, the Committee reserves the
authority to thereafter accelerate the exercisability of any stock appreciation
right.
RESTRICTED STOCK. The Committee will determine when each restricted stock
Award is made, the terms of the restricted stock Award, including the price, if
any, to be paid by the Grantee for the restricted stock, the restrictions placed
on the shares and the time or times when the restrictions will lapse. In
addition, when the restricted stock is granted under the Plan, the Committee
may, in its discretion, decide: (i) whether dividends paid on the restricted
stock will be remitted to the Grantee or deferred until the restrictions on the
restricted stock Award lapse, (ii) whether any deferred dividends will be
invested in additional shares of Common Stock, (iii) whether interest will be
accrued on any dividends not reinvested in additional shares of restricted
stock, (iv) whether any stock dividends paid on the restricted stock Award will
be subject to the restrictions applicable to the restricted stock award, and (v)
whether, and to what extent, the restrictions on the restricted stock shall
lapse upon a Change of Control.
PERFORMANCE UNITS AND PERFORMANCE SHARES. Performance units and performance
shares will be awarded as the Committee may determine, and the vesting of
performance units and performance shares will be based upon the Company's
attainment of specified performance objectives within the established
performance period (the "Measuring Period"). Performance objectives and the
length of the Measuring Period for performance units and performance shares will
be determined by the Committee when the Award is made, but no Measuring Period
will be less than one year nor more than five years. Prior to the end of a
Measuring Period, the Committee, in its discretion, may adjust the performance
objectives to reflect any Change in Capitalization or other event which may
materially affect the performance of the Company or any Subsidiary. The
agreements evidencing Awards of performance units and performance shares will
set forth the terms and conditions of the Awards, including those applicable in
the event of the Grantee's Termination of Employment or a Change of Control.
Performance units may be denominated in dollars or in shares of Common Stock,
and payments in respect of vested performance units will be made in cash,
shares, shares of restricted
21
<PAGE>
stock or any combination of the foregoing, as determined by the Committee.
Performance shares are initially denominated in shares of Common Stock, but the
Committee may ultimately settle performance share Awards in cash, shares of
Common Stock or a combination thereof, at its discretion.
PHANTOM STOCK. The Committee may grant phantom stock to employees employed
outside the United States, subject to the terms and conditions established by
the Committee. Upon the vesting of a phantom stock Award, the Grantee will be
entitled to receive a cash payment in respect of each share of phantom stock
equal to the Fair Market Value of a share of Common Stock as of the date the
phantom stock Award was granted or such other date as determined by the
Committee when the phantom stock Award was granted. The Committee may, when a
phantom stock Award is granted, provide a limitation on the amount payable in
respect of each share of phantom stock.
TANDEM AWARDS. The 1993 Long-Term Incentive Plan provides that the
Committee may grant any Award in tandem with another Award. Unless otherwise
provided by the Committee, upon the exercise, payment or forfeiture of one
tandem Award, the related tandem Award will be cancelled to the extent of the
number of shares as to which the tandem Award is so exercised, paid or
forfeited.
AMENDMENT AND TERMINATION. The 1993 Long-Term Incentive Plan will terminate
on February 2, 2003. However, the Board of Directors may sooner terminate or
amend the 1993 Long-Term Incentive Plan at any time without stockholder
approval, except where stockholder approval is required to retain the favorable
tax treatment of Incentive Stock Options under the Internal Revenue Code, to
retain the Rule 16b-3 exemptions applicable to Awards or to qualify the shares
offered under the 1993 Long-Term Incentive Plan for listing on any securities
exchange. The termination of the Plan will not affect then outstanding Awards.
AWARDS MADE UNDER THE 1993 LONG-TERM INCENTIVE PLAN. The Committee has made
grants of Nonqualified Stock Options under the 1993 Long-Term Incentive Plan to
officers, key employees and non-employee directors. In February 1996, the
Committee made grants of approximately 500,000 Nonqualified Stock Options to
officers (one of whom is also a director) under the 1993 Long-Term Incentive
Plan, subject to stockholder approval of the amendment to the 1993 Long-Term
Incentive Plan to increase by 6,000,000 the number of shares of Common Stock
which may be made the subject of awards under the plan. Options granted to
officers and key employees in 1995 and February 1996 (other than Options granted
in 1995 to certain key employees in connection with the acquisition of Next
Level) are subject to the following terms. Each Option is exercisable with
respect to one-third of the underlying shares on each of the first, second and
third anniversaries of the Grant Date. The maximum term during which the Options
may be exercised is ten years. However, if a Grantee's employment is terminated
due to death, disability or retirement, the Grantee's Option will be exercisable
for a period of one year after the termination of employment, and if the
Grantee's employment is terminated for any other reason, the Grantee's Option
will be exercisable for a period of 30 days after the termination of employment,
in each case, to the extent that the Option was exercisable on the date of
termination.
Options granted in connection with the acquisition of Next Level to certain
employees who were founders of Next Level (the "Next Level Founders Options")
and to certain other key employees (the "Next Level Employee Options") are
subject to the following terms. A portion of each Next Level Employee Option
will become exercisable quarterly based on sales of Next Level for that quarter
through March 31, 2000. The Next Level Employee Option would be fully
exercisable if Next Level's sales were to reach $450 million on or before March
31, 2000. Next Level Employee Options will not become exercisable with respect
to any additional shares of Common Stock based on Next Level's sales after March
31, 2000. The Next Level Employee Options are exercisable for a period of ten
years. Each Next Level Employee Option will become exercisable with respect to
any shares as to which it is not yet exercisable 30 days prior to the end of
such ten-year period provided that the Grantee remains an employee of Next Level
or a subsidiary of the Company at that time. If a Grantee voluntarily terminates
his or her employment or if the Company or any subsidiary of the Company
terminates a Grantee's employment for "cause" (as defined in the option
agreement), the Grantee may exercise the
22
<PAGE>
Next Level Employee Option for 30 days after such termination only with respect
to those shares as to which the Next Level Employee Option was then exercisable.
If the Grantee's employment terminates for any other reason, the Next Level
Employee Option will become exercisable according to the vesting schedule
described above.
A portion of each Next Level Founders Option (the "Contingent Shares") will
vest according to the same terms as the Next Level Employee Options with the
following exceptions. If the Company or a subsidiary of the Company terminates
the Grantee's employment without "cause" (as defined in the option agreement),
the Next Level Founders Option will become exercisable immediately upon such
termination with respect to an aggregate of 500,000 Contingent Shares. In
addition, each Next Level Founders Option will become exercisable to purchase a
specified number of shares of Common Stock (the "Fixed Shares") on March 27,
1997. If a Grantee voluntarily terminates his or her employment prior to March
27, 1997, the Next Level Founders Option will terminate and expire with respect
to the Fixed Shares. If a Grantee voluntarily terminates his or her employment
on or after March 27, 1997, the Next Level Founders Option will remain
exercisable with respect to the Fixed Shares for 30 days after termination. If a
Grantee's employment terminates for any other reason, the Next Level Founders
Option will vest with respect to the Fixed Shares and will be exercisable until
the expiration of the ten-year period, except that if the Company or a
subsidiary of the Company terminates such Grantee's employment for "cause," the
Next Level Founders Option will be exercisable with respect to the Fixed Shares
until the later of 30 days after March 27, 1997 or 30 days after such
termination for "cause."
All Options granted to non-employee directors in connection with their
initial election as directors of the Company are subject to the following terms.
Each Option is exercisable with respect to one-third of the underlying shares on
each of the first, second and third anniversaries of the Grant Date. The maximum
term during which the Options may be exercised is ten years. If a director
ceases to serve as a director of the Company for any reason, the Option will be
exercisable, during the remaining term of the Option, to the extent that the
Option was exercisable on the date the director ceases to serve as a director.
Future awards under the 1993 Long-Term Incentive Plan are not determinable
because they are made at the discretion of the Compensation Committee. The
following table sets forth information concerning the Options that were granted
pursuant to the 1993 Long-Term Incentive Plan from January 1, 1995 through
February 28, 1996, but such grants are not necessarily indicative of awards that
may be made in the future.
23
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NEW PLAN BENEFITS
<TABLE>
<CAPTION>
SHARES SUBJECT TO
OPTIONS GRANTED FROM
JANUARY 1, 1995
THROUGH FEBRUARY 28,
1996 UNDER 1993
LONG-TERM INCENTIVE
NAME AND POSITION PLAN (#) (1)
- ----------------------------------------------------------------------------- ----------------------
<S> <C>
Richard S. Friedland ........................................................ 810,000
Chairman of the Board of Directors, Chief Executive Officer and President
Daniel F. Akerson ........................................................... 200,000
Director of the Company and Former Chairman of the Board of Directors and
Chief Executive Officer
Frank M. Drendel ............................................................ 48,000
Chairman, President and Chief Executive Officer of CommScope and Director of
the Company
Thomas A. Dumit ............................................................. 66,000
Vice President, General Counsel and Chief Administrative Officer
Ronald A. Ostertag .......................................................... 54,000
Vice President and President, Power Semiconductor Division
Laurence L. Osterwise ....................................................... 31,000
Former Vice President and President, GI Communications Division
All current executive officers who were granted options, as a group (includes 1,227,000
11 persons, including those named above other than Messrs. Akerson and
Osterwise)..................................................................
All current directors (including nominees for director) who are not executive 280,000
officers who were granted options, as a group (2 persons, including Mr.
Akerson)....................................................................
All employees (other than current executive officers) who were granted 5,843,772
options, as a group (1,112 persons) (2).....................................
</TABLE>
- ------------------------
(1) Of the options listed in the New Plan Benefits table, Options to purchase
the following number of shares granted to the following individuals in
February 1996 are subject to stockholder approval of the amendment to the
1993 Long-Term Incentive Plan to increase by 6,000,000 the number of shares
available for Awards thereunder: Mr. Friedland, 250,000 shares; Mr. Drendel,
24,000 shares; Mr. Dumit, 42,000 shares; Mr. Ostertag, 30,000 shares; all
current executive officers as a group (including those named above), 489,000
shares; and all employees as a group (other than current executive
officers), 10,800 shares. The exercise price of such Options is the per
share closing price of Common Stock on the date of grant, which exercise
price per share is $26.75 for such Option granted to Mr. Friedland and
$27.25 for such Options granted to the other grantees.
(2) Does not include 2.5 million options which were granted in September 1995
and subsequently cancelled in November 1995, but does include the 2.5
million options granted in November 1995 in connection with such
cancellation.
The per share exercise price of each Option granted is the per share closing
price of Common Stock on the date of grant, as reported on the New York Stock
Exchange Composite Tape. The per share exercise price of Options granted from
January 1, 1995 through February 28, 1996 ranges from $18.875 to $39.50.
24
<PAGE>
The per share closing price of Common Stock on March 14, 1996, as reported
on the New York Stock Exchange Composite Tape, was $25.50.
Adoption of the amendment to the 1993 Long-Term Incentive Plan requires
approval by the affirmative vote of a majority of the shares present in person
or by proxy and entitled to vote thereon.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES RELATING TO OPTIONS AND STOCK
APPRECIATION RIGHTS UNDER THE 1993 LONG-TERM INCENTIVE PLAN
In general, a Grantee to whom a Nonqualified Stock Option is granted will
recognize no income when the Option is granted. Upon exercise of the
Nonqualified Stock Option, the Grantee will recognize ordinary income equal to
the excess of the fair market value of the shares on the date of exercise over
the exercise price of the Option. If the Company and its Subsidiaries comply
with applicable income reporting requirements, they will be entitled to a
business expense deduction in the same amount and at the same time as the
Grantee recognizes ordinary income, subject to any deduction limitation under
Section 162(m).
In general, a Grantee will not recognize taxable income upon grant or
exercise of an Incentive Stock Option, and the Company and its Subsidiaries will
not be entitled to any business expense deduction with respect to the grant or
exercise of an Incentive Stock Option. (However, upon the exercise of an
Incentive Stock Option, the excess of the fair market value on the date of
exercise of the shares received over the exercise price of shares will be
treated as an adjustment to alternative minimum taxable income.) In order for
the exercise of an Incentive Stock Option to qualify for the foregoing tax
treatment, the Grantee generally must be an employee of the Company or a
Subsidiary from the date the Incentive Stock Option is granted through the date
three months before the date of exercise, except that special rules apply in the
case of death or disability.
If the Grantee has held the shares acquired upon exercise of an Incentive
Stock Option for at least two years after the date of grant and for at least one
year after the date of exercise, upon disposition of the shares by the Grantee,
the difference, if any, between the sales price of the shares and the exercise
price of the Option will be treated as long-term capital gain or loss. If the
Grantee does not satisfy these holding period requirements, the Grantee will
recognize ordinary income at the time of the disposition of the shares,
generally in an amount equal to the excess of the fair market value of the
shares at the time the Option was exercised over the exercise price of the
Option. The balance of gain realized, if any, will be long-term or short-term
capital gain, depending upon whether or not the shares were sold more than one
year after the Option was exercised. If the Grantee sells the shares prior to
the satisfaction of the holding period requirements but at a price below the
fair market value of the shares at the time the Option was exercised, the amount
of ordinary income will be limited to the amount realized on the sale in excess
of the exercise price of the Option. The Company and its Subsidiaries will be
allowed a business expense deduction to the extent the Grantee recognizes
ordinary income, subject to any deduction limitation under Section 162(m).
Upon exercise of a stock appreciation right, the Grantee will recognize
ordinary income in an amount equal to the cash or the fair market value of the
shares received on the exercise date. If the Company and its Subsidiaries comply
with applicable income reporting requirements, they will be entitled to a
business expense deduction in the same amount and at the same time as the
Grantee of a stock appreciation right recognizes ordinary income, subject to any
deduction limitation under Section 162(m).
Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to any publicly-held corporation for compensation paid in
excess of $1 million in any taxable year to the chief executive officer or any
of the four other most highly compensated executive officers who are employed by
the Company on the last day of the taxable year, but does not disallow a
deduction for qualified "performance-based compensation," the material terms of
which are disclosed to and approved by stockholders. The Company has structured
the stock option and stock appreciation rights portions of the 1993 Long-Term
Incentive Plan with the intention that compensation resulting
25
<PAGE>
therefrom would be qualified "performance-based compensation" and would be
deductible. To qualify, the Company is seeking stockholder approval of the
amendment to the 1993 Long-Term Incentive Plan. If the Company were to grant
awards of restricted stock or to grant (and it has no current intention to
grant) awards of performance units, performance shares or phantom stock,
compensation deductions attributable to those awards would be subject to the
general disallowance provisions of Section 162(m) of the Internal Revenue Code.
Special rules may apply to a Grantee who is subject to Section 16(b) of the
Exchange Act.
Under certain circumstances, the accelerated vesting or exercise of Options
or stock appreciation rights, or the accelerated lapse of restrictions on other
Awards, in connection with a Change of Control of the Company might be deemed an
"excess parachute payment" for purposes of the golden parachute tax provisions
of Section 280G of the Internal Revenue Code. To the extent it is so considered,
the Grantee may be subject to a 20% excise tax and the Company may be denied a
tax deduction.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE 1993 LONG-TERM INCENTIVE PLAN. PROXIES WILL BE VOTED FOR APPROVAL OF THE
AMENDMENT TO THE 1993 LONG-TERM INCENTIVE PLAN UNLESS OTHERWISE SPECIFIED IN THE
PROXY.
STOCKHOLDER PROPOSAL RELATING TO THE DECLASSIFICATION
OF THE BOARD OF DIRECTORS
The Service Employees International Union Master Trust (SEIU), 1313 L Street
N.W., Washington, D.C. 20005, the owner of 48,200 shares of common stock, has
notified the Company of its intention to introduce the following proposal for
consideration and action by the stockholders at the 1996 Annual Meeting:
"BE IT RESOLVED: That the stockholders of General Instrument urge
that the Board of Directors take the necessary steps to declassify the
Board of Directors for the purpose of director elections. The Board
declassification shall be done in a manner that does not affect the
unexpired terms of directors previously elected."
The Board of Directors intends to submit to stockholders at the 1997 Annual
Meeting, and to recommend approval of, a proposal to amend the Company's
certificate of incorporation to declassify the Board of Directors. Accordingly,
the Board of Directors recommends a vote FOR approval of the Stockholder
Proposal.
Adoption of the Stockholder Proposal requires the approval by the
affirmative vote of a majority of the shares present in person or by proxy and
entitled to vote thereon. Adoption of the Stockholder Proposal will not,
however, immediately result in the declassification of the Board of Directors.
Declassification would require an amendment to the Company's certificate of
incorporation to delete provisions requiring a classified Board of Directors.
The Board of Directors intends to propose to stockholders such amendment at the
1997 Annual Meeting. Approval of this amendment to the certificate of
incorporation will require the affirmative vote of a majority of the outstanding
shares, assuming a quorum is present, at the 1997 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE STOCKHOLDER
PROPOSAL. PROXIES WILL BE VOTED FOR APPROVAL OF THE STOCKHOLDER PROPOSAL UNLESS
OTHERWISE SPECIFIED IN THE PROXY.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP, as independent
auditors for the fiscal year ending December 31, 1996, upon the recommendation
of its Audit Committee. Deloitte & Touche LLP has served as auditors for the
Company since September 1990. A representative of Deloitte & Touche LLP will be
in attendance at the 1996 Annual Meeting with the opportunity to make a
statement if the representative desires to do so and will be available to
respond to appropriate questions.
26
<PAGE>
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers, directors
and regular employees of the Company and its subsidiaries, none of whom will
receive additional compensation therefor, may solicit proxies in person or by
telephone, telegraph or other means. Solicitation will also be made by employees
of Morrow & Co., Inc., which firm will be paid a fee of $5,500, plus expenses.
As is customary, the Company will, upon request, reimburse brokerage firms,
banks, trustees, nominees and other persons for their out-of-pocket expenses in
forwarding proxy materials to their principals.
STOCKHOLDER PROPOSALS FOR THE 1997
ANNUAL MEETING OF STOCKHOLDERS
Stockholders may present proposals which may be proper subjects for
inclusion in the proxy statement and for consideration at an Annual Meeting. To
be considered, proposals must be submitted on a timely basis. Proposals for the
1997 Annual Meeting must be received by the Company no later than November 15,
1996. Proposals, as well as any questions related thereto, should be submitted
in writing to the Secretary of the Company. Proposals may be included in the
proxy statement for the 1997 Annual Meeting if they comply with certain rules
and regulations promulgated by the Securities and Exchange Commission.
OTHER MATTERS
The Company knows of no other matter to be brought before the 1996 Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the meeting, it is the intention of the persons named in the proxy to
vote the same with respect to any such matter in accordance with their best
judgment.
The Company will furnish, without charge, to each person whose proxy is
being solicited, upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits thereto also
will be furnished upon the payment of a reasonable duplicating charge. Requests
in writing for copies of any such materials should be directed to Ms. Susan M.
Meyer, Secretary, General Instrument Corporation, 8770 West Bryn Mawr Avenue,
Chicago, Illinois 60631.
By order of the Board of Directors,
/s/ Susan M. Meyer
Susan M. Meyer
Secretary
Chicago, Illinois
March 15, 1996
27
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
GENERAL INSTRUMENT CORPORATION
1993 LONG-TERM INCENTIVE PLAN
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C> <C>
1. Establishment, Purpose and Effective Date and Termination of the FLGI Holding Corp. Stock Option Plan.... A-3
(a) Establishment................................................................................. A-3
(b) Purpose....................................................................................... A-3
(c) Effective Date................................................................................ A-3
(d) Termination of the FLGI Holding Corp. Stock Option Plan....................................... A-3
2. Definitions.............................................................................................. A-3
3. Scope of the Plan........................................................................................ A-6
(a) Number of Shares Available Under the Plan..................................................... A-6
(b) Reduction in the Available Shares in Connection with Award Grants............................. A-7
(c) Effect of the Expiration or Termination of Awards............................................. A-7
(d) Maximum Number of Options and Stock Appreciation Rights to any Individual Grantee............. A-7
4. Administration........................................................................................... A-7
(a) Committee Administration...................................................................... A-7
(b) Board Reservation and Delegation.............................................................. A-7
(c) Committee Authority........................................................................... A-8
(d) Committee Determinations Final................................................................ A-8
5. Eligibility.............................................................................................. A-8
6. Conditions to Grants..................................................................................... A-8
(a) General Conditions............................................................................ A-8
(b) Grant of Options and Option Price............................................................. A-9
(c) Grant of Incentive Stock Options.............................................................. A-9
(d) Grant of Shares of Restricted Stock........................................................... A-10
(e) Grant of Stock Appreciation Rights............................................................ A-11
(f) Grant of Performance Units and Performance Shares............................................. A-12
(g) Grant of Phantom Stock........................................................................ A-12
(h) Tandem Awards................................................................................. A-12
7. Non-transferability...................................................................................... A-12
8. Exercise................................................................................................. A-12
(a) Exercise of Options........................................................................... A-12
(b) Exercise of Stock Appreciation Rights......................................................... A-13
(c) Exercise of Peformance Units.................................................................. A-14
(d) Payment of Performance Shares................................................................. A-14
(e) Payment of Phantom Stock Awards............................................................... A-15
(f) Special Rules for Section 16 Grantees......................................................... A-15
(g) Exercise, Cancellation, Expiration or Forfeiture of Tandem Awards............................. A-15
9. Effect of Certain Transactions........................................................................... A-15
10. Mandatory Withholding Taxes.............................................................................. A-15
11. Termination of Employment................................................................................ A-16
12. Securities Law Matters................................................................................... A-16
13. No Funding Required...................................................................................... A-16
14. No Employment Rights..................................................................................... A-17
15. Rights as a Stockholder.................................................................................. A-17
16. Nature of Payments....................................................................................... A-17
17. Non-Uniform Determinations............................................................................... A-17
18. Adjustments.............................................................................................. A-17
19. Amendment of the Plan.................................................................................... A-17
20. Termination of the Plan.................................................................................. A-18
21. No Illegal Transactions.................................................................................. A-18
22. Governing Law............................................................................................ A-18
23. Severability............................................................................................. A-18
</TABLE>
A-2
<PAGE>
1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE AND TERMINATION OF THE FLGI
HOLDING CORP. STOCK OPTION PLAN.
(a) ESTABLISHMENT. The Company hereby establishes the General Instrument
Corporation 1993 Long-Term Incentive Plan (as set forth herein and from time to
time amended, the "Plan").
(b) PURPOSE. The primary purpose of the Plan is to provide a means by which
key employees and directors of the Company and its Subsidiaries can acquire and
maintain stock ownership, thereby strengthening their commitment to the success
of the Company and its Subsidiaries and their desire to remain employed by the
Company and its Subsidiaries, focusing their attention on managing the Company
as an equity owner, and aligning their interests with those of the Company's
stockholders. The Plan also is intended to attract and retain key employees and
to provide such employees with additional incentive and reward opportunities
designed to encourage them to enhance the profitable growth of the Company and
its Subsidiaries.
(c) EFFECTIVE DATE. The Plan shall become effective upon its adoption by
the Board, subject to the approval of the holders of a majority of the shares of
Stock of the Company present or represented by proxy at the annual meeting of
stockholders held in 1993.
(d) TERMINATION OF THE FLGI HOLDING CORP. STOCK OPTION PLAN. Effective upon
stockholder approval of this Plan, the FLGI Holding Corp. Stock Option Plan
shall terminate and the shares of Stock allotted for stock option grants under
that plan, which are not the subject of outstanding options granted under that
plan, shall not be available for the granting of any further options or other
awards under that plan or any other employee or director plan or arrangement of
the Company. The options outstanding under the FLGI Holding Corp. Stock Option
Plan shall remain outstanding and exercisable in accordance with their
respective terms.
2. DEFINITIONS.
As used in the Plan, terms defined parenthetically immediately after their
use shall have the respective meanings provided by such definitions and the
terms set forth below shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Award" means Options, shares of restricted Stock, stock
appreciation rights, performance units, or performance shares granted under
the Plan.
(b) "Award Agreement" means the written agreement by which an Award is
evidenced.
(c) "Beneficial Owner", "Beneficially Owned" and "Beneficially Owning"
shall have the meanings applicable under Rule 13d-3 promulgated under the
1934 Act.
(d) "Board" means the board of directors of the Company.
(e) "Change in Capitalization" means any increase or reduction in the
number of shares of Stock, or any change in the shares of Stock or exchange
of shares of Stock for a different number or kind of shares or other
securities by reason of a stock dividend, extraordinary dividend, stock
split, reverse stock split, share combination, reclassification,
recapitalization, merger, consolidation, spin-off, split-up, reorganization,
issuance of warrants or rights, liquidation, exchange of shares, repurchase
of shares, change in corporate structure, or similar event, of or by the
Company.
(f) "Change of Control" means any of the following:
(i) the acquisition by any Person, other than Instrument Partners or
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-IV or any of their affiliates (collectively, the "Forstmann
Little Companies") of Beneficial Ownership of Voting Securities which,
when added to the Voting Securities then Beneficially Owned by such
Person, would result in such Person Beneficially Owning (A) 33% or more
of the combined
A-3
<PAGE>
Voting Power of the Company's then outstanding Voting Securities and (B)
a number of Voting Securities greater than the aggregate number of Voting
Securities then Beneficially Owned by the Forstmann Little Companies;
PROVIDED, HOWEVER, that for purposes of this paragraph (i), a Person
shall not be deemed to have made an acquisition of Voting Securities if
such Person: (1) acquires Voting Securities as a result of a stock split,
stock dividend or other corporate restructuring in which all stockholders
of the class of such Voting Securities are treated on a pro rata basis;
(2) acquires the Voting Securities directly from the Company; (3) becomes
the Beneficial Owner of 33% or more of the combined Voting Power of the
Company's then outstanding Voting Securities solely as a result of the
acquisition of Voting Securities by the Company or any Subsidiary which,
by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by such Person, provided
that if (x) a Person would own at least such percentage as a result of
the acquisition by the Company or any Subsidiary and (y) after such
acquisition by the Company or any Subsidiary, such Person acquires Voting
Securities, then an acquisition of Voting Securities shall have occurred;
(4) is the Company or any corporation or other Person of which a majority
of its voting power or its equity securities or equity interest is owned
directly or indirectly by the Company (a "Controlled Entity"); or (5)
acquires Voting Securities in connection with a "Non-Control Transaction"
(as defined in paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date, are members of
the Board (the "Incumbent Board") cease for any reason to constitute at
least two-thirds of the Board; PROVIDED, HOWEVER, that if either the
election of any new director or the nomination for election of any new
director by the Company's stockholders was approved by a vote of at least
two-thirds of the Incumbent Board prior to such election or nomination,
such new director shall be considered as a member of the Incumbent Board;
PROVIDED FURTHER, HOWEVER, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation or reorganization involving the
Company (a "Business Combination"), unless
(1) the stockholders of the Company, immediately before the
Business Combination, own, directly or indirectly immediately
following the Business Combination, at least a majority of the
combined voting power of the outstanding voting securities of the
corporation resulting from the Business Combination (the
"Surviving Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately before the
Business Combination, and
(2) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
the Business Combination constitute at least a majority of the
members of the Board of Directors of the Surviving Corporation,
and
(3) no Person (other than the Company or any Controlled
Entity, a trustee or other fiduciary holding securities under one
or more employee benefit plans or arrangements (or any trust
forming a part thereof) maintained by the Company, the Surviving
Corporation or any Controlled Entity, or any Person who,
immediately prior to the Business Combination, had Beneficial
Ownership of 33% or more of the then outstanding Voting
Securities) has Beneficial Ownership of 33% or more of the
A-4
<PAGE>
combined voting power of the Surviving Corporation's then
outstanding voting securities (a Business Combination satisfying
the conditions of clauses (1), (2) and (3) of this subparagraph
(A) shall be referred to as a "Non-Control Transaction");
(B) a complete liquidation or dissolution of the Company; or
(C) the sale or other disposition of all or substantially all of
the assets of the Company (other than a transfer to a Controlled
Entity).
Notwithstanding the foregoing, a Change of Control shall not be deemed to
occur solely because 33% or more of the then outstanding Voting Securities is
Beneficially Owned by (x) a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Company or any Controlled Entity or (y) any
corporation which, immediately prior to its acquisition of such interest, is
owned directly or indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to such
acquisition.
(g) "Committee" means the committee of the Board appointed pursuant to
Article 4.
(h) "Company" means General Instrument Corporation, a Delaware
corporation.
(i) "Disability" means a mental or physical condition which, in the
opinion of the Committee, renders a Grantee unable or incompetent to carry
out the job responsibilities which such Grantee held or the duties to which
such Grantee was assigned at the time the disability was incurred, and which
is expected to be permanent or for an indefinite duration.
(j) "Effective Date" means the date that the Plan is adopted by the
Board.
(k) "Fair Market Value" of any security of the Company or any other
issuer means, as of any applicable date:
(i) if the security is listed for trading on the New York Stock
Exchange, the closing price, regular way, of the security as reported on
the New York Stock Exchange Composite Tape, or if no such reported sale
of the security shall have occurred on such date, on the next preceding
date on which there was such a reported sale, or
(ii) if the security is not so listed, but is listed on another
national securities exchange or authorized for quotation on the National
Association of Securities Dealers Inc.'s NASDAQ National Market System
("NASDAQ/NMS"), the closing price, regular way, of the security on such
exchange or NASDAQ/NMS, as the case may be, or if no such reported sale
of the security shall have occurred on such date, on the next preceding
date on which there was such a reported sale, or
(iii) if the security is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the
average of the closing bid and asked prices as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
or, if no such prices shall have been so reported for such date, on the
next preceding date for which such prices were so reported, or
(iv) if the security is not listed for trading on a national
securities exchange or is not authorized for quotation on NASDAQ/NMS or
NASDAQ, the fair market value of the security as determined in good faith
by the Committee.
(l) "Grant Date" means the date of grant of an Award determined in
accordance with Article 6.
(m) "Grantee" means an individual who has been granted an Award.
(n) "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Internal Revenue Code and designated by the Committee
as an Incentive Stock Option.
A-5
<PAGE>
(o) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and regulations and rulings thereunder. References to a particular
Section of the Internal Revenue Code shall include references to successor
provisions.
(p) "Measuring Period" has the meaning specified in Article 6(f)(ii)(B).
(q) "Minimum Consideration" means the $.0l par value per share of Stock
or such larger amount determined pursuant to resolution of the Board to be
capital within the meaning of Section 154 of the Delaware General
Corporation Law.
(r) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(s) "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option or other type of statutory stock option under the
Internal Revenue Code.
(t) "Option" means an option to purchase Stock granted under the Plan.
(u) "Option Price" means the per share purchase price of (i) Stock
subject to an Option or (ii) restricted Stock subject to an Option.
(v) "Performance Percentage" has the meaning specified in Article
6(f)(ii)(C).
(w) "Person" means a person within the meaning of Sections 13(d) and
14(d) of the 1934 Act.
(x) "Plan" has the meaning set forth in Article l(a).
(y) "SEC" means the Securities and Exchange Commission.
(z) "Section 16 Grantee" means a person subject to potential liability
with respect to equity securities of the Company under Section 16(b) of the
1934 Act.
(aa) "Stock" means common stock, par value $.0l per share, of the
Company.
(bb) "Subsidiary" means a corporation as defined in Section 424(f) of
the Internal Revenue Code, with the Company being treated as the employer
corporation for purposes of this definition.
(cc) "10% Owner" means a person who owns stock (including stock treated
as owned under Section 424(d) of the Internal Revenue Code) possessing more
than 10% of the Voting Power of the Company.
(dd) "Termination of Employment" occurs the first day on which an
individual is for any reason no longer employed by the Company or any of its
Subsidiaries, or with respect to an individual who is an employee of a
Subsidiary, the first day on which the Company no longer owns Voting
Securities possessing at least 50% of the Voting Power of such Subsidiary.
(ee) "Voting Power" means the combined voting power of the then
outstanding Voting Securities.
(ff) "Voting Securities" means, with respect to the Company or any
Subsidiary, any securities issued by the Company or such Subsidiary,
respectively, which generally entitle the holder thereof to vote for the
election of directors of the Company.
3. SCOPE OF THE PLAN.
(A) NUMBER OF SHARES AVAILABLE UNDER THE PLAN. The maximum number of shares
of Stock that may be made the subject of Awards granted under the Plan is
16,880,000 (or the number and kind of shares of Stock or other securities to
which such shares of Stock are adjusted upon a Change in Capitalization pursuant
to Article 18); PROVIDED, HOWEVER, that, in the aggregate, not more than one-
third of the number of allotted shares may be made the subject of restricted
Stock and phantom stock Awards under the Plan. The Company shall reserve for the
purpose of the Plan, out of its authorized but unissued shares of Stock or out
of shares held in the Company's treasury, or partly out of each,
A-6
<PAGE>
such number of shares as shall be determined by the Board. The Board shall have
the authority to cause the Company to purchase from time to time shares of Stock
to be held as treasury shares and used for or in connection with Awards.
(b) REDUCTION IN THE AVAILABLE SHARES IN CONNECTION WITH AWARD GRANTS. Upon
the grant of an Award, the number of shares of Stock available under Article
3(a) for the granting of further Awards shall be reduced as follows:
(i) PERFORMANCE UNITS DENOMINATED IN DOLLARS. In connection with the
granting of each performance unit denominated in dollars, the number of
shares of Stock available under Article 3(a) for the granting of further
Awards shall be reduced by the quotient of (x) the dollar amount represented
by the performance unit divided by (y) the Fair Market Value of a share of
Stock on the date immediately preceding the Grant Date of the performance
unit.
(ii) OTHER AWARDS. In connection with the granting of each Award, other
than a performance unit denominated in dollars, the number of shares of
Stock available under Article 3(a) for the granting of further Awards shall
be reduced by a number of shares equal to the number of shares of Stock in
respect of which the Award is granted or denominated.
Notwithstanding the foregoing, where two or more Awards are granted with
respect to the same shares of Stock, such shares shall be taken into account
only once for purposes of this Article 3(b).
(c) EFFECT OF THE EXPIRATION OR TERMINATION OF AWARDS. If and to the extent
an Award expires, terminates or is cancelled or forfeited for any reason without
having been exercised in full (including, without limitation, a cancellation of
an Option pursuant to Article 4(c)(vi)), the shares of Stock associated with the
expired, terminated, cancelled or forfeited portion of the Award (to the extent
the number of shares available for the granting of Awards was reduced pursuant
to Article 3(b)) shall again become available for Awards under the Plan.
Notwithstanding anything contained in this Article 3, the number of shares
of Stock available for Awards at any time under the Plan shall be reduced to
such lesser amount as may be required pursuant to the methods of calculation
necessary so that the exemptions provided pursuant to Rule 16b-3 under the 1934
Act will continue to be available for transactions involving all current and
future Awards. In addition, during the period that any Awards remain outstanding
under the Plan, the Committee may make good faith adjustments with respect to
the number of shares of Stock attributable to such Awards for purposes of
calculating the maximum number of shares available for the granting of future
Awards under the Plan, provided that following such adjustments the exemptions
provided pursuant to Rule 16b-3 under the 1934 Act will continue to be available
for transactions involving all current and future Awards.
(d) MAXIMUM NUMBER OF OPTIONS AND STOCK APPRECIATION RIGHTS TO ANY
INDIVIDUAL GRANTEE. No individual Grantee may be granted Options and stock
appreciation rights to purchase more than one-fifth of the maximum number of
shares of Stock that may be made the subject of Awards under the Plan as set
forth in Article 3(a).
4. ADMINISTRATION.
(a) COMMITTEE ADMINISTRATION. Subject to Article 4(b), the Plan shall be
administered by the Committee, which shall consist of not less than three
"disinterested persons" within the meaning of Rule 16b-3 under the 1934 Act;
PROVIDED, HOWEVER, that the membership of the Committee shall be subject to such
changes (including, if appropriate, a change in the minimum number of members of
the Committee) as the Board deems appropriate and permissible to permit
transactions pursuant to the Plan to be exempt from potential liability under
Section 16(b) of the 1934 Act.
(b) BOARD RESERVATION AND DELEGATION. The Board may, in its discretion,
reserve to itself or delegate to another committee of the Board any or all of
the authority and responsibility of the Committee with respect to Awards to
Grantees who are not Section 16 Grantees at the time any such delegated
authority or responsibility is exercised. Such other committee may consist of
one or more
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directors who may, but need not be, officers or employees of the Company or of
any of its Subsidiaries. To the extent that the Board has reserved to itself or
delegated the authority and responsibility of the Committee to such other
committee, all references to the Committee in the Plan shall be to the Board or
to such other committee.
(c) COMMITTEE AUTHORITY. The Committee shall have full and final authority,
in its discretion, but subject to the express provisions of the Plan, as
follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and (B) whether or not
specific Awards shall be identified with other specific Awards, and if so,
whether they shall be exercisable cumulatively with, or alternatively to,
such other specific Awards,
(iii) to interpret the Plan and to make all determinations necessary or
advisable for the administration of the Plan,
(iv) to prescribe, amend, and rescind rules and regulations relating to
the Plan, including, without limitation, rules with respect to the
exercisability and nonforfeitability of Awards upon the Termination of
Employment of a Grantee,
(v) to determine the terms and provisions of the Award Agreements, which
need not be identical and, with the consent of the Grantee, to modify any
such Award Agreement at any time,
(vi) to cancel, with the consent of the Grantee, outstanding Awards,
(vii) to accelerate the exercisability of, and to accelerate or waive any
or all of the restrictions and conditions applicable to, any Award,
(viii) to make such adjustments or modifications to Awards to Grantees
working outside the United States as are necessary and advisable to fulfill
the purposes of the Plan,
(ix) to authorize any action of or make any determination by the Company
as the Committee shall deem necessary or advisable for carrying out the
purposes of the Plan, and
(x) to impose such additional conditions, restrictions, and limitations
upon the grant, exercise or retention of Awards as the Committee may, before
or concurrently with the grant thereof, deem appropriate, including, without
limitation, requiring simultaneous exercise of related identified Awards,
and limiting the percentage of Awards which may from time to time be
exercised by a Grantee.
(d) COMMITTEE DETERMINATIONS FINAL. The determination of the Committee on
all matters relating to the Plan or any Award Agreement shall be conclusive and
final. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award.
5. ELIGIBILITY.
Awards may be granted to any employee of the Company or any of its
Subsidiaries. In selecting the individuals to whom Awards may be granted, as
well as in determining the number of shares of Stock subject to, and the other
terms and conditions applicable to, each Award, the Committee shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan. In addition, Nonqualified Stock Options may be granted to any nonemployee
director of the Company, subject to the limitation set forth in Article 6(b)(ii)
and such other terms and conditions as the Committee deems appropriate in
promoting the purposes of the Plan.
6. CONDITIONS TO GRANTS.
(a) GENERAL CONDITIONS.
(i) The Grant Date of an Award shall be the date on which the Committee
grants the Award or such later date as specified in advance by the
Committee.
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(ii) The term of each Award (subject to Article 6(c) with respect to
Incentive Stock Options) shall be a period of not more than ten years from
the Grant Date, and shall be subject to earlier termination as provided
herein or in the applicable Award Agreement.
(iii) A Grantee may, if otherwise eligible, be granted additional Awards
in any combination.
(iv) The Committee may grant Awards with terms and conditions which
differ among the Grantees thereof. To the extent not set forth in the Plan,
the terms and conditions of each Award shall be set forth in an Award
Agreement.
(b) GRANT OF OPTIONS AND OPTION PRICE. The Committee may, in its
discretion, grant Options as follows:
(i) EMPLOYEE OPTIONS. Options to acquire unrestricted Stock or
restricted Stock may be granted to any employee eligible under Article 5
to receive Awards. No later than the Grant Date of any Option, the Committee
shall determine the Option Price which shall not be less than 100% of the
Fair Market Value of the Stock on the Grant Date.
(ii) NONEMPLOYEE DIRECTOR OPTIONS. Nonqualified Stock Options to
purchase up to an aggregate of 40,000 shares of unrestricted Stock may be
granted to any nonemployee director of the Company (other than nonemployee
directors who were directors on February 2, 1993) at an Option Price
determined by the Committee, which shall not be less than 100% of the Fair
Market Value of the Stock on the Grant Date.
(c) GRANT OF INCENTIVE STOCK OPTIONS. At the time of the grant of any
Option, the Committee may designate that such Option shall be an Incentive Stock
Option. Any Option designated as an Incentive Stock Option:
(i) shall have an Option Price of (A) not less than 100% of the Fair
Market Value of the Stock on the Grant Date or (B) in the case of a 10%
Owner, not less than 110% of the Fair Market Value of the Stock on the Grant
Date;
(ii) shall have a term of not more than ten years (five years, in the
case of a 10% Owner) from the Grant Date, and shall be subject to earlier
termination as provided herein or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value (determined for each
Incentive Stock Option at its Grant Date) of Stock with respect to which
Incentive Stock Options are exercisable for the first time by such Grantee
during any calendar year (under the Plan and any other employee stock option
plan of the Grantee's employer or any parent or subsidiary thereof ("Other
Plans")), determined in accordance with the provisions of Section 422 of the
Internal Revenue Code, which exceeds $100,000 (the "$100,000 Limit");
(iv) shall, if, with respect to any grant, the aggregate Fair Market
Value of Stock (determined on the Grant Date) of all Incentive Stock Options
previously granted under the Plan and any Other Plans ("Prior Grants") and
any Incentive Stock Options under such grant (the "Current Grant") which are
exercisable for the first time during any calendar year would exceed the
$100,000 Limit, be exercisable as follows:
(A) the portion of the Current Grant exercisable for the first time
by the Grantee during any calendar year which would be, when added to any
portions of any Prior Grants exercisable for the first time by the
Grantee during such calendar year with respect to Stock which would have
an aggregate Fair Market Value (determined as of the respective Grant
Date for such Options) in excess of the $100,000 Limit shall,
notwithstanding the terms of the Current Grant, be exercisable for the
first time by the Grantee in the first subsequent calendar year or years
in which it could be exercisable for the first time by the Grantee when
added to all Prior Grants without exceeding the $100,000 Limit; and
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(B) if, viewed as of the date of the Current Grant, any portion of a
Current Grant could not be exercised under the provisions of Article
6(c)(iv)(A) during any calendar year commencing with the calendar year in
which it is first exercisable through and including the last calendar
year in which it may by its terms be exercised, such portion of the
Current Grant shall not be an Incentive Stock Option, but shall be
exercisable as a separate Nonqualified Stock Option at such date or dates
as are provided in the Current Grant;
(v) shall be granted within ten years from the earlier of the date the
Plan is adopted by the Board or the date the Plan is approved by the
stockholders of the Company; and
(vi) shall require the Grantee to notify the Committee of any disposition
of any Stock issued pursuant to the exercise of the Incentive Stock Option
under the circumstances described in Section 421(b) of the Internal Revenue
Code (relating to certain disqualifying dispositions), within ten days of
such disposition.
(d) GRANT OF SHARES OF RESTRICTED STOCK.
(i) The Committee may, in its discretion, grant shares of restricted Stock
to any employee eligible under Article 5 to receive Awards.
(ii) Before the grant of any shares of restricted Stock, the Committee shall
determine, in its discretion:
(A) whether the certificates for such shares shall be delivered to the
Grantee or held (together with a stock power executed in blank by the
Grantee) in escrow by the Secretary of the Company until such shares become
nonforfeitable or are forfeited,
(B) the per share purchase price of such shares, which may be zero,
PROVIDED, HOWEVER, that
(1) the per share purchase price of all such shares (other than
treasury shares) shall not be less than the Minimum Consideration for
each such share; and
(2) if such shares are to be granted to a Section 16 Grantee and the
purchase price is to be in excess of the Minimum Consideration, to the
extent necessary so that such grant qualifies for the exemption provided
pursuant to Rule 16b-3 under the 1934 Act, the per share purchase price
of any such shares shall be at least 50% of the Fair Market Value of the
Stock on the Grant Date;
(C) the restrictions applicable to such grant; and
(D) whether the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on such shares by the Company shall be
deferred until the lapsing of the restrictions imposed upon such shares and
shall be held by the Company for the account of the Grantee, whether such
dividends shall be reinvested in additional shares of restricted Stock (to
the extent shares are available under Article 3) subject to the same
restrictions and other terms as apply to the shares with respect to which
such dividends are issued or otherwise reinvested in Stock or held in
escrow, whether interest will be credited to the account of the Grantee with
respect to any dividends which are not reinvested in restricted or
unrestricted Stock, and whether any Stock dividends issued with respect to
the restricted Stock to be granted shall be treated as additional shares of
restricted Stock.
(iii) Payment of the purchase price (if greater than zero) for shares of
restricted Stock shall be made in full by the Grantee before the delivery of
such shares and, in any event, no later than ten days after the Grant Date for
such shares. Such payment may be made, as determined by the Committee in its
discretion, in any one or any combination of the following:
(A) cash, or
(B) shares of restricted or unrestricted Stock owned by the Grantee
prior to such grant and valued at its Fair Market Value on the business day
immediately preceding the date of payment;
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PROVIDED, HOWEVER, that, in the case of payment in shares of restricted or
unrestricted Stock,
(1) the use of shares of restricted or unrestricted Stock in
payment of such purchase price by a Section 16 Grantee is subject to
the prior receipt by the Company of either an opinion of counsel for
the Company or an interpretive or "no action" letter from the staff
of the SEC to the effect that such use of stock does not raise the
potential for liability under Section 16(b) of the 1934 Act or render
inapplicable any exemption otherwise available pursuant to Rule 16b-3
under the 1934 Act; and
(2) if the purchase price for restricted Stock ("New Restricted
Stock") is paid with shares of restricted Stock ("Old Restricted
Stock"), the restrictions applicable to the New Restricted Stock
shall be the same as if the Grantee had paid for the New Restricted
Stock in cash unless, in the judgment of the Committee, the Old
Restricted Stock was subject to a greater risk of forfeiture, in
which case a number of shares of New Restricted Stock equal to the
number of shares of Old Restricted Stock tendered in payment for New
Restricted Stock shall be subject to the same restrictions as the Old
Restricted Stock, determined immediately before such payment.
(iv) The Committee may, but need not, provide that all or any portion of a
Grantee's Award of restricted Stock shall be forfeited
(A) except as otherwise specified in the Award Agreement, upon the
Grantee's Termination of Employment within a specified time period after the
Grant Date, or
(B) if the Company or the Grantee does not achieve specified performance
goals within a specified time period after the Grant Date and before the
Grantee's Termination of Employment, or
(C) upon failure to satisfy such other restrictions as the Committee may
specify in the Award Agreement.
(v) If a share of restricted Stock is forfeited, then
(A) the Grantee shall be deemed to have resold such share of restricted
Stock to the Company at the lesser of (1) the purchase price paid by the
Grantee (such purchase price shall be deemed to be zero dollars ($0) if no
purchase price was paid) or (2) the Fair Market Value of a share of Stock on
the date of such forfeiture;
(B) the Company shall pay to the Grantee the amount determined under
clause (A) of this sentence, if not zero, as soon as is administratively
practicable, but in any case within 90 days after forfeiture; and
(C) such share of restricted Stock shall cease to be outstanding, and
shall no longer confer on the Grantee thereof any rights as a stockholder of
the Company, from and after the date of the Company's tender of the payment
specified in clause (B) of this sentence, whether or not such tender is
accepted by the Grantee, or the date the restricted Stock is forfeited if no
purchase price was paid for the restricted Stock.
(vi) Any share of restricted Stock shall bear an appropriate legend
specifying that such share is non-transferable and subject to the restrictions
set forth in the Plan. If any shares of restricted Stock become nonforfeitable,
the Company shall cause certificates for such shares to be issued or reissued
without such legend and delivered to the Grantee or, at the request of the
Grantee, shall cause such shares to be credited to a brokerage account specified
by the Grantee.
(e) GRANT OF STOCK APPRECIATION RIGHTS. The Committee may grant stock
appreciation rights to any employee eligible under Article 5 to receive Awards.
When granted, stock appreciation rights may, but need not, be identified with
shares of Stock subject to a specific Option awarded to the Grantee (including
any Option granted on or before the Grant Date of the stock appreciation rights)
in a number equal to or different from the number of stock appreciation rights
so granted. If stock
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appreciation rights are identified with shares of Stock subject to an Option
then, unless otherwise provided in the applicable Award Agreement, the Grantee's
associated stock appreciation rights shall terminate upon the exercise,
expiration, termination, forfeiture, or cancellation of such Option.
(f) GRANT OF PERFORMANCE UNITS AND PERFORMANCE SHARES.
(i) The Committee may, in its discretion, grant performance units or
performance shares to any employee eligible under Article 5 to receive Awards.
(ii) Before the grant of any performance unit or performance share, the
Committee shall:
(A) determine performance goals applicable to such grant,
(B) designate a period, of not less than one year nor more than five
years, for the measurement of the extent to which performance goals are
attained (the "Measuring Period"), and
(C) assign a "Performance Percentage" to each level of attainment of
performance goals during the Measuring Period, with the percentage
applicable to minimum attainment being zero percent (0%) and the percentage
applicable to optimum attainment to be determined by the Committee from time
to time.
(iii) In establishing performance goals, the Committee may consider such
performance factor or factors as it deems appropriate, including, without
limitation, net income, growth in net income, earnings per share, growth of
earnings per share, return on equity, or return on capital. The Committee may,
at any time, in its discretion, modify performance goals in order to facilitate
their attainment for any reason, including, but not limited to, recognition of
unusual or nonrecurring events affecting the Company or a Subsidiary, or changes
in applicable laws, regulations or accounting principles. If a Grantee is
promoted, demoted or transferred to a different business unit of the Company
during a performance period, the Committee may adjust or eliminate the
performance goals as it deems appropriate.
(g) GRANT OF PHANTOM STOCK. The Committee may, in its discretion, grant
shares of phantom stock to any employee who is eligible under Article 5 to
receive Awards and is employed outside the United States. Such phantom stock
shall be subject to the terms and conditions established by the Committee and
set forth in the applicable Award Agreement.
(h) TANDEM AWARDS. The Committee may grant and identify any Award with any
other Award granted under the Plan, on terms and conditions determined by the
Committee.
7. NON-TRANSFERABILITY.
Each Award (other than restricted Stock) granted hereunder shall by its
terms not be assignable or transferable, other than as permitted pursuant to the
applicable provisions of Rule 16b-3 under the 1934 Act and as provided in the
applicable Award Agreement, and may be exercised, during the Grantee's lifetime,
only by the Grantee. Each share of restricted Stock shall be non-transferable
until such share becomes nonforfeitable. Notwithstanding the foregoing, the
Grantee may, to the extent provided in the Plan and in a manner specified by the
Committee, (a) designate in writing a beneficiary to exercise his or her Options
after the Grantee's death, and (b) transfer an Option (other than an Incentive
Stock Option), stock appreciation right, performance unit or performance share
to a revocable, INTER VIVOS trust as to which the Grantee is both the settlor
and the trustee, but in no event shall any such transfer be effective unless the
Company shall have received an opinion of counsel for the Company or an
interpretive or "no action" letter from the staff of the SEC to the effect that
such a transfer does not raise the potential for liability under Section 16(b)
of the 1934 Act or render inapplicable any exemption otherwise available
pursuant to Rule 16b-3 under the 1934 Act.
8. EXERCISE.
(a) EXERCISE OF OPTIONS. Subject to Articles 4(c)(vii), 11 and 12 and such
terms and conditions as the Committee may impose, each Option shall be
exercisable in one or more installments commencing not earlier than the first
anniversary of the Grant Date of such Option; PROVIDED, HOWEVER, that all
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Options held by each Grantee shall become fully (100%) exercisable upon the
occurrence of a Change of Control regardless of whether the acceleration of the
exercisability of such Options would cause such Options to lose their
eligibility for treatment as Incentive Stock Options. Notwithstanding the
foregoing, Options may not be exercised by a Grantee for twelve months following
a hardship distribution to the Grantee, to the extent such exercise is
prohibited under Treasury Regulation Section 1.401(k)-l(d)(2)(iv)(B)(4). Each
Option shall be exercised by delivery to the Company of written notice of intent
to purchase a specific number of shares of Stock or restricted Stock subject to
the Option. The Option Price of any shares of Stock or restricted Stock as to
which an Option shall be exercised shall be paid in full at the time of the
exercise. Payment may be made, as determined by the Committee in its discretion,
in any one or any combination of the following:
(i) cash,
(ii) shares of restricted or unrestricted Stock owned by the Grantee
prior to the exercise of the Option and valued at its Fair Market Value on
the last business day immediately preceding the date of exercise, or
(iii) through simultaneous sale through a broker of shares of
unrestricted Stock acquired on exercise, as permitted under Regulation T of
the Federal Reserve Board.
Payment in Stock or restricted Stock may be made, with the consent of the
Committee and if the Company obtains an opinion of counsel for the Company or an
interpretive or "no action" letter from the staff of the SEC to the effect that
no potential liability under Section 16(b) of the 1934 Act would result, by
pyramiding (I.E., paying the Option Price with shares of Stock simultaneously
acquired by Option exercise).
If restricted Stock ("Tendered Restricted Stock") is used to pay the Option
Price for Stock, then a number of shares of Stock acquired on exercise of the
Option equal to the number of shares of Tendered Restricted Stock shall be
subject to the same restrictions as the Tendered Restricted Stock, determined as
of the date of exercise of the Option. If the Option Price for restricted Stock
is paid with Tendered Restricted Stock, and if the Committee determines that the
restricted Stock acquired on exercise of the Option shall be subject to
restrictions ("Greater Restrictions") that cause it to have a greater risk of
forfeiture than the Tendered Restricted Stock, then notwithstanding the
preceding sentence, all the restricted Stock acquired on exercise of the Option
shall be subject to such Greater Restrictions.
Shares of unrestricted Stock acquired by a Grantee on exercise of an Option
shall be delivered to the Grantee or, at the request of the Grantee, shall be
credited directly to a brokerage account specified by the Grantee.
(b) EXERCISE OF STOCK APPRECIATION RIGHTS. Subject to Articles 4(c)(vii),
11 and 12 and such terms and conditions as the Committee may impose, each stock
appreciation right shall be exercisable not earlier than the first anniversary
of the Grant Date of such stock appreciation right and, if such stock
appreciation right is identified with an Option, to the extent such Option may
be exercised, unless otherwise provided by the Committee. Stock appreciation
rights shall be exercised by delivery to the Company of written notice of intent
to exercise a specific number of stock appreciation rights.
Unless otherwise provided in the applicable Award Agreement, the exercise of
stock appreciation rights which are identified with shares subject to an Option
shall result in the forfeiture of such Option to the extent of such exercise.
The benefit for each stock appreciation right exercised shall be equal to
the excess, if any, of
(i) the Fair Market Value of a share of Stock on the date of such exercise,
over
(ii) an amount equal to
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(A) in the case of a stock appreciation right identified with a share of
Stock subject to an Option, the Option Price of such Option, unless the
Committee in the grant of the stock appreciation right specified a higher
amount, or
(B) in the case of any other stock appreciation right, the Fair Market
Value of a share of Stock on the Grant Date of such stock appreciation
right, unless the Committee in the grant of the stock appreciation right
specified a higher amount;
provided that the Committee, in its discretion, may provide that the benefit for
any stock appreciation right shall not exceed a maximum amount (I.E., a cap) set
by Committee, which cap may be expressed as (i) a percentage of the excess
amount described above (not to exceed 100%), (ii) a percentage of the Fair
Market Value of a share of Stock on the Grant Date of the stock appreciation
right, or (iii) a fixed dollar amount. The benefit upon the exercise of a stock
appreciation right shall be payable in cash, except that the Committee, with
respect to any particular exercise, may, in its discretion, pay benefits wholly
or partly in Stock delivered to the Grantee or credited to a brokerage account
specified by the Grantee.
(c) EXERCISE OF PERFORMANCE UNITS.
(i) Subject to Articles 4(c)(vii), 11 and 12 and such terms and conditions
as the Committee may impose, and unless otherwise provided in the applicable
Award Agreement, if, with respect to any performance unit, the minimum
performance goals have been achieved during the applicable Measuring Period,
then such performance unit shall be deemed exercised on the date on which it
first becomes exercisable.
(ii) The benefit for each performance unit exercised shall be an amount
equal to the product of
(A) the Unit Value (as defined below), multiplied by
(B) the Performance Percentage attained during the Measuring Period for
such performance unit.
(iii) The Unit Value shall be, as specified by the Committee,
(A) a dollar amount,
(B) an amount equal to the Fair Market Value of a share of Stock on the
Grant Date,
(C) an amount equal to the Fair Market Value of a share of Stock on the
exercise date of the performance unit, plus, if so provided in the Award
Agreement, an amount ("Dividend Equivalent Amount") equal to the Fair Market
Value of the number of shares of Stock that would have been purchased if
each dividend paid on a share of Stock on or after the Grant Date and on or
before the exercise date were invested in shares of Stock at a purchase
price equal to its Fair Market Value on the respective dividend payment
date, or
(D) an amount equal to the Fair Market Value of a share of Stock on the
exercise date of the performance unit (plus, if so specified in the Award
Agreement, a Dividend Equivalent Amount), reduced by the Fair Market Value
of a share of Stock on the Grant Date of the performance unit.
(iv) The benefit upon the exercise of a performance unit shall be payable as
soon as is administratively practicable (but in any event within 90 days) after
the later of (A) the date the Grantee is deemed to exercise such performance
unit, or (B) the date (or dates in the event of installment payments) as
provided in the applicable Award Agreement. Such benefit shall be payable in
cash, except that the Committee, with respect to any particular exercise, may,
in its discretion, pay benefits wholly or partly in Stock delivered to the
Grantee or credited to a brokerage account specified by the Grantee. The number
of shares of Stock payable in lieu of cash shall be determined by valuing the
Stock at its Fair Market Value on the business day next preceding the date such
benefit is to be paid.
(d) PAYMENT OF PERFORMANCE SHARES. Subject to Articles 4(c)(vii), 11 and 12
and such terms and conditions as the Committee may impose, and unless otherwise
provided in the applicable Award
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Agreement, if the minimum performance goals specified by the Committee with
respect to an Award of performance shares have been achieved during the
applicable Measuring Period, then the Company shall pay to the Grantee of such
Award (or, at the request of the Grantee, deliver to a brokerage account
specified by the Grantee) shares of Stock equal in number to the product of the
number of performance shares specified in the applicable Award Agreement
multiplied by the Performance Percentage achieved during such Measuring Period,
except to the extent that the Committee in its discretion determines that cash
be paid in lieu of some or all of such shares of Stock. The amount of cash
payable in lieu of a share of Stock shall be determined by valuing such share at
its Fair Market Value on the business day next preceding the date such cash is
to be paid. Payments pursuant to this Article 8(d) shall be made as soon as
administratively practicable (but in any event within 90 days) after the end of
the applicable Measuring Period. Any performance shares with respect to which
the performance goals have not been achieved by the end of the applicable
Measuring Period shall expire.
(e) PAYMENT OF PHANTOM STOCK AWARDS. Upon the vesting of a phantom stock
Award, the Grantee shall be entitled to receive a cash payment in respect of
each share of phantom stock which shall be equal to the Fair Market Value of a
share of Stock as of the date the phantom stock Award was granted, or such other
date as determined by the Committee at the time the phantom stock Award was
granted. The Committee may, at the time a phantom stock Award is granted,
provide a limitation on the amount payable in respect of each share of phantom
stock.
(f) SPECIAL RULES FOR SECTION 16 GRANTEES. No stock appreciation right,
Option, performance unit (if the benefit payable with respect to such
performance unit is to be determined by reference to the Fair Market Value of
the Stock on the date the performance unit is deemed to be exercised) or
performance share shall be exercisable by a Section 16 Grantee during the first
six months after its Grant Date, except as may be exempt from Section 16(b) of
the 1934 Act pursuant to Rule 16a-2(d) under the 1934 Act.
(g) EXERCISE, CANCELLATION, EXPIRATION OR FORFEITURE OF TANDEM AWARDS. Upon
the exercise, cancellation, expiration, forfeiture or payment in respect of any
Award which is identified with any other Award (the "Tandem Award") pursuant to
Article 6(h), the Tandem Award shall automatically terminate to the extent of
the number of shares in respect of which the Award is so exercised, cancelled,
expired, forfeited or paid, unless otherwise provided by the Committee at the
time of grant of the Tandem Award or thereafter.
9. EFFECT OF CERTAIN TRANSACTIONS.
With respect to any Award which relates to Stock, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a "Transaction"), the Plan and the Awards issued hereunder shall
continue in effect in accordance with their respective terms and each Grantee
shall be entitled to receive in respect of each share of Stock subject to any
outstanding Awards, upon the vesting, payment or exercise of the Award (as the
case may be), the same number and kind of stock, securities, cash, property, or
other consideration that each holder of a share of Stock was entitled to receive
in the Transaction in respect of a share of Stock.
10. MANDATORY WITHHOLDING TAXES.
The Company shall have the right to deduct from any distribution of cash to
any Grantee an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld (the "Withholding Taxes")
with respect to any Award. If a Grantee is to experience a taxable event in
connection with the receipt of shares pursuant to an Option exercise or the
vesting or payment of another type of Award (a "Taxable Event"), the Grantee
shall pay the Withholding Taxes to the Company prior to the issuance, or release
from escrow, of such shares or payment of such Award. Payment of the applicable
Withholding Taxes may be made, as determined by the Committee in its discretion,
in any one or any combination of (i) cash, (ii) shares of restricted or
unrestricted Stock owned by the Grantee prior to the Taxable Event and valued at
its Fair Market Value on the business day immediately preceding the date of
exercise, or (iii) by making a Tax Election (as described below). For purposes
of this Article 10, a Grantee may make a written election, which may
A-15
<PAGE>
be accepted or rejected at the discretion of the Committee (the "Tax Election"),
to have withheld a portion of the shares then issuable to him or her having an
aggregate Fair Market Value, on the date preceding the date of such issuance,
equal to the Withholding Taxes, provided that in respect of a Section 16 Grantee
either: (i) in the case of a Taxable Event involving any Award (A) the Tax
Election is made at least six months prior to the date of the Taxable Event and
(B) the Tax Election is irrevocable with respect to all Taxable Events of a
similar nature occurring prior to the expiration of six months following a
revocation of the Tax Election; or (ii) in the case of the exercise of an Option
or a stock appreciation right (A) the Grantee makes the Tax Election at least
six months after the date the Option or stock appreciation right was granted,
(B) the Option or stock appreciation right is exercised during the ten day
period beginning on the third business day and ending on the twelfth business
day following the release for publication of the Company's quarterly or annual
statement of sales and earnings (a "Window Period") and (C) the Tax Election is
made during the Window Period in which the related Option or stock appreciation
right is exercised or prior to such Window Period and subsequent to the
immediately preceding Window Period; or (iii) in the case of a Taxable Event
relating to the payment or vesting of an Award which does not involve the
exercise of an Option or a stock appreciation right (A) the Grantee makes the
Tax Election at least six months after the date the Award was granted and (B)
the Tax Election is made (x) in the case of a Taxable Event occurring within a
Window Period, during the Window Period in which the Taxable Event occurs, or
(y) in the case of a Taxable Event not occurring within a Window Period, during
the Window Period immediately preceding the Taxable Event relating to the Award.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Article 10 or impose such other
restrictions or limitations on Tax Elections as may be necessary to ensure that
the Tax Elections will be exempt transactions under Section 16(b) of the 1934
Act, and (ii) permit Tax Elections to be made at such other times and subject to
such other conditions as the Committee determines will constitute exempt
transactions under Section 16(b) of the 1934 Act.
11. TERMINATION OF EMPLOYMENT.
The Award Agreement pertaining to each Award shall set forth the terms and
conditions applicable to such Award upon a Termination of Employment of the
Grantee by the Company, a Subsidiary or an operating division or unit, as the
Committee may, in its discretion, determine at the time the Award is granted or
thereafter.
12. SECURITIES LAW MATTERS.
(a) If the Committee deems it necessary to comply with the Securities Act of
1933, the Committee may require a written investment intent representation by
the Grantee and may require that a restrictive legend be affixed to certificates
for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the Committee
determines that the exercise or nonforfeitability of, or delivery of benefits
pursuant to, any Award would violate any applicable provision of (i) federal or
state securities law or (ii) the listing requirements of any national securities
exchange on which are listed any of the Company's equity securities, then the
Committee may postpone any such exercise, nonforfeitability or delivery, as the
case may be, but the Company shall use its best efforts to cause such exercise,
nonforfeitability or delivery to comply with all such provisions at the earliest
practicable date.
(c) Notwithstanding any provision of the Plan or any Award Agreement to the
contrary, no shares of Stock shall be issued to any Grantee in respect of any
Award prior to the time a registration statement under the Securities Act of
1933 is effective with respect to such shares.
13. NO FUNDING REQUIRED.
Benefits payable under the Plan to any person shall be paid directly by the
Company. The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under the Plan.
A-16
<PAGE>
14. NO EMPLOYMENT RIGHTS.
Neither the establishment of the Plan, nor the granting of any Award shall
be construed to (a) give any Grantee the right to remain employed by the Company
or any of its Subsidiaries or to any benefits not specifically provided by the
Plan or (b) in any manner modify the right of the Company or any of its
Subsidiaries to modify, amend, or terminate any of its employee benefit plans.
15. RIGHTS AS A STOCKHOLDER.
A Grantee shall not, by reason of any Award (other than restricted Stock),
have any right as a stockholder of the Company with respect to the shares of
Stock which may be deliverable upon exercise or payment of such Award until such
shares have been delivered to him. Shares of restricted Stock held by a Grantee
or held in escrow by the Secretary of the Company shall confer on the Grantee
all rights of a stockholder of the Company, except as otherwise provided in the
Plan.
16. NATURE OF PAYMENTS.
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company or any Subsidiary, on the
one hand, and the Grantee, on the other hand, except as such plan or agreement
shall otherwise expressly provide.
17. NON-UNIFORM DETERMINATIONS.
Neither the Committee's nor the Board's determinations under the Plan need
be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive, Awards (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment of Terminations of Employment.
18. ADJUSTMENTS.
In the event of Change in Capitalization, the Committee shall, in its sole
discretion, make equitable adjustment of
(a) the aggregate number and class of shares of Stock or other stock or
securities available under Article 3,
(b) the number and class of shares of Stock or other stock or securities
covered by an Award,
(c) the Option Price applicable to outstanding Options,
(d) the terms of performance unit and performance share grants, and
(e) the Fair Market Value of Stock to be used to determine the amount of the
benefit payable upon exercise of stock appreciation rights, performance units,
performance shares or phantom stock.
19. AMENDMENT OF THE PLAN.
The Board may from time to time in its discretion amend or modify the Plan
without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to retain Incentive Stock Option
treatment under Section 422 of the Internal Revenue Code, (b) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act or (c) under the listing requirements of any
securities exchange on which any of the Company's equity securities are listed.
A-17
<PAGE>
20. TERMINATION OF THE PLAN.
The Plan shall terminate on the tenth (10th) anniversary of the Effective
Date or at such earlier time as the Board may determine. Any termination,
whether in whole or in part, shall not affect any Award then outstanding under
the Plan.
21. NO ILLEGAL TRANSACTIONS.
The Plan and all Awards granted pursuant to it are subject to all laws and
regulations of any governmental authority which may be applicable thereto; and
notwithstanding any provision of the Plan or any Award, Grantees shall not be
entitled to exercise Awards or receive the benefits thereof and the Company
shall not be obligated to deliver any Stock or pay any benefits to a Grantee if
such exercise, delivery, receipt or payment of benefits would constitute a
violation by the Grantee or the Company of any provision of any such law or
regulation.
22. GOVERNING LAW.
Except where preempted by federal law, the law of the State of Delaware
shall be controlling in all matters relating to the Plan, without giving effect
to the conflicts of law principles thereof.
23. SEVERABILITY.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Article or part of an Article so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Article or part of an Article to the fullest extent possible while
remaining lawful and valid.
A-18
<PAGE>
GENERAL INSTRUMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
The undersigned hereby appoints Thomas A. Dumit and Richard C. Smith, each
of them, his attorneys and agents, with full power of substitution to vote as
Proxy for the undersigned, as herein stated, at the annual meeting of
stockholders of General Instrument Corporation to be held at the Hyatt Regency -
O'Hare, 9300 West Bryn Mawr Avenue, Rosemont, Illinois, on Wednesday April 24,
1996 at 3:00 p.m., Central Time, and at any adjournment thereof, according to
the number of votes the undersigned would be entitled to vote if personally
present, on the proposals set forth below and in accordance with their
discretion on any other matters that may properly come before the meeting or any
adjournments thereof. The undersigned hereby acknowledges receipt of the Notice
and Proxy Statement, dated March 15, 1996, and Annual Report to Stockholders for
1995.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
/X/ PLEASE MARK
YOUR CHOICES
LIKE THIS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. ELECTION OF DIRECTORS.
For the election of Daniel F. Akerson, Frank M. Drendel, Steven B. Klinsky
and Robert S. Strauss as Directors, except as indicated.
FOR WITHHELD FOR ALL
/ / / /
INSTRUCTION:
To withhold authority to vote for any INDIVIDUAL nominee, strike a line
through the nominee's name.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED GENERAL
INSTRUMENT CORPORATION 1993 LONG-TERM INCENTIVE PLAN.
FOR AGAINST ABSTAIN
/ / / / / /
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.
FOR AGAINST ABSTAIN
/ / / / / /
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
PLEASE FILL IN, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
NO POSTAGE IS REQUIRED IF RETURNED IN THE ACCOMPANYING ENVELOPE AND MAILED IN
THE UNITED STATES.
Dated: ________________________________________________________________, 1996
Signature ___________________________________________________________________
Signature ___________________________________________________________________
Please sign exactly as your name appears on this Proxy. If acting as executor,
administrator, trustee, guardian, etc., you should so indicate when signing. If
a corporation, please sign the full corporate name, by duly authorized officer.
If a partnership, please sign full partnership name by authorized person. If
shares are held jointly, each stockholder named should sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
GENERAL INSTRUMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
The undersigned hereby appoints Thomas A. Dumit and Richard C. Smith, each
of them, his attorneys and agents, with full power of substitution to vote as
Proxy for the undersigned, as herein stated, at the annual meeting of
stockholders of General Instrument Corporation to be held at the Hyatt Regency -
O'Hare, 9300 West Bryn Mawr Avenue, Rosemont, Illinois, on Wednesday April 24,
1996 at 3:00 p.m., Central Time, and at any adjournment thereof, according to
the number of votes the undersigned would be entitled to vote if personally
present, on the proposals set forth below and in accordance with their
discretion on any other matters that may properly come before the meeting or any
adjournments thereof. The undersigned hereby acknowledges receipt of the Notice
and Proxy Statement, dated March 15, 1996, and Annual Report to Stockholders for
1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS. 2.
For the election of Daniel F. Akerson, Frank M. Drendel,
Steven B. Klinsky and Robert S. Strauss as Directors,
EXCEPT AS INDICATED.
<CAPTION>
<S> <C> <C>
/ / FOR / / WITHHELD FOR ALL
INSTRUCTION:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE AMENDED AND
RESTATED GENERAL INSTRUMENT CORPORATION 1993 LONG-TERM
INCENTIVE PLAN.
</TABLE>
<TABLE>
<S> <C> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
<TABLE>
<S> <C>
PLEASE FILL IN, DATE, SIGN
AND RETURN THIS PROXY IN
THE ACCOMPANYING ENVELOPE.
NO POSTAGE IS REQUIRED IF
RETURNED IN THE AC-
COMPANYING ENVELOPE AND
MAILED IN THE UNITED
STATES.
Dated: , 1996
Signature
Signature
Please sign exactly as
your name appears on this
Proxy. If acting as
executor, administrator,
trustee, guardian, etc.,
you should so indicate
when signing. If a
corporation, please sign
the full corporate name,
by duly authorized
officer. If a partnership,
please sign full
partnership name by
authorized person. If
shares are held jointly,
each stockholder named
should sign.
</TABLE>
<PAGE>
GENERAL INSTRUMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
The undersigned hereby authorizes and directs State Street Bank and Trust
Company, as trustee of the CommScope, Inc. Employees Profit Sharing and Savings
Plan, to vote as Proxy for the undersigned, as herein stated, at the annual
meeting of stockholders of General Instrument Corporation to be held at the
Hyatt Regency -- O'Hare, 9300 West Bryn Mawr Avenue, Rosemont, Illinois, on
Wednesday, April 24, 1996 at 3:00 P.M., Central Time, and at any adjournment
thereof, all shares of Common Stock of General Instrument Corporation allocated
to the account of the undersigned under such Plan, on the proposals set forth
below and in accordance with their discretion on any other matters that may
properly come before the meeting or any adjournments thereof. The undersigned
hereby acknowledges receipt of the Notice and Proxy Statement, dated March 15,
1996, and Annual Report to Stockholders for 1995.
The Board of Directors recommends a vote FOR the following proposals:
1. ELECTION OF DIRECTORS.
/ / FOR the election of Daniel F. Akerson, Frank M. Drendel, Steven B.
Klinsky and Robert S. Strauss as Directors, except as indicated.
/ / WITHHOLD AUTHORITY to vote for all nominees in such election.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME ABOVE.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED GENERAL
INSTRUMENT CORPORATION 1993 LONG-TERM INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
3.STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, THE PROXY WILL BE VOTED IN THE SAME PROPORTION AS THE SHARES FOR WHICH
THE TRUSTEE RECEIVES PROPER VOTING INSTRUCTIONS.
PLEASE FILL IN, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF
RETURNED IN THE ACCOMPANYING ENVELOPE
AND MAILED IN THE UNITED STATES.
Dated: ________________________, 1996
_____________________________________
Signature
_____________________________________
Signature
Please sign exactly as your name
appears on this Proxy. If acting as
executor, administrator, trustee,
guardian, etc., you should so
indicate when signing. If a
corporation, please sign the full
corporate name, by duly authorized
officer. If a partnership, please
sign full partnership name by
authorized person. If shares are held
jointly, each stockholder named
should sign.
<PAGE>
GENERAL INSTRUMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
The undersigned hereby authorizes and directs State Street Bank and Trust
Company, as trustee of the General Instrument Corporation Savings Plan, to vote
as Proxy for the undersigned, as herein stated, at the annual meeting of
stockholders of General Instrument Corporation to be held at the Hyatt Regency
- -- O'Hare, 9300 West Bryn Mawr Avenue, Rosemont, Illinois, on Wednesday, April
24, 1996 at 3:00 P.M., Central Time, and at any adjournment thereof, all shares
of Common Stock of General Instrument Corporation allocated to the account of
the undersigned under such Plan, on the proposals set forth below and in
accordance with their discretion on any other matters that may properly come
before the meeting or any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice and Proxy Statement, dated March 15, 1996,
and Annual Report to Stockholders for 1995.
The Board of Directors recommends a vote FOR the following proposals:
1. ELECTION OF DIRECTORS.
/ / FOR the election of Daniel F. Akerson, Frank M. Drendel, Steven B.
Klinsky and Robert S. Strauss as Directors, except as indicated.
/ / WITHHOLD AUTHORITY to vote for all nominees in such election.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME ABOVE.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED GENERAL
INSTRUMENT CORPORATION 1993 LONG-TERM INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
3.STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED IN THE SAME
PROPORTION AS THE SHARES FOR WHICH THE TRUSTEE RECEIVES PROPER VOTING
INSTRUCTIONS.
PLEASE FILL IN, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF
RETURNED IN THE ACCOMPANYING ENVELOPE
AND MAILED IN THE UNITED STATES.
Dated: ________________________, 1996
_____________________________________
Signature
_____________________________________
Signature
Please sign exactly as your name
appears on this Proxy. If acting as
executor, administrator, trustee,
guardian, etc., you should so
indicate when signing. If a
corporation, please sign the full
corporate name, by duly authorized
officer. If a partnership, please
sign full partnership name by
authorized person. If shares are held
jointly, each stockholder named
should sign.
<PAGE>
GENERAL INSTRUMENT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1996
The undersigned hereby authorizes and directs Banco Santander Puerto Rico,
as trustee of the General Instrument (Puerto Rico), Inc. Savings Plan, to vote
as Proxy for the undersigned, as herein stated, at the annual meeting of
stockholders of General Instrument Corporation to be held at the Hyatt Regency
- -- O'Hare, 9300 West Bryn Mawr Avenue, Rosemont, Illinois, on Wednesday, April
24, 1996 at 3:00 P.M., Central Time, and at any adjournment thereof, all shares
of Common Stock of General Instrument Corporation allocated to the account of
the undersigned under such Plan, on the proposals set forth below and in
accordance with their discretion on any other matters that may properly come
before the meeting or any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice and Proxy Statement, dated March 15, 1996,
and Annual Report to Stockholders for 1995.
The Board of Directors recommends a vote FOR the following proposals:
1. ELECTION OF DIRECTORS.
/ / FOR the election of Daniel F. Akerson, Frank M. Drendel, Steven B.
Klinsky and Robert S. Strauss as Directors, except as indicated.
/ / WITHHOLD AUTHORITY to vote for all nominees in such election.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME ABOVE.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED GENERAL
INSTRUMENT CORPORATION 1993 LONG-TERM INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED IN THE SAME PROPORTION AS THE
SHARES FOR WHICH THE TRUSTEE RECEIVES PROPER VOTING INSTRUCTIONS.
PLEASE FILL IN, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF
RETURNED IN THE ACCOMPANYING ENVELOPE
AND MAILED IN THE UNITED STATES.
Dated: ________________________, 1996
_____________________________________
Signature
_____________________________________
Signature
Please sign exactly as your name
appears on this Proxy. If acting as
executor, administrator, trustee,
guardian, etc., you should so
indicate when signing. If a
corporation, please sign the full
corporate name, by duly authorized
officer. If a partnership, please
sign full partnership name by
authorized person. If shares are held
jointly, each stockholder named
should sign.
