<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-61(e)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
RACOTEK, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / 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 pur-
suant 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>
RS
March 28, 1997
To Our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Racotek, Inc. to be held at the Minneapolis Marriott City Center located at
30 South Seventh Street, Minneapolis, Minnesota 55402, on Tuesday, May 13, 1997,
at 11:00 a.m. Central time.
The matters expected to be acted upon at the meeting are described in detail
in the following Notice of Annual Meeting of Stockholders and Proxy Statement.
It is important that you use this opportunity to take part in the affairs of
your Company by voting on the business to come before this meeting. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE PRIOR TO THE
MEETING. Returning the Proxy does not deprive you of your right to attend the
meeting and to vote your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
[SIG]
Michael A. Fabiaschi
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
RACOTEK, INC.
7301 OHMS LANE, SUITE 200
MINNEAPOLIS, MINNESOTA 55439
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Racotek,
Inc. (the "Company") will be held at the Minneapolis Marriott City Center
located at 30 South Seventh Street, Minneapolis, Minnesota 55402 on Tuesday, May
13, 1997, at 11:00 a.m. Central time, for the following purposes:
1. To elect six directors of the Company, each to hold office until the
next Annual Meeting of Stockholders and until his successor has been elected
and qualified or until his earlier resignation or removal. The following
persons are the nominees for election as directors:
<TABLE>
<S> <C>
Yuval Almog Dixon R. Doll
Jamie B. Bader Michael A. Fabiaschi
Joseph B. Costello Donald L. Lucas
</TABLE>
2. To consider and vote upon a proposal to approve an amendment to the
Company's 1993 Equity Incentive Plan to increase the number of shares of
Common Stock reserved for issuance thereunder from 2,200,000 to 3,200,000
shares.
3. To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants for the Company for the current fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 17, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
[SIG]
Michael A. Fabiaschi
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MINNEAPOLIS, MINNESOTA
MARCH 28, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
<PAGE>
RACOTEK, INC.
7301 OHMS LANE, SUITE 200
MINNEAPOLIS, MINNESOTA 55439
------------------------
PROXY STATEMENT
March 28, 1997
The accompanying proxy is solicited on behalf of the Board of Directors of
Racotek, Inc., a Delaware corporation (the "Company" or "Racotek"), for use at
the Annual Meeting of Stockholders of the Company to be held at the Minneapolis
Marriott City Center located at 30 South Seventh Street, Minneapolis, Minnesota
55402 on Tuesday, May 13, 1997, at 11:00 a.m. Central time (the "Meeting"). All
proxies will be voted in accordance with the instructions contained therein,
and, if no choice is specified, the proxies will be voted in favor of the
nominees and the proposals set forth in the accompanying Notice of Meeting and
this Proxy Statement. This Proxy Statement and the accompanying form of proxy
were first mailed to stockholders on or about March 28, 1997.
VOTING RIGHTS AND SOLICITATION OF PROXIES
At the close of business on March 17, 1997, the Company had 24,871,870
shares of Common Stock outstanding and entitled to vote. No shares of the
Company's Preferred Stock were outstanding. Only holders of record of the
Company's Common Stock at the close of business on March 17, 1997 (the "Record
Date") will be entitled to vote at the Meeting. A majority of the shares
outstanding on the Record Date will constitute a quorum for the transaction of
business. Holders of the Company's Common Stock are entitled to one vote for
each share held as of the Record Date. Shares of Common Stock may not be voted
cumulatively.
With respect to proposal no. 1, the affirmative vote of a plurality of the
votes of the shares of Common Stock present in person or represented by proxy at
the Meeting and entitled to vote on the election of directors is required to
approve the election of each of the six directors. The affirmative vote of the
majority of shares present in person or represented by proxy at the Meeting and
entitled to vote on proposal nos. 2 and 3 are required to approve these
proposals. The aggregate number of votes entitled to be cast by all stockholders
present in person or represented by proxy at the Meeting who vote for or against
the proposals, whether those stockholders vote "for," "against" or give no
instructions, will be counted for purposes of determining the minimum number of
affirmative votes required to approve proposal nos. 2 and 3, and the total
number of shares cast "for" these proposals or giving no instructions will be
counted for purposes of determining whether sufficient affirmative votes have
been cast. An abstention from voting on a matter by a stockholder will be
counted for purposes of determining both the presence or absence of a quorum for
the transaction of business and the total number of shares present and entitled
to vote with respect to that matter. Accordingly, an abstention will have the
same effect as a vote "against" the proposal. In the event that a broker
indicates on a proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will be counted for purposes
of determining the presence or absence of a quorum for the transaction of
business but will not be considered present and entitled to vote with respect to
that matter.
In the event that sufficient votes in favor of the proposals are not
received by the date of the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
proxies. Any such adjournment would require the affirmative vote of the majority
of the shares present in person or represented by proxy at the Meeting.
The cost of preparing, assembling, printing and mailing the Proxy Statement,
the Notice of Annual Meeting of Stockholders and the enclosed form of proxy, as
well as the cost of soliciting proxies relating to the Meeting, will be borne by
the Company. Following the original mailing of the proxies and other soliciting
materials, the Company will request that the brokers, custodians, nominees and
other record holders forward copies of the proxy and other soliciting materials
to persons for whom they hold shares of
<PAGE>
Common Stock and request authority for the exercise of proxies. In such cases,
the Company, upon the request of the record holders, will reimburse such holders
for their reasonable expenses. The original solicitation of proxies by mail may
be supplemented by telephone, telegram and personal solicitation by directors,
officers and regular employees of the Company. No additional compensation will
be paid for any such services.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement has
the power to revoke it prior to the Meeting or at the Meeting prior to the vote
pursuant to the proxy. A proxy may be revoked by a written instrument delivered
to the Company stating that the proxy is revoked, by a subsequent proxy that is
signed by the person who signed the earlier proxy and is presented at the
Meeting or by attendance at the Meeting and voting in person. Please note,
however, that if a stockholder's shares are held of record by a broker, bank or
other nominee and that stockholder wishes to vote at the Meeting, the
stockholder must bring to the Meeting a letter from the broker, bank or other
nominee confirming that stockholder's beneficial ownership of the shares.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
NOMINEES
At the Meeting, stockholders will elect directors to hold office until the
next Annual Meeting of Stockholders and until their respective successors have
been elected and qualified or until such directors' earlier resignation or
removal. The size of the Company's Board of Directors (the "Board") is currently
set at six members, and six nominees will be elected at the Meeting. Proxies
cannot be voted for a greater number of persons than the number of nominees
named. Shares represented by the accompanying proxy will be voted for the
election of each of the six nominees named below, unless the proxy is marked in
such a manner as to withhold authority so to vote. If any nominee for any reason
is unable to serve or for good cause will not serve, the proxies may be voted
for such substitute nominee as the proxy holder may determine. The Company is
not aware of any nominee who will be unable to or for good cause will not serve
as a director.
The names of the six nominees, each of whom, except for Mr. Bader, is
currently a director of the Company, and certain information about them as of
March 17, 1997 are set forth below:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ------------------------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Yuval Almog(1)(2)(3)............................ 46 Chairman of the Board of the Company and President of
Coral Group, Inc.
Jamie B. Bader.................................. 37 Vice President and General Manager, Worldwide Data
Solutions Division of Motorola, Inc.
Joseph B. Costello.............................. 43 President and Chief Executive Officer of Cadence Design
Systems, Inc.
Dixon R. Doll(2)................................ 54 Venture Capitalist and Managing General Partner, Doll
Capital Management
Michael A. Fabiaschi(3)......................... 41 President and Chief Executive Officer of the Company
Donald L. Lucas(1)(3)........................... 66 Venture Capitalist
</TABLE>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
2
<PAGE>
Mr. Almog has been a director of the Company since May 1989 and has served
as the Chairman of the Board of the Company since December 1992. Mr. Almog has
been the President of Coral Group, Inc., which manages venture capital funds,
since November 1993. From October 1986 through October 1993, Mr. Almog was a
Senior Vice President of Investment Advisers, Inc., a money management firm and
the former manager of certain venture capital partnerships, which partnerships
are now managed by Coral Group, Inc. In addition, Mr. Almog is the managing
general partner of these venture capital partnerships. Mr. Almog holds a
Bachelor of Arts degree in mathematics and a Bachelor of Science degree in
computer science and economics from the University of Alabama and a Master of
Management degree from the Massachusetts Institute of Technology. Mr. Almog is a
director of Delphi Information Systems, Inc. and Tricord Systems, Inc.
Mr. Bader is Vice President and General Manager of the Worldwide Data
Solutions Division of the Land Mobile Products Sector of Motorola, Inc.
("Motorola") and was Vice President and Director of Marketing, Strategy &
Development for Motorola's United States and Canada Group between June 1992 and
May 1996. Prior to joining Motorola, Mr. Bader was a Manager at Bain & Co., an
international management consulting firm, from 1987 to June 1992. Mr. Bader
holds a Master Degree in Business Administration from Harvard Graduate School of
Business Administration and both a Master of Science degree in chemical
engineering and Bachelor of Science degree from the Massachusetts Institute of
Technology.
Mr. Costello has been a director of the Company since April 1996. Mr.
Costello has been the Chief Executive Officer of Cadence Design Systems, Inc., a
supplier of electronic design automation software and services, since May 1988.
Mr. Costello holds a Bachelor of Science degree in mathematics and physics from
Harvey Mudd College, a Master of Science degree in physics from Yale University
and a Master of Science degree in physics from the University of California,
Berkeley.
Dr. Doll has been a director of the Company since May 1989. In December
1996, he founded Doll Capital Management, a private venture capital firm that
invests in entrepreneurial companies in the information technology and
communications markets, where he serves as Managing General Partner. From
September 1994 to December 1996, Dr. Doll was actively engaged in venture
capital activities as a private investor. From September 1985 to September 1994,
Dr. Doll was a partner of Accel Partners, a venture capital firm. Dr. Doll holds
a Bachelor of Science degree in electrical engineering from Kansas State
University and Master of Science and Ph.D. degrees in electrical engineering
from the University of Michigan. Dr. Doll is also a director of Network
Equipment Technologies, Inc. and numerous private companies.
Mr. Fabiaschi has been President, Chief Executive Officer and a director of
the Company since February 1996 and was its Vice President of Sales and Support
from August 1991 to February 1996. From September 1978 to August 1991, he held
various positions with MAI Systems Corporation, a vendor of computer systems and
applications and operating systems software, and was most recently Vice
President of U.S. Sales and Service from December 1989 to August 1991. Mr.
Fabiaschi holds a Bachelor of Science degree in accounting from Fairfield
University. In 1993, MAI Systems Corporation filed a petition for reorganization
under the Bankruptcy Code.
Mr. Lucas has been a director of the Company since November 1991. Since
1967, Mr. Lucas has been actively engaged in venture capital activities as a
private investor. Mr. Lucas holds a Bachelor of Arts degree in economics and a
Master of Business Administration degree from Stanford University. Mr. Lucas is
also a director of Amati Communications Corporation, Cadence Design Systems,
Inc., Coulter Pharmaceutical, Inc., Macromedia, Inc., Oracle Corporation,
Transcend Services, Inc. and Tricord Systems, Inc.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board met six times, including telephone conference meetings, and acted
by written consent twice during fiscal 1996. No director attended fewer than 75%
of the aggregate of the total number of meetings
3
<PAGE>
of the Board held during the period for which he was a director and the total
number of meetings held by all committees of the Board on which he served during
the period that he served during fiscal 1996.
Standing committees of the Board include an Audit Committee, a Compensation
Committee and an Executive Committee. The Board does not have a nominating
committee or a committee performing similar functions.
Messrs. Almog and Lucas are currently the members of the Audit Committee.
The Audit Committee met four times during fiscal 1996. The Audit Committee meets
with the Company's independent accountants to review the adequacy of the
Company's internal control systems and financial reporting procedures, reviews
the general scope of the Company's annual audit and the fees charged by the
independent accountants, reviews and monitors the performance of non-audit
services by the Company's auditors, and reviews the fairness of any proposed
transaction between management of the Company and the Company, making
recommendations, after such review, to the full Board.
Messrs. Almog and Doll are currently the members of the Company's
Compensation Committee. The Compensation Committee met once and acted by written
consent 32 times during fiscal 1996. The Compensation Committee is responsible
for granting options and stock awards under the Company's employee benefit
plans, including executive officers, and is responsible for setting the
compensation of all executive officers of the Company.
Messrs. Almog, Fabiaschi and Lucas are currently the members of the
Company's Executive Committee. The Executive Committee met twice during fiscal
1996. The Executive Committee has all the powers and authority of the Board
while the Board is not in session, except those powers that may not be lawfully
delegated by the Board under the Delaware General Corporation Law and the
Company's By-laws and except those specific powers delegated by the Board to
another committee.
DIRECTOR COMPENSATION
The Company does not pay fees to members of its Board, but directors receive
reimbursement of authorized expenses.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ALL SIX NOMINEES LISTED ABOVE.
4
<PAGE>
PROPOSAL NO. 2--APPROVAL OF AMENDMENT TO THE
1993 EQUITY INCENTIVE PLAN
Stockholders are being asked to approve an amendment to the Company's 1993
Equity Incentive Plan (the "Equity Incentive Plan") to increase the number of
shares of Common Stock reserved for issuance thereunder from 2,200,000 shares to
3,200,000 shares (an increase of 1,000,000 shares).
The Board approved the proposed amendment described above on February 19,
1997 to be effective on stockholder approval. Stockholder approval of the
amendment requires the affirmative vote of a majority of the Company's voting
shares that are present in person or represented by proxy and entitled to vote
at the Meeting.
Below is a summary of the principal provisions of the Equity Incentive Plan,
assuming approval of the above amendment, which summary is qualified in its
entirety by reference to the full text of the Equity Incentive Plan.
1993 EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN HISTORY. The Board adopted the Equity Incentive Plan
on October 21, 1993 and it was approved by stockholders on November 12, 1993 to
offer eligible persons an opportunity to participate in the Company's future
performance through awards of stock options, restricted stock and stock bonuses.
SHARES SUBJECT TO THE EQUITY INCENTIVE PLAN. An aggregate of 3,200,000
shares (assuming approval of the proposed amendment) of the Company's Common
Stock have been reserved by the Board for issuance under the Equity Incentive
Plan. If any option granted pursuant to the 1989 Stock Option Plan or the Equity
Incentive Plan expires or terminates for any reason without being exercised in
whole or in part, or any award is forfeited or repurchased by the Company at the
original issue price or terminates without being issued, the shares released
from such award will again become available for grant and issuance under the
Equity Incentive Plan. In addition, any shares issuable upon exercise of options
granted pursuant to the Company's 1989 Stock Option Plan that expire or become
unexercisable for any reason without having been exercised in full also will
become available for distribution under the Equity Incentive Plan. As of March
17, 1997, assuming approval of the proposed amendment, options to purchase
1,274,992 shares of the Company's Common Stock are available for distribution
under the Equity Incentive Plan.
ADMINISTRATION. The Equity Incentive Plan is administered by the
Compensation Committee (the "Committee"), the members of which are appointed by
the Board. The Committee currently consists of Yuval Almog and Dixon R. Doll,
both of whom are "disinterested persons" as that term is defined under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and "outside
directors" as that term is defined pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
Subject to the terms of the Equity Incentive Plan, the Committee determines
the persons who are to receive awards, the number of shares subject to each such
award and the terms and conditions of such awards. The Committee also has the
authority to construe and interpret any of the provisions of the Equity
Incentive Plan or any awards granted thereunder. See the Compensation Committee
Report on Executive Compensation contained herein.
ELIGIBILITY. Employees, officers, directors, consultants, independent
contractors and advisers of the Company (and of any parent, subsidiaries and
affiliates) whom the Board deems to have any potential to contribute to the
future success of the Company (the "Participants") will be eligible to receive
awards under the Equity Incentive Plan, provided such consultants, independent
contractors and advisers render bona fide services not in connection with the
offer and sale of securities in a capital-raising transaction. No "Named
Executive Officer," as that term is defined under Item 402(a)(3) of Regulation
S-K promulgated
5
<PAGE>
under the Securities Act of 1933, as amended (the "Securities Act") and the
Exchange Act (a "Named Executive Officer"), is eligible to receive more than
750,000 shares of Common Stock over the term of the Equity Incentive Plan. As of
March 17, 1997, approximately 101 persons were eligible to receive awards under
the Equity Incentive Plan, 59,808 shares had been issued upon exercise of
options and 2,048,563 shares were subject to outstanding options. As of that
date, 1,274,992 shares were available for future awards, after taking into
account the proposed increase, and the fair market value of the Company's Common
Stock was $3.88 per share. As of March 17, 1997, the following Named Executive
Officers have been granted options to purchase shares of Common Stock under the
Equity Incentive Plan as follows: Michael A Fabiaschi, 330,000 shares; Richard
A. Cortese, 150,000 shares; Isaac Shpantzer, 180,000 shares; Emmett Hume,
165,000 shares; Paul Edelhertz, 200,000 shares; David J. Maenke, 150,000 shares;
Ronald Bosrock, 100,000 shares; and James Flaherty, 30,000 shares. Current
executive officers as a group have been granted options to purchase 900,000
shares, and all employees as a group, other than executive officers, have been
granted options to purchase 1,572,429 shares.
STOCK OPTIONS. The Equity Incentive Plan permits the granting of options
that are intended to qualify either as Incentive Stock Options ("ISOs") or
Nonqualified Stock Options ("NQSOs").
ISOs may be granted only to employees. The option exercise price for each
ISO must be no less than 100% of the fair market value (as defined in the Equity
Incentive Plan) of a share at the time such option is granted (except in the
case of a 10% stockholder, in which case the exercise price must be no less than
110% of the fair market value). The option exercise price for each NQSO must be
no less than 85% of the fair market value of a share at the time of grant.
The exercise price of options granted under the Equity Incentive Plan, must
be paid: (1) in cash or by check; (2) by cancellation of indebtedness of the
Company to the Participant; (3) by surrender of shares that either (i) have been
owned by the Participant for more than six months and have been paid for within
the meaning of Rule 144 of the Securities Act or (ii) were obtained by the
Participant in the public market; (4) by tender of a full recourse promissory
note; (5) by waiver of compensation due to or accrued by the Participant for
services rendered; (6) by tender of property; (7) by a "same-day sale"
commitment from the Participant and a NASD broker; (8) by a "margin" commitment
from the Participant and a NASD broker; or (9) by any combination of the
foregoing, when approved by the Committee in its sole discretion.
RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted
stock awards to purchase stock either in addition to, or in tandem with, other
awards under the Equity Incentive Plan, under such terms, conditions and
restrictions as the Committee may determine. The purchase price for such awards
must be no less than 85% of the fair market value of the Company's Common Stock
on the date of the award (except in the case of a 10% stockholder, in which case
the purchase price must be 100% of the fair market value), and can be paid for
as described under Stock Options above (except through a "same-day sale" or
"margin" commitment).
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus awards
either in addition to, or in tandem with, other awards under the Equity
Incentive Plan, under such terms, conditions and restrictions as the Committee
may determine.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all the assets of the Company or any other similar corporate
transaction, the successor corporation, if any, may assume, replace or
substitute equivalent awards in exchange for those granted under the Equity
Incentive Plan or provide substantially similar consideration, shares or other
property subject to repurchase restrictions no less favorable to the
Participants under the Equity Incentive Plan. In the event that the successor
corporation does not assume or substitute the awards, outstanding options will
accelerate and become exercisable in full prior to the consummation of such
transaction.
6
<PAGE>
AMENDMENT OF THE EQUITY INCENTIVE PLAN. The Board may at any time terminate
or amend the Equity Incentive Plan in any respect, including amending any form
of award agreement or instrument to be executed pursuant to the Equity Incentive
Plan. The Board may not amend the Equity Incentive Plan in any manner that
requires stockholder approval pursuant to the Code or the regulations
promulgated thereunder or pursuant to the Exchange Act or Rule 16b-3 promulgated
thereunder (or its successor) without such approval.
TERM OF THE EQUITY INCENTIVE PLAN. The Equity Incentive Plan will terminate
on October 21, 2003, ten years from the date the Equity Incentive Plan was
adopted by the Board.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF
THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER
THE EQUITY INCENTIVE PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL,
STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR
HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN AND IS ENCOURAGED TO
SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF
PARTICIPATION IN THE PLAN.
INCENTIVE STOCK OPTIONS. A Participant will recognize no income upon grant
of an ISO and incur no tax on its exercise (unless the Participant is subject to
the alternative minimum tax (the "AMT")). If the Participant holds the stock
acquired upon exercise of an ISO (the "ISO Shares") for more than one year after
the date the option was exercised and for more than two years after the date the
option was granted, the Participant generally will realize long-term capital
gain or loss (rather than ordinary income or loss) upon disposition of the ISO
Shares. This gain or loss will be equal to the difference between the amount
realized upon such disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of either
required holding period (a "disqualifying disposition"), the gain realized upon
such disposition, up to the difference between the fair market value of the ISO
Shares on the date of exercise (or, if less, the amount realized on a sale of
such shares) and the option exercise price, will be treated as ordinary income.
Any additional gain will be long-term or short-term capital gain, depending upon
the amount of time the ISO Shares were held by the Participant.
ALTERNATIVE MINIMUM TAX. The difference between the fair market value of
the ISO Shares on the date of exercise and the exercise price is an adjustment
to income for purposes of the AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum
taxable income (28% in the case of alternative minimum taxable income in excess
of $175,000). Alternative minimum taxable income is determined by adjusting
regular taxable income for certain items, increasing that income by certain tax
preference items (including the difference between the fair market value of the
ISO Shares on the date of exercise and the exercise price) and reducing this
amount by the applicable exemption amount ($45,000 in the case of a joint
return, subject to reduction under certain circumstances). If a disqualifying
disposition of the ISO Shares occurs in the same calendar year as exercise of
the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon
a sale of ISO Shares that is not a disqualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the ISO
Shares.
NONQUALIFIED STOCK OPTIONS. A Participant will not recognize any taxable
income at the time a NQSO is granted. However, upon exercise of a NQSO the
Participant will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount will be treated as
ordinary income by the Participant and
7
<PAGE>
may be subject to withholding by the Company (either by payment in cash or
withholding out of the Participant's salary). Upon resale of the shares by the
Participant, any subsequent appreciation or depreciation in the value of the
shares will be treated as capital gain or loss.
RESTRICTED STOCK AND STOCK BONUS AWARDS. Restricted stock and stock bonus
awards will generally be subject to tax at the time of receipt, unless there are
restrictions that enable the Participant to defer tax. At the time that tax is
incurred, the tax treatment will be similar to that discussed above for NQSOs.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993. The Omnibus Budget
Reconciliation Act of 1993 provides that the maximum rate applicable to ordinary
income is 39.6%. Long term capital gain will be taxed at a maximum tax rate of
28%. For this purpose, in order to receive long-term capital gain treatment, the
stock must be held for more than one year. Capital gains will continue to be
offset by capital losses and up to $3,000 of capital losses may be offset
annually against ordinary income. The Omnibus Budget Reconciliation Act of 1993
also increased the alternative minimum tax to 26% (28% for alternative minimum
taxable income in excess of $175,000) of an individual taxpayer's alternative
minimum taxable income, effective with respect to taxable years beginning after
December 31, 1992.
TAX TREATMENT OF THE COMPANY. The Company generally will be entitled to a
deduction in connection with the exercise of a NQSO by a Participant or the
receipt of restricted stock or stock bonuses by a Participant to the extent that
the Participant recognizes ordinary income. The Company will be entitled to a
deduction in connection with the disposition of ISO Shares only to the extent
that the Participant recognizes ordinary income on a disqualifying disposition
of the ISO Shares.
ERISA
The Equity Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1993 EQUITY INCENTIVE PLAN.
8
<PAGE>
NEW PLAN BENEFITS
The following table sets forth the grants of options received under the
Equity Incentive Plan during fiscal 1996, by each of the Named Executive
Officers and all current executive officers as a group. The proposed amendment
to the Equity Incentive Plan, had it been in effect for fiscal 1996, would have
had no effect on such grants.
Grants under the Equity Incentive Plan are made at the discretion of the
Board. Accordingly, future grants under the Equity Incentive Plan are not
determinable.
<TABLE>
<CAPTION>
EQUITY INCENTIVE PLAN (1)
--------------------------
EXERCISE
PRICE NUMBER OF
NAME AND POSITION PER SHARE SHARES
- --------------------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Michael A. Fabiaschi (2) .............................................................. $ 4.80 250,000
President and Chief Executive Officer
Richard A. Cortese (3) ................................................................ -- --
Former President and Chief Executive Officer
Isaac Shpantzer ....................................................................... 4.6875 20,000
Fellow and Senior Vice President of Technology
Emmett B. Hume (4) .................................................................... -- --
Former Vice President of Marketing
Paul Edelhertz ........................................................................ 3.9375 175,000
Vice President of Customer Solutions
David J. Maenke ....................................................................... 4.1250 150,000
Chief Financial Officer and Secretary
Ronald M. Bosrock (5) ................................................................. -- --
Former Vice President of International Operations
James E. Flaherty (6) ................................................................. -- --
Former Chief Financial Officer and Secretary
All current executive officers as a group (5 persons).................................. 4.44(7) 625,000
</TABLE>
- ------------------------
(1) Future grants are discretionary and future exercise prices of options are
unknown, as they are based upon committee discretion and fair market value
on the date of grant.
(2) Mr. Fabiaschi was appointed President and Chief Executive Officer of the
Company in February 1996.
(3) Mr. Cortese resigned as President and Chief Executive Officer of the Company
in February 1996 and resigned as Vice Chairman of the Board of the Company
in June 1996.
(4) Mr. Hume resigned as Vice President of Marketing of the Company in February
1997.
(5) Mr. Bosrock resigned as Vice President of International Operations of the
Company in March 1996.
(6) Mr. Flaherty resigned as Chief Financial Officer and Secretary of the
Company in August 1996 and resigned as Corporate Controller of the Company
in December 1996.
(7) Reflects weighted average exercise price.
9
<PAGE>
PROPOSAL NO. 3--RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
The Board has selected Coopers & Lybrand L.L.P. as the Company's independent
accountants to perform the audit of the Company's financial statements for the
fiscal year ending December 31, 1997, and the stockholders are being asked to
ratify such selection. Notwithstanding the selection, the Board, in its
discretion may direct the appointment of new independent accountants at any time
during the year, if the Board feels that such a change would be in the best
interests of the Company and its stockholders. In the event of a negative vote
of such ratification, the Board will reconsider its selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Meeting, will have the opportunity to make a statement at the Meeting if
they desire to do so and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE SELECTION OF COOPERS & LYBRAND L.L.P.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company, as
of March 17, 1997, with respect to beneficial ownership of the Company's Common
Stock by (i) each stockholder known by the Company to be the beneficial owner of
more than 5% of the Company's Common Stock, (ii) each present director, (iii)
each of the Named Executive Officers and (iv) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(2)
- --------------------------------------------------------------------------------- ------------------ -------------
<S> <C> <C>
Yuval Almog(3)................................................................... 4,198,460 16.8%
Motorola, Inc.(4)................................................................ 2,275,892 9.2
Vanguard Associates III, L.P.(5)................................................. 1,847,341 7.4
Investment Advisers, Inc.(6)..................................................... 1,279,622 5.1
Michael A. Fabiaschi(7).......................................................... 380,700 1.5
Donald L. Lucas(8)............................................................... 223,040 *
Dixon R. Doll(9)................................................................. 171,988 *
Isaac Shpantzer(10).............................................................. 164,145 *
Richard A. Cortese............................................................... 83,581 *
Leif Soderberg(11)............................................................... 75,000 *
Joseph B. Costello(12)........................................................... 60,000 *
Paul Edelhertz................................................................... 1,000 *
David J. Maenke.................................................................. -- --
Ronald Bosrock................................................................... -- --
James Flaherty................................................................... -- --
Emmett B. Hume................................................................... -- --
All executive officers and directors as a group (9 persons) (13)................. 5,274,333 20.5%
</TABLE>
- ------------------------
* Less than 1%.
(1) Based upon information supplied by officers, directors and principal
stockholders, as well as Schedules 13G filed with the Securities and
Exchange Commission. Unless otherwise noted, each person or group identified
possesses sole voting and sole investment power with respect to such shares,
subject to community property laws where applicable. A person is deemed to
be the beneficial owner of securities that can be acquired by such person
within 60 days of March 17, 1997 upon the exercise of options or warrants.
(2) Based upon 24,871,870 shares outstanding on March 17, 1997. Each beneficial
owner's percentage ownership is determined by assuming that options that are
held by such person (but not those held by any other person) and that are
exercisable within 60 days of March 17, 1997 have been exercised.
(3) Represents 48,187 shares owned of record by Mr. Almog and 129,383 shares
subject to options that are exercisable within 60 days of March 17, 1997
that, if exercised, would be subject to vesting restrictions with respect to
52,337 shares. Also includes 1,504,374 shares owned of record by Coral
Partners II (known as IAI Venture Partners II prior to November 1, 1993), of
which Mr. Almog is managing general partner of the general partner, and
2,516,516 shares owned of record by Coral Partners I-Superior (known as
Superior Ventures prior to November 1, 1993), of which Mr. Almog is managing
general partner of the general partner. Mr. Almog disclaims beneficial
ownership with respect to the shares held by these entities except to the
extent attributable to him as a result of any ownership interest he may have
in such entities. Mr. Almog is Chairman of the Board of Directors of the
Company. Mr. Almog's address is Coral Group, Inc., 60 South Sixth Street,
Suite 3510, Minneapolis, Minnesota 55402.
(4) The address of Motorola, Inc. is 1303 East Algonquin Road, Schaumburg,
Illinois 60196.
11
<PAGE>
(5) The address of Vanguard Associates III, L.P. is 525 University Avenue, Suite
600, Palo Alto, California 94301.
(6) The address of Investment Advisers, Inc. is 3700 First Bank Place, P. O. Box
357, Minneapolis, MN 55440.
(7) Includes 348,200 shares subject to options exercisable within 60 days of
March 17, 1997. Mr. Fabiaschi is President, Chief Executive Officer and a
director of the Company.
(8) Represents 149,864 shares owned of record by the Donald L. and Lygia S.
Lucas Trust dated 12/3/84, 6,557 of which are subject to vesting
restrictions, and 73,176 shares subject to options exercisable within 60
days of March 17, 1997 that, if exercised, would be subject to vesting
restrictions with respect to 39,075 shares. Mr. Lucas is a director of the
Company.
(9) Represents 114,988 shares owned of record by Dr. Doll, 1,430 of which are
subject to vesting restrictions, and 48,000 shares subject to options
exercisable within 60 days of March 17, 1997 that, if exercised, would be
subject to vesting restrictions with respect to 35,251 shares. Also includes
8,000 shares held by the University of Michigan Business School Growth Fund,
and 1,000 shares owned by Dr. Doll's son. Dr. Doll is an alumni investment
manager for the University of Michigan Business School Growth Fund. Dr. Doll
disclaims beneficial ownership with respect to these shares. Dr. Doll is a
director of the Company.
(10) Represents 37,858 shares owned of record by Dr. Shpantzer and 109,145
shares subject to options exercisable within 60 days of March 17, 1997. Also
includes an aggregate of 17,142 shares, representing 5,714 shares owned by
each of Dr. Shpantzer's three children. Dr. Shpantzer disclaims beneficial
ownership of the shares owned by his children. Dr. Shpantzer is Fellow and
Senior Vice President of Technology of the Company.
(11) Represents 75,000 shares subject to options exercisable within 60 days of
March 17, 1997 that, if exercised, would be subject to vesting restrictions
with respect to 41,250 shares. Mr. Soderberg is a director of the Company.
(12) Represents 60,000 shares subject to options exercisable within 60 days of
March 17, 1997 that, if exercised, would be subject to vesting restrictions
with respect to 47,813 shares. Mr. Costello is a director of the Company.
(13) Includes shares described in notes (3), (7), (8), (9), (10), (11) and (12)
above.
12
<PAGE>
EXECUTIVE OFFICERS
The following table lists certain information regarding the Company's
executive officers as of March 17, 1997, except as otherwise noted.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Michael A. Fabiaschi............................ 41 President, Chief Executive Officer and Director
Paul Edelhertz.................................. 34 Vice President of Customer Solutions
Vladimir Kelman................................. 37 Vice President of Product Development
David J. Maenke................................. 40 Chief Financial Officer and Secretary
Isaac Shpantzer................................. 51 Fellow and Senior Vice President of Technology
</TABLE>
- ------------------------
Information regarding Michael A. Fabiaschi is listed under "Proposal No.
1--Election of Directors."
Mr. Edelhertz has been Vice President of Customer Solutions of the Company
since September 1996. From 1984 to September 1996, he served as Associate
Partner at Andersen Consulting, a business consulting firm. Mr. Edelhertz holds
a Bachelor of Arts degree in economics from Claremont McKenna College.
Mr. Kelman has been Vice President of Product Development of the Company
since March 18, 1997 and had been its Director of the Systems Group in Technical
Solutions and Services from May 1995 to March 1997, its Manager of the Systems
Group in Research and Development from December 1993 to May 1995 and a software
systems engineer with the Company from September 1989 to December 1993. Mr.
Kelman holds a Bachelor of Science degree in electrical engineering from the
Technion-Israel Institute of Technology.
Mr. Maenke has been Chief Financial Officer and Secretary of the Company
since August 1996. From May 1996 to August 1986, he served as Vice President and
Chief Financial Officer of Dataserv, an independent third party computer
maintenance company. From September 1992 to May 1996, he served as Vice
President and Controller of Dataserv and, from January 1990 to September 1992,
he served as Treasurer of Dataserv. Mr. Maenke holds a Bachelor of Science
degree in accounting from Bemidji State University.
Dr. Shpantzer has been Fellow and Senior Vice President of Technology of the
Company since March 1997 and had been its Chief Technical Officer from April
1996 to March 1997, its Vice President of Research and Development from January
1991 to March 1997 and its director of research from June 1989 to January 1991.
From August 1985 to February 1989, he served as DSP Systems and Applications
Manager for Zoran Corporation, a vendor of VLSI digital signal processors. Dr.
Shpantzer holds Bachelor and Master of Science degrees in electrical engineering
from the Technion-Israel Institute of Technology and a Ph.D. in networking from
the University of Manitoba in Winnipeg, Canada.
13
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or
paid for services rendered in all capacities to the Company during each of the
fiscal years ended December 31, 1994, 1995 and 1996 by each of the Named
Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS(#)
- ---------------------------------------------------------- ----------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Michael A. Fabiaschi(1) .................................. 1996 $ 194,103(2) $ 95,000(2) 250,000
President and Chief Executive Officer 1995 200,000(2) -- 30,000
1994 200,000(2) -- 50,000
Richard A. Cortese(3) .................................... 1996 167,981 -- --
Former President and Former Vice Chairman of the Board 1995 224,843 -- 356,727(4)
1994 234,230 52,500 --
Isaac Shpantzer .......................................... 1996 174,719 27,300 20,000
Fellow and Senior Vice President of Technology 1995 159,000 19,000 30,000
1994 148,362 28,000 80,000
Emmett B. Hume(5) ........................................ 1996 147,789 6,750 --
Former Vice President of Marketing 1995 132,625 27,000 165,000
1994 -- -- --
Paul Edelhertz ........................................... 1996 63,718 41,667 175,000
Vice President of Customer Solutions 1995 -- -- --
1994 -- -- --
David J. Maenke .......................................... 1996 50,193 10,417 150,000
Chief Financial Officer and Secretary 1995 -- -- --
1994 -- -- --
Ronald M. Bosrock ........................................ 1996 142,941 -- --
Former Vice President of International Operations 1995 59,856 -- 100,000
1994 -- -- --
James E. Flaherty ........................................ 1996 102,204 9,000 --
Former Chief Financial Officer and Secretary 1995 94,789 8,000 10,000
1994 88,673 13,700 20,000
</TABLE>
- ------------------------
(1) Mr. Fabiaschi was appointed President and Chief Executive Officer of the
Company in February 1996.
(2) Includes $80,000 of guaranteed commissions in each of fiscal 1994 and fiscal
1995, and includes $18,333 of draw or commissions prior to February 1996,
the date that Mr. Fabiaschi was appointed President and Chief Executive
Officer of the Company. Mr. Fabiaschi's employment agreement provided that
he was eligible for a bonus in 1996 of $90,000; the Board of Directors of
the Company awarded a bonus of $95,000.
(3) Mr. Cortese resigned as President and Chief Executive Officer of the Company
in February 1996 and resigned as Vice Chairman of the Board of Directors in
June 1996.
(4) Includes options to purchase 206,727 shares of the Company's Common Stock
that were issued by the Company to Mr. Cortese to replace shares of stock
that he sold back to the Company at his original cost of $0.10 per share.
(5) Mr. Hume resigned as Vice President of Marketing of the Company in February
1997. The Company and Mr. Hume entered into a Severance Agreement and Mutual
Release dated February 26, 1997, as amended March 18, 1997, pursuant to
which the Company agreed to pay Mr. Hume an amount equal to his regular base
salary in effect at the time of his resignation semi-monthly through
December 1997 and an amount equal to an additional three months of salary in
December 1997, and Mr. Hume agreed to forfeit options to purchase 155,000
shares of the Company's Common Stock. Prior to his resignation, Mr. Hume had
exercised options to purchase 10,000 shares of the Company's Common Stock in
1997.
14
<PAGE>
OPTION GRANTS
The following table sets forth information regarding individual option
grants pursuant to the Company's Equity Incentive Plan during fiscal 1996 to
each of the Named Executive Officers. In accordance with the rules of the
Securities and Exchange Commission, the table sets forth the hypothetical gains
or "option spreads" that would exist for the options at the end of their
respective terms. These gains are based on assumed rates of annual compound
stock appreciation of 5% and 10% from the date the option was granted to the end
of the option term. Actual gains, if any, on option exercises are dependent on
the future performance of the Company's Common Stock.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------
NAME GRANTED(1) FISCAL 1996 SHARE DATE 5%(2) 10%(2)
- ---------------------------------- ----------- ------------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Fabiaschi.............. 250,000 23.7% $ 4.80 02/28/2006 $ 754,674 $ 1,912,491
Richard A. Cortese................ -- -- -- -- -- --
Isaac Shpantzer................... 20,000 1.9 4.6875 04/30/2006 58,959 149,413
Emmett B. Hume.................... -- -- -- -- -- --
Paul Edelhertz.................... 175,000 16.6 3.9375 09/05/2006 433,348 1,098,188
David J. Maenke................... 150,000 14.2 4.1250 08/19/2006 389,129 986,128
Ronald M. Bosrock................. -- -- -- -- -- --
James E. Flaherty................. -- -- -- -- -- --
</TABLE>
- ------------------------
(1) These securities are subject to incentive stock options that were granted at
fair market value and become exercisable with respect to 25% of the shares
on the first anniversary date after the date of grant and with respect to
6.25% of the shares each quarter thereafter.
(2) The 5% and 10% assumed rates of annual compound stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock
prices.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information concerning the exercise
of options by each of the Named Executive Officers during fiscal 1996, including
the aggregate amount of gain on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options held on December 31, 1996 by each of the Named Executive Officers.
Also reported are values for "in-the-money" stock options that represent the
positive spread between the respective exercise prices of outstanding stock
options and the fair market value of the Common Stock as of December 31, 1996 as
determined by the closing price of the Company's Common Stock as reported on the
Nasdaq National Market.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END(#) FISCAL YEAR END($)(2)
ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- -------------- ------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Fabiaschi...... -- -- 280,700 297,500 $ 1,038,379 --
Richard A. Cortese........ 530,532 $ 2,654,949 108,384 -- 331,354 --
Isaac Shpantzer........... 26,000 118,456 92,308 94,000 70,078 $ 23,547
Emmett B. Hume(3)......... -- -- 66,563 98,437 50,157 150,474
Paul Edelhertz............ -- -- -- 175,000 -- 65,625
David J. Maenke........... -- -- -- 150,000 -- 28,125
Ronald M. Bosrock......... -- -- 31,250 68,750 -- --
James E. Flaherty......... 20,000 100,188 37,875 -- 107,662 --
</TABLE>
- ------------------------
(1) "Value Realized" represents the fair market value of the shares of Common
Stock underlying the option on the date of exercise less the aggregate
exercise price of the option.
(2) The values of the options shown have not been and may never be realized and
are based on the positive spread between the respective exercise prices of
outstanding stock options and the closing price of the Company's Common
Stock on December 31, 1996 ($4.3125).
(3) Mr. Hume resigned as Vice President of Marketing of the Company in February
1997. The Company and Mr. Hume entered into a Severance Agreement and Mutual
Release dated February 26, 1997, as amended March 18, 1997, pursuant to
which the Company agreed to pay Mr. Hume an amount equal to his regular base
salary in effect at the time of his resignation semi-monthly through
December 1997 and an amount equal to an additional three months of salary in
December 1997, and Mr. Hume agreed to forfeit options to purchase 155,000
shares of the Company's Common Stock. Prior to his resignation, Mr. Hume had
exercised options to purchase 10,000 shares of the Company's Common Stock in
1997.
EMPLOYMENT AGREEMENTS
On February 29, 1996, the Company amended its agreement with Michael A.
Fabiaschi dated July 23, 1991. The amended agreement (the "Fabiaschi Agreement")
provides that Mr. Fabiaschi will be appointed President and Chief Executive
Officer of the Company. The Fabiaschi Agreement also provides that the Board
will appoint Mr. Fabiaschi as a member of the Board to fill a vacancy and will
use its best efforts to cause him to be nominated and reelected to the Board for
each future fiscal year during the term of his employment. The Fabiaschi
Agreement provides for employment at will, has an indefinite term and
establishes an initial base salary of $180,000, which salary will be reviewed by
the Board annually for possible increases to be effective at the start of each
succeeding fiscal year. Mr. Fabiaschi is further entitled to receive a cash
bonus at the end of fiscal 1996 of up to $90,000, one-half of which he will earn
if he continues to be employed as President and Chief Executive Officer until
the end of fiscal 1996 and one-half of which he will earn if certain Company and
personal performance milestones that are agreed upon by Mr. Fabiaschi and the
Board in advance are achieved. Mr. Fabiaschi will be entitled to receive a cash
bonus at the end of each subsequent fiscal year at the discretion of the
Compensation Committee, subject to achieving in whole or in part Company and
personal performance milestones that are agreed upon by Mr. Fabiaschi and the
Board in advance. Pursuant to the Fabiaschi Agreement, the Company has also
granted Mr. Fabiaschi an option to purchase 250,000 shares of the Company's
Common Stock. This option is in addition to the options to purchase 280,700
shares granted pursuant to the agreement dated July 23, 1991. In the event that
the Company terminates Mr. Fabiaschi's employment other than for cause, the
Company must continue to pay Mr. Fabiaschi his base salary and to provide him
with benefits for six
16
<PAGE>
months and, if such termination is due to a change of control of the Company
(with such termination occurring within six months of the change of control),
then the Company must pay Mr. Fabiaschi an additional amount equal to his base
salary and guaranteed bonus for the preceding twelve month period.
The Company has entered into a standard employment agreement with each of
its employees (except Mr. Fabiaschi) which provides for protection of the
Company's confidential information, assignment to the Company of certain
inventions, and a prohibition against competition with the Company for two years
following termination. Messrs. Edelhertz and Maenke and Dr. Shpantzer, among
others, are subject to such agreements. No assurance can be given, however, that
any such noncompetition agreement would be enforced by a court.
CERTAIN TRANSACTIONS
The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such individuals to the fullest extent permitted by law.
17
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report on Executive Compensation shall not be
deemed to be incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933,
as amended, or under the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
GENERAL
The Compensation Committee of the Board of Directors (the "Committee") makes
decisions regarding non-equity compensation for executives which are approved by
the entire Board or by the Executive Committee. Final decisions regarding stock
option grants to executives are made by the Committee itself. The Committee is
composed of two independent non-employee directors, neither of whom has any
interlocking relationships as defined by the Securities and Exchange Commission.
Each of the members of the Committee is a "disinterested" director within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended. Although Michael A. Fabiaschi attends the meetings of
the Committee, he does not participate in deliberations that relate to his own
compensation.
GENERAL COMPENSATION POLICY
The Committee acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. The
Committee typically reviews base salary levels and target bonuses for the Chief
Executive Officer ("CEO") and other executive officers and employees of the
Company before the beginning of each year. The Committee administers the
Company's incentive plans, including the 1993 Equity Incentive Plan (the "Equity
Incentive Plan"). Stock options granted under the Equity Incentive Plan provide
long-term incentives for officers because they generally have value only if the
price of the Company's stock increases above the fair market value on the grant
date and the officer remains in the Company's employ for the period required for
the shares to vest.
The Committee's philosophy in compensating executive officers, including the
CEO, is to consider (1) the Company's financial performance during the past
year, (2) the individual's performance during the past year, and (3) the
salaries of executive officers in similar positions of companies of comparable
size and other companies in the telecommunications industry. With respect to
executive officers other than the CEO, the Committee places considerable weight
upon the recommendations of the CEO. The method for determining compensation
varies from case to case based on a discretionary and subjective determination
of what is appropriate at the time. In general, for 1996 no one factor was given
greater consideration in determining compensation than the other factors listed
above.
1996 EXECUTIVE COMPENSATION
BASE COMPENSATION. Prior to the beginning of fiscal 1996, the Committee
reviewed the performance and market data outlined above and established a base
salary level for each executive officer, including the CEO.
INCENTIVE COMPENSATION. The Company awards cash bonuses only if an
executive officer achieves or exceeds individual performance goals and the
Company meets relevant corporate objectives that are set by the Committee at the
beginning of the year. These factors receive approximately equal weighting, but
subjective factors can alter the weighting in any specific case. The CEO's
subjective judgment of executives' performances (other than his own) is taken
into account in determining whether individual performance goals have been
satisfied. Because the Company's business is still at an early stage of
development, the
18
<PAGE>
Company's corporate objectives include the establishment of strategic
relationships with corporate partners, continuing development of the Company's
products, and organizational growth, as well as typical measurements of
operational performance, such as number of customers, revenues and
profitability. The specific Company objectives, which are considered by the
Company to be confidential business information, do not necessarily have an
immediate or direct effect on the trading price of the Common Stock of the
Company. Target bonuses generally are set at 20% of an executive officer's base
compensation. The Committee retains discretion to award full, partial or pro
rata bonus payments or awards to executives for partial achievement of
objectives.
STOCK OPTIONS. In 1996, stock options were granted to certain executive
officers as incentives for them to become employees or to aid in the retention
of executive officers and to align their interests with those of the
stockholders. Stock options typically have been granted to executive officers
when the executive first joins the Company, in connection with a significant
change in responsibilities, and, occasionally, to achieve equity within a peer
group. The Committee may, however, grant additional stock options to executives
for other reasons. The number of shares subject to each stock option granted is
determined by the Committee in its sole discretion and is based on anticipated
future contributions and ability to impact corporate and/or business unit
results, past performance where applicable and consistency within the
executive's peer group. In the discretion of the Committee, executive officers
may also be granted stock options under the Equity Incentive Plan to provide
greater incentives to those officers to continue their employment with the
Company and to strive to increase the value of the Company's Common Stock. The
relative importance of these factors varies from case to case based on a
discretionary and subjective determination by the Committee of what is
appropriate at the time. The stock options generally become exercisable over a
four-year period (25% at the end of the first year and 6.25% each quarter
thereafter) and are granted at a price that is equal to the fair market value of
the Company's Common Stock on the date of grant.
COMPANY PERFORMANCE AND CEO COMPENSATION
The Committee based Mr. Fabiaschi's compensation for fiscal 1996 on the
Company's financial performance, Mr. Fabiaschi's performance in his prior
position of Vice President of Sales and Support, the salaries of CEO's in
similar positions of companies of comparable size and other companies in the
telecommunications industry.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986
The Company's Equity Incentive Plan complies with the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended, and limits the
total number of options any Named Executive Officer receives to 750,000 over the
life of the plan. The Company does not expect cash compensation to be affected
by the requirements of Section 162(m) for fiscal year 1997.
COMPENSATION COMMITTEE
Yuval Almog
Dixon R. Doll
19
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below includes companies required by the
Securities and Exchange Commission and shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed soliciting material or filed under such Acts.
The following graph demonstrates a comparison of cumulative total returns
based upon an initial investment of $100.00 in the Company's Common Stock as
compared with the Hambrecht & Quist Technology Index and the Nasdaq Stock
Market--U.S. Index. The stock price performance shown on the graph below is not
necessarily indicative of future price performance and only reflects the
Company's relative stock price on December 10, 1993 (the date the Company's
Common Stock began trading on the Nasdaq National Market), December 31, 1993,
December 31, 1994, December 31, 1995 and December 31, 1996.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RACOTEK, INC. H&Q TECHNOLOGY INDEX NASDAQ STOCK MARKET - U.S. INDEX
<S> <C> <C> <C>
12/10/93 $ 100.00 $ 100.00 $ 100.00
12/31/93 $ 144.64 $ 102.88 $ 102.05
12/30/94 $ 48.21 $ 119.42 $ 99.79
12/29/95 $ 73.21 $ 179.31 $ 140.96
12/31/96 $ 61.61 $ 215.15 $ 173.61
</TABLE>
20
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Yuval Almog and Dixon R. Doll served on the Compensation Committee of the
Board of Directors during the fiscal year ended December 31, 1996.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting of Stockholders must be received by the Company at its principal
executive offices no later than November 28, 1997 in order to be included in the
Company's Proxy Statement and form of proxy relating to that meeting.
COMPLIANCE UNDER SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission and the Nasdaq National Market. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms furnished to the
Company and representations from the executive officers and directors, the
Company believes that all Section 16(a) filing requirements were met during
1996.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
Dated: March 28, 1997
By Order of the Board of Directors
[SIG]
Michael A. Fabiaschi
PRESIDENT AND CHIEF EXECUTIVE OFFICER
21
<PAGE>
RACOTEK, INC.
1993 EQUITY INCENTIVE PLAN
As Adopted October 21, 1993
As Amended December 22, 1995
As Amended February 19, 1997
1. PURPOSE. The purpose of the Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parents, Subsidiaries and
Affiliates, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 24.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be 3,200,000 Shares. Any Shares issuable upon
exercise of options granted pursuant to the 1989 Stock Option Plan (the
"PRIOR PLAN") that expire or become unexercisable for any reason without
having been exercised in full shall no longer be available for distribution
under the Prior Plan, but shall be available for distribution under this
Plan. Subject to Sections 2.2 and 18, Shares shall again be available for
grant and issuance in connection with future Awards under the Plan that: (a)
are subject to issuance upon exercise of an Option but cease to be subject
to such Option for any reason other than exercise of such Option, (b) are
subject to an Award granted hereunder but are forfeited or are repurchased
by the Company at the original issue price, or (c) are subject to an Award
that otherwise terminates without Shares being issued.
2.2 ADJUSTMENT OF SHARES. In the event that the number of outstanding
Shares is changed by a stock dividend, recapitalization, stock split,
reverse stock split, subdivision, combination, reclassification or similar
change in the capital structure of the Company without consideration, then
(a) the number of Shares reserved for issuance under the Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and
(c) the number of Shares subject to other outstanding Awards shall be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
PROVIDED, HOWEVER, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest Share, as determined by the Committee; and PROVIDED, FURTHER, that
the Exercise Price of any Option may not be decreased to below the par value
of the Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisers of the Company or any Parent, Subsidiary or Affiliate of the
Company; PROVIDED such consultants, contractors and advisers render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. "Named Executive Officers" (as that term is defined
in Item 402(a)(3) of Regulation S-K promulgated under the Exchange Act) shall
each be eligible to receive up to an aggregate maximum of 750,000 Shares over
the term of the Plan. A person may be granted more than one Award under the
Plan.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. The Plan shall be administered by the
Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of the Plan, and to the direction of the
Board, the Committee shall have full power to implement and carry out the
Plan. The Committee shall have the authority to:
(a) construe and interpret the Plan, any Award Agreement and any
other agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating to
the Plan;
<PAGE>
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to
Awards;
(f) determine whether Awards will be granted singly, in combination,
in tandem, in replacement of, or as alternatives to, other Awards under
the Plan or any other incentive or compensation plan of the Company or
any Parent, Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of the Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the Committee with
respect to any Award shall be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of the
Plan or Award, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Award under
the Plan. The Committee may delegate to one or more officers of the Company
the authority to grant an Award under the Plan to Participants who are not
Insiders of the Company.
4.3 EXCHANGE ACT REQUIREMENTS. If two or more members of the Board are
Outside Directors, the Committee shall be comprised of at least two members
of the Board, all of whom are Outside Directors and Disinterested Persons.
The Company will take appropriate steps to comply with the disinterested
administration requirements of Section 16(b) of the Exchange Act, which
shall consist of the appointment by the Board of a Committee consisting of
not less than two members of the Board, each of whom is a Disinterested
Person.
5. OPTIONS. The Committee may grant Options to eligible persons and shall
determine whether such Options shall be Incentive Stock Options within the
meaning of the Code ("ISOS") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 FORM OF OPTION GRANT. Each Option granted under the Plan shall be
evidenced by an Award Agreement which shall expressly identify the Option as
an ISO or NQSO ("STOCK OPTION AGREEMENT"), and be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee shall from time to time approve, and which shall comply with and
be subject to the terms and conditions of the Plan.
5.2 DATE OF GRANT. The date of grant of an Option shall be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy
of the Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 EXERCISE PERIOD. Options shall be exercisable within the times or
upon the events determined by the Committee as set forth in the Stock Option
Agreement; PROVIDED, HOWEVER, that no Option shall be exercisable after the
expiration of one hundred twenty (120) months from the date the Option is
granted, and provided further that no ISO granted to a person who directly
or by attribution owns more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any
2
<PAGE>
Parent or Subsidiary of the Company ("TEN PERCENT STOCKHOLDER") shall be
exercisable after the expiration of five (5) years from the date the Option
is granted. The Committee also may provide for the exercise of Options to
become exercisable at one time or from time to time, periodically or
otherwise, in such number or percentage as the Committee determines.
5.4 EXERCISE PRICE. The Exercise Price shall be determined by the
Committee when the Option is granted and may be not less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO shall be not less than 100% of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any
ISO granted to a Ten Percent Stockholder shall not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of the Plan.
5.5 METHOD OF EXERCISE. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same
for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to
information, if any, as may be required or desirable by the Company to
comply with applicable securities laws, together with payment in full of the
Exercise Price for the number of Shares being purchased.
5.6 TERMINATION. Notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option shall always be subject to the
following:
(a) If the Participant is Terminated for any reason except death or
Disability, then Participant may exercise such Participant's Options only
to the extent that such Options would have been exercisable upon the
Termination Date no later than ninety (90) days after the Termination
Date (or such shorter time period as may be specified in the Stock Option
Agreement), but in any event, no later than the expiration date of the
Options.
(b) If the Participant is terminated because of death or Disability
(or the participant dies within three months of such termination), then
Participant's Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the Termination
Date and must be exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve (12) months
after the Termination Date (or such shorter time period as may be
specified in the Stock Option Agreement), but in any event no later than
the expiration date of the Options.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISOS. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year
(under the Plan or under any other incentive stock option plan of the
Company or any Affiliate, Parent or Subsidiary of the Company) shall not
exceed $100,000. If the Fair Market Value of Shares on the date of grant
with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, the Options for the
first $100,000 worth of Shares to become exercisable in such calendar year
shall be ISOs and the Options for the amount in excess of $100,000 that
become exercisable in that calendar year shall be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of the Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISOs, such different limit
shall be automatically incorporated herein and shall apply to any Options
granted after the effective date of such amendment.
3
<PAGE>
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options
in substitution therefor, provided that any such action may not, without the
written consent of Participant, impair any of Participant's rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section
424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a
written notice to them; PROVIDED, HOWEVER, that the Exercise Price may not
be reduced below the minimum Exercise Price that would be permitted under
Section 5.4 of the Plan for Options granted on the date the action is taken
to reduce the Exercise Price; PROVIDED, FURTHER, that the Exercise Price
shall not be reduced below the par value of the Shares, if any.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision in the
Plan, no term of the Plan relating to ISOs shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee shall determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares shall be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a Restricted
Stock Award made pursuant to the Plan shall be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that shall be in such form
(which need not be the same for each Participant) as the Committee shall
from time to time approve, and shall comply with and be subject to the terms
and conditions of the Plan. The offer of Restricted Stock shall be accepted
by the Participant's execution and delivery of the Restricted Stock Purchase
Agreement and full payment for the Shares to the Company within thirty (30)
days from the date the Restricted Stock Purchase Agreement is delivered to
the person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company
within thirty (30) days, then the offer shall terminate, unless otherwise
determined by the Committee.
6.2 PURCHASE PRICE. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award shall be determined by the Committee and shall be at
least 85% of the Fair Market Value of the Shares when the Restricted Stock
Award is granted, except in the case of a sale to a Ten Percent Stockholder,
in which case the Purchase Price shall be 100% of the Fair Market Value.
Payment of the Purchase Price may be made in accordance with Section 8 of
the Plan.
6.3 RESTRICTIONS. Restricted Stock Awards shall be subject to such
restrictions as the Committee may impose. The Committee may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or part, based on length of service, performance or
such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company
or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may be
awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company pursuant to an Award Agreement (the
"STOCK BONUS AGREEMENT") that shall be in such form (which need not be the
same for each Participant) as the Committee shall from time to time approve,
and shall comply with and be subject to the terms and conditions of the
Plan. A Stock Bonus may be awarded upon satisfaction of such performance
goals as are set out in advance in Participant's individual Award Agreement
(the "PERFORMANCE STOCK BONUS
4
<PAGE>
AGREEMENT") that shall be in such form (which need not be the same for each
Participant) as the Committee shall from time to time approve, and shall
comply with and be subject to the terms and conditions of the Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement of the Company, Parent,
Subsidiary or Affiliate and/or individual performance factors or upon such
other criteria as the Committee may determine.
7.2 TERMS OF STOCK BONUSES. The Committee shall determine the number
of Shares to be awarded to the Participant and whether such Shares shall be
Restricted Stock. If the Stock Bonus is being earned upon the satisfaction
of performance goals pursuant to a Performance Stock Bonus Agreement, then
the Committee shall determine: (a) the nature, length and starting date of
any period during which performance is to be measured (the "PERFORMANCE
PERIOD") for each Stock Bonus; (b) the performance goals and criteria to be
used to measure the performance, if any; (c) the number of Shares that may
be awarded to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and Participants
may participate simultaneously with respect to Stock Bonuses that are
subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance
with such performance goals and criteria as may be determined by the
Committee. The Committee may adjust the performance goals applicable to the
Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events
or circumstances to avoid windfalls or hardships.
7.3 FORM OF PAYMENT. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of
cash, whole Shares, including Restricted Stock, or a combination thereof,
either in a lump sum payment or in installments, all as the Committee shall
determine.
7.4 TERMINATION DURING PERFORMANCE PERIOD. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
shall be entitled to payment (whether in Shares, cash or otherwise) with
respect to the Stock Bonus only to the extent earned as of the date of
Termination in accordance with the Performance Stock Bonus Agreement, unless
the Committee shall determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 PAYMENT. Payment for Shares purchased pursuant to the Plan may be
made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of Shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully paid with respect to
such Shares); or (2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate sufficient
to avoid imputation of income under Sections 483 and 1274 of the Code;
PROVIDED, HOWEVER, that Participants who are not employees of the Company
shall not be entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the Shares; PROVIDED,
FURTHER, that the portion of the Purchase Price equal to the par value of
the Shares, if any, must be paid in cash;
(d) by waiver of compensation due or accrued to Participant for services
rendered;
(e) by tender of property;
5
<PAGE>
(f) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby Participant irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased to
pay for the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or
(2) through a "margin" commitment from Participant and an NASD Dealer
whereby Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company;
(g) by any combination of the foregoing.
8.2 LOAN GUARANTEES. The Committee may help the Participant pay for
Shares purchased under the Plan by authorizing a guarantee by the Company of
a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under the Plan,
payments in satisfaction of Awards are to be made in cash, such payment
shall be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.
9.2 STOCK WITHHOLDING. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay
the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be
withheld, determined on the date that the amount of tax to be withheld is to
be determined (the "TAX DATE"). All elections by a Participant to have
Shares withheld for this purpose shall be made in writing in a form
acceptable to the Committee and shall be subject to the following
restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, then except as provided below, the election shall be
irrevocable as to the particular Shares as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of the
Committee;
(d) if the Participant is an Insider and if the Company is subject to
Section 16(b) of the Exchange Act: (1) the election may not be made within
six (6) months of the date of grant of the Award, except as otherwise
permitted by SEC Rule 16b-3(e) under the Exchange Act, and (2) either (A)
the election to use stock withholding must be irrevocably made at least six
(6) months prior to the Tax Date (although such election may be revoked at
any time at least six (6) months prior to the Tax Date) or (B) the exercise
of the Option or election to use stock withholding must be made in the ten
(10) day period beginning on the third day following the release of the
Company's quarterly or annual summary statement of sales or earnings;
PROVIDED, that, prior to the date the Company elects to comply with the
requirements of Rule 16b-3, as amended effective May 1, 1992, the provisions
of former Rule 16b-3(e) of the Exchange Act shall apply with respect to any
such elections; and
6
<PAGE>
(e) in the event that the Tax Date is deferred until six (6) months
after the delivery of Shares under Section 83(b) of the Code, the
Participant shall receive the full number of Shares with respect to which
the exercise occurs, but such Participant shall be unconditionally obligated
to tender back to the Company the proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 VOTING AND DIVIDENDS. No Participant shall have any of the rights
of a stockholder with respect to any Shares until the Shares are issued to
the Participant. After Shares are issued to the Participant, the Participant
shall be a stockholder and have all the rights of a stockholder with respect
to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; PROVIDED, that
if such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to
such Shares by virtue of a stock dividend, stock split or any other change
in the corporate or capital structure of the Company shall be subject to the
same restrictions as the Restricted Stock; PROVIDED, FURTHER, that the
Participant shall have no right to retain such dividends or distributions
with respect to Shares that are repurchased at the Participant's original
Purchase Price pursuant to Section 12.
10.2 FINANCIAL STATEMENTS. The Company shall provide financial
statements to each Participant prior to such Participant's purchase of
Shares under the Plan, and to each Participant annually during the period
such Participant has Options outstanding; PROVIDED, HOWEVER, the Company
shall not be required to provide such financial statements to Participants
whose services in connection with the Company assure them access to
equivalent information.
11. TRANSFERABILITY. Awards granted under the Plan, and any interest
therein, shall not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Award Agreement provisions relating thereto. During the lifetime of the
Participant an Award shall be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under the Plan, for cash or cancellation of purchase money indebtedness,
at: (A) with respect to Shares that are "Vested" (as defined in the Award
Agreement), the higher of: (l) Participant's original Purchase Price, or (2) the
Fair Market Value of such Shares on Participant's Termination Date, PROVIDED,
such right of repurchase terminates when the Company's securities become
publicly traded; or (B) with respect to Shares that are not "Vested" (as defined
in the Award Agreement), at the Participant's original Purchase Price, provided,
that the right to repurchase at the original Purchase Price lapses at the rate
of at least 20% per year over 5 years from the date the Shares were purchased,
and if the right to repurchase is assignable, the assignee must pay the Company,
upon assignment of the right to repurchase, cash equal to the excess of the Fair
Market Value of the Shares over the original Purchase Price.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates, together with stock powers or other
7
<PAGE>
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under the Plan shall be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; PROVIDED, HOWEVER, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company shall have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant shall be required to execute and deliver a written
pledge agreement in such form as the Committee shall from time to time approve.
The Shares purchased with the promissory note may be released from the pledge on
a prorata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant shall agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed, as they are in effect on the date of grant of the
Award and also on the date of exercise or other issuance. Notwithstanding any
other provision in the Plan, the Company shall have no obligation to issue or
deliver certificates for Shares under the Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) completion of any registration or other qualification
of such shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
shall have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award granted
under the Plan shall confer or be deemed to confer on any Participant any right
to continue in the employ of, or other relationship with, the Company or any
Parent, Subsidiary or Affiliate of the Company or limit in any way the right of
the Company or any Parent, Subsidiary or Affiliate of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In the event of
(a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the
stockholders of the Company and the Awards granted under the Plan are
assumed or replaced by the successor corporation, which assumption shall be
binding on all Participants), (b) a dissolution or liquidation of the
Company, (c) the sale of substantially all of the assets of the Company, or
(d) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the stockholders of the Company give up
all of their equity interest in the Company (EXCEPT for the acquisition,
sale or transfer of all or substantially all of the outstanding shares of
the Company), any or all outstanding Awards may be assumed or replaced by
the successor corporation, which assumption or replacement shall be binding
on
8
<PAGE>
all Participants. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration
to Participants as was provided to stockholders (after taking into account
the existing provisions of the Awards). The successor corporation may also
issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject
repurchase restrictions no less favorable to the Participant.
18.2 EXPIRATION OF OPTIONS. In the event such successor corporation,
if any, refuses to assume or substitute the Options as provided above,
pursuant to a transaction described in Susection 18.1(a), (b), (c) or (d)
above, such Option shall, notwithstanding any contrary terms of the Award,
accelerate and become exercisable in full prior to the consummation of such
transaction.
18.3 OTHER TREATMENT OF AWARDS. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 18, in the
event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards shall be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, sale of assets
or other "corporate transaction."
18.4 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to time,
also may substitute or assume outstanding awards granted by another company,
whether in connection with an acquisition of such other company or otherwise, by
either (a) granting an Award under the Plan in substitution of such other
company's award, or (b) assuming such award as if it had been granted under the
Plan if the terms of such assumed award could be applied to an Award granted
under the Plan. Such substitution or assumption shall be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(EXCEPT that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. The Plan shall become effective on
the date that it is adopted by the Board (the "EFFECTIVE DATE"). The Plan shall
be approved by the stockholders of the Company (excluding Shares issued pursuant
to this Plan), consistent with applicable laws, within twelve months before or
after the Effective Date. Upon the Effective Date, the Board may grant Awards
pursuant to the Plan; PROVIDED, HOWEVER, that: (a) no Option may be exercised
prior to initial stockholder approval of the Plan; (b) no Option granted
pursuant to an increase in the number of Shares approved by the Board shall be
exercised prior to the time such increase has been approved by the stockholders
of the Company; and (c) in the event that stockholder approval is not obtained
within the time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Award shall be cancelled and any
purchase of Shares hereunder shall be rescinded. After the Company becomes
subject to Section 16(b) of the Exchange Act, the Company will comply with the
requirements of Rule 16b-3 (or its successor), as amended, with respect to
stockholder approval.
20. TERM OF PLAN. The Plan will terminate ten (10) years from the
Effective Date or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend the Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to the Plan;
PROVIDED, HOWEVER, that the Board shall not, without the approval of the
stockholders of the Company, amend the Plan in any manner that requires such
stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or pursuant to the Exchange Act
or Rule 16b-3 (or its successor), as amended, thereunder.
9
<PAGE>
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board, the submission of the Plan to the stockholders of the Company for
approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. GOVERNING LAW. The Plan and all agreements, documents and instruments
entered into pursuant to the Plan shall be governed by and construed in
accordance with the internal laws of the State of Minnesota except to the extent
required to be governed under the General Corporation Law of the State of
Delaware.
24. DEFINITIONS. As used in the Plan, the following terms shall have the
following meanings:
"AFFILIATE" means any corporation that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, another corporation, where "control" (including the terms "controlled by"
and "under common control with") means the possession, direct or indirect, of
the power to cause the direction of the management and policies of the
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"AWARD" means any award under the Plan, including any Option, Restricted
Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to administer the
Plan, or if no committee is appointed, the Board.
"COMPANY" means Racotek, Inc., a corporation organized under the laws of the
State of Delaware, or any successor corporation.
"DISABILITY" means a disability, whether temporary or permanent, partial or
total, within the meaning of Section 22(e)(3) of the Code, as determined by the
Committee.
"DISINTERESTED PERSON" shall have the meaning set forth in Rule
16b-3(c)(2)(i) as promulgated by the SEC under Section 16(b) of the Exchange
Act, as such rule is amended from time to time and as interpreted by the SEC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE PRICE" means the price at which a holder of an Option may purchase
the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the NASDAQ National Market
System, its last reported sale price on the NASDAQ National Market System
or, if no such reported sale takes place on such date, the average of the
closing bid and asked prices;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, the last reported sale price or, if no such
reported sale takes place on such date, the average of the closing bid and
asked prices on the principal national securities exchange on which the
Common Stock is listed or admitted to trading;
10
<PAGE>
(c) if such Common Stock is publicly traded but is not quoted on the
NASDAQ National Market System nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked
prices on such date, as reported by The Wall Street Journal, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of Directors of
the Company in good faith.
"INSIDER" means an officer or director of the Company or any other person
whose transactions in the Company's Common Stock are subject to Section 16 of
the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant to Section
5.
"OUTSIDE DIRECTOR" shall mean any director who is not (i) a current employee
of the Company or any Parent, Subsidiary or Affiliate of the Company, (ii) a
former employee of the Company or any Parent, Subsidiary or Affiliate of the
Company who is receiving compensation for prior services (other than benefits
under a tax-qualified pension plan), (iii) a current or former officer of the
Company or any Parent, Subsidiary or Affiliate of the Company or (iv) currently
receiving compensation for personal services in any capacity, other than as a
director, from the Company or any Parent, Subsidiary or Affiliate of the
Company; provided, however, that at such time as the term "Outside Director", as
used in Section 162(m) is defined in regulations promulgated under Section
162(m) of the Code, "Outside Director" shall have the meaning set forth in such
regulations, as amended from time to time and as interpreted by the Internal
Revenue Service.
"PARENT" means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, if at the time of the granting of an
Award under the Plan, each of such corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under the Plan.
"PLAN" means this Racotek, Inc. 1993 Equity Incentive Plan, as amended from
time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock, $0.01 par value,
reserved for issuance under the Plan, as adjusted pursuant to Sections 2 and 15,
and any successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of Shares, pursuant
to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of granting of
the Award, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of the Plan with respect
to a Participant, that the Participant has ceased to provide services as an
employee, director, consultant, independent contractor or adviser, to the
Company or a Parent, Subsidiary or Affiliate of the Company, except in the case
of sick leave, military leave, or any other leave of absence approved by the
Committee, PROVIDED, that such leave is for a period of not more than ninety
(90) days, or reinstatement upon the expiration of such leave is guaranteed by
contract or statute. The Committee shall have sole discretion to determine
whether a Participant has ceased to provide services and the effective date on
which the Participant ceased to provide services (the "TERMINATION DATE").
11
<PAGE>
RACOTEK, INC.
7301 OHMS LANE, SUITE 200
MINNEAPOLIS, MINNESOTA 55439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RACOTEK, INC.
The undersigned hereby appoints Michael A. Fabiaschi and David J. Maenke as
proxies, each with full powers of substitution, and hereby authorizes them to
represent and to vote, as designated below, all shares of Common Stock, $.01 par
value, of Racotek, Inc. ("RACOTEK") held of record by the undersigned on March
17, 1997, at the Annual Meeting of Stockholders of Racotek to be held on
Tuesday, May 13, 1997, and at any continuations or adjournments thereof.
This Proxy, when properly executed and returned in a timely manner, will be
voted at the Annual Meeting and any adjournments thereof in the manner described
herein. If no contrary indication is made, the proxy will be voted FOR the Board
of Director nominees, FOR Proposals 2 and 3 and in accordance with the judgment
of the persons named as proxies herein on any other matters that may properly
come before the Annual Meeting.
/X/ Please mark votes as in this example.
The Board of Directors unanimously recommends that you vote FOR the Board of
Director nominees and FOR Proposals 2 and 3.
1. ELECTION OF DIRECTORS. FOR all nominees WITHHOLD AUTHORITY
listed below TO VOTE FOR ALL
EXCEPT AS MARKED. NOMINEES. / /
/ /
To withhold authority to vote for any individual nominee, strike a line
through that nominee's name:
Yuval Almog, Jamie B. Bader, Joseph B. Costello, Dixon R. Doll, Michael A.
Fabiaschi and Donald L. Lucas
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
2. Proposal to approve the amendment to the 1993 Equity Incentive
Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to ratify the appointment of Coopers & Lybrand L.L.P. as
independent auditors for fiscal 1997.
/ / FOR / / AGAINST / / ABSTAIN
In accordance with their judgment, the proxies are authorized to vote upon
such other matters as may properly come before the Annual Meeting or any
adjournment thereof.
This Proxy must be signed exactly as your name appears hereon. If more than
one name appears, all persons so designated should sign. Attorneys, executors,
administrators, trustees and guardians should indicate their capacities. If the
signer is a corporation, please print full corporate name and indicate capacity
of duly authorized officer executing on behalf of the corporation. If the signer
is a partnership, please print full partnership name and indicate capacity of
duly authorized person executing on behalf of the partnership.
Signature: ________________________
Date ________________________, 1997
Signature: ________________________
Date ________________________, 1997
(Reverse Side)
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THIS PROXY AND RETURN IT PRIOR TO THE MEETING IN THE ENCLOSED ENVELOPE.
