SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy materials
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CASCADE COMMUNICATIONS CORP.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set Forth the amount on which
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>
CASCADE COMMUNICATIONS CORP.
5 Carlisle Road
Westford, Massachusetts 01886
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------
To the Stockholders:
The Annual Meeting of Stockholders of Cascade Communications Corp., a
Delaware corporation (the "Corporation"), will be held on Thursday, May 1, 1997
(the "Annual Meeting") at 9:30 A.M., local time, at The Omni Parker House, 60
School Street, Boston, Massachusetts 02108, to consider and act upon the
following matters:
1. To elect three members to the Board of Directors to serve for three-year
terms as Class I Directors.
2. To approve amendments to the Corporation's 1994 Non-Employee Director
Stock Option Plan (the "Director Plan") to (i) amend the initial stock
option grant from 90,000 shares to 30,000 shares for non-employee
Directors first elected after the Annual Meeting; (ii) to amend the
stock option grant for each subsequent year of service on the Board of
Directors from 12,000 to 10,000 shares for all non-employee Directors
following the Annual Meeting; (iii) to limit the number of shares
granted for each initial stock option grant and the stock option grant
for each subsequent year of service on the Board of Directors to the
amount stated above effective after the Annual Meeting; and (iv) to
increase the number of shares of Common Stock available for issuance
under the Director Plan from 720,000 shares to 870,000 shares.
3. To approve an amendment to the Corporation's Amended and Restated
Certificate of Incorporation increasing from 225,000,000 to 300,000,000
the number of authorized shares of Common Stock, par value $.001 per
share, of the Corporation.
4. To ratify the selection of Coopers & Lybrand L.L.P. as auditors for the
fiscal year ending December 31,1997.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of March 19, 1997, the record date fixed by the Board of Directors
for such purpose.
By Order of the Board of Directors,
Paul E. Blondin
Secretary
Mail Date: April 4, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
CASCADE COMMUNICATIONS CORP.
5 Carlisle Road
Westford, Massachusetts 01886
----------------------------------
PROXY STATEMENT
-----------------------------------
APRIL 4, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Cascade Communications Corp. (the
"Corporation") for use at the Annual Meeting of Stockholders to be held on
Thursday, May 1, 1997 (the "Annual Meeting") at 9:30 A.M., local time, at The
Omni Parker House, 60 School Street, Boston, Massachusetts 02108, and any
adjournments thereof.
Only stockholders of record as of March 19, 1997 (the "Record Date")
will be entitled to vote at the meeting and any adjournments thereof. As of that
date, 94,301,202 shares of common stock, $.001 par value (the "Common
Stock"), of the Corporation were issued and outstanding. The holders of Common
Stock are entitled to one vote per share on any proposal presented at the Annual
Meeting. Stockholders may vote in person or by proxy. Execution of a proxy will
not in any way affect a stockholder's right to attend the Annual Meeting and
vote in person. Any proxy may be revoked by a stockholder at any time before it
is exercised by delivery of a written revocation or a later executed proxy to
the Secretary of the Corporation.
An Annual Report to Stockholders, containing financial statements for
the fiscal year ended December 31, 1996, is being mailed together with this
Proxy Statement to all stockholders entitled to vote. This Proxy Statement and
the form of proxy were first mailed to stockholders on or about April 4, 1997.
Voting Securities and Votes Required
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the meeting is necessary
to constitute a quorum for the transaction of business. Votes withheld from any
nominee for election as director, abstentions and broker "non-votes" are counted
as present or represented for purposes of determining the presence or absence of
a quorum for the meeting. A "non-vote" occurs when a nominee holding shares for
a beneficial owner votes on one proposal, but does not vote on another proposal
because, in respect of such other proposal, the nominee does not have
discretionary voting power and has not received instructions from the beneficial
owner.
In the election of directors, the nominees receiving the highest number
of affirmative votes of the shares present or represented and entitled to vote
at the meeting shall be elected as directors. On all other matters being
submitted to stockholders, an affirmative vote of a majority of the shares
present or represented and voting on each such matter is required for approval,
except that the proposal to amend the Corporation's Amended and Restated
Certificate of Incorporation requires the affirmative vote of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting. An automated
system administered by the Corporation's transfer agent tabulates the votes. The
vote on each matter submitted to stockholders is tabulated separately.
Abstentions are included in the number of shares present or represented and
voting on each matter. Abstentions and broker "non-votes" have the practical
effect of a vote "against" the proposal to amend the Corporation's Amended and
Restated Certificate of Incorporation. On all other matters, broker "non-votes"
are not considered to have been voted for the particular matter and have the
practical effect of reducing the number of affirmative votes required to achieve
a majority for such matter by reducing the total number of shares from which the
majority is calculated.
The persons named as attorneys in the proxies are officers of the
Corporation. All properly executed proxies returned in time to be counted at the
meeting will be voted. Any stockholder giving a proxy has the right to withhold
authority to vote for any individual nominee to the Board of Directors by
writing that nominee's name in the space provided on the proxy. In addition to
the election of directors, the stockholders will consider and vote upon
proposals to amend the Corporation's 1994 Non-Employee Director Stock Option
Plan, to amend the Corporation's Amended and Restated Certificate of
Incorporation and to ratify the selection of auditors, all as further described
in this Proxy Statement. 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 matters set forth in the accompanying Notice of
Meeting.
The Board of Directors of the Corporation knows of no other matters to
be presented at the meeting. If any other matter should be presented at the
meeting upon which a vote properly may be taken, shares represented by all
proxies received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
Adjustments for Stock Splits
All share and per share information in this Proxy Statement has been
adjusted as of each date given to reflect the following stock splits in the form
of stock dividends; (i) a two-for-one in June 1995; (ii) a three-for-two in
February 1996; and (iii) a two-for-one in May 1996.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 20,
1997, with respect to beneficial ownership of the Corporation's Common Stock by:
(i) each person who, to the knowledge of the Corporation, beneficially owned
more than 5% of the shares of Common Stock outstanding as of such date; (ii)
each director or nominee for director; (iii) each executive officer identified
in the Summary Compensation Table set forth below under the heading
"Compensation and Other Information Concerning Directors and Officers," and (iv)
all directors, nominees and executive officers as a group.
<TABLE>
Amount and Percentage of Common
Nature of Stock
Name and Address of Beneficial Owner Ownership(1) Outstanding (2)
- ---------------------------------------- ------------ ---------------------
<S> <C> <C>
5% Stockholders
Putnam Investments, Inc............... 7,844,574 (3) 8.57%
One Post Office Square
Boston, MA 02109
American Century Mutual Funds, Inc... 7,033,000 (4) 7.68%
4500 Main Street, P.O. Box 418210
Kansas City, MO 64141-9210
Directors and Executive Officers
Victoria A. Brown..................... 240,000 (5) *
Richard M. Burnes, Jr................. 173,278 (6) *
Paul J. Ferri.......................... 137,877 (7) *
Bruns H. Grayson....................... 266,425 (8) *
Steven C. Walske....................... 32,068 (9) *
Daniel E. Smith........................ 1,661,034 (10) 1.78%
Gururaj Deshpande...................... 826,174 (11) *
Paul E. Blondin........................ 154,204 (12) *
Michael A. Champa...................... 146,574 (13) *
Robert N. Machlin...................... 62,426 (14) *
All directors and executive officers
as a group............................ 4,425,742 (15) 4.71%
(14 persons)
- ------------------------
</TABLE>
*Less than 1% of the total number of outstanding shares of Common Stock.
(1) Except as otherwise noted, each person or entity named in the table has
sole voting and investment power with respect to the shares.
(2) The number of shares of Common Stock deemed outstanding on February 20,
1997 includes (i) 91,528,185 shares of Common Stock outstanding on such
date and (ii) all options that are currently exercisable or will become
exercisable within 60 days of February 20, 1997 by the person or group
in question.
(3) Represents shares held by Putnam Investments, Inc., which is the parent
corporation to Putnam Investment Management, Inc. and The Putnam
Advisory Company, Inc., two investment managers which are deemed to
beneficially own an aggregate of 7,844,574 shares of the Corporation's
Common Stock. Information stated above was provided to the Corporation
as of December 31, 1996.
(4) Represents shares held by American Century Mutual Funds, Inc. ("ACMF").
American Century Investment Management, Inc. ("ACIM"), a registered
investment advisor, is the investment manager of ACMF and ACIM is a
wholly-owned subsidiary of American Century Companies, Inc. ("ACC").
Mr. James E. Stowers, Jr. controls ACC by virtue of his beneficial
ownership of a majority of the voting stock of ACC. Mr. Stowers, ACC
and ACIM disclaim beneficial ownership of such shares.
Information stated above was provided to the Corporation as of
January 15, 1997.
(5) Consists of 240,000 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(6) Includes 72,000 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(7) Includes 60,046 shares of Common Stock held by Matrix Partners IV, L.P.
and 5,006 shares of Common Stock held by Matrix IV Entrepreneurs Fund,
L.P. Mr. Ferri is the general partner of Matrix IV Management Company,
L.P. which is the general partner of Matrix Partners IV, L.P. and
Matrix IV Entrepreneurs Fund, L.P., and as such may be deemed to
beneficially own all shares of Common Stock held by such entities.
Mr. Ferri disclaims beneficial ownership of the shares held by Matrix
Partners IV, L.P. and Matrix IV Entrepreneurs Fund, L.P. except to the
extent of any pecuniary interest therein. Also includes 72,000 shares
of Common Stock issuable pursuant to stock options that are currently
exercisable or will become exercisable within 60 days of February 20,
1997.
(8) Includes 27,000 shares of Common Stock held by the Grayson Family
Foundation which Mr. Grayson may be deemed the beneficial owner since he
exercises voting and investment control over the shares as the President
of the Foundation. Mr. Grayson disclaims any pecuniary interest in the
shares held by the Grayson Family Foundation. Also includes 72,000
shares of Common Stock issuable pursuant to stock options that are
currently exercisable or will become exercisable within 60 days of
February 20, 1997.
(9) Includes 30,000 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(10) Includes 1,559,934 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(11) Includes 32,268 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(12) Includes 75,704 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(13) Includes 144,174 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(14) Includes 61,351 shares of Common Stock issuable pursuant to stock
options that are currently exercisable or will become exercisable within
60 days of February 20, 1997.
(15) Includes an aggregate of 2,516,549 shares of Common Stock issuable
pursuant to stock options that are currently exercisable or will become
exercisable within 60 days of February 20, 1997.
ELECTION OF DIRECTORS
In accordance with the Corporation's Amended and Restated Certificate
of Incorporation, the Corporation's Board of Directors is divided into three
classes.
Two Class I Directors, Ms. Brown and Mr. Deshpande, were elected for
three-year terms through a Written Consent of Stockholders in Lieu of a Special
Meeting dated May 23, 1994. One Class I Director, Mr. Walske, was elected for a
one-year term through a Unanimous Written Consent of Directors dated March 20,
1996. The terms of Ms. Brown and Messrs. Deshpande and Walske expire on
the date of the 1997 Annual Meeting of Stockholders.
Two Class II Directors, Mr. Ferri and Mr. Smith, were elected for
three-year terms at the Annual Meeting of Stockholders held on May 2, 1996. The
terms of Messrs. Ferri and Smith expire on the date of the 1999 Annual Meeting
of Stockholders.
Two Class III Directors, Mr. Burnes and Mr. Grayson, were elected for
three-year terms at the Annual Meeting of Stockholders held on May 4, 1995.
The terms of Messrs. Burnes and Grayson expire on the date of the 1998 Annual
Meeting of Stockholders.
Three Class I Directors will be elected at this Annual Meeting of
Stockholders for three-year terms. The Class I nominees, Ms. Brown and Messrs.
Deshpande and Walske, are currently serving as directors of the Corporation.
Shares represented by all proxies received by the Board of Directors and not
marked to withhold authority to vote for Ms. Brown and Messrs. Deshpande and
Walske will be voted FOR the election of all nominees. Ms. Brown and Messrs.
Deshpande and Walske will be elected to hold office until the Annual Meeting of
Stockholders to be held in 2000 and until their respective successors are duly
elected and qualified. All of the nominees have indicated their willingness to
serve, if elected; however, if any of the nominees should be unable or unwilling
to serve, the proxies will be voted for a substitute nominee designated by the
Board of Directors or for fixing the number of directors at a lesser number.
The following table sets forth for each nominee to be elected at the
Annual Meeting and for each director whose term of office will extend beyond the
Annual Meeting, the year each such nominee or director was first elected a
director, the positions currently held by each nominee or director with the
Corporation, the year each nominee's or director's term will expire and the
class of director of each nominee or director.
<TABLE>
Nominee's or Director's
Name and Year Nominee
or Director First Year Term Class of
Became a Director Position(s) Held Will Expire Director
<S> <C> <C> <C>
Victoria A. Brown...... Director 1997 I
(1991)
Richard M. Burnes, Jr... Director 1998 III
(1991)
Gururaj Deshpande...... Executive Vice
(1990) President Business
Development and
Chairman of the Board
of Directors 1997 I
Paul J. Ferri......... Director 1999 II
(1991)
Bruns H. Grayson...... Director 1998 III
(1993)
Daniel E. Smith........ President, Chief
(1992) Executive Officer
and Director 1999 II
Steven C. Walske....... Director 1997 I
(1996)
</TABLE>
Board of Directors' Meetings and Committees
The Board of Directors met 10 times during the fiscal year ended
December 31, 1996.
The Audit Committee of the Board of Directors, presently comprised of
Mr. Burnes and Mr. Grayson, both outside directors of the Corporation, was
established on April 29, 1994. The Audit Committee provides the opportunity for
direct contact between the Corporation's independent accountants and the Board
of Directors. The Audit Committee has responsibility for recommending the
appointment of the Corporation's independent accountants, reviewing the scope
and results of audits and reviewing the Corporation's internal accounting
control policies and procedures. During the fiscal year ended December 31, 1996,
the Audit Committee met twice.
The Compensation Committee of the Board of Directors, presently
comprised of Ms. Brown and Mr. Ferri, both outside directors of the Corporation,
was established on April 29, 1994. The Compensation Committee reviews and makes
recommendations concerning executive compensation, administers the Corporation's
Amended and Restated 1991 Stock Plan, Concert Communications 1995 Stock Option
Plan, 1994 Employee Stock Purchase Plan and 1994 Non-Employee Director Stock
Option Plan and oversees the administration of the Corporation's 401(k) plan.
During the fiscal year ended December 31, 1996, the Compensation Committee
met four times, and took action by unanimous written consent thirteen times.
The Board of Directors does not currently have a nominating committee.
In 1996, each of the directors attended at least 75% of the total number of
meetings of the Board of Directors and all Committees of the Board on which he
or she served.
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Class I nominees to be elected at
the meeting, the current directors who will continue to serve as directors
beyond the meeting, and the executive officers of the Corporation, their ages,
and the positions currently held by each such person with the Corporation.
Information with respect to the number of shares of Common Stock beneficially
owned by each director, directly or indirectly, as of February 20, 1997, appears
under the heading "Stock Ownership of Certain Beneficial Owners and Management."
<TABLE>
Name Age Position
<S> <C> <C>
Victoria A. Brown............................... 49 Director
Richard M. Burnes, Jr........................... 55 Director
Gururaj Deshpande............................... 46 Executive Vice
President of
Business Development
and Chairman of the
Board of Directors
Paul J. Ferri................................... 58 Director
Bruns H. Grayson................................ 49 Director
Daniel E. Smith................................. 47 President, Chief
Executive Officer
and Director
Steven C. Walske................................ 45 Director
Hassan M. Ahmed................................. 39 Vice President of
Engineering
Paul E. Blondin................................. 46 Vice President of
Finance and
Administration,
Chief Financial
Officer, Treasurer
and Secretary
Michael A. Champa............................... 45 Vice President of
Worldwide Sales and
Customer Service
James A. Dolce, Jr.............................. 34 Vice President and
General Manager of
Remote Access
John E. Dowling................................. 43 Vice President of
Operations
Robert N. Machlin............................... 39 Vice President of
Marketing
Jonathan M. Reeves.............................. 37 Vice President
and General Manager
of Broadband Access
</TABLE>
Directors to be Elected at the Meeting
Victoria A. Brown has been a director of the Corporation since November 1991 and
served as Chairperson of the Board of Directors from November 1991 to January
1997. Ms. Brown has been President of Communicore, a consulting company, since
1991. Prior to that time, Ms. Brown was President of Timeplex, Inc., a data
communications equipment manufacturer and a subsidiary of Unisys Corp., from
1988 to 1990.
Gururaj Deshpande is a founder of the Corporation and has served as a director
of the Corporation since inception and as Chairman of the Board of Directors and
Executive Vice President of Business Development of the Corporation since
January 1997. From April 1992 to January 1997, Mr. Deshpande served as Executive
Vice President of Marketing and Customer Service of the Corporation and from
October 1990 to April 1992, served as President of the Corporation. From
December 1988 to May 1990, Mr. Deshpande served as Vice President of Engineering
for Coral Network Corporation, a designer and manufacturer of high performance
LAN internetworking products.
Steven C. Walske has been a director of the Corporation since March 1996.
Since August 1994, Mr. Walske has served as Chairman of the Board of Directors
of Parametric Technology Corporation, a developer of software products for the
automation of the mechanical design process, and Chief Executive Officer of
Parametric Technology Corporation since December 1986. Mr. Walske served as
President of Parametric Technology Corporation from December 1986 to August
1994. Mr. Walske also serves on the Board of Directors of Synopsys, Inc.,
VideoServer, Inc. and Object Design, Inc.
Directors Whose Terms Extend Beyond the Meeting
Richard M. Burnes, Jr. has been a director of the Corporation since June 1991.
Since 1970, he has been a General Partner of The Charles River Partnerships, a
group of venture capital funds based in Waltham, Massachusetts. Mr. Burnes is
also a director of CellCall, Inc., LANart Corporation, Concord Communications,
Passport Corporation and Prominet Corporation.
Bruns H. Grayson has been a director of the Corporation since October 1993.
Since September 1987, Mr. Grayson has served as the Managing General Partner
of Calvert Capital L.P., a partnership that manages the investment activities of
the ABS Ventures partnerships. Mr. Grayson is also a director of Anadigics,
Inc.
Paul J. Ferri has been a director of the Corporation since June 1991. He has
served as a General Partner of Matrix Partners, a venture capital firm, since
February 1982. Mr. Ferri also serves on the Board of Directors of Stratus
Computer Inc., Applix Inc., BancTec, Inc., TechForce Corp. and VideoServer, Inc.
Daniel E. Smith has served as President, Chief Executive Officer and Director of
the Corporation since April 1992. From August 1987 until April 1992, Mr. Smith
served as Vice President of Sales for Proteon, Inc., a producer of LAN and LAN
internetworking products. Prior to that time, Mr. Smith spent seven years at
Rolm Corporation, a manufacturer of telecommunications systems, in several
positions, most recently General Manager, Named Accounts Program Division, that
corporation's sales division for certain major accounts.
Executive Officers
Dr. Hassan M. Ahmed has served as Vice President of Engineering of the
Corporation since December 1995. From July 1995 to December 1995, Dr. Ahmed
served as Vice President and Chief Technology Officer of the Corporation. Prior
to that time, Dr. Ahmed was President of AirAccess, an emerging high-speed,
wireless LAN company from June 1993 to June 1995 and he worked as an independent
consultant to technology companies such as Motorola, Inc., Telco Systems, Inc.,
and Windata, Inc. from September 1987 to June 1993. In addition, he was an
associate professor at Boston University's Electrical Engineering and Computer
Science and Systems Engineering Departments from September 1987 to September
1992.
Paul E. Blondin has served as Vice President of Finance and Administration,
Chief Financial Officer and Treasurer of the Corporation since March 1993 and
assumed the office of Secretary in May 1994. Prior to that time, Mr. Blondin
served at Proteon, Inc. as Controller from February 1987 to February 1993, as
General Manager of European Subsidiaries from September 1992 until February 1993
and as Vice President from January 1990 to February 1993.
Michael A. Champa has served as Vice President of Worldwide Sales of the
Corporation since May 1995, and has served as Vice President of Customer Service
since January 1997. From April 1993 to May 1995, Mr. Champa served as Vice
President of Sales of the Corporation. Prior to that time, Mr. Champa served as
Vice President of International Sales at Microcom Inc., a manufacturer of
modems, communications software and internetworking equipment, from March 1991
to April 1993 and at Racal-Interlan, Inc., a manufacturer of data communications
and internetworking products, as National Sales Director, from February 1990 to
February 1991 and as Director of International Sales from February 1987 to
February 1990.
James A. Dolce, Jr. has served as Vice President and General Manager of Remote
Access of the Corporation since February 1997. From May 1996 to February 1997,
Mr. Dolce served as Vice President of Remote Access Marketing of the
Corporation. Prior to that time, Mr. Dolce was a founder and Vice President of
Sales and Marketing of Arris Networks, Inc., a developer of carrier-class remote
access products, from its inception to May 1996. From April 1989 to June 1995,
Mr. Dolce was also a founder and Vice President of Sales and Marketing of
Promptus Communications, a manufacturer of high speed digital network access
products.
John E. Dowling has served as Vice President of Operations of the Corporation
since May 1994. Prior to that time, Mr. Dowling served as Vice President of
Operations at Coral Network Corporation from July 1991 to May 1994 and as Vice
President of Operations at Epoch Systems, Inc., formerly a manufacturer of mass
storage devices, from March 1987 to July 1991.
Robert N. Machlin has served as Vice President of Marketing of the Corporation
since October 1994. Prior to that time, Mr. Machlin served as an independent
consultant to manufacturers of networking equipment from December 1993 to
September 1994. Mr. Machlin served as Vice President of Marketing at Coral
Network Corporation from October 1992 to November 1993 and as Vice President of
Marketing at Amnet, Inc., a manufacturer of wide area network switches, from
November 1988 to October 1992.
Jonathan M. Reeves has served as Vice President and General Manager of Broadband
Access of the Corporation since January 1997. Prior to that time, Mr. Reeves
served as Chief Executive Officer of Sahara Networks, Inc., a developer of
scaleable, high-speed broadband access products from June 1995 to January 1997.
Mr. Reeves served at General DataComm, Inc., a supplier of networking and ATM
switching equipment, as Associate Vice President for the ATM Business Unit from
January 1995 to May 1995, as Executive Director ATM from January 1994 to January
1995, as Director System Architecture from August 1991 to January 1994 and as
Product Manager from October 1989 to August 1991.
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation Summary
The following table sets forth summary information concerning the
annual and long-term compensation paid or earned for services rendered to the
Corporation during the fiscal years ended December 31, 1996, 1995 and 1994 to
the Corporation's Chief Executive Officer and each of the four most highly
compensated executive officers of the Corporation in fiscal year 1996 (the
"Named Executive Officers").
<TABLE>
Summary Compensation Table
Annual Compensation (1) Long Term
------------------------ Compensation (3)
Fiscal Year
Ending Awards All Other
Name and Principal December 31, Salary Bonus($)(2) Options(#) Compensation
Position
<S> <C> <C> <C> <C> <C>
Daniel E. Smith 1996 $214,615 $140,148 - -
President and Chief 1995 193,596 82,258 330,778 -
Executive Officer 1994 122,038 60,000 - -
Gururaj Deshpande 1996 189,231 103,588 - -
Executive Vice 1995 149,269 63,275 180,874 -
President of 1994 111,885 15,000 - -
Business Development
Paul E. Blondin 1996 149,423 79,214 - -
Vice President of 1995 119,846 44,293 108,526 -
Finance and 1994 111,885 18,500 - -
Administration and
Chief Financial Officer
Michael A. Champa 1996 149,327 213,896(4) - -
Vice President of 1995 114,505 164,476(4) 180,874 -
Worldwide Sales and 1994 100,000 295,905(4) - -
Customer Service
Robert N. Machlin 1996 144,519 79,214 - -
Vice President of 1995 120,000 37,965 156,756 -
Marketing 1994 27,692 - 300,002 -
- -------------------
</TABLE>
(1) Excludes perquisites and other personal benefits, if any, the aggregate
annual amount of which for each officer was less than the lesser of
$50,000 or 10% of the total of annual salary and bonus reported.
(2) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(3) The Corporation did not grant any restricted stock awards or stock
appreciation rights or make any long term incentive plan payouts during
the fiscal years ended December 31, 1996, 1995 and 1994.
(4) Consists of amounts paid pursuant to commissions.
Option Grants in the Last Fiscal Year
The Corporation did not grant any stock options or stock appreciation
rights to the Named Executive Officers during the fiscal year ended December 31,
1996.
Option Exercises and Fiscal Year-End Values
The following table sets forth information with respect to options to
purchase the Corporation's Common Stock granted to the Corporation's Named
Executive Officers under the Amended and Restated 1991 Stock Plan, including:
(i) the number of shares of Common Stock purchased upon exercise of options in
the fiscal year ending December 31, 1996; (ii) the net value realized upon such
exercise; (iii) the number of unexercised options outstanding at December 31,
1996; and (iv) the value of such unexercised options at December 31, 1996.
<TABLE>
Aggregated Option Exercises In Last Fiscal
Year and December 31, 1996 Option Values
Number of
Shares Unexercised Value of Unexercised
Acquired Options at In-the-Money Options
on Value December 31, at December 31,
Exercise Realized 1996 (#) 1996 ($)(2)
Name (#) ($)(1) Exercisable/ Exercisable/
Unexercisable Unexercisable
- -------------- -------- ---------- ---------------- ----------------------
<S> <C> <C> <C> <C>
Daniel E. Smith 702,428 $35,197,578 1,368,597/555,959 $73,732,692/$23,873,480
Gururaj Deshpande 0 0 36,174/144,700 1,068,640/4,274,680
Paul E. Blondin 126,000 7,038,300 21,704/248,822 641,172/11,489,717
Michael A. Champa 0 0 144,174/306,700 7,018,541/13,199,530
Robert N. Machlin 60,000 3,535,487 31,352/305,406 926,190/12,232,238
- -----------------------
</TABLE>
(1) Amounts disclosed in this column do not reflect amounts actually
received by the Named Executive Officers, but are calculated based on
the difference between the fair market value of the Corporation's Common
Stock on the date of exercise and the exercise price of the options.
Named Executive Officers will receive cash only if and when they sell
the Common Stock issued upon exercise of the options and the amount of
cash received by such individuals is dependent on the price of the
Corporation's Common Stock at the time of such sale.
(2) Value is based on the difference between the option exercise price and
the fair market value at December 31, 1996, the last day during fiscal
year 1996 for which market prices are available ($55.125 per share as
quoted on the Nasdaq National Market), multiplied by the number of
shares underlying the option.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for establishing and administering the Corporation's executive
compensation policies and plans. The Committee is composed of two independent
outside directors. This report is submitted by the Committee and addresses the
Corporation's policies for the fiscal year ended December 31, 1996 as they apply
to all executive officers.
General Compensation Policy
The Committee's compensation program is designed to achieve the
following objectives:
- To enhance profitability of the Corporation and stockholder
value.
- To reward executives consistent with the Corporation's
annual and long-term performance goals.
- To recognize individual initiative and achievement.
- To provide competitive compensation that will attract and
retain qualified executives.
Procedure for Establishing Compensation
At the beginning of each fiscal year, the Committee establishes an
annual salary plan for the Corporation's senior executive officers based on
recommendations from the Corporation's Chief Executive Officer and the Human
Resources Department. The Committee reviews these recommendations taking into
account the following factors: (i) external market data, (ii) the Corporation's
performance, (iii) the individual's contribution to the Corporation's success,
and (iv) the internal equity of pay relationships.
In fiscal year 1996, the Corporation retained an independent
compensation consultant at the request of the Committee. The consultant compared
the Corporation's executive compensation policies with those of companies of
comparable size in the industry.
Executive Officer Compensation Program
The Corporation's executive officer compensation program consists of
three elements:
(i) base salary which is based upon the overall performance of the Corporation
and external market data, (ii) annual incentive compensation in the form of
bonuses and commissions which is based upon achievement of pre-determined
financial objectives of the Corporation and individual non-financial objectives,
and (iii) long-term incentive compensation, in the form of stock options,
granted with the objective of aligning executive officers' long-term interests
with those of the stockholders and encouraging the achievement of superior
results over an extended period.
Base Salary. Base salary is generally set within the range of salaries
of executive officers with comparable qualifications, experience and
responsibilities at other companies of comparable size and success in the same
or similar businesses. The Committee employs an outside compensation consultant
to gather such external market data. The Committee has generally set base salary
in the low- to mid-range level of competitive compensation. In addition to
external market data, salary is also based on the Corporation's financial
performance as well as individual performance.
Annual Incentive Compensation. Annual incentive compensation, in the
form of bonuses and commissions, is based on the Corporation's achievement of
pre-determined revenue and earnings objectives and is also based on various
non-financial objectives such as the ability to motivate and manage others,
develop and maintain the skills necessary to work in a high-growth company,
recognize and pursue new business opportunities and initiate programs to enhance
the Corporation's growth and success.
Long-Term Incentive Compensation. Long-term incentive compensation, in
the form of stock options, allows the executive officers to share in any
appreciation in the value of the Corporation's Common Stock. The Committee
believes that stock option participation aligns the executive officers'
interests with those of the stockholders. When establishing stock option grant
levels for executive officers, the Committee considered the existing levels of
stock ownership, previous grants of stock options, vesting schedules of
previously granted options and the current stock price. Stock options granted
under the Corporation's Amended and Restated 1991 Stock Plan have an exercise
price equal to the fair market value of the stock on the date of grant and vest
over a five-year period.
No stock options were granted to either the Chief Executive Officer or
any of the Named Executive Officers during the fiscal year ended December 31,
1996 as the Committee determined that the stock and option holdings of the Named
Executive Officers adequately align their interests with those of the
stockholders of the Corporation. During the fiscal year ended December 31, 1996,
options to purchase an aggregate of 150,000 shares of the Corporation's Common
Stock were granted to James A. Dolce, Jr., an executive officer of the
Corporation.
Tax Considerations
The Corporation does not believe Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), which disallows a tax deduction for
certain compensation in excess of $1 million, will generally have an effect on
the Corporation. The Committee has structured Executive Officer Compensation
such that it meets the exception for qualified performance-based compensation in
accordance with Internal Revenue Code Regulations and therefore is fully
deductible.
Summary of Compensation of the Chief Executive Officer
In fiscal year 1996, the Corporation's President and Chief Executive
Officer, Daniel E. Smith, received a salary and bonus compensation of $354,763,
including base salary of $214,615 and bonus compensation of $140,148.
Consistent with the Committee's philosophy, Mr. Smith's base salary for
1996 was in the low- to mid- range level of competitive compensation. The bonus
paid to Mr. Smith for fiscal 1996 reflected the Corporation's achievement of
certain financial objectives, the successful acquisition of Arris Networks,
Inc., the work in connection with the proposed Sahara Networks, Inc.
acquisition, the expansion of the Corporation's senior management team and the
Corporation's continued development of innovative products. Mr. Smith was not
granted any stock options in 1996 after consideration of his existing stock
options, stock option exercises, existing vesting schedules and the current
exercise price of existing stock options in relation to the current stock price.
Respectfully submitted by the Compensation Committee:
Victoria A. Brown
Paul J. Ferri
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1996, Ms. Brown and Mr. Ferri
served on the Compensation Committee. No member of the Compensation Committee
was at any time during the past fiscal year or at any other time (i) an officer
or employee of the Corporation or any of its subsidiaries, or (ii) was formerly
an officer of the Corporation or any of its subsidiaries.
In May 1996, the Corporation completed its acquisition of Arris
Networks, Inc. ("Arris"), a privately-held developer of high performance remote
access technology for carrier class networks, by means of a merger (the
"Merger") of a wholly-owned subsidiary of the Corporation with and into Arris.
As a result of the Merger, Arris became a wholly-owned subsidiary of the
Corporation. The Corporation issued approximately 3.2 million shares of the
Corporation's Common Stock in exchange for all outstanding shares of Arris, of
which 60,886 shares were issued to Matrix IV Entrepreneurs Fund, LP and
1,156,852 shares were issued to Matrix Partner IV, LP. Paul J. Ferri, a director
of the Corporation, is a general partner of the general partner of each of these
entities. The Company also assumed all outstanding Arris options to purchase
approximately 242,000 shares of the Corporation's Common Stock.
No executive officer of the Corporation served as a member of the
Compensation Committee (or other Board committee performing equivalent functions
or, in the absence of any such committee, the entire Board of Directors) of
another entity, where an executive officer of such other entity served as a
director of the Corporation. In addition, no executive officer of the
Corporation served on the Board of Directors of another entity, one of whose
executive officers served as a member of the Compensation Committee of the
Corporation.
Compensation of Directors
As compensation for serving on the Board of Directors, the Corporation
pays each non-employee director $5,000 annually and an additional $500 for each
meeting that they attend of the Board of Directors and Board committees on which
they serve. Non-employee directors may receive expense reimbursements for
attending Board and committee meetings. Directors who are officers or employees
of the Corporation do not receive any additional compensation for their services
as directors. Non-employee directors are also entitled to participate in the
Corporation's 1994 Non-Employee Director Stock Option Plan (the "Director
Plan"). Under the Director Plan, each non-employee director as of
July 28, 1994 automatically received an option for 90,000 shares of Common
Stock on such date, and each non-employee director first elected to the
Board of Directors after July 28, 1994 automatically receives an option for
90,000 shares on the date of his or her election (each, an "Initial Grant").
Every non-employee director who continues to be a non-employee director
immediately following each annual meeting of stockholders occurring after
his or her Initial Grant automatically receives an option to purchase 12,000
shares of Common Stock on each such annual meeting date (each, a "Subsequent
Grant"). Initial Grants become exercisable in three equal annual installments
from the date of grant and Subsequent Grants become exercisable on the earlier
of one year from the date of grant or the date of the next annual meeting of
stockholders. The exercise price per share of all options granted under the
Director Plan is equal to the fair market value of the Corporation's Common
Stock on the date of grant, and such options expire on the date which is ten
years from the date of the option grant. Options to purchase 90,000 shares of
Common Stock at an exercise price of $43.625 per share and 60,000 shares of
Common Stock at an exercise price of $51.375 per share were granted in 1996.
If the proposed amendment to the Director Plan is approved by the
stockholders of the Corporation at the Annual Meeting then the Initial Grant to
non-employee directors elected for the first time after the Annual Meeting will
be amended from 90,000 shares to 30,000 shares and each Subsequent Grant to all
non-employee directors occurring after the Annual Meeting will be amended from
12,000 shares to 10,000 shares.
Stock Performance Graph
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Corporation's Common Stock during the
period from the Corporation's initial public offering through December 31, 1996,
with the cumulative total return on the Nasdaq Telecommunications Stock Index
and Standard and Poor's 400 Stock Index. The comparison assumes $100 was
invested on July 28, 1994 in the Corporation's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends, if any.
Comparison of Five Year* Cumulative Total Return Among
Cascade Communications Corp., the Nasdaq Telecommunications
Stock Index and Standard and Poor's 400 Stock Index
CSCC: Cascade Communications Corp.
S&P 400: Standard and Poor's 400 Stock Index
Nasdaq Telecom Index: Nasdaq Telecommunications Stock Index
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
7/28/94 9/30/94 12/30/94 3/31/95 6/30/95 9/29/95
CSCC 100 315 412 460 577 657
S&P 400 100 104 103 113 123 130
Nasdaq Telecom Index 100 105 98 102 112 131
12/29/95 3/29/96 6/28/96 9/30/96 12/31/96
CSCC 1,137 1,795 2,720 3,260 2,205
S&P 400 136 144 150 153 164
Nasdaq Telecom Index 131 138 141 136 136
</TABLE>
- ------------
* Prior to July 28, 1994 the Corporation's Common Stock was not publicly traded.
Comparative data is provided only for the period since that date.
Certain Relationships and Related Transactions
In May 1996, the Corporation completed its acquisition of Arris
Networks, Inc. ("Arris"), a privately-held developer of high performance remote
access technology for carrier class networks, by means of a merger (the
"Merger") of a wholly-owned subsidiary of the Corporation with and into Arris.
As a result of the Merger, Arris became a wholly-owned subsidiary of the
Corporation. The Corporation issued approximately 3.2 million shares of the
Corporation's Common Stock in exchange for all outstanding shares of Arris, of
which 60,886 shares were issued to Matrix IV Entrepreneurs Fund, LP and
1,156,852 shares were issued to Matrix Partner IV, LP. Paul J. Ferri, a director
of the Corporation, is a general partner of the general partner of each of these
entities. The Company also assumed all outstanding Arris options to purchase
approximately 242,000 shares of the Corporation's Common Stock.
The Corporation has adopted a policy that all transactions between the
Corporation and its officers, directors, principal stockholders and their
affiliates be on terms no less favorable to the Corporation than could be
obtained from unrelated third parties and must be approved by a majority of the
outside independent and disinterested directors. No such transactions are
currently being considered.
PROPOSAL TO AMEND THE 1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The 1994 Non-Employee Director Stock Option Plan (the "Director Plan"),
which was adopted by the Board of Directors on April 29, 1994 and approved by
the Corporation's stockholders on May 23, 1994, provides for the grant of
options to purchase shares of the Corporation's Common Stock only to
non-employee directors of the Corporation. Under the Director Plan, each
non-employee director as of July 28, 1994 automatically received an option for
90,000 shares of Common Stock on such date, and each non-employee director first
elected to the Board of Directors after July 28, 1994 automatically receives an
option for 90,000 shares on the date of his or her election (each, an "Initial
Grant"). Every non-employee director who continues to be a non-employee director
immediately following each annual meeting of stockholders occurring after his or
her Initial Grant automatically receives an option to purchase 12,000 shares of
Common Stock on each such annual meeting date (each, a "Subsequent Grant"). The
Corporation currently has five non-employee directors eligible to participate in
the Director Plan.
It is now proposed to approve amendments to the Director Plan to (i)
amend the initial stock option grant from 90,000 shares to 30,000 shares; (ii)
to amend the stock option grant for each subsequent year of service on the Board
of Directors from 12,000 to 10,000 shares; (iii) to limit the number of shares
granted for each initial stock option grant and the stock option grant for each
subsequent year of service on the Board of Directors to the amount stated above;
and (iv) increase the number of shares of Common Stock available for issuance
under the Director Plan from 720,000 shares to 870,000 shares. The executive
officers of the Corporation believe that the Director Plan is important to
permit the Corporation to obtain and retain the service of qualified persons who
are neither employees nor officers of the Corporation to serve as members of the
Board of Directors.
If the proposed amendments to the Director Plan are not approved by the
stockholders of the Corporation, the current provisions of the Director Plan
regarding the number of options granted to non-employee directors and the number
of shares of Common Stock issuable under the Director Plan will remain in
effect.
Description of the Director Plan
Administration. The Director Plan is administered by the Compensation
Committee of the Corporation's Board of Directors. The Compensation Committee,
subject to the provisions of the Director Plan, has the power to construe the
Plan, to determine all questions thereunder and to adopt and amend such rules
and regulations for the administration of the Director Plan as it may deem
desirable.
Automatic Grant of Options. Options are granted pursuant to the
Director Plan only to members of the Board of Directors of the Corporation who
are neither employees nor officers of the Corporation. Under the provisions of
the Director Plan, each non-employee director as of July 28, 1994 automatically
received an option for 90,000 shares of Common Stock on such date. Each
non-employee director first elected to the Board of Directors after July 28,
1994 will automatically receive an option for 90,000 shares on the date of his
or her election. Each non-employee director granted an initial grant pursuant to
the Director Plan who continues to be a non-employee director immediately
following each successive annual meeting of stockholders occurring after the
initial grant shall automatically receive an option to purchase 12,000 shares of
Common Stock on each such annual meeting date.
Shares Subject to the Director Plan. The Director Plan authorizes the
grant of options to purchase 720,000 shares of Common Stock of the Corporation.
Option Price. The exercise price per share of options granted under the
Director Plan is 100% of the fair market value of the Corporation's Common Stock
on the date the option is granted.
Period of Option. Options granted under the Director Plan shall expire
on the date which is ten (10) years after the date of grant of the option.
Vesting of Shares and Non-Transferability of Options. Options granted
under the Director Plan shall not be exercisable until they become vested.
Initial Grants become exercisable in three equal annual installments beginning
one year from the date of grant and Subsequent Grants become exercisable on the
earlier of one year from the date of grant or the date of the next annual
meeting of stockholders, provided that the optionee has continuously served as a
member of the Board of Directors through such vesting date and has attended at
least 75% of the Board of Directors meetings held during such period.
Any option granted pursuant to the Director Plan shall not be
assignable or transferable other than by will or the laws of descent and
distribution or pursuant to a domestic relations order and shall be exercisable
during the optionee's lifetime only by him or her.
Effect of Termination as a Director or of Death or Disability. In the
event an optionee ceases to be a member of the Board of Directors for any reason
other than death or permanent disability, any then unexercised portion of
options granted to such optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is then
vested but has not been exercised at the time the optionee so ceases to be a
member of the Board of Directors may be exercised, to the extent it is then
vested, by the optionee within 90 days of the date the optionee ceased to be a
member of the Board of Directors; and all options shall terminate after such 90
days have expired.
In the event an optionee ceases to be a member of the Board of
Directors by reason of his or her death of permanent disability, any option
granted to such optionee shall be immediately and automatically accelerated and
become fully vested and all unexercised options shall be exercisable by the
optionee (or by the optionee's personal representative, heir or legatee, in the
event of death) until the scheduled expiration date of the option.
Exercise of Options. An option granted under the Director Plan, to the
extent then exercisable, may be exercised in whole or in part by giving written
notice to the Corporation stating the number of shares with respect to which the
option is being exercised, which generally shall not be less than 100 shares,
accompanied by payment in full for such shares. Payment may be (a) in United
States dollars in cash or by check, (b) in whole or in part in shares of the
Common Stock of the Corporation already owned by the person or persons
exercising the option or shares subject to the option being exercised (subject
to such restrictions and guidelines as the Board of Directors may adopt from
time to time), valued at fair market value or (c) consistent with applicable
law, through the delivery of an assignment to the Corporation of a sufficient
amount of the proceeds from the sale of the Common Stock acquired upon exercise
of the option and an authorization to the broker or selling agent to pay that
amount to the Corporation.
Adjustments Upon Changes in Capitalization and Other Events. Upon the
occurrence of any of the following events, an optionee's rights with respect to
options granted to him or her under the Director Plan shall be adjusted
hereinafter provided:
(a) Stock Dividend and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number
of shares or if the Corporation shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock, the
number of shares of Common Stock deliverable upon the exercise of
options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination
or stock dividend.
(b) Recapitalization Adjustments. If the Corporation is to be
consolidated with or acquired by another entity in a merger,
sale of all or substantially all of the Corporation's assets or
otherwise, each option granted under the Director Plan which is
outstanding but unvested as of the effective date of such event
shall become exercisable in full thirty (30) days prior to the
effective date of such event. In the event of a reorganization,
recapitalization, merger, consolidation, or any other change in
the corporate structure or shares of the Corporation, to the
extent permitted by Rule 16b-3 under the Securities Exchange Act
of 1934, adjustments in the number and kind of shares authorized
by the Director Plan and in the number and kind of shares covered
by, and in the option price of outstanding options under the
Director Plan necessary to maintain the proportionate interest of
the optionee and preserve, without exceeding, the value of such
options, shall be made. Notwithstanding the foregoing, no such
adjustment shall be made which would, within the meaning of any
applicable previsions of the Internal Revenue Code of 1986, as
amended, constitute a modification, extension or renewal of any
option or a grant of additional benefits to the holder of an
option.
(c) Issuances of Securities. Except as expressly provided herein, no
issuance by the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to options. No
adjustments shall be made for dividends paid in cash or in
property other than securities of the Corporation.
Termination and Amendment of Plan. Options may no longer be granted
under the Director Plan after April 28, 2004, and the Director Plan shall
terminate when all options granted or to be granted hereunder are no longer
outstanding. The Board of Directors may at any time terminate the Director Plan
or make such modification or amendment thereof as it deems advisable; provided,
however, that the Board of Directors may not, without approval by the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at a meeting, (a) increase
the maximum number of shares for which options may be granted under the Director
Plan, (b) materially modify the requirements as to eligibility to participate in
the Director Plan, (c) materially increase benefits accruing to option holders
under the Director Plan, (d) change the provisions of the Director Plan
regarding the termination of the options or the times when they may be
exercised, (e) change the designation of the class of persons eligible to
receive options, or (f) amend the Director Plan in any manner which would cause
Rule 16b-3 under the Securities Exchange Act (or any successor or amended
provision thereof) to become inapplicable to the Director Plan; and provided
further that the provisions of the Director Plan specified in Rule
16b-3(c)(2)(ii)(A) (or any successor or amended provision thereof) under the
Securities Exchange Act of 1934 (including without limitation, provisions as to
eligibility, amount, price and timing of awards) may not be amended more than
once every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder. Termination or any modification or amendment of the Director Plan
shall not, without consent of a participant, affect his or her rights under an
option previously granted to him or her.
Federal Income Tax Consequences. Options granted under the Director
Plan are intended to be Nonqualified Options for federal income tax purposes. A
director will not recognize any taxable income upon the grant of an option under
the Director Plan, but will generally recognize ordinary compensation income at
the time of exercise of the option in an amount equal to the excess, if any, of
the fair market value of the shares on the date of exercise over the exercise
price. Upon the exercise of an option, the Corporation, may require the optionee
to pay withholding taxes in respect of amounts considered to be compensation
includible in the optionee's gross income. In some circumstances, however, a
director may acquire Common Stock subject to special rules under Section 83 of
the Code because of certain securities laws restrictions on resale.
Generally, upon any grant or exercise of an option in which a director
does not recognize compensation income, no tax deduction will be allowed to the
Corporation. When a director recognizes compensation income as a result of the
exercise of an option under the Director Plan, the Corporation generally will be
entitled to a corresponding deduction for income tax purposes.
Option Information
The following table sets forth as of March 1, 1997, options granted in
the aggregate under the Director Plan to each non-employee director:
<TABLE>
Name Title No. of Options Granted
<S> <C> <C>
Victoria A. Brown....... Director 114,000
Richard M. Burnes, Jr... Director 114,000
Paul J. Ferri........... Director 114,000
Bruns H. Grayson........ Director 114,000
Steven C. Walske........ Director 102,000
</TABLE>
Approval of the amendments to the Director Plan will require the
affirmative vote of a majority of the outstanding shares of Common Stock of the
Corporation eligible to vote and present and voting on this matter.
The Board of Directors recommends a vote FOR the approval of the
amendments to the Director Plan.
PROPOSAL TO AMEND THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
By a Board of Directors vote dated January 22, 1997, the Board of
Directors recommended to the stockholders that the Corporation amend the
Corporation's Amended and Restated Certificate of Incorporation (the "Charter")
to increase the number of authorized shares of Common Stock, par value $.001 per
share, from 225,000,000 to 300,000,000 shares. Shares of the Corporation's
Common Stock, including the additional shares proposed for authorization, do not
have preemptive or similar rights.
As of February 20, 1997, there were approximately 91,528,185 shares of
Common Stock issued and outstanding and, assuming the proposal to amend the 1994
Non-Employee Director Plan is approved, there will be approximately 19,809,856
shares reserved for future issuance pursuant to the Corporation's stock plans.
If the amendment to the Charter is approved, the Board of Directors will have
the authority to issue approximately 188,661,959 additional shares of Common
Stock without further stockholder approval. The Board of Directors believes that
the authorized number of shares of Common Stock should be increased to provide
sufficient shares for such corporate purposes as may be determined by the Board
of Directors to be necessary or desirable. These purposes may include, without
limitation: acquiring other businesses in exchange for shares of the
Corporation's Common Stock; entering into collaborative research and development
arrangements with other companies in which Common Stock or the right to acquire
Common Stock are part of the consideration; facilitating broader ownership of
the Corporation's Common Stock by effecting a stock split or issuing a stock
dividend; raising capital through the sale of Common Stock; and attracting and
retaining valuable employees by the issuance of stock options. The Corporation
at present has no commitments, agreements or undertakings to issue any such
additional shares. The Board of Directors considers the authorization of
additional shares of Common Stock advisable to ensure prompt availability of
shares for issuance should the occasion arise.
The issuance of additional shares of Common Stock could have the effect
of diluting earnings per share and book value per share, which could adversely
affect the Corporation's existing stockholders. In addition, the Corporation's
authorized but unissued shares of Common Stock could be used to make a change in
control of the Corporation more difficult or costly. Issuing additional shares
of Common Stock could have the effect of diluting stock ownership of the persons
seeking to obtain control of the Corporation. The Corporation is not aware,
however, of any pending or threatened efforts to obtain control of the
Corporation, and the Board of Directors has no current intention to use the
additional shares of Common Stock in order to impede a takeover attempt.
Approval of the proposed amendment to the Amended and Restated
Certificate of Incorporation will require the affirmative vote of the
stockholders of at least a majority of all outstanding shares of Common Stock of
the Corporation.
The Board of Directors recommends a vote FOR the approval of the
amendment to the Corporation's Amended and Restated Certificate of
Incorporation.
RATIFICATION OF SELECTION OF AUDITORS
The Corporation's consolidated financial statements for the years ended
December 31, 1994, 1995 and 1996 were audited by Coopers & Lybrand L.L.P.
("Coopers & Lybrand"). The Board of Directors has selected the firm of Coopers &
Lybrand, independent certified public accountants, to serve as auditors for the
fiscal year ending December 31, 1997. Coopers & Lybrand has served as the
Corporation's auditors since 1993. It is expected that a member of the firm will
be present at the meeting with the opportunity to make a statement if so desired
and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of this
selection.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of 1934, as amended, requires the
Corporation's directors, executive officers and holders of more than 10% of the
Corporation's outstanding shares of Common Stock (collectively, "Reporting
Persons") to file with the Securities and Exchange Commission (the "Commission")
initial reports of ownership and reports of changes in ownership of Common Stock
of the Corporation. Such persons are required by regulations of the Commission
to furnish the Corporation with copies of all such filings. Based on its review
of the copies of such filings received by it with respect to the fiscal year
ended December 31, 1996 and written representations from certain Reporting
Persons, the Corporation believes that all Reporting Persons complied with all
Section 16(a) filing requirements in the fiscal year ended December 31, 1996,
with the following exceptions: Daniel E. Smith, President, Chief Executive
Officer and Director of the Corporation, filed an Amended Form 4 in January
1997, reporting a transaction which should have been reported in May 1996; and
Gururaj Deshpande, Executive Vice President of Business Development and Chairman
of the Board of Directors, filed an Amended Form 4 in January 1997, reporting a
transaction which should have been reported in May 1996.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement
to be furnished to all stockholders entitled to vote at the next Annual Meeting
of Stockholders of the Corporation must be received at the Corporation's
principal executive offices not later than December 5, 1997. In order to curtail
any controversy as to the date on which a proposal was received by the
Corporation, it is suggested that proponents submit their proposals by Certified
Mail, Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation,
and, in addition to soliciting stockholders by mail through its regular
employees, the Corporation may request banks, brokers and other custodians,
nominees and fiduciaries to solicit their customers who have stock of the
Corporation registered in the names of a nominee and, if so, will reimburse such
banks, brokers and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket costs. Solicitation by officers and employees of the
Corporation may also be made of some stockholders in person or by mail,
telephone or telegraph following the original solicitation. The Corporation has
retained Corporate Investors Communications, Inc. to assist in the solicitation
of proxies and will pay this company a fee of approximately $5,500 plus
out-of-pocket expenses.
CASCADE COMMUNICATIONS CORP.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Non-Qualified Stock Option Plan, to be known as the 1994
Non-Employee Director Stock Option Plan (hereinafter, this "Plan") is intended
to promote the interests of Cascade Communications Corp. (hereinafter, the
"Company") by providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, par value
$.001 per share, of the Company (the "Common Stock") for which options may be
granted under this Plan shall not exceed 720,000 shares, subject to adjustment
in accordance with paragraph 11 of this Plan. Shares subject to this Plan are
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Company. If any options granted under this Plan are
surrendered before exercise or lapse without exercise, in whole or in part, the
shares reserved therefor shall continue to be available under this Plan.
3. Administration. This Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer this Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe this Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
under it.
4. Automatic Grant of Options. Subject to the availability of shares
under this Plan,
(a) each person who is or becomes a member of the Board and who is
not an employee or officer of the Company (a "Non-Employee Director") shall be
automatically granted on the latest of (i) the date such person is first elected
to the Board, (ii) April 29, 1994 (the "Approval Date"), or (iii) the effective
date of an initial public offering of the Company's Common Stock (such later
date being referred to herein as the "Grant Date"), without further action by
the Board, an option to purchase 90,000 shares of the Common Stock, and
(b) each person receiving an option pursuant to clause (a) hereof
who is a Non-Employee Director immediately following each successive annual
meeting of stockholders occurring after such person's Grant Date during the term
of this Plan shall be automatically granted on each such annual meeting date an
option to purchase 12,000 shares of the Common Stock.
The options to be granted under this paragraph 4 shall be the only options
ever to be granted at any time to such member under this Plan. Notwithstanding
anything to the contrary set forth herein, if this Plan is not approved by a
majority of the Company's stockholders present, or represented, and entitled to
vote at the first meeting of Stockholders of the Company following the Approval
Date, then the Plan and the options granted pursuant to this Section 4 shall
terminate and become void, and no further options shall be granted under this
Plan.
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of paragraph 10 of this Plan. For
purposes of this Plan, if, at the time an option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National Market List. The "fair market value" of the stock issuable upon
exercise of an option granted pursuant to the Plan within 120 days prior to the
time the Company's Common Stock is publicly traded shall be deemed to be equal
to the initial per-share purchase price at which the Company's Common Stock is
offered to the public. However, if the Common Stock is not publicly traded at
the time an option is granted under the Plan, "fair market value" shall be
deemed to be the fair value of the Common Stock as determined by the Committee
after taking into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of the Common Stock
in private transactions negotiated at arm's length.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of paragraph 8 of this Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.
7. (a) Vesting of Shares and Non-Transferability of Options.
Options granted under this Plan shall not be exercisable until they become
vested. Options granted under clause (a) of paragraph 4 of this Plan shall
vest in the optionee and thus become exercisable, in accordance
<PAGE>
with the following schedule, provided that the optionee has continuously served
as a member of the Board through such vesting date:
Percentage of Option
Shares for which
Option Will be Exercisable Date of Vesting
33 1/3% One year from the date of grant
66 2/3% Two years from the date of grant
100% Three years from the date of grant
provided, that, in the event that an optionee's term as a director expires at
the date of an annual meeting of stockholders within the 90-day period preceding
any vesting date, the installment of such option corresponding to such vesting
date shall vest on the date of such meeting.
Options granted under clause (b) of paragraph 4 of the Plan shall vest in
the optionee and thus become exercisable on the earlier of one year from the
date of grant or the date of the next meeting of stockholders, provided that the
optionee has continuously served as a member of the Board through such vesting
date.
Notwithstanding the foregoing provisions of this part (a) to paragraph 7,
an option installment shall not vest with respect to any of the vesting periods
described above in the event the optionee fails to attend at least 75% of the
meetings of the Board of Directors during such period.
The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares it
shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in this Plan.
(b) Non-transferability. Any option granted pursuant to this Plan
shall not be assignable or transferable other than by will or the laws of
descent and distribution or pursuant to a domestic relations order and shall be
exercisable during the optionee's lifetime only by him or her.
8. Termination of Option Rights.
(a) Except as otherwise specified in the agreement relating to an
option, in the event an optionee ceases to be a member of the Board for any
reason other than death or permanent disability, any then unexercised portion of
options granted to such optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is then
vested but has not been exercised at the time the optionee so ceases to be a
member of the Board may be exercised, to the extent it is then vested, by the
optionee within 90 days of the date the optionee ceased to be a member of the
Board; and all options shall terminate after such 90 days have expired.
(b) In the event that an optionee ceases to be a member of the
Board by reason of his or her death or permanent disability, any option granted
to such optionee shall be immediately and automatically accelerated and become
fully vested and all unexercised options shall be exercisable by the optionee
(or by the optionee's personal representative, heir or legatee, in the event of
death) until the scheduled expiration date of the option.
9. Exercise of Option. Subject to the terms and conditions of this Plan
and the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to Cascade Communications Corp., at its
principal executive offices, stating the number of shares with respect to which
the option is being exercised, accompanied by payment in full for such shares.
Payment may be (a) in United States dollars in cash or by check, (b) in whole or
in part in shares of the Common Stock of the Company already owned by the person
or persons exercising the option or shares subject to the option being exercised
(subject to such restrictions and guidelines as the Board may adopt from time to
time), valued at fair market value determined in accordance with the provisions
of paragraph 5 or (c) consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise. There shall be no
such exercise at any one time as to fewer than one hundred (100) shares or all
of the remaining shares then purchasable by the person or persons exercising the
option, if fewer than one hundred (100) shares. The Company's transfer agent
shall, on behalf of the Company, prepare a certificate or certificates
representing such shares acquired pursuant to exercise of the option, shall
register the optionee as the owner of such shares on the books of the Company
and shall cause the fully executed certificate(s) representing such shares to be
delivered to the optionee as soon as practicable after payment of the option
price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Events. Upon
the occurrence of any of the following events, an optionee's rights with respect
to options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) Stock Dividends and Stock Splits. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of
shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
(b) Recapitalization Adjustments. If the Company is to be
consolidated with or acquired by another entity in a merger, sale of all
or substantially all of the Company's assets or otherwise, each option
granted under this plan which is outstanding but unvested as of the
effective date of such event shall become exercisable in full thirty (30)
days prior to the effective date of such event. In the event of a
reorganization, recapitalization, merger, consolidation, or any other
change in the corporate structure or shares of the Company, to the extent
permitted by Rule 16b-3 under the Securities Exchange Act of 1934,
adjustments in the number and kind of shares authorized by this Plan and
in the number and kind of shares covered by, and in the option price of
outstanding options under this Plan necessary to maintain the
proportionate interest of the optionee and preserve, without exceeding,
the value of such option, shall be made. Notwithstanding the foregoing, no
such adjustment shall be made which would, within the meaning of any
applicable provisions of the Internal Revenue Code of 1986, as amended,
constitute a modification, extension or renewal of any Option or a grant
of additional benefits to the holder of an Option.
(c) Issuances of Securities. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the
Company.
(d) Adjustments. Upon the happening of any of the foregoing
events, the class and aggregate number of shares set forth in paragraph 2
of this Plan that are subject to options which previously have been or
subsequently may be granted under this Plan shall also be appropriately
adjusted to reflect such events. The Board shall determine the specific
adjustments to be made under this paragraph 10 and its determination shall
be conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the
provisions of paragraphs 4 and 9 of this Plan, the Company shall have no
obligation to deliver any certificate or certificates upon exercise of an option
until one of the following conditions shall be satisfied:
(i) The issuance of shares with respect to which the option has been
exercised is at the time of the issue of such shares effectively
registered under applicable Federal and state securities laws as now in
force or hereafter amended; or
(ii) Counsel for the Company shall have given an opinion that the
issuance of such shares is exempt from registration under Federal and
state securities laws as now in force or hereafter amended; and the
Company has complied with all applicable laws and regulations with respect
thereto, including without limitation all regulations required by any
stock exchange upon which the Company's outstanding Common Stock is then
listed.
12. Legend on Certificates. The certificates representing shares issued
pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933 or any state securities laws.
13. Representation of Optionee. If requested by the Company, the optionee
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with Federal and
state securities laws, including representations and warranties to the effect
that a purchase of shares under the option is made for investment and not with a
view to their distribution (as that term is used in the Securities Act of 1933).
14. Option Agreement. Each option granted under the provisions of this
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with this Plan as may be determined by the officer
executing it.
15. Termination and Amendment of Plan. Options may no longer be granted
under this Plan after April 28, 2004, and this Plan shall terminate when all
options granted or to be granted hereunder are no longer outstanding. The Board
may at any time terminate this Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board may not,
without approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and entitled to vote at a
meeting, (a) increase the maximum number of shares for which options may be
granted under this Plan (except by adjustment pursuant to Section 10), (b)
materially modify the requirements as to eligibility to participate in this
Plan, (c) materially increase benefits accruing to option holders under this
Plan, (d) change the provisions of this Plan regarding the termination of the
options or the times when they may be exercised, (e) change the designation of
the class of persons eligible to receive options, or otherwise change paragraph
4, or (f) amend this Plan in any manner which would cause Rule 16b-3 under the
Securities Exchange Act (or any successor or amended provision thereof) to
become inapplicable to this Plan; and provided further that the provisions of
this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended
provision thereof) under the Securities Exchange Act of 1934 (including without
limitation, provisions as to eligibility, amount, price and timing of awards)
may not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. Termination or any modification or amendment of
this Plan shall not, without consent of a participant, affect his or her rights
under an option previously granted to him or her.
16. Withholding of Income Taxes. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, may
require the optionee to pay withholding taxes in respect of amounts considered
to be compensation includible in the optionee's gross income.
17. Compliance with Regulations. It is the Company's intent that the Plan
comply in all respects with Rule 16b-3 under the Securities Exchange Act of 1934
(or any successor or amended provision thereof) and any applicable Securities
and Exchange Commission interpretations thereof. If any provision of this Plan
is deemed not to be in compliance with Rule 16b-3, the provision shall be null
and void.
18. Governing Law. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflicts of
law thereof.
19. Approval of Board of Directors and Stockholders of the Company.
The Plan was adopted by the Board of Directors on April 29, 1994 and the
stockholders of the Company as of May 23, 1994.
<PAGE>
P CASCADE COMMUNICATIONS CORP.
R
O Proxy for Annual Meeting of Stockholders
X
Y May 1, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Daniel E. Smith and Paul E. Blondin, and each of
them, proxies, with full power of substitution, to vote all shares of stock of
Cascade Communications Corp. (the "Corporation") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Corporation to be
held on Thursday, May 1, 1997 (the "Annual Meeting") at 9:30 a.m. local time, at
The Omni Parker House, 60 School Street, Boston, Massachusetts 02108, and at any
adjournments thereof, upon matters set forth in the Notice of Annual Meeting of
Stockholders and Proxy Statement dated April 4, 1997, a copy of which has been
received by the undersigned. The proxies are further authorized to vote, in
their discretion, upon such other business as may properly come before the
meeting or any adjournments thereof.
SEE REVERSE SIDE
<PAGE>
Please mark votes as in this example
X
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE
PROPOSALS IN ITEMS 2, 3 AND 4.
<PAGE>
1. To elect three members to the Board of Directors to serve for three year
terms as Class I Directors:
Nominees:
Gururaj Deshpande
Victoria A. Brown
Steven C. Walske
[ ] FOR [ ] WITHHELD
- -----------------------------
For all nominees except as noted above
2. To approve amendments to the Corporation's 1994 Non-Employee Director
Stock Option Plan (the "Director Plan") to (i) amend the initial stock
option grant from 90,000 shares to 30,000 shares for non-employee
Directors first elected after the Annual Meeting; (ii) to amend the stock
option grant for each subsequent year of service on the Board of
Directors from 12,000 to 10,000 shares for all non-employee Directors
following the Annual Meeting; (iii) to limit the number of shares
granted for each initial stock option grant and the stock option grant
for each subsequent year of service on the Board of Directors to the
amount stated above effective after the Annual Meeting; and (iv) increase
the number of shares of Common Stock available for issuance under the
Director Plan from 720,000 shares to 870,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Corporation's Amended and Restated
Certificate of Incorporation increasing from 225,000,000 to 300,000,000
the number of authorized shares of Common Stock, par value $.001 per
share, of the Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of the firm of
Coopers & Lybrand L.L.P. as auditors
for the fiscal year ending December
31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transact such other business as may
properly come before the meeting and
any adjournment thereof.
[ ] MARK HERE FOR ADDRESS
CHANGE AND NOTE BELOW
_________________________
_________________________
[ ] MARK HERE IF YOU PLAN
TO ATTEND THE MEETING
If signing as attorney, executor, trustee or guardian, please give your full
title as such. If stock is held jointly, each owner should sign.
- ---------------------------------
Signature Date
- ----------------------------------
Signature Date
<PAGE>
