SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BroadBand Technologies, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PROXY MATERIALS
BROADBAND TECHNOLOGIES, INC.
DURHAM, NORTH CAROLINA
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS To Be Held on May 20, 1997
TO THE STOCKHOLDERS OF BROADBAND TECHNOLOGIES, INC.
The Annual Meeting of Stockholders of BroadBand Technologies, Inc. will be
held at The North Carolina Biotechnology Center, 15 T.W. Alexander Drive,
Research Triangle Park, North Carolina, 27709, at 10:00 A.M. on Tuesday, May 20,
1997, for the following purposes:
1. Setting the number of Directors that constitutes the entire Board at
eight (8).
2. Electing three (3) Directors for three-year terms;
3. Ratifying the selection of Ernst & Young LLP as auditors for 1997; and
4. Transacting such other business as may properly come before the meeting
or any adjournment thereof.
Only holders of Common Stock of record at the close of business on March
26, 1997, will be entitled to vote at the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. Please sign and date the
accompanying proxy and mail it in the enclosed envelope whether you plan to
attend the meeting or not.
A complete list of the stockholders entitled to vote at the meeting will
be available for inspection by any stockholder, for any purpose germane to the
meeting for a period of at least ten (10) days prior to the meeting during
ordinary business hours at the office of the Secretary of the Company, BroadBand
Technologies, Inc., 4024 Stirrup Creek Drive, Durham, North Carolina 27703.
By order of the Board of Directors
April 18, 1997 /s/ Timothy K. Oakley
TIMOTHY K. OAKLEY
SECRETARY
<PAGE>
BROADBAND TECHNOLOGIES, INC.
4024 Stirrup Creek Drive, Durham, N.C. 27703
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of BroadBand
Technologies, Inc., a Delaware corporation (hereinafter referred to as the
"Company"), for use at the Annual Meeting of Stockholders, to be held at The
North Carolina Biotechnology Center, 15 T.W. Alexander Drive, Research Triangle
Park, North Carolina, on Tuesday, May 20, 1997, at 10:00 A.M., and at any
subsequent time which may be made necessary by any adjournment or adjournments
of the meeting. The Company expects to mail this Proxy Statement and the
enclosed proxy card to the holders of Common Stock of the Company on or about
April 18, 1997.
A stockholder who has executed and returned a proxy may revoke it at any
time before it is voted by submitting to the Company a properly executed proxy
bearing a later date or by filing with the Company a written revocation or by
attending the meeting in person and requesting that the proxy be returned.
The persons acting as proxies will vote the shares represented thereby as
directed by the person giving the proxy. Unless otherwise directed, the person
acting under the proxies will vote the shares represented thereby: (1) for
setting the number of Directors that constitutes the entire board at eight (8);
(2) for the election as Directors of the three (3) nominees named in this Proxy
Statement; (3) to ratify the selection of Ernst & Young LLP as auditors for
1997; and (4) in their discretion on such other business as may come before the
meeting or any adjournment(s) thereof. The Company does not know of any other
business to be brought before the meeting, but it is intended that as to any
such other business the proxies will be voted in accordance with the judgment of
the person or persons acting thereunder.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone by one or more of the regular personnel of the Company without
additional compensation. The Company expects to pay an independent proxy
solicitor approximately $5,000 as compensation for the solicitation of proxies.
In addition, the Company may reimburse brokers and other custodians, nominees
and fiduciaries for their expenses for sending proxy material to beneficial
owners, in accordance with Securities and Exchange Commission regulations.
OUTSTANDING VOTING SECURITIES
On March 26, 1997, the date for determining stockholders entitled to vote
at the meeting, 13,256,654 shares of Common Stock of the Company were
outstanding, with each share being entitled to one (1) vote on all matters to be
presented for action at the meeting. A quorum will be present at the meeting if
a majority of the outstanding shares of Common Stock are present at the meeting
in person or by proxy.
A plurality of the votes cast is required to elect the Directors. A
majority of the votes cast is required for all other actions to be voted upon at
the meeting as described above.
In the election of Directors, any action other than a vote for a nominee
will have the practical effect of voting against the nominee. Abstentions and
"broker non-votes" (as defined below) are counted for purposes of determining
whether a quorum is present, but do not represent votes cast with respect to any
proposal. "Broker non-votes" are shares held by a broker or nominee for which an
executed proxy is received by the Company, but are not voted as to one or more
proposals because instructions have not been received from the beneficial owners
or persons entitled to vote and the broker or nominee does not have
discretionary voting power.
An independent party will receive and tabulate all proxies and ballots,
and such independent party and certain other team members of the Company will
act as voting inspectors at the meeting.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the only stockholders known by the Company
to be the beneficial owners, as of March 26, 1997, of more than five percent
(5%) of the outstanding shares of Common Stock of the Company.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY SHARES
NAME AND ADDRESS OWNED (1) OUTSTANDING
- ------------------------------ ----------------------------- ----------------------------
<S> <C> <C>
AMP Incorporated 1,093,063 8.2%
470 Friendship Road
Harrisburg, PA 17111
Chancellor LGT Asset Management, Inc. 1,236,900 (2) 9.3%
Fifty California Street
27th Floor
San Francisco, CA 94111-4624
Goldman, Sachs and Co. 1,780,033 (3) 12.4%
85 Broad Street
New York, NY 10004
================================================================================================================
</TABLE>
- ------------
(1) The persons and entities named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by
them, except as noted below.
(2) Based on information filed with the Securities and Exchange Commission on
a Schedule 13G, dated February 7, 1997.
(3) Based on information filed with the Securities and Exchange Commission on
a Schedule 13G, dated February 14, 1997.
2
<PAGE>
The table below gives the number of shares of Common Stock of the Company
beneficially owned as of March 26, 1997 by each director, nominee, the chief
executive officer and the four other most highly compensated executive officers,
and, all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY SHARES
NAME OWNED (1) OUTSTANDING
- ------------- --------------------------- ------------------------------
<S> <C>
Frederic R. Boswell 8,667 *
Director (2)
Richard P. Clark 1,108,563 8.4%
Director (3)
Dr. John R. Hutchins, III 109,932 *
Director (4)
Dr. Charles T. Lee 13,600 *
Director (5)
Lawrence A. McLernon 15,500 *
Director (6)
Salim A.L. Bhatia 265,815 2.0%
Director and Chairman of
the Board of Directors (7)
David E. Orr 0 *
Director, President and
Chief Executive Officer (8)
J. Richard Jones 145,908 1.1%
Director and Executive
Vice President (9)
Timothy K. Oakley 9,392 *
Vice President, Chief
Financial Officer (10)
All directors and executive 1,709,391 12.9%
officers as a group (11
persons) (11)
</TABLE>
- ------------
* Represents beneficial ownership of less than one percent (1%) of Common
Stock.
(1) The persons and entities named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by
them, except as noted below. Share ownership also includes shares of
Common Stock issuable within 60 days upon exercise of outstanding options.
(2) Includes 8,667 shares that The St. Paul Fire and Marine Insurance Company
may acquire pursuant to stock options exercisable within 60 days after
March 26, 1997. Mr. Boswell, a Director of the Company, is an officer and
Director of St. Paul Venture Capital, Inc., a wholly-owned subsidiary of
The St. Paul Fire and Marine Insurance Company. Mr. Boswell exercises
shared voting and investment power with respect to shares beneficially
owned by The St. Paul Fire and Marine Insurance Company and disclaims
beneficial ownership of such shares.
(3) Includes 15,500 shares that Mr. Clark may acquire pursuant to stock
options exercisable within 60 days after March 26, 1997. Also includes
1,093,063 shares beneficially owned by AMP Incorporated. Mr. Clark, a
Director of the
<PAGE> 3
Company, is the President and Chief Executive Officer of
M/A-COM, Inc., a wholly owned subsidiary of AMP Incorporated. Mr. Clark
does not exercise sole or shared voting or investment power with respect
to such shares and disclaims beneficial ownership of such shares. AMP
Incorporated is a corporation whose shares are publicly traded. Voting and
investment power with respect to shares of the Company owned by AMP
Incorporated are exercised by the Board of Directors of AMP Incorporated.
(4) Includes (i) 91,764 shares owned by Dr. John R. Hutchins, III, Revocable
Trust, for which Dr. Hutchins is both the sole trustee and beneficiary,
(ii) 18,000 shares that Dr. Hutchins may acquire pursuant to stock options
exercisable within 60 days after March 26, 1997 and (iii) 168 shares in a
401(k) plan as to which Dr. Hutchins lacks voting power, of which Dr.
Hutchins is the sole beneficiary. Does not include the following shares as
to which Dr. Hutchins disclaims beneficial ownership: (i) 48,402 shares
owned by Jane Ide Hutchins Revocable Trust, for which Jane I. Hutchins,
the wife of Dr. Hutchins, is both the sole trustee and beneficiary, and
(ii) 30 shares in a 401(k) plan of which Jane I. Hutchins is the sole
beneficiary.
(5) Includes 13,600 shares that Dr. Lee may acquire pursuant to stock options
exercisable within 60 days after March 26, 1997.
(6) Includes 15,500 shares that Mr. McLernon may acquire pursuant to stock
options exercisable within 60 days after March 26, 1997.
(7) Includes 594 shares in a 401(k) plan as to which Mr. Bhatia lacks voting
power, but as to which he is the sole beneficial owner, and 90,041 shares
that Mr. Bhatia may acquire pursuant to stock options exercisable within
60 days after March 26, 1997. Until April 1, 1997, Mr. Bhatia served as
the President and Chief Executive Officer of the Company.
(8) Effective as of April 1, 1997, Mr. Orr became the President and Chief
Executive Officer of the Company. As of March 26, 1997, Mr. Orr did not
beneficially own any shares of the Common Stock of the Company, but in
connection with his joining the Company, the Company issued to Mr. Orr
80,000 shares of the Company's Common Stock. Mr. Orr will forfeit such
shares of Common Stock if Mr. Orr's employment with the Company terminates
for any reason prior to the fifth anniversary of the grant of the stock to
Mr. Orr, except under certain circumstances. Mr. Orr also received a
nonqualified stock option to purchase 350,000 shares of the Company's
Common Stock. See "Executive Compensation - Employment Agreements".
(9) Includes 343 shares in a 401(k) plan as to which Mr. Jones lacks voting
power, but as to which he is the sole beneficial owner and 44,603 shares
that Mr. Jones may acquire pursuant to stock options exercisable within 60
days after March 26, 1997.
(10) Includes 7,500 shares that Mr. Oakley may acquire pursuant to stock
options exercisable within 60 days after March 26, 1997.
(11) Includes 301,563 shares that the officers and Directors as a group may
acquire upon exercise of options within 60 days after March 26, 1997.
PROPOSAL 1
SETTING THE NUMBER OF DIRECTORS
Pursuant to Article III, Section 1 of the Bylaws of the Company, the Board
of Directors shall consist of such number of members not less than three (3) nor
more than eleven (11) as shall be set by the Board of Directors or the
stockholders at the annual meeting or at any special meeting of stockholders at
which the election is to be held. The Board of Directors proposes that the
number of Directors be set at eight (8) until such number is increased or
decreased by the Board of Directors or the stockholders in accordance with the
Bylaws of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL TO
SET THE NUMBER OF DIRECTORS THAT CONSTITUTES THE ENTIRE BOARD OF DIRECTORS AT
EIGHT (8).
4
<PAGE>
PROPOSAL 2
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors with staggered
three-year terms with one third of the Directors elected each year. With a Board
consisting of eight (8) Directors, three (3) Directors are to be elected at the
1997 Annual Meeting. Mr. Orr, Mr. Hutchins, and Mr. McLernon are being nominated
to serve as Class I Directors with terms that expire at the 2000 Annual Meeting
of Stockholders.
Set forth below is certain information concerning the three (3) nominees
for election as a Director at the 1997 Annual Meeting including each nominee's
business experience for the past five years:
<TABLE>
<CAPTION>
FIRST YEAR
ELECTED AS TERM
NAME AGE DIRECTOR EXPIRES FIVE YEAR BUSINESS EXPERIENCE
<S> <C> <C> <C> <C>
David E. Orr 45 1997 2000 President and Chief Executive Officer of
the Company effective as of April 1,
1997. President and Chief Executive
Officer of ALCATEL Network Systems,
Inc. from August 1991 to March 1997.
John R. Hutchins, III 62 1988 2000 Chairman of the Board Emeritus effective
as of April 1, 1997. Chairman of the
Board of the Company from 1988 to
March 31, 1997.
Lawrence A. McLernon 58 1992 2000 Chief Executive Officer of McLernon
Enterprises, Inc., a consulting firm,
since November 1991; Founder and Chief
Executive Officer of LCI International,
formerly called Litel Telecommunications,
Inc., a provider of long distance
telephone services, from 1983 to 1991.
===================================================================================================================================
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL TO
ELECT DAVID E. ORR, JOHN R. HUTCHINS, III, AND LAWRENCE A. MCLERNON AS CLASS I
DIRECTORS TO SERVE FOR THREE-YEAR TERMS.
5
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the Directors of the
Company whose terms of office extend beyond the 1997 Annual Meeting.
<TABLE>
<CAPTION>
FIRST YEAR
ELECTED AS TERM
NAME AGE DIRECTOR EXPIRES FIVE YEAR BUSINESS EXPERIENCE
<S> <C> <C> <C> <C>
Salim A.L. Bhatia 46 1988 1999 Chairman of the Board of the Company
effective as of April 1, 1997. Chief
Executive Officer of the Company from 1988
until March 31, 1997.
Frederic R. Boswell 53 1990 1998 Executive Vice President of St. Paul
Venture Capital, Inc., a wholly-owned
investment subsidiary of The St. Paul Fire
and Marine Insurance Company, since
April 1989.
Richard P. Clark 49 1992 1998 President and Chief Executive Officer of
M/A-COM, Inc., a wholly owned
subsidiary of AMP, Incorporated, July
1995 - Present; Vice President of Global
Wireless Products Group of AMP, Incorporated,
July 1995 - Present; Associate Director of
Corporate Development of AMP Incorporated, a
supplier of connectors for electronic
products, since July 1989.
J. Richard Jones 49 1988 1998 Executive Vice President and Chief
Technical Officer of the Company since
1988.
Charles T. Lee 57 1989 1999 Chairman and founder of Charles Lee
Enterprise, an information industry business
development firm with a specialty in
Asia/Pacific alliances since 1989.
</TABLE>
SECTION 16(A) REPORTING
The Company believes that all executive officers and Directors of the
Company and all other persons known by the Company to be subject to Section 16
of the Securities Exchange Act of 1934, filed all reports required to be filed
during 1996 under Section 16(a) of that Act on a timely basis, except J. Richard
Jones, who filed one late report. The Company's belief is based solely on its
review of Forms 3, 4 and 5 and amendments thereto furnished to the Company
during, and with respect to, its most recent fiscal year by persons known to be
subject to Section 16.
COMPENSATION OF DIRECTORS
Directors who are not full-time employees of the Company (i) are
reimbursed for reasonable travel expenses incurred in attending meetings of the
Board or committees of the Board, (ii) are paid a fee of $1,000 for each meeting
of the Board or committee which such Directors attend, except for committee
meetings held on the same date as a Board meeting, (iii) are paid a $10,000
retainer each year while serving on the Board and (iv) are granted stock options
pursuant to the terms of a Directors' Stock Option Plan. Under the Plan,
eligible Directors were granted on May 23, 1994 options to purchase
6
<PAGE>
an aggregate of 62,000 shares of Common Stock of the Company and annual grants
are made to each eligible Director of options to purchase 1,000 shares.
MEETINGS AND COMMITTEES
The Board of Directors held six (6) regular meetings and two (2) special
meetings during 1996. Each Director attended at least seventy-five percent (75%)
of the meetings held by the Board of Directors and the committees on which the
Director served during the year. Each Director's absence from a meeting was with
prior notice to the Company and occurred as a result of either travel, illness
or a prior business commitment.
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out its duties, the Board has established
several committees of the Board and delegated to these committees certain
authority.
The regular committees of the Board are the Audit Committee, Compensation
Committee, the Operations Committee, and the Personnel Committee. In addition,
the Board from time to time establishes other committees to make decisions about
specific matters or specific transactions.
The members of the Company's Audit Committee during 1996 were Messrs.
Boswell (Chairman), Clark and Lee. The Audit Committee met one (1) time during
the year. The Audit Committee ascertains from the Company's independent auditors
whether they consider the scope and extent of the audit and the procedures used
to be sufficient to accurately reflect the financial condition and earnings of
the Company; whether generally accepted accounting practices have been followed;
whether all losses which would materially affect income have been recorded; and
whether accounting systems, procedural controls and internal audit systems are
effective and adequate. The Audit Committee also ascertains the Company's
compliance with tax and regulatory requirements. In addition, the Audit
Committee reviews and approves proposed accounting changes; reviews with the
auditors the annual report; serves as a liaison between the independent
auditors, the internal audit group and the Company's accounting department, the
management and the Directors; reports its findings to the Directors and Chief
Executive Officer with such recommendations as it deems appropriate; and
recommends the appointment of independent auditors.
The members of the Operations Committee during 1996 were Messrs. Clark
(Chairman) and Boswell. The Operations Committee met two (2) times during 1996.
The Operations Committee reviews various matters relating to the operations of
the Company and makes recommendations to the Board of Directors regarding such
matters.
The members of the Personnel Committee during 1996 were Messrs. Hutchins
(Chairman), Boswell, Clark, Lee and McLernon. The Personnel Committee met three
(3) times during 1996. The Personnel Committee develops recommendations to the
Board of Directors regarding the organization of the Board of Directors and the
management of the Company.
Until September 20, 1996, the members of the Compensation Committee during
1996 were Messrs. Hutchins (Chairman) and McLernon. Since September 20, 1996,
Messrs. Clark (Chairman) and McLernon have been the members of the Compensation
Committee. The Compensation Committee met five (5) times during 1996. The
Compensation Committee recommends to the Board salaries for the Chief Executive
Officer and other executive officers, makes recommendations to the CEO regarding
compensation of team members, and administers and approves awards under the
Company's stock option plans.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table and the narrative text disclose the compensation paid
during 1996, 1995 and 1994 to the Company's President and Chief Executive
Officer and to the four (4) other highest paid executive officers whose annual
salary and bonuses exceeded $100,000 during 1996.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
===========================================================================================================================
ANNUAL COMPENSATION Long Term Compensation
=======================================
Awards Payouts
- ---------------------------------------------------------------------------------------------------------------------------
Other Annual Restricted Options/ LTIP All other
Name and Salary Bonus Compensation Stock SARs PAYOUTS Compensation
Principal Position Year ($) ($)(1) ($) Awards (#)(2) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salim A. L. Bhatia 1996 190,008 95,285 (3) (4) 107,110 (4) (4)
President and 1995 180,000 43,200 (3) (4) 35,000 (4) (4)
Chief Executive 1994 180,000 61,000 (3) (4) (4) (4) (4)
Officer
- ---------------------------------------------------------------------------------------------------------------------------
Robert W. Henry 1996 140,004 40,408 (3) (4) 27,172 (4) (4)
Vice President 1995 140,004 38,710 (3) (4) (4) (4) (4)
1994 140,004 83,214 (3) (4) 10,000 (4) (4)
- ---------------------------------------------------------------------------------------------------------------------------
Richard L. Popp 1996 161,983 59,394 (3) (4) 36,102 (4) (4)
Executive Vice 1995 143,004 25,900 (3) (4) (4) (4) (4)
President of 1994 143,004 38,100 (3) (4) 18,000 (4) 18,021(5)
Operations
- ---------------------------------------------------------------------------------------------------------------------------
J. Richard Jones 1996 140,004 56,242 (3) (4) 32,608 (4) (4)
Executive Vice 1995 135,000 24,500 (3) (4) 22,500 (4) (4)
President 1994 135,000 39,300 (3) (4) (4) (4) (4)
- ---------------------------------------------------------------------------------------------------------------------------
Wayne C. Machon 1996 120,000 30,276 (3) (4) 18,632 (4) (4)
Vice President 1995 120,000 17,800 (3) (4) 12,500 (4) (4)
1994 120,000 19,400 (3) (4) (4) (4) (4)
===========================================================================================================================
</TABLE>
- --------------
(1) Amounts in column include amounts earned during the year but paid during
the following year.
(2) Number of shares of Common Stock issuable upon exercise of options granted
during 1996. The Company did not grant any Stock Appreciation Rights
during 1996.
(3) Other Annual Compensation for executive officers is not reported as it is
less than the required reporting threshold of the Securities and Exchange
Commission.
(4) No compensation of this type received.
(5) $18,021 was paid during 1994 to Mr. Popp for moving expenses.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with each of David E.
Orr and Salim A.L. Bhatia (together the "Employment Agreements"). Set forth
below is a summary of certain terms of the Employment Agreements. This summary
is not a complete description of the terms and conditions of the Employment
Agreements and is qualified in its entirety by reference to the Employment
Agreements, copies of which are filed as exhibits to the Company's reports filed
with the Securities and Exchange Commission.
Mr. Orr was appointed the President and Chief Executive Officer of the
Company effective as of April 1, 1997. Mr. Orr's term of employment is five
years, but automatically extends for additional one year periods unless either
the Company or Mr. Orr terminates the Employment Agreement by written notice to
the other at least one year prior to the termination date then in effect. Mr.
Orr's base annual compensation will be at least $350,000 and he will be eligible
for an incentive bonus of at least $175,000 for his first year of employment by
the Company. Thereafter, he will be eligible for an incentive
8
<PAGE>
bonus in accordance with the Company's incentive compensation program, but the
annual target bonus will be at least 50% of his then-current base salary. The
Company also agreed to pay Mr. Orr a signing bonus in the amount of $4,000,000
under certain conditions. To carry out this agreement, the Company will place
in trust $4,000,000, which will be distributed to Mr. Orr on the earlier of the
fifth anniversary of his Employment Agreement or the termination of Mr. Orr's
employment by the Company without cause. If Mr. Orr voluntarily terminates his
employment before the fifth anniversary of his Employment Agreement or the
Company terminates his employment for cause before the fifth anniversary of his
Employment Agreement, the trust will not be distributed to Mr. Orr. He will
receive a pro-rata portion of this amount upon an employment termination due to
permanent disability. Interest on the amount deposited in trust will accrue and
be payable to Mr. Orr periodically. The Company has also issued to Mr. Orr
80,000 shares of the Company's Common Stock. Mr. Orr will forfeit such shares of
Common Stock if his employment with the Company terminates for any reason prior
to the fifth anniversary of the grant of the stock, unless the Company
terminates him without cause. Mr. Orr was also granted a nonqualified stock
option to purchase 350,000 shares of the Company's Common Stock (the "Option")
at an exercise price of $12.50 per share. The Option will become exercisable
upon reaching certain performance goals, but is subject to accelerated vesting
upon a Change in Control (as defined below) under certain circumstances. If the
Company terminates his employment without cause during the term of his
Employment Agreement, Mr. Orr will receive, for two years after termination,
payments based on his then-current base salary, plus his target bonus for the
year in which the termination occurs. If a Change in Control occurs and the
Company terminates his employment without cause during the three year period
commencing on the effective date of the Change in Control, the Company will (i)
either arrange for the full vesting of the Option or make a lump sum payment to
him equal to the value lost under the Option, and (ii) pay him three lump sum
payments, each in an amount equal to his base salary in effect on the date of
the termination of his employment and his target bonus for the year in which
such termination occurs. The Company will make such payments on the date of
termination and the first and second anniversaries of the date of termination.
Mr. Orr's Employment Agreement includes certain provisions restricting Mr. Orr's
ability to compete with the Company or solicit the Company's employees,
suppliers or customers for two years after the termination of his employment.
Effective April 1, 1997, Mr. Bhatia, a founder of the Company and its
former President and Chief Executive Officer, was appointed the Chairman of the
Board of the Company. His Employment Agreement provides the terms under which he
is to serve as a senior member of management. Mr. Bhatia's base salary generally
will be at least $252,000 and he will be eligible to participate in such
incentive programs as the Company makes available to senior management. Mr.
Bhatia's term of employment continues until February 28, 1998, but automatically
extends for additional one year periods, unless either the Company or Mr. Bhatia
terminates the Employment Agreement by written notice to the other at least
ninety days prior to the anniversary date of the Employment Agreement. If the
Company terminates Mr. Bhatia without cause during the term of the Employment
Agreement, he will receive, for two years after termination, payments based upon
his then current base salary, plus his target bonus for the year in which the
termination occurs. If, however, the Company releases him from his obligations
under the noncompetition and nonsolicitation covenants of the Employment
Agreement, he would instead receive a lump sum payment in an amount equal to his
base salary and target bonus for the year in which the termination occurs.
Pursuant to Mr. Bhatia's Employment Agreement, the Company granted him an
incentive stock option to purchase 45,000 shares of the Company's Common Stock.
Such option will become fully vested and exercisable on September 30, 2005,
provided he is employed by the Company on that date, but is
subject to accelerated vesting upon a Change in Control under certain
circumstances. In the event of a Change in Control, under certain circumstances
the Company will either arrange for the full vesting of any stock option (other
than the incentive stock options granted pursuant to the Employment Agreement)
or make a lump sum payment to Mr. Bhatia equal to the value lost under the
outstanding unvested options. Additionally, in the event of a Change in Control
under certain circumstances, the Company will pay him lump sum payments, the
amount of which depend upon whether he receives and accepts an offer of
employment from the surviving corporation following the Change in Control. Mr.
Bhatia's Employment Agreement includes certain provisions restricting his
ability to compete with the Company or solicit the Company's employees,
suppliers or customers for two years after the termination of his employment.
For the purposes of both of the Employment Agreements, a "Change in
Control" means: (i) a tender offer or other acquisition pursuant to which at
least 50% of the Company's stock is purchased; (ii) the merger or consolidation
of the Company with or into another corporation; (iii) the sale of all or
substantially all of the Company's assets; (iv) the liquidation of the Company;
or (v) the directors of the Company as of the commencement of the agreement or
directors elected by the shareholders on the recommendation of at least
two-thirds of such directors (or directors previously so elected) cease to be a
majority of the Board of Directors.
9
<PAGE>
STOCK OPTIONS GRANTED DURING FISCAL YEAR
The following table sets forth information about the stock options granted
to the named executive officers of the Company during 1996. No stock
appreciation rights were granted to the named executive officers during 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Potential Realized
Value at Assumed
% of Total Annual Rates of Stock
Options Price Appreciation for
Granted to Exercise or Option Term (2)
Options Employees in Base Price Expiration -----------------------------
Name Granted Fiscal Year (1) ($/Sh) Date 5% 10%
---- ------- --------------- -------- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Salim A. L. Bhatia 45,000 7.8% 18.00 1/02/06 $452,143 $1,199,751
62,110 11.2% 17.25 1/30/06 $686,443 $1,727,668
- ---------------------------------------------------------------------------------------------------------
Robert W. Henry 27,172 4.8% 17.25 1/30/06 $300,306 $755,824
- ---------------------------------------------------------------------------------------------------------
Richard L. Popp 36,102 6.4% 17.25 1/30/06 $399,001 $1,004,223
- ---------------------------------------------------------------------------------------------------------
J. Richard Jones 32,608 5.8% 17.25 1/30/06 $360,385 $907,033
- ---------------------------------------------------------------------------------------------------------
Wayne C. Machon 18,632 3.3% 17.25 1/30/06 $205,922 $518,273
=========================================================================================================
</TABLE>
- ------------
(1) Options to acquire an aggregate of 564,028 shares of Common Stock of the
Company were granted to all team members during 1996. Options to acquire
an additional 7,400 shares of Common Stock were granted to nonemployee
Directors of the Company during 1996.
(2) The potential realizable value of the options reported above was
calculated by assuming 5% and 10% annual rates of appreciation of the
Common Stock of the Company from the date of grant of the options until
the expiration of the options. These assumed annual rates of appreciation
were used in compliance with the rules of the Securities and Exchange
Commission and are not intended to forecast future price appreciation of
the Common Stock of the Company. The Company chose not to report the
present value of the options because the Company does not believe any
formula will determine with reasonable accuracy a present value because of
unknown or volatile factors. The actual value realized from the options
could be substantially higher or lower than the values reported above,
depending upon the future appreciation or depreciation of the Common Stock
during the option period and the timing of exercise of the options.
STOCK OPTIONS EXERCISED DURING FISCAL YEAR AND YEAR END VALUES OF UNEXERCISED
OPTIONS
The following table sets forth information about the stock options
exercised by the named executive officers of the Company during 1996. No stock
appreciation rights were exercised by the named executive officers during 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
<TABLE>
<CAPTION>
===================================================================================================================
Value of Unexercised In-the-
Money Options at FY End
Shares Acquired Value Number of Unexercised ($)
----
on Exercise Realized Options at FY-End (#) Exercisable/Unexercisable
NAME (#) ($)(1) Exercisable/Unexercisable (2)
---- ----- -------- ------------------------- -------------------------------
<S> <C> <C> <C> <C>
Salim A.L. Bhatia --- --- 85,791 / 106,319 118,750 / 0
- -------------------------------------------------------------------------------------------------------------------
Robert W. Henry 9,500 217,789 16,689 / 20,483 0 / 0
- -------------------------------------------------------------------------------------------------------------------
J. Richard Jones --- --- 43,478 / 31,630 95,000 / 0
- -------------------------------------------------------------------------------------------------------------------
Richard L. Popp 6,300 87,413 51,338 / 56,464 0 / 0
- -------------------------------------------------------------------------------------------------------------------
Wayne C. Machon 11,375 169,484 14,362 / 17,895 1,125 / 0
===================================================================================================================
</TABLE>
- ------------
10
<PAGE>
(1) Upon exercise of the option an option holder did not receive the amount
reported above under the column Value Realized. The amounts reported above
under the column Value Realized merely reflect the amount by which the
value of the Common Stock of the Company on the date the option was
exercised exceeded the exercise price of the option. The option holder
does not realize any cash until the shares of Common Stock issued upon
exercise of the options are sold.
(2) The value of the Common Stock of the Company at December 31, 1996 was
$14.75 per share. Value was determined by taking the last sale price of
the Common Stock of the Company on that date as reported by NASDAQ. The
value of options was determined by subtracting the aggregate exercise
prices of the options from the value of the Common Stock issuable upon
exercise of the options.
TERMS OF 1996 STOCK OPTION GRANTS TO EXECUTIVE OFFICERS
On January 30, 1996, options to purchase 176,624 shares of Common Stock
were granted to the named executive officers with an exercise price of $17.25
per share pursuant to the Company's 1992 Nonqualified Stock Option Plan. The
options become vested based upon the market price of the Company's common stock
and upon the achievement of certain performance objectives, subject to
accelerated vesting upon sale of the Company. The options are exercisable upon
vesting. None of the options are transferable and all options expire ten years
after the date of grant, subject to early termination if employment terminates.
REPRICING OF OPTIONS
On March 27, 1997, the Board of Directors of the Company approved a
repricing program for Underwater Options (as defined below) pursuant to which
option exercise prices were reduced to $9.75 per share, the fair market value of
the Corporation's Common Stock as of April 2, 1997. In the case of the
executives of the Company, the reduction in exercise prices applied to less than
one-third of their total outstanding options. The executives also agreed to
postpone the vesting of their repriced options by one year. All other terms of
the options would remain unchanged. The option repricing for employees other
than the executives selected by the Board is not conditioned on postponing the
vesting. The repricing program does not apply to options held by the directors
of the Company.
The basis for the Board of Directors' determination to approve the
repricing was that (i) the interest of the Company in providing a compensation
incentive through the use of stock options would be adversely impacted as to
employees whose stock options had exercise prices substantially in excess of the
market price of the Company's Common Stock ("Underwater Options"); (ii) in the
Company's competitive environment, employees holding Underwater Options were
seen to be vulnerable to being recruited by other employers who offer a more
attractive incentive by granting stock options at current market prices; and
(iii) the disruption to the Company's operations from the loss of key employees
was perceived to be likely to have an adverse effect on the Company.
The table below sets forth information concerning all stock option
repricings held by any executive officer of the Company during the last ten
completed fiscal years.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
===========================================================================================================================
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION
UNDERLYING STOCK AT PRICE AT TERM
OPTIONS TIME OF TIME OF NEW REMAINING
REPRICED REPRICING REPRICING EXERCISE AT TIME OF
NAME DATE ($) ($) ($) PRICE ($) REPRICING
---- ---- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Salim A.L. Bhatia 04/02/97 25,000 9.75 26.63 9.75 6.64
04/02/97 35,000 9.75 25.25 9.75 8.24
04/02/97 45,000 9.75 18.00 9.75 8.75
- ---------------------------------------------------------------------------------------------------------------------------
Timothy K. Oakley 04/02/97 25,000 9.75 23.50 9.75 9.14
- ---------------------------------------------------------------------------------------------------------------------------
James L. Chitkowski 04/02/97 10,000 9.75 16.50 9.75 9.63
- ---------------------------------------------------------------------------------------------------------------------------
Carl A. Kammire 04/02/97 15,000 9.75 17.50 9.75 8.64
- ---------------------------------------------------------------------------------------------------------------------------
Kris Nasta 04/02/97 30,000 9.75 19.13 9.75 7.02
- ---------------------------------------------------------------------------------------------------------------------------
J. Richard Jones 04/02/97 22,500 9.75 25.25 9.75 8.24
===========================================================================================================================
</TABLE>
11
<PAGE>
DIRECTORS' STOCK OPTION PLAN
The Board of Directors of the Company approved the Directors' Stock Option
Plan (the "Formula Plan") on March 23, 1994. The Formula Plan was approved by
the stockholders of the Company on May 23, 1994. The Formula Plan was
established to allow the Company to grant stock options to compensate Directors
of the Company who are not full-time team members of the Company ("Eligible
Directors") while at the same time allowing for disinterested administration of
the other stock option plans of the Company under Rule 16b-3 of the Securities
and Exchange Commission.
An aggregate of 100,000 shares of Common Stock may be issued pursuant to
options awarded under the Formula Plan. The Formula Plan is administered by the
Compensation Committee of the Company (the "Committee"), but the number of
shares subject to options for each Eligible Director, termination, vesting,
exercise, the date of issuance and the exercise price of options are fixed by
the terms of the Formula Plan.
The Formula Plan provides that each Eligible Director is initially granted
options to acquire 10,000 shares of Common Stock of the Company (the "Initial
Grant"). In addition, on the date of the annual meeting of stockholders, each
Eligible Director is granted options to purchase an additional 1,000 shares of
Common Stock of the Company (the "Annual Grant"). The exercise price of all
options granted under the Formula Plan equals the fair market value of the
Common Stock of the Company on the date of grant.
Initial Grants to Eligible Directors in 1994 were reduced to less than
10,000 shares for certain Directors whose options under the Nonqualified Plan
(described below) had not vested. To date, Messrs. Clark and McLernon have been
granted options for 8,000 shares, Mr. Boswell has been granted options for
10,500 shares, Mr. Lee has been granted options for 10,500 shares and Dr.
Hutchins has been granted options for 13,000 shares. The options have an average
exercise price of $19.40 per share. Each Eligible Director will be granted
options for 1,000 shares on May 20, 1997.
Initial Grants vest in three equal installments except that the Initial
Grants made in 1994 vest in accordance with categories in the Formula Plan based
on the service provided to the Company by each Eligible Director prior to the
Initial Grant. Annual Grants vest in all cases on the date of the annual meeting
of stockholders of the Company that follows the date of the Annual Grant.
RETIREMENT SAVINGS PLAN
The Company has a retirement savings plan for its team members that is
intended to qualify under Section 401(k) of the Internal Revenue Code. Eligible
team members are permitted to contribute to the 401(k) Plan through payroll
deductions within statutory limitations and subject to any limitations included
in the 401(k) Plan. The Company matches fifty percent (50%) of the salary
deferrals (up to 6% of salary) of participants to the 401(k) Plan.
FLEXIBLE BENEFITS PLAN
The Company has a flexible benefits plan for its team members that is
intended to qualify under Section 125 of the Internal Revenue Code. Eligible
team members are entitled to deduct team member-paid premiums for the Company's
group medical plan from pre-tax salary subject to any limitations included in
the flexible benefits plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until September 20, 1996, the members of the Compensation Committee of the
Board of Directors were Dr. Hutchins (Chairman) and Mr. McLernon. Since
September 20, 1996, Messrs. Clark (Chairman) and McLernon have been the members
of the Compensation Committee. Mr. Clark and Mr. McLernon are nonemployee
directors. From July 1988 until April 1, 1997, Dr. Hutchins was the Chairman of
the Board of Directors, which position is considered to be an Executive Officer
of the Company. Except for a period during 1990 and 1991, Dr. Hutchins also
served as the Company's Treasurer and Secretary until November 1992. Since March
1991, Dr. Hutchins has been employed by the Company on a part-time basis. Until
1995, Dr. Hutchins also served as Director of Human Resources for the Company.
Dr. Hutchins participated in discussions concerning compensation of executive
officers and directors.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee reviews and recommends salary and bonus
incentives for executives and makes recommendations to the Board for
consideration and approval. The Compensation Committee also administers the
Incentive Stock Option, the Non-Qualified Stock Option, and the Directors' Stock
Option plans for the purpose of securing and retaining team members and others
who provide services of value to the Company.
12
<PAGE>
The strategy-guiding recommendations and actions of the Committee, the
actions taken and a description of the effect on the 1996 compensation of Mr.
Bhatia, President and CEO of the Company, are discussed below:
COMPENSATION STRATEGY
The Committee is responsible for ensuring that executive compensation is
based on objective measures of performance by the Company, the individual, and
where appropriate, the organizational unit. The Committee also believes that
compensation should vary with corporate performance and should be driven by the
long-term interests of the stockholders. The compensation strategy being
followed by the Committee is based of the following principles:
O Base salary ranges at all levels should be competitive and
movement within the range should reward performance and
contribution of the Company.
O Bonus compensation should become a larger part of total
compensation as the Company grows and/or a team member takes
on greater responsibilities; payouts should be based on
performance relative to well- defined targets and measures
that influence growth in the value of the Company's stock.
O Stock options and other forms of equity interest should be
granted broadly within the Company; they promote and increase
personal interest in the welfare of the Company, and encourage
team members to think and act like owners; the specific
agreements should have terms that encourage continued
employment, and should provide long-term incentives for all
participating team members responsible for today's operations
and/or shaping and carrying out the long-range plans of the
Company, thereby aiding its continued growth and financial
success.
O Retirement and benefit packages should be competitive and
designed to promote career commitment to the Company.
The compensation program for executives is composed of four key elements:
base salary, annual bonus, equity ownership, and retirement plan benefits.
Periodically, the Committee test each element with data from industry surveys
and independent consultants. The equity portion was reviewed by an independent
consultant in 1996. The Committee adopted the recommendations to align a
significant portion of compensation with shareholder value by providing an
annual performance based equity payout comparable to those for executives at
both high performing (in terms of total return to shareholders) companies and
companies in the telephone equipment industry. Performance is measured by the
Company's trading stock price, compared to market expectations for a custom peer
group. Options will vest based on growth in the Company's stock price if that
growth rate is better than that of companies in the Telecom equipment industry.
Currently, the cash portion of the Company's compensation program for its
executives is generally near the median for companies of comparable size. The
cash portion will be reviewed in 1997; the goal is to ensure the Company can
attract and retain experienced executives from companies with larger revenues,
which generally provide the pool of talent needed to manage the Company's
continued growth and success.
COMPENSATION ACTIONS
In determining the annual compensation shown in the salary column of the
Summary Compensation Table, the Committee reviewed recommendations from an
independent compensation consultant and the reward opportunity most likely to
align interests of both the executive and the stockholders, with adjustments
made based on corporate and individual performance and responsibilities.
The annual compensation for 1996 shown in the bonus column for Messrs.
Bhatia, Popp, Jones, and Machon was paid through a Bonus Plan, under which
target awards were set based on annual financial, strategic and individual goals
approved by the Committee near the beginning of 1996. Mr. Henry's bonus was
determined by this Plan and a Sales Incentive Plan under which target awards
were set based on sales and orders achieved by him and the Sales Department.
Stock options are granted broadly within the Company. Options generally
vested in installments over a number of years to encourage team members to
remain employed by the Company. In 1996 the Committee approved the annual
performance based equity payout for executives; a one time option with vesting
tied to profitability achievement, and replaced the five year anniversary grant
with an annual team performance stock option grant for all other full time,
regular employees. This team based reward is performance driven; performance is
based on the company's ability to meet its annual goals. In addition, the
Committee granted additional options to key team members.
13
<PAGE>
The retirement and welfare benefits provided to executives are competitive
and provided to all team members. This include their participation in the
Retirement Savings Plan for which the Company matches 50% of a team member's
salary deferrals, up to 6% of salary.
CEO COMPENSATION
Base Salary: In 1996 Mr. Bhatia's annual salary was increased to $190,000
after remaining unchanged for two years. This was based on recommendations of an
independent compensation consultant, and the Committee's assessment of his 1995
performance. The Committee determined that he substantially achieved most of his
objectives as the Company strengthened its overall position relative to the end
of 1994.
Bonus: During 1996, significant progress was made. Bell Atlantic signed a
multi-year contract for 2 million homes; over 3,500 subscribers have video
service in Dover Township, New Jersey and Richardson, Texas; Samsung Electronics
formalized its strategic partnership in an agreement for Korea and had its first
100 digital broadcast subscribers by year end; $115 million in convertible debt
was raised and a joint development relationship with Intel was established for a
data product. However, 1996 results were disappointing in terms of revenues,
deployment and the slow pace of the market. The Committee determined that
overall the Company improved its position relative to others who will likely
participate in its market. His bonus is consistent with that determination.
Stock Options: In January 2, 1996 he was granted an incentive stock option
for 45,000 shares as part of an employment agreement which includes provisions
for non competition and change in control events. On January 30, 1996 he was
granted 31,055 non qualified stock options as part of the annual performance
based equity payout, and an additional 31,055 non qualified stock options with
vesting tied to profitability achievement.
CONCLUSION
The Committee believes the quality of executive leadership makes a
significant difference in the long-term performance of the Company, and that it
is in the stockholder's interest to award compensation that rewards high
expectations and continuous improvement, as long as there is risk when
expectations are not met or when improvement does not occur. The Committee also
believes incentives should relate to corporate performance, so all team members
think and act like owners in their desire to maximize shareholder value. The
Committee believes the current compensation program is making progress towards
these goals.
The Compensation Committee:
Richard P. Clark, Chairman
Lawrence A. McLernon
14
<PAGE>
PERFORMANCE GRAPH
The graph below is a line presentation on an indexed basis for the period
commencing on July 1, 1993 (the initial trading date of the Company's Common
Stock) and ending on February 28, 1997, comparing the Company's cumulative
stockholder return for that period to the cumulative total return of The NASDAQ
Stock Market (US) and the NASDAQ Non-Financial Stocks. The total return is
based on a $100 investment on July 1, 1993 and assumes the dividends were
reinvested quarterly.
COMPARATIVE FORTY-FOUR MONTH TOTAL RETURNS
JULY 1, 1993 THROUGH FEBRUARY 28, 1997
FOR BROADBAND TECHNOLOGIES, INC.,
NASDAQ STOCK MARKET (US) AND
NASDAQ NON-FINANCIAL STOCKS
<TABLE>
<CAPTION>
=================================================================================================
7/1/93 12/31/93 12/31/94 12/31/95 12/31/96 02/28/97
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BroadBand $100.00 $111.40 $107.01 $57.02 $51.75 $32.89
- -------------------------------------------------------------------------------------------------
NASDAQ Stock $100.00 $110.43 $107.94 $152.65 $187.77 $190.14
Market (US)
- -------------------------------------------------------------------------------------------------
NASDAQ Non- $100.00 $112.05 $107.74 $150.15 $182.41 $184.27
Financial
- -------------------------------------------------------------------------------------------------
Source:
NASDAQ
=================================================================================================
</TABLE>
PROPOSAL 3
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, who have served as auditors of the Company since 1988,
were recommended by the Audit Committee, selected by the Directors and ratified
by the stockholders as auditors for the year ended December 31, 1996.
Representatives of Ernst & Young will be present at the Annual Meeting of the
Stockholders and will have an opportunity to respond to appropriate questions
from stockholders and make a statement if they so desire. The Audit Committee
has recommended to the Board of Directors that Ernst & Young be designated
independent auditors for the year ending December 31, 1997 and the Board of
Directors has approved that recommendation, subject to approval by the
stockholders of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ERNST & YOUNG
LLP, AS THE AUDITORS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997.
15
<PAGE>
STOCKHOLDER PROPOSALS
In order for proposals by stockholders to be considered for inclusion in
the Proxy Statement and form of proxy relating to the next Annual Meeting of
Stockholders, such proposals must be received no later than December 19, 1997.
Any such proposals should be sent to the Secretary of the Company at P.O. Box
13737, Research Triangle Park, NC 27709-3737.
OTHER BUSINESS
The Company is not aware that any matters other than those mentioned above
will be presented for action at the 1996 Annual Meeting, but if any other
matters do properly come before the Meeting, the persons named as proxies will
vote upon such matters in accordance with their best judgment.
TIMOTHY K. OAKLEY
Secretary
Dated: April 18, 1997
THE COMPANY'S ANNUAL REPORT TO THE SEC (FORM 10-K) IS AVAILABLE TO
STOCKHOLDERS WITHOUT CHARGE ON WRITTEN REQUEST TO: CHIEF FINANCIAL OFFICER,
BROADBAND TECHNOLOGIES, INC., P.O. BOX 13737, RESEARCH TRIANGLE PARK, NC
27709-3737.
16
<PAGE>
********************************************************************************
APPENDIX
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF BROADBAND TECHNOLOGIES, INC.
The undersigned stockholder of BroadBand Technologies, Inc. hereby
acknowledges receipt of the Notice of the Annual meeting of Stockholders and the
accompanying Proxy Statement and hereby constitutes and appoints David E. Orr,
Salim A. L. Bhatia, and Timothy K. Oakley and each of them, attorneys and
proxies with full power of substitution, to act and vote the shares of the
undersigned at the Annual Meeting of Stockholders of the said corporation to be
held Tuesday, May 20, 1997, at 10:00 A.M. and at any adjournment or adjournments
thereof. The undersigned hereby directs this proxy to be voted as follows.
1. Setting the number of Directors that constitutes the entire Board at
eight (8).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Electing David E. Orr, John R. Hutchins, III, and Lawrence A. McLernon
as Class I Directors to serve for three-year terms.
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY TO VOTE FOR
ALL NOMINEES LISTED ABOVE
[ ] WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEE(S) LISTED BELOW; AND TO
VOTE FOR ALL OTHER NOMINEES:
3. Ratifying the selection of Ernst & Young LLP, as auditors for 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion with respect to any other business to come before
the meeting or any adjournments thereof.
<PAGE>
[ ] PLEASE CHECK BOX IF YOU INTEND TO ATTEND THE
ANNUAL MEETING IN PERSON. PLEASE COMPLETE, SIGN
AND RETURN PROXY WHETHER OR NOT YOU INTEND TO
ATTEND THE MEETING.
Any proxy heretofore given by the undersigned is hereby revoked.
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IN THE ABSENCE OF ANY DIRECTION
TO THE CONTRARY, THE PROXYHOLDERS WILL VOTE THIS PROXY FOR THE ELECTION OF THE
NOMINEES LISTED ABOVE AS DIRECTORS, FOR APPROVAL OF THE OTHER MATTERS LISTED
ABOVE, AND IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS WHICH PROPERLY
COME BEFORE THE MEETING. IF, AT OR BEFORE THE TIME OF THE MEETING, ANY OF THE
NOMINEES LISTED ABOVE HAS BECOME UNAVAILABLE FOR ANY REASON, THE PROXYHOLDERS
HAVE THE DISCRETION TO VOTE FOR A SUBSTITUTE NOMINEE.
<TABLE>
<S> <C> <C>
Number of Shares Date Signature of Stockholder
</TABLE>
IMPORTANT: Please sign your name
exactly as it appears on your
certificate. Please add your full
title to your signature.
Executors, administrators,
trustees, and other fiduciaries
should so indicate when signing
and furnish proof of such
fiduciary capacity. All persons
signing on behalf of corporations
and/or partnerships should so
indicate when signing.
NOTE: If you receive more than one
proxy, please date and sign each
one and return all proxies in the
same envelope.
PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
