<PAGE> 1
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
Proxim, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 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> 2
PROXIM, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1997
To The Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
PROXIM, INC., a Delaware corporation (the "Company"), will be held on May 19,
1997 at 10:00 a.m., local time, at the Sunnyvale Hilton Inn, 1250 Lakeside
Drive, Sunnyvale, California 94086, for the following purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected and duly qualified;
2. To approve an amendment to the Company's 1995 Long-Term
Incentive Plan to increase the number of shares of Common Stock for issuance
thereunder by 500,000 shares;
3. To approve an amendment to the Company's 1993 Employee Stock
Purchase Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 200,000 shares;
4. To approve an amendment to the Company's 1994 Director Option
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares;
5. To ratify the appointment of Price Waterhouse LLP as
independent accountants of the Company for the fiscal year ending December 31,
1997; and
6. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 4, 1997
are entitled to receive notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if he or she
previously returned a proxy.
By Order of the Board of Directors
Jeffrey D. Saper
Secretary
Mountain View, California
April 15, 1997
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 3
PROXIM, INC.
295 NORTH BERNARDO AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043
--------------------
PROXY STATEMENT
--------------------
The enclosed Proxy is solicited on behalf of the Board of Directors of
Proxim, Inc., a Delaware corporation ("Proxim" or the "Company"), for use at
Proxim's Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Monday, May 19, 1997 at 10:00 a.m., local time, or at any adjournment(s)
thereof. The purposes of the Annual Meeting are set forth in this Proxy
Statement and in the accompanying Notice of Annual Meeting of Stockholders.
The Annual Meeting will be held at the Sunnyvale Hilton Inn, 1250 Lakeside
Drive, Sunnyvale, California 94086. The telephone number at that location is
(408) 738-4888.
These proxy solicitation materials were mailed on or about April 15,
1997 to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE; OUTSTANDING SHARES; PROCEDURAL MATTERS
Stockholders of record as of the close of business on April 4, 1997
(the "Record Date") are entitled to notice of and to vote at the Annual
Meeting. At the April 4, 1997 Record Date, 9,938,948 shares of Proxim's Common
Stock, $.001 par value (the "Common Stock"), were issued and outstanding. Each
share has one vote on all matters. For information regarding holders of more
than 5% of the outstanding Common Stock, see "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT." The Closing sale price of Proxim Common
Stock as reported on the Nasdaq National Market on April 4, 1997 was $16.50 per
share.
Proxies properly executed, duly returned to the Company and not
revoked, will be voted in accordance with the specifications made. Where no
specifications are given, such proxies will be voted as the management of the
Company may propose. If any matter not described in this Proxy Statement is
properly presented for action at the meeting, the persons named in the enclosed
form of proxy will have discretionary authority to vote according to their best
judgment.
Each stockholder is entitled to one vote for each share of Common
Stock on all matters presented at the meeting. The required quorum for the
transaction of business at the Annual Meeting is a majority of the votes
eligible to be cast by holders of shares of Common Stock issued and outstanding
on the Record Date. Shares that are voted "FOR," "AGAINST," "WITHHELD" or
"ABSTAIN" are treated as being present at the meeting for purposes of
establishing a quorum and are also treated as shares entitled to vote at the
Annual Meeting (the "Votes Cast") with respect to such matter. Abstentions
will have the same effect as a vote against a proposal. Broker non-votes will
be counted for purposes of determining the presence or absence of a quorum for
the transaction of business, but such non-votes will not be counted for
purposes of determining the number of Votes Cast with respect to the particular
proposal on which a broker has expressly not voted. Thus, a broker non- vote
will not effect the outcome of the voting on a proposal.
Proxim will bear the cost of this solicitation, including
reimbursement of brokerage firms and other persons representing beneficial
owners of shares for their reasonable expenses in forwarding solicitation
material
<PAGE> 4
to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or facsimile.
REVOCABILITY OF PROXIES
A stockholder may revoke any proxy given pursuant to this solicitation
by attending the Annual Meeting and voting in person, or by delivering to the
Company prior to the Annual Meeting a written notice of revocation or a duly
executed proxy bearing a date later than that of the previous proxy.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETING FOR FISCAL
YEAR 1997
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 1998 Annual Meeting must be received by the
Company no later than December 16, 1997 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company presently provide that there shall be five
directors and that such directors are to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's five nominees named below, all of
whom are presently directors of the Company. If any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any nominee designated by the present Board of
Directors to fill the vacancy. It is not presently expected that any of the
nominees named below will be unable or will decline to serve as a director. If
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in a manner to assure the election
of as many of the nominees listed below as possible. In such event, the
specific nominees to be voted for will be determined by the proxy holders. The
term of office of each person elected as a director will continue until the
next Annual Meeting of Stockholders or until a successor has been elected and
duly qualified.
Names of the five nominees and certain information about each of them
are set forth below. There is no family relationship among any directors or
executive officers of the Company.
<TABLE>
<CAPTION>
Director
Name, Principal Occupation and Directorships Age Since
-------------------------------------------- --- --------
<S> <C> <C>
David C. King . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 1993
Mr. King joined Proxim in December 1992 as Vice President of Marketing and Acting
Chief Financial Officer, in July 1993 was appointed, President, Chief Executive
Officer and director, and in January 1996 was appointed Chairman of the Board. From
December 1990 to November 1992, Mr. King served in various executive capacities at
Vitalink Communications Corporation ("Vitalink"), a LAN internetworking subsidiary
of Network Systems Corporation, most recently as Vice President of Marketing and
General Manager of Customer Service. From 1985 to 1990, Mr. King was Senior Manager
in the San Francisco office of McKinsey & Company, Inc., a management consulting
firm, where he was a member of the firm's high technology and health care practices.
Mr. King holds an A.B. in Economics, as well as M.B.A. and J.D. degrees, all from
Harvard University.
Raymond Chin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 1991
Dr. Chin became a director of the Company in April 1991 and served as Chairman of
the Board from September 1991 until January 1996. Since July 1994, Dr. Chin has
served as Chairman of the Board of GWcom, Inc., and was appointed Chief Executive
Officer in July 1996. From January 1995 to June 1996, Dr. Chin served as a general
partner of Alpine Technology Ventures, a venture capital firm. From May 1990 to
January 1995, Dr. Chin served as a general partner of MK Global Ventures, a venture
capital firm. From June 1984 to May 1990, Dr. Chin served in various investment and
strategic planning management positions at Ameritech Development Corporation, a
subsidiary of Ameritech Corporation, a regional Bell operating company. Dr. Chin
holds B.S., M.S. and Ph.D. degrees in Electrical Engineering from the University of
Illinois, Champaign-Urbana.
Leslie G. Denend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 1996
Mr. Denend became a director of the Company in March 1996. Since June 1993, Mr.
Denend has served as President, Chief Executive Officer and director of Network
General Corporation, after joining the company as Senior Vice President of Products
in February 1993. From October 1990 until January 1993, Mr. Denend was President
and Chief Executive Officer of Vitalink, where he served as Chairman from October
1990 until July 1991, and served as a director of Network Systems Corporation upon
its acquisition of Vitalink in July 1991, until January 1993. From January 1989
until October 1990, Mr. Denend served as Executive Vice President of Product
Operations at 3COM Corporation.
</TABLE>
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<TABLE>
<CAPTION>
Director
Name, Principal Occupation and Directorships Age Since
-------------------------------------------- --- --------
<S> <C> <C>
Michael D. Kaufman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 1991
Mr. Kaufman became a director of the Company in September 1991. Since October 1987,
Mr. Kaufman has served as the managing general partner of MK Global Ventures, a
venture capital firm. From August 1981 until October 1987, Mr. Kaufman was a
general partner of Oak Investment Partners, a venture capital firm. Mr. Kaufman is
also a director of Asante Technologies, Inc., Davox Corp., Document Technologies,
Inc., Document Imaging Systems Corp., and HyperMedia Communications, Inc.
G. Russell Mortenson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 1994
Mr. Mortenson became a director of the Company in August 1994. Mr. Mortenson served
as President, Chief Operating Officer and director of Amtech Corporation from 1987
until his appointments as Chief Executive Officer in January 1992, and as Chairman
of the Board in February 1997.
</TABLE>
VOTE REQUIRED
The five (5) candidates receiving the highest number of "FOR" votes
shall be elected to the Company's Board of Directors. An abstention will have
the same effect as a vote withheld for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL OF
THE NOMINEES LISTED ABOVE.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of ten (10)
meetings during the fiscal year ended December 31, 1996. The Board has an
Audit Committee and a Compensation Committee but does not have a nominating
committee or any committee performing a similar function.
The Audit Committee of the Board of Directors, which currently
consists of Messrs. Denend, Kaufman and Mortenson, was established in September
1993. The Audit Committee recommends engagement of the Company's independent
accountants and is primarily responsible for approving the services performed
by the Company's independent accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting controls.
There was one (1) meeting of the Audit Committee during fiscal 1996.
The Compensation Committee of the Board of Directors, which currently
consists of Messrs. Chin, Denend and Mortenson, was established in September
1993. The Compensation Committee is primarily responsible for making
recommendations to the Board of Directors regarding the Company's executive
compensation policy and incentive compensation for employees and consultants to
the Company. There were two (2) meetings of the Compensation Committee during
fiscal 1996.
During fiscal 1996, no incumbent director attended fewer than 80% of
the sum of the total number of meetings of the Board of Directors and the total
number of meetings of all committees of the Board of Directors on which that
director served. See "Director Compensation" for information on the
compensation of nonemployee directors.
DIRECTOR COMPENSATION
Beginning in 1996 nonemployee directors received $3,000 each quarter
as their sole cash compensation from the Company for their service as members
of the Board of Directors and any committees thereof. Prior to 1996,
nonemployee directors did not receive any cash compensation from the Company
for their service as members of the Board of Directors. Directors are also
reimbursed for all reasonable expenses incurred in
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connection with attending Board and Committee meetings. Each director who is
also an officer of the Company has been granted options to purchase Common
Stock under the 1986 Stock Option Plan and under the 1995 Long-Term Incentive
Plan. In addition, all nonemployee directors have received options to purchase
Common Stock under the Company's 1986 Stock Option Plan for grants prior to
January 1994 and under the 1994 Director Option Plan for grants after December
1993.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE
1995 LONG-TERM INCENTIVE PLAN
The Proxim, Inc. 1995 Long-Term Incentive Plan (the "1995 Plan") was
adopted by the Board of Directors in April 1995 and approved by the
stockholders of the Company in May 1995. A total of 1,250,000 shares of the
Company's Common Stock are currently authorized for issuance under the 1995
Plan. The 1995 Plan was intended to supplement and replace the Company's 1986
Stock Option Plan, which expired in March 1996. As of April 4, 1997, 528,600
options to purchase shares were outstanding under the 1995 Plan and 713,900
shares remained available for future issuance.
AMENDMENT TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE 1995
PLAN
On April 8, 1997, the Board of Directors approved an amendment to the
1995 Plan to increase the number of shares reserved for issuance thereunder by
500,000 shares to an aggregate of 1,750,000 shares. The stockholders are being
asked to approve this amendment at the Annual Meeting.
The Board of Directors believe that it is in the best interests of the
Company to provide an incentive to eligible employees, consultants and officers
whose present and potential contributions are important to the continued
success of the Company, to afford these individuals with the opportunity to
acquire a proprietary interest in the Company, and to enable the Company to
enlist and retain in its employment the best available talent for the
successful conduct of its business. The Board of Directors believes that the
shares remaining available for issuance pursuant to the 1995 Plan are
insufficient for such purposes. Accordingly, at the Annual Meeting, the
stockholders are being requested to consider and approve the amendment of the
1995 Plan to increase the number of shares reserved for issuance thereunder by
500,000 shares.
VOTE REQUIRED
The approval of this proposal requires the affirmative vote of a
majority of the Votes Cast on the proposal at the Annual Meeting. An
abstention will have the same effect as a vote against the proposal, and,
pursuant to Delaware law, a broker non-vote will not be treated as a Vote Cast
on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1995 LONG-TERM INCENTIVE PLAN.
SUMMARY OF THE 1995 PLAN
The essential features of the 1995 Plan are outlined below.
GENERAL
Purpose. The purpose of the 1995 Plan is to enable the Company to
provide an incentive to eligible employees, consultants and officers whose
present and potential contributions are important to the continued success of
the Company, to afford these individuals the opportunity to acquire a
proprietary interest in the
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Company, and to enable the Company to enlist and retain in its employment the
best available talent for the successful conduct of its business. It is
intended that this purpose will be effected through the granting of stock
options, stock purchase rights to buy restricted stock, stock appreciation
rights, performance shares, stock unit awards or a combination of the above.
The 1995 Plan has replaced the Company's 1986 Stock Option Plan as the
principal method of providing incentives to employees with equity in the
Company. The 1986 Stock Option Plan (but not outstanding options issued
thereunder) terminated by its terms on March 20, 1996.
Administration. The 1995 Plan is administered by the Company's Board
of Directors, the Compensation Committee or any other committee appointed by
the Board (the "Administrator"). The 1995 Plan is administered so as to comply
with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934
(the "Exchange Act"). The Administrator is authorized to grant awards in the
form of stock options, restricted stock, performance shares, restricted stock
units, and stock unit awards, and the terms and conditions relating thereto.
The Administrator has complete authority to construe, interpret and administer
the provisions of the 1995 Plan and the provisions of the agreements governing
awards granted thereunder. The Administrator has the authority to prescribe,
amend and rescind rules and regulations pertaining to the 1995 Plan and to make
all other determinations necessary or deemed advisable in the administration of
the 1995 Plan. The determinations and interpretations made by the
Administrator are final and binding.
Eligibility. The 1995 Plan provides that stock options and other plan
awards may be granted to employees (including officers and directors who are
also employees) and consultants of the Company, as selected by the
Administrator. Directors who are not employees of the Company are not eligible
to participate in the 1995 Plan.
AWARDS UNDER THE 1995 PLAN
Stock Options. The Administrator may grant awards under the 1995 Plan
in the form of options to purchase shares of the Company's Common Stock. The
maximum number of shares of Common Stock in respect of which stock options may
be granted under the Plan will be 1,750,000 shares. In addition, no
participant in the Plan may be granted stock options for more than 200,000
shares of Common Stock in the aggregate during any fiscal year of the Company.
With regard to each such option, the Administrator will determine the number of
shares subject to the option, the manner and time of the exercise of the
option, the exercise price per share of stock subject to the option, and other
applicable conditions. The Administrator may grant either "non-qualified stock
options" ("NSOs") or "incentive stock options" ("ISOs") pursuant to Section 422
of the Internal Revenue Code, as amended (the "Code") or both. In the case of
ISOs, the term of each option may not exceed 10 years from the date of grant.
In addition, the exercisability of options may be accelerated either
automatically upon the occurrence of certain events described in the 1995 Plan
or on a discretionary basis by the Administrator at the time the options are
granted. See "Extraordinary Events--Change-in-Control Provisions" below.
The exercise price of ISOs will not be less than the fair market value
of the Common stock on the date of grant (and not less than 110% of the fair
market value in the case of options granted to an optionee owning 10% or more
of the outstanding Common Stock). The exercise price for NSOs shall not be
less than 100% of the fair market value of the Common Stock on the date of
grant. The fair market value on the date of grant is the closing price as
reported on the Nasdaq National Market on the last market trading day prior to
the date of grant of the option. The exercise price may, at the discretion of
the Administrator, be paid in cash, by promissory note, shares of Common Stock,
or a combination thereof. The Company may make financing available to the
optionee on such terms as the Committee shall specify. The effect of an
optionee's termination of employment by reason of death, retirement,
disability, or otherwise and other conditions that will apply to the exercise
of the option will be specified in the option agreement evidencing the grant of
the option.
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Under the 1995 Plan, in the event of an optionee's termination of
employment or consulting relationship for any reason, an option may thereafter
be exercised, to the extent it was exercisable at the date of such termination,
for such period of time as is determined by the Administrator, up to a maximum
of 12 months in the case of death or permanent disability or six months in the
case of termination for any other reason. After termination of employment or
consulting, an option may thereafter be exercised during the specified period,
but in no event after the expiration of the original term of the option. After
termination, an option is generally only exercisable to the extent it was
exercisable at the date of such termination, unless otherwise determined by the
Administrator. The employment or consulting relationship is not considered to
be terminated in the event of certain leaves of absence or transfers between
the Company, its parent (if any) and its majority-owned subsidiaries.
The method of payment of consideration with respect to shares issued
upon exercise of options granted under the 1995 Plan shall be determined by the
Administrator (and, in the case of ISOs, determined at the time of grant) and
may be any legal form of consideration permitted by applicable laws. The 1995
Plan specifically enumerates the following as acceptable forms of
consideration: cash, check, promissory note, other shares of Common Stock or
delivery of irrevocable instructions to a broker to deliver to the Company the
appropriate amount of proceeds of the sale or loan of the shares exercised
(often referred to as a "cashless exercise").
The Administrator of the 1995 Plan may at any time offer to buy out,
for a payment in cash or shares of Common Stock of the Company, any outstanding
option, based on such terms and conditions as the Administrator shall establish
and communicate to the optionee at the time that such offer is made.
Stock Appreciation Rights. The 1995 Plan also permits the granting of
nontransferable stock appreciation rights ("SARs"). SARs may be granted in
connection with all or any part of an option, either concurrently with the
grant of the option or at any time thereafter during the term of the option, or
may be granted independently of options.
An SAR in connection with an option will entitle the optionee to
exercise the SAR by surrendering to the Company a portion of the unexercised
related option. The optionee will receive in exchange from the Company an
amount equal to the excess of the fair market value, on the date of exercise of
the SAR, of the Common Stock covered by the surrendered portion of the related
option over the exercise price of the Common Stock covered by the surrendered
portion of the related option. When an SAR granted in connection with an
option is exercised, the related option, to the extent surrendered, will cease
to be exercisable. An SAR granted in connection with an option will be
exercisable until, and will expire no later than, the date on which the related
option ceases to be exercisable or expires.
SARs may also be granted independently of options. In such an event,
the SAR will entitle the optionee, upon exercise, to receive from the Company
an amount equal to the excess of the fair market value of the Common Stock
covered by the exercised portion of the SAR as of the date of such exercise,
over the fair market value of the Common Stock covered by the exercised portion
of the SAR as of the last market trading date prior to the date on which the
SAR was granted. An SAR granted without a related option will be exercisable,
in whole or in part, at such time as the Administrator will specify in the SAR
agreement.
The Company's obligation arising upon the exercise of an SAR may be
paid in Common Stock or in cash, or any combination thereof, as the
administrator may determine.
Stock Purchase Rights. The 1995 Plan permits the Company to grant
stock purchase rights which allow the offeree the opportunity, during a
specified period of time not exceeding 30 days, to purchase Common Stock of the
Company on the terms specified by the Administrator. The Administrator
notifies the offeree in writing of the terms, conditions and restrictions
related to the offer, including the number of shares of Common Stock that
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the offeree will be entitled to purchase, the price to be paid and the time
within which the offeree must accept such offer (which will in no event exceed
30 days from the date upon which the Administrator made the determination to
grant the purchase right). Offers may be accepted by execution of a restricted
stock purchase agreement between the Company and the offeree and payment of the
purchase price.
Unless the Administrator determines otherwise, the restricted stock
purchase agreement will grant the Company a repurchase option at the original
price paid by the purchaser, exercisable upon the termination of the
purchaser's employment or consulting relationship with the Company for any
reason. The purchase price for shares repurchased by the Company pursuant to
the restricted stock purchase agreement may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option will lapse
at such rate as the Administrator may determine.
Performance Shares. The 1995 Plan permits the Administrator to grant
awards of performance shares to eligible employees. These awards are
contingent upon the achievement of certain performance goals established by the
Administrator. The length of time over which performance will be measured, the
performance goals, and the criteria to be used in determining whether and to
what degree the goals have been attained will be determined by the
Administrator. The Administrator will also determine at the time of grant the
effect (on the performance share award) of the termination of employment of a
recipient of performance shares (by reason of death, retirement, disability or
otherwise) during the performance period.
Other Stock Based Awards. In addition, the Administrator shall have
authority under the 1995 Plan to grant restricted stock unit awards and other
stock unit awards, which can be in the form of Common Stock or units, the value
of which is based, in whole or in part, on the value of the Company's Common
Stock. Such stock unit awards will be subject to such terms, restrictions,
conditions, vesting requirements and payment rules as the Administrator may
determine. Stock unit awards may relate in whole or in part to certain
performance criteria established by the Administrator at the time of grant.
The Administrator will also determine at the time of grant the effect of
termination of employment (on the stock unit award) of a stock unit award
recipient (by reason of death, retirement, disability or otherwise) during any
applicable vesting period.
Written Agreements; Rule 16b-3. All awards under the 1995 Plan shall
be evidenced by a written agreement between the Company and the employee or
consultant to whom such award is granted. Awards granted to persons subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), referred to as "Insiders," are subject to any additional applicable
restrictions under Rule 16b-3.
Nontransferability of Rights. Options, SARs, stock purchase rights,
performance shares and stock unit awards or other stock based awards granted
pursuant to the 1995 Plan are nontransferable by the participant, other than by
will or by the laws of descent and distribution and may be exercised, during
the lifetime of the participant, only by the participant.
EXTRAORDINARY EVENTS
Adjustment Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, in the event any change, such as a
stock split or dividend, is made in the Company's capitalization which results
in an increase or decrease in the number of outstanding shares of Common Stock
without receipt of consideration by the Company, an appropriate adjustment
shall be made in the number of shares which have been reserved for issuance
under the 1995 Plan (including shares subject to outstanding options or rights)
and the price per share covered by each outstanding option, SAR, purchase
right, performance share and stock unit award. In the event of any proposed
dissolution or liquidation of the Company, all outstanding options and rights
will terminate immediately prior to the consummation of such proposed action.
However, the Administrator may, in
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its discretion, make provisions for accelerating the exercisability of any
option or right under the 1995 Plan in such event.
Change in Control Provisions. The 1995 Plan provides that at the time
any option or right is granted under the 1995 Plan the Administrator may, in
its discretion, provide that in the event of a "Change-in-Control" of the
Company (as defined below) (i) all or any portion of such option or right will
become immediately vested and fully exercisable or (ii) all or any portion of
such option or right will be cashed out at the "Change-in-Control Price" (as
defined below) reduced by the exercise price, if any, applicable to such option
or right.
A "Change-in-Control" means the occurrence of (i) the acquisition by
an unaffiliated third party of securities representing 40% or more of the
combined voting power of the Company with an intent to acquire control of the
Company, or (ii) the Company's merger or consolidation with any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto continuing to hold at least 60% of the total voting power represented
by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iii) stockholder approval
of an agreement for the sale or disposition of all or substantially all of the
Company's assets, or (iv) a change in the composition of the Board of Directors
of the Company occurring within a two-year period, as a result of which fewer
than a majority of the directors are incumbent directors.
The "Change-in-Control Price" shall be determined by the Administrator
and shall be (i) the highest closing sale price of a share of Common Stock (as
quoted on any established exchange or a national market system) any time within
the 60-day period immediately preceding the date of determination of the
Change-in-Control Price, (ii) the highest price paid or offered per share of
Common Stock in any bona fide action or bona fide offer related to the
Change-in-Control of the Company at any time within such 60-day period, or
(iii) such lower price as the Administrator, in its discretion, determines to
be a reasonable estimate of the fair market value of a share of Common Stock.
Merger or Sale of Assets. Subject to the 1995 Plan's
Change-in-Control Provisions discussed above, in the event of a sale of
substantially all of the assets of the Company or the merger of the Company
with or into another corporation which also constitutes a Change- in-Control,
the 1995 Plan provides that (i) each outstanding option and right shall be
assumed or substituted by such successor corporation or a parent or subsidiary
of such successor corporation and (ii) twelve months of unvested shares, if
any, subject to such option or right shall vest and become fully exercisable
upon the Change-in-Control. In the event that the successor corporation does
not agree to such assumption or substitution, the 1995 Plan provides that any
unvested shares subject to the option or right shall vest as of the
Change-in-Control and the participant shall have the right to exercise such
option or right as to all of the shares subject thereto for a period of time
determined by the Administrator, after which such options and rights shall
terminate.
Amendment and Termination. The Board may amend, alter, suspend or
discontinue the 1995 Plan at any time, but any such amendment, alteration,
suspension or discontinuation shall not adversely affect any outstanding option
or right under the 1995 Plan without the written consent of the holder thereof.
To the extent necessary and desirable to comply with Rule 16b-3 promulgated
under the Exchange Act or Section 422 of the Code (or any other applicable law
or regulation), the Company shall obtain stockholder approval of any amendment
to the 1995 Plan in such a manner and to such a degree as is required. The
1995 Plan continues until terminated by the Board; however, no ISOs may be
granted after March 2, 2005.
Subject to applicable laws and the specific terms of the 1995 Plan,
the Administrator may accelerate any option or right or waive any condition or
restriction pertaining to such option or right at any time. The Administrator
may also substitute new options or rights for outstanding options or rights,
including outstanding options or rights having higher prices, and may reduce
the exercise price of any option or right.
-9-
<PAGE> 12
UNITED STATES TAX INFORMATION
Under current U.S. federal law, the following are the U.S. federal
income tax consequences generally arising with respect to awards under the 1995
Plan.
Stock Options. An optionee who is granted an incentive stock option
will not recognize taxable income either at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon the sale or exchange of the shares more than two
years after grant of the option and one year after exercising the option, any
gain or loss will be treated as long-term capital gain or loss. If these
holding periods are not satisfied, the optionee will recognize ordinary income
at the time of sale or exchange equal to the difference between the exercise
price and the lower of (i) the fair market value of the shares at the date of
the option exercise or (ii) the sale price of the shares. A different rule for
measuring ordinary income upon such a premature disposition may apply if the
optionee is also an officer, director, or 10% stockholder of the Company. The
Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term or short-term capital gain or loss,
depending on the holding period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any
taxable income at the time he or she is granted a nonstatutory option.
However, upon its exercise, the optionee generally will recognize taxable
income generally measured as the excess of the then fair market value of the
shares purchased over the purchase price. Any taxable income recognized in
connection with an option exercise by an optionee who is also an employee of
the Company may be subject to tax withholding by the Company. Upon resale of
such shares by the optionee, any difference between the sales price and the
optionee's purchase price, to the extent not recognized as taxable income as
described above, will be treated as long-term or short-term capital gain or
loss, depending on the holding period. The Company will be entitled to a tax
deduction in the same amount as the ordinary income recognized by the optionee
with respect to shares acquired upon exercise of a nonstatutory option.
Stock Appreciation Rights. No income will be recognized by a
recipient in connection with the grant of an SAR. When the SAR is exercised,
the recipient will generally be required to include as taxable ordinary income
in the year of exercise an amount equal to the amount of cash received and the
fair market value of any Common Stock received on the exercise. In the case of
a recipient who is also an employee, any income recognized upon exercise of an
SAR will constitute wages for which withholding will be required. The Company
will be entitled to a tax deduction in the same amount. If the optionee
receives Common Stock upon the exercise of an SAR, any gain or loss on the sale
of such stock will be treated in the same manner as discussed above with
respect to nonstatutory stock options. See also "Special Rules Applicable to
Corporate Insiders and Restricted Stock Purchasers."
Performance Shares. A participant who has been granted a performance
share award will not realize taxable income at the time of the grant, and the
Company will not be entitled to a tax deduction at such time. A participant
will realize ordinary income at the time the award is paid equal to the amount
of cash paid or the value of shares delivered, and the Company will have a
corresponding tax deduction.
Restricted Stock. A participant who has been granted an award of
restricted stock will not realize taxable income at the time of the grant, and
the Company will not be entitled to a tax deduction at the time of the grant,
unless the participant makes an election to be taxed at the time of the award.
When the restrictions lapse, the participant will recognize taxable income in
an amount equal to the excess of the fair market value of the shares at such
time over the amount, if any, paid for such shares. The Company will be
entitled to a corresponding tax deduction. The holder of a restricted stock
award may elect to be taxed at the time of the restricted stock award
-10-
<PAGE> 13
on the market value of the shares, (See "Special Rules Applicable to Corporate
Insiders and Restricted Stock Purchasers." below) in which case (1) the
Company will be entitled to a deduction at the same time and in the same
amount, and (2) there will be no further income tax consequences when the
restrictions lapse.
Stock Units. The grant of a stock unit award produces no U.S. federal
income tax consequences for the participant or the Company. The payment of a
stock unit award results in taxable income to the participant equal to the
amount of the payment received, valued with reference to the market value of
the Common Stock on the payment date. The Company is entitled to a
corresponding tax deduction for the same amount.
Special Rules Applicable to Corporate Insiders and Restricted Stock
Purchasers. Generally, Insiders (persons who are subject to Section 16 of the
Exchange Act) and individuals who purchase restricted stock may have their
recognition of compensation income and the beginning of their capital gains
holding period deferred until a date that is up to six months after the option
exercise (for Insiders) or until the date that the restrictions lapse (for
restricted stock purchasers) (the "Deferral Date"). The excess of the fair
market value of the stock determined as of the Deferral Date over the purchase
price will be taxed as ordinary income, and the tax holding period for any
subsequent gain or loss will begin on the Deferral Date. However, an Insider
or restricted stock purchaser who so elects under Code Section 83(b) on a
timely basis may instead be taxed on the difference between the excess of the
fair market value on the date of transfer over the purchase price, with the tax
holding period beginning on such date. Similar rules apply for alternative
minimum tax purposes with respect to the exercise of an incentive stock option
by an Insider.
THE FOREGOING BRIEF SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL
INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY IN CONNECTION WITH THE 1995
PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE
APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS
THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN
COUNTRY IN WHICH PARTICIPANTS MAY RESIDE.
CERTAIN GRANT LIMITS
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") added Section
162(m) to the Code. Under Section 162(m), the allowable deduction for
compensation paid or accrued with respect to the chief executive officer and
each of the four most highly compensated employees of a publicly-held
corporation is limited to no more than $1,000,000 per year for fiscal years
beginning on or after January 1, 1994. For purposes of Section 162(m), any
compensation expense attributable to stock options is subject to this
limitation unless, among other things, the plan under which the options are
granted includes a limit on the number of shares with respect to which options
may be granted to any one employee in a specified period.
In order to qualify compensation resulting from options granted under
the Company's 1995 Plan as "performance-based" and thereby to exclude such
compensation from the $1,000,000 limit on deductibility, the 1995 Plan limits
the number of options that may be granted to employees in a fiscal year. The
1995 Plan provides that no employee may be granted, in any fiscal year of the
Company, options to acquire in the aggregate more than 200,000 shares of Common
Stock. The foregoing limitation adjusts proportionately in connection with any
change in capitalization. The purpose of this provision is solely to preserve
the Company's ability to deduct compensation expense related to stock options.
-11-
<PAGE> 14
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE
1993 EMPLOYEE STOCK PURCHASE PLAN
DESCRIPTION OF PROPOSED AMENDMENT
On April 8, 1997, subject to approval by the stockholders at the
Annual Meeting, the Board approved an amendment to the 1993 Employee Stock
Purchase Plan (the "Purchase Plan") to increase the number of shares of Common
Stock reserved for issuance thereunder by 200,000 shares, from 400,000 to
600,000 shares. As of April 4, 1997, without giving effect to the proposed
amendment, only 85,720 shares remained available for issuance under the
Purchase Plan.
The Board believes that in order to provide additional incentives to
participants in the Purchase Plan, it is necessary to continue to provide for
the sale of Common Stock to such employees. The Board further believes that
without increasing the number of shares reserved for issuance the remaining
shares in the Purchase Plan are insufficient for such purpose.
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of the holders
of a majority of the Votes Cast on the proposal at the Annual Meeting. An
abstention will have the same effect as a vote against the proposal, and,
pursuant to Delaware law, a broker non-vote will not be treated as a Vote Cast
on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1993 EMPLOYEE STOCK PURCHASE PLAN.
GENERAL
The Purchase Plan was adopted by the Board of Directors in September
1993 and approved by the stockholders in November 1993. Prior to the adoption
of the amendment discussed above, a total of 400,000 shares of Common Stock had
been reserved for issuance under the Purchase plan. The stockholders are being
asked to approve this share increase at the Annual Meeting. The Board believes
that increasing the number of shares available for issuance under the Purchase
Plan will enable the Company to continue its policy of encouraging employee
equity participation in the Company by enabling employees to purchase the
Company's Common Stock at a discount from the market price through voluntary
payroll deductions. The Board believes the continued opportunity for employee
equity participation will promote the attraction, retention and motivation of
employees.
PURCHASE PLAN ACTIVITY
To date (without taking into account the proposed amendment to the
Purchase Plan), the Company has issued and sold an aggregate of 314,280 shares
of Common Stock pursuant to the Purchase Plan and 85,720 shares of Common Stock
are available for future issuance under the Purchase Plan. Participation in
the Purchase Plan is voluntary and is dependent on each eligible employee's
election to participate and his or her determination as to the level of payroll
deductions. Accordingly, future purchases under the Purchase Plan are not
determinable.
-12-
<PAGE> 15
The following table sets forth certain information regarding shares
purchased under the Purchase Plan during the Company's last fiscal year by each
of the Named Executive Officers, all current executive officers as a group and
all non-executive officer employees as a group:
<TABLE>
<CAPTION>
Number of
Shares
Name of Individual or Identity of Group or Position Dollar Value(1) Purchased
--------------------------------------------------- --------------- ---------
<S> <C> <C>
David C. King . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,437 5,927
Brian Button . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,370 3,141
Keith E. Glover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,610 4,194
Juan Grau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,455 4,517
Warren Hackbarth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,488 5,943
All executive officers as a group (7 persons) . . . . . . . . . . . . . . . . . 593,397 28,272
All other employees (excluding executive officers) as a group . . . . . . . . . 2,270,943 107,464
</TABLE>
- --------------
(1) Represents the market value of the shares on the date of purchase. The
purchase price paid by each participant in the Purchase Plan is at least
15% below the market value.
SUMMARY OF PURCHASE PLAN
The purpose of the Purchase Plan is to provide a convenient and practical
means for employees of the Company and its subsidiaries to purchase the
Company's Common Stock and a method by which the Company may assist and
encourage its employees to become stockholders. The Purchase Plan is intended
to be a permanent program but the Board of Directors may terminate the Purchase
Plan at any time.
The Purchase Plan is intended to qualify under Sections 421 and 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). Each twenty-four-month
offering period will consist of four purchase periods of approximately six
months duration. The Purchase Plan was implemented with an eight-month
purchase period which commenced on December 15, 1993. Subsequent purchase
periods each have a six-month duration commencing on the first trading day on
or after February 15 and August 15 of each year. The Purchase Plan is
administered by the Compensation Committee. All individuals employed by the
Company or its subsidiaries on the commencement of an offering period are
eligible to participate if they are customarily employed by the Company for at
least twenty hours per week and at least five months per year, provided,
however, that individuals holding 5% or more of the Company's Common Stock
(directly or upon the exercise of options) are not eligible to participate.
The Purchase Plan permits eligible employees to purchase Common Stock through
payroll deductions not exceeding 10% of an employee's compensation (and not
more than $25,000 in fair market value in any calendar year with such value
being determined as of the first day of an offering period), at a price equal
to 85% of the closing sale price for the Common Stock reported on the Nasdaq
National Market at the beginning or at the end of each purchase period,
whichever is lower. Employees may end their participation in the offering at
any time during the offering period. Participation ends automatically on
termination of employment with the Company.
In the event of a stock dividend, stock split or other change in
capitalization affecting the Company's Common Stock, or in the event of any
merger, sale or reorganization, appropriate adjustments will be made in the
Purchase Plan's share reserve, the shares subject to purchase under each
participant's purchase opportunity and the purchase price per share of Common
Stock. In the event of a transfer of control of the Company pursuant to a sale
of stock, a merger or a sale of assets, the Board of Directors may provide that
the purchase opportunities under the Purchase Plan shall become fully
exercisable or arrange with the successor corporation for such corporation to
assume the Company's rights and obligations under the Purchase Plan. All
purchase opportunities
-13-
<PAGE> 16
shall terminate as of the date of the transfer of control to the extent that
the purchase opportunity is neither exercised nor assumed by the successor
corporation.
The Board of Directors may amend or terminate the Purchase Plan at any
time, except that such termination cannot affect shares of Common Stock or
purchase opportunities previously granted under the Purchase Plan, nor can any
amendment be made without approval of the stockholders of the Company within
twelve months of the date of the adoption of the amendment if the amendment
would authorize the sale of more shares than are authorized under the Purchase
Plan or would change the designation of the corporations whose employees may
participate under the Purchase Plan.
UNITED STATES TAX INFORMATION
The Purchase Plan, and the right of participants to make purchase
thereunder, are intended to qualify under the provisions of Sections 421 and
423 of the Code, under which no income will be taxable to a participant until
the shares purchased under the Purchase Plan are sold or otherwise disposed of.
Upon the sale or other disposition of shares, the participant will generally be
subject to tax and the amount of the tax will depend upon the holding period.
If the shares are sold or otherwise disposed of more than two years from the
first day of the offering period and one year from the date the shares are
purchased, the participant will recognize ordinary income measured as the
lesser of (a) the excess of the fair market value of the shares at the time of
such sale or disposition over the purchase price, or (b) an amount equal to 15%
of the fair market value of the shares as of the first day of the offering
period. Any additional gain will be treated as long-term capital gain. If the
shares are sold or otherwise disposed of before the expiration of these holding
periods, the participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date the shares are
purchased over the purchase price. Any additional gain or loss on such sale or
disposition will be long-term or short-term capital gain or loss, depending on
the holding period. The Company is not entitled to a deduction for amounts
taxed as ordinary income or capital gain to a participant except to the extent
of ordinary income recognized by participants upon a sale or disposition of
shares prior to the expiration of the holding period described above.
THE FOREGOING SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL INCOME
TAXATION UPON PARTICIPANTS AND THE COMPANY IN CONNECTION WITH THE PURCHASE PLAN
DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE
PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH PARTICIPANTS MAY RESIDE.
-14-
<PAGE> 17
PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO THE
1994 DIRECTOR OPTION PLAN
DESCRIPTION OF PROPOSED AMENDMENTS
On April 8, 1997, subject to approval by the stockholders at the Annual
Meeting, the Board approved an amendment to the 1994 Director Option Plan (the
"Director Plan") to increase the number of shares reserved for issuance
thereunder by 100,000 shares to an aggregate of 200,000 shares.
PURPOSE OF THE DIRECTOR PLAN
The purpose of the Director Plan is to attract and retain the best
available people for service as directors of the Company and to encourage their
continued service on the Board. The Board believes that in order to attract
and retain the best available people for service as directors of the Company
and encourage their continued service on the Board, the amendments proposed are
necessary to meet such purposes.
VOTE REQUIRED
The approval of this proposal requires the affirmative vote of a majority
of the shares of the Votes Cast on the proposal at the Annual Meeting. An
abstention will have the same effect as a vote against the proposal, and,
pursuant to Delaware law, a broker non-vote will not be treated as a Vote Cast
on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE 1994 DIRECTOR OPTION PLAN.
SUMMARY OF DIRECTOR PLAN, AS AMENDED
Administration. The Director Plan is administered by the Board of
Directors. All options under the Director Plan shall be automatic options.
The timing of automatic option grants are determined by the Director Plan and
no discretion is permitted. No member of the Board may vote on the grant of
any option which relates to himself.
Eligibility. Only nonemployee directors ("Outside Directors") may
participate in the Director Plan. As of April 4, 1997, there were four (4)
Outside Directors eligible to participate in the Director Plan.
Automatic Option Grants. Each Outside Director is automatically granted
an initial option to purchase 15,000 shares of Common Stock upon the date such
person first becomes a director, whether through election by the stockholders
of the Company or appointment by the Board of Directors to fill a vacancy. On
January 1 of each year, each Outside Director automatically will be granted an
option to purchase 5,000 shares of Common Stock, provided, however, that such
grant shall be prorated for the number of whole months the director served
during the previous year.
Terms of Options. Options granted under the Director Plan have a term of
ten years and are exercisable only while the Outside Director remains an
Outside Director of the Company or within three (3) months following the date
the Outside Director ceases to serve as a director. The exercise price of
automatic options is 100% of the fair market value per share on the date of
grant of the option.
-15-
<PAGE> 18
The shares subject to the automatic options shall fully vest one (1) year
after the date of grant provided, however, that if the optionee ceases to serve
as an Outside Director of the Company, vesting shall cease as of the date of
termination. If an option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased shares which were
subject to such option shall become available for future grant under the
Director Plan.
Options granted under the Director Plan shall comply with Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
16b-3 (or any successor rule) promulgated thereunder and shall contain any such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
plan transactions.
Exercise of Options. An option is exercised by giving written notice of
exercise to the Company, specifying the number of full shares of Common Stock
to be purchased, and tendering payment to the Company of the purchase price.
The payment shall consist entirely of cash, check, other shares of Common Stock
having a fair market value on the date of surrender equal to the aggregate
exercise price of the shares as to which said option shall be exercised (which,
if acquired from the Company, shall have been held for at least six (6)
months), or any combination of such methods of payment.
Termination of Director Status. If an optionee ceases to serve as an
director, the optionee may, but only within three (3) months after the date he
or she ceases to be an director of the Company, exercise his or her option to
the extent he or she was entitled to exercise it at the date of such
termination.
Disability of Optionee. If an Outside Director ceases to serve as a
director or is unable to continue his or her service as a director with the
Company as a result of total and permanent disability (as defined in Section
22(e)(3) of the Code), the director may exercise the option, but only within
twelve (12) months after the date he or she ceases to be a director of the
Company, and only to purchase vested shares. To the extent that he or she was
not entitled to exercise an option at the date of such termination, or if he or
she does not exercise such option (which he or she was entitled to exercise)
within the time specified herein, the option shall terminate.
Death of Optionee. If the optionee dies during the term of the option and
the optionee was, at the time of his death, a director of the Company and who
shall have been in continuous status as a director since the date of grant of
the option, the option may be exercised, at any time within twelve (12) months
following the date of death, by the optionee's estate or by a person who
acquired the right to exercise the option by bequest or inheritance, but only
to the extent of the shares that had vested at the date of death.
Changes in Capitalization. In the event of any changes in the
capitalization of the Company effected without receipt of consideration by the
Company, such as stock splits or stock dividends, resulting in an increase or
decrease in the number of shares of Common Stock, proportionate adjustments
shall be made by the Company in the shares subject to purchase and in the price
per share.
Effect of Liquidation, Dissolution, Asset Sale, Merger or Change in
Control. In the event of a liquidation or dissolution of the Company, all
options will terminate immediately before consummation of such event. In the
event of a proposed sale of all or substantially all of the assets of the
Company, or merger of the Company with or into another corporation, all options
shall be assumed or equivalent options shall be substituted, by such successor
corporation or a parent or subsidiary of such successor corporation. If such
successor corporation refuses to assume the option or to substitute an
equivalent option, each outstanding option shall become fully vested and
exercisable, including as to shares as to which it would not otherwise be
exercisable, unless the Board, in its discretion, determines otherwise. If the
Board makes an option fully exercisable in lieu of assumption or
-16-
<PAGE> 19
substitution in the event of a merger or sale of assets, the Board shall notify
the optionee that the option shall be fully exercisable for a period of thirty
(30) days from the date of such notice, and the option will terminate upon the
expiration of such period.
Amendment and Termination. The Board of Directors may amend, alter,
suspend or discontinue the Director Plan; provided, however, that the terms of
automatic options may not be amended more than once in any six-month period.
The Company shall obtain stockholder approval of any Director Plan amendment
that is required to comply with Rule 16b-3. No action by the Board may affect
options already granted under the Director Plan without the consent of the
Optionee. The Director Plan will terminate on March 31, 2004, unless
terminated earlier by the Bard.
Tax Information. Options granted under the Director Plan are nonstatutory
stock options. An optionee will not recognize any taxable income at the time
he or she is granted a nonstatutory option. However, upon its exercise, the
optionee will recognize taxable income, generally measured by the excess of the
then fair market value of the shares of Common Stock purchased over the
purchase price. Upon resale of such shares by the optionee, any difference
between the sale price and the optionee's purchase price, to the extent not
recognized as taxable income as provided above, will be treated as long-term or
short-term capital gain or loss, depending on the holding period. The Company
will be entitled to a tax deduction in the same amount as the ordinary income
recognized by the optionee with respect to shares acquired upon exercise of
nonstatutory option.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE DIRECTOR PLAN, DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE.
PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Price Waterhouse LLP, independent
accountants, to audit Proxim's financial statements for the fiscal year ending
December 31, 1997. Such nomination is being presented to the stockholders for
ratification at the meeting. The affirmative vote of the holders of a majority
of the Votes Cast on this proposal at the Annual Meeting is required to ratify
the Board's selection. If the stockholders reject the nomination, the Board
will reconsider its selection.
Price Waterhouse LLP has audited Proxim's financial statements since the
fiscal period ended October 31, 1985. Representatives of Price Waterhouse LLP
are expected to be present at the Annual Meeting and will have the opportunity
to respond to questions and to make a statement if they desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
-17-
<PAGE> 20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 4, 1997, information relating
to the beneficial ownership of the Company's Common Stock by each person known
by the Company, based upon Schedule 13G's filed with the Securities and
Exchange Commission, to be the beneficial owner of more than five percent (5%)
of the outstanding shares of Common Stock, by each director and nominee for
director, by each of the executive officers named in the Summary Compensation
Table, and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
-------------------------
Name and Address Number Percent
- ---------------------------------------------------------------------------- ------- -------
<S> <C> <C>
Kopp Investment Advisors, Inc.(2). . . . . . . . . . . . . . . . . . . . . 971,750 9.8%
6600 France Avenue South
Suite 672
Edina, MN 55435
Wells Fargo Bank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . . . 827,000 8.3%
464 California Street
San Francisco, CA 94163
Wellington Management Company LLP. . . . . . . . . . . . . . . . . . . . . 607,000 6.1%
75 State Street
Boston, MA 02109
National Westminister Bank, PLC. . . . . . . . . . . . . . . . . . . . . 595,800 6.0%
41 Lothbury
London, EC2P 2BP
England
Hartford Investment Management Company. . . . . . . . . . . . . . . . . . . 559,000 5.6%
200 Hopmeadow Street
Simsbury, CT 06070
David C. King(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290,983 2.8%
Raymond Chin(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,561 *
Leslie G. Denend(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 *
Michael Kaufman(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,020 *
G. Russell Mortenson(7) . . . . . . . . . . . . . . . . . . . . . . . . . . 10,833 *
Brian Button(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,174 1.2%
Keith E. Glover(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,540 *
Juan Grau(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,542 *
All directors and executive officers as a group (9 persons)(11) . . . . . . 661,030 6.2%
</TABLE>
- --------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the Rules and
Regulations of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities. Options
to purchase shares of Common Stock currently exercisable or exercisable
within 60 days of April 4, 1997 are deemed outstanding for computing the
percentage of the person holding such option but are not outstanding for
computing the percentage of any other person. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them.
(2) Includes 966,750 shares with shared dispositive power and 5,000 shares
with sole dispositive power.
(3) Includes 224,921 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. King holds stock options to purchase an
aggregate of 196,524 shares under the Company's 1986 Stock Option Plan and
90,000 shares under the Company's 1995 Long-Term Incentive Plan.
(4) Includes 8,020 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Dr. Chin holds stock options to purchase an
aggregate of 15,000 shares under the Company's 1994 Director Option Plan.
(5) Includes 15,000 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. Denend holds stock options to purchase
an aggregate of 19,167 shares under the Company's 1994 Director Option
Plan.
(6) Includes 8,020 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. Kaufman holds stock options to purchase
an aggregate of 15,000 shares under the Company's 1994 Director Option
Plan.
-18-
<PAGE> 21
(7) Includes 10,833 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. Mortenson holds stock options to
purchase an aggregate of 21,250 shares under the Company's 1994 Director
Option Plan.
(8) Includes 44,322 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. Button holds stock options to purchase
an aggregate of 72,500 shares under the Company's 1986 Stock Option Plan
and 10,000 shares under the Company's 1995 Long-Term Incentive Plan.
(9) Includes 48,490 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. Glover holds stock options to purchase
an aggregate of 73,334 shares under the Company's 1986 Stock Option Plan
and 10,000 shares under the Company's 1995 Long-Term Incentive Plan.
(10) Includes 32,292 shares issuable upon the exercise of stock options within
60 days after April 4, 1997. Mr. Grau holds stock options to purchase an
aggregate of 22,917 shares under the Company's 1986 Stock Option Plan and
32,500 shares under the Company's 1995 Long-Term Incentive Plan.
(11) Includes 407,131 shares issuable upon the exercise of stock options held
by all directors and executive officers within 60 days after April 4,
1997, including one executive officer not named in this table. Includes
17,377 shares owned by one executive officer not named in this table.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, as to (i) the Chief Executive Officer and
(ii) the four other most highly compensated executive officers whose salary
plus bonus exceeded $100,000 in the last fiscal year (collectively, the "Named
Executive Officers"), information concerning compensation paid for services to
the Company in all capacities during the fiscal years ended December 31, 1994,
December 31, 1995 and December 31, 1996.
<TABLE>
<CAPTION>
Annual Compensation Long-Term
--------------------------------------- Compensation
Other ------------
Annual Stock Options
Year Salary Bonus(2) Compensation Granted(#)
---- --------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
David C. King . . . . . . . . . . . . . . . . . 1996 $ 192,164 $ 38,500 -- 17,500
Chairman, President and Chief Executive 1995 175,395 35,000 -- 122,500
Officer(1) 1994 150,000 -- -- --
Brian T. Button . . . . . . . . . . . . . . . . 1996 119,707 24,000 -- 17,500
Vice President of Sales and Marketing (3) 1995 104,999 21,000 -- 10,000
Keith E. Glover . . . . . . . . . . . . . . . . 1996 134,800 27,000 -- 22,500
Vice President of Finance and Administration 1995 124,519 25,000 -- --
and Chief Financial Officer 1994 100,000 -- -- 30,000
Juan Grau . . . . . . . . . . . . . . . . . . . 1996 144,805 29,000 -- 10,000
Vice President of Engineering 1995 134,423 27,000 -- 30,000
1994 104,998 -- -- 30,000
Warren Hackbarth . . . . . . . . . . . . . . . 1996 90,000 122,439 -- 10,000
Vice President of Sales (4) 1995 80,000 98,980 10,000
</TABLE>
- --------------
(1) Mr. King was appointed Chairman on January 17, 1996 and President and
Chief Executive Officer on July 26, 1993. Mr. King joined the Company in
December 1992 as Vice President of Marketing and Acting Chief Financial
Officer at a salary of less than $100,000 annually.
(2) Bonuses related to operating achievements and financial performance during
1995 and 1996 were paid in January 1996 and January 1997, respectively.
(3) Mr. Button was named Vice President of Sales on September 1, 1996 and Vice
President of Marketing on June 26, 1994.
(4) Mr. Hackbarth's bonus represents sales commissions paid during 1995 and
1996. Mr. Hackbarth resigned as Vice President of Sales on December 31,
1996, but continues to serve as an employee of the Company.
-19-
<PAGE> 22
STOCK OPTION GRANTS AND EXERCISES
The following table sets forth the stock options granted to the Named
Executive Officers under the Company's stock option plans and the options
exercised by such Named Executive Officers during the fiscal year ended
December 31, 1996.
Stock Option Grants in Fiscal Year 1996
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value Assumed Annual
------------------------------------------------------- Rates of Stock Price
Percent of Appreciation for
Granted to Exercise or Option Term(2)
Option/SARs Employees in Base Price Expiration --------------------
Name Granted(#)(1) Fiscal Year ($/share) Date 5%($) 10%($)
------------------------------- ------------- ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David C. King . . . . . . . . . 7,500 1.2% $ 17.750 1/23/06 $ 83,722 $212,167
10,000 1.7% 18.500 10/28/06 116,346 294,842
Brian Button . . . . . . . . . 7,500 1.2% 18.625 3/1/06 87,849 222,626
10,000 1.7% 18.500 10/28/06 116,346 294,842
Keith E. Glover . . . . . . . . 12,500 2.1% 18.625 3/1/06 146,415 371,043
10,000 1.7% 18.500 10/28/06 116,346 294,842
Juan Grau . . . . . . . . . . . 10,000 1.7% 18.500 10/28/06 116,346 294,842
Warren Hackbarth . . . . . . . 5,000 .8% 18.625 3/1/06 58,566 148,417
5,000 .8% 18.500 10/28/06 58,173 147,421
</TABLE>
- ------------------
(1) The Company did not grant SARs in fiscal 1996. 32,500 and 45,000
options to purchase shares of the Company's Common Stock in this table
were granted under the Company's 1986 Stock Option Plan and under the
1995 Long-Term Incentive Plan, respectively, and have exercise prices
equal to the fair market value on the respective dates of grant.
(2) Potential realizable value is based on an assumption that the stock
price of the Common Stock appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the ten
(10)-year option term. Potential realizable value is shown net of
exercise price. These numbers are calculated based on the regulations
promulgated by the SEC and do not reflect the Company's estimate of
future stock price growth.
Option Exercises in Fiscal 1996 and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at in-the-money Options at
Acquired 1996 Year-End(2) 1996 Year-End(2)
on Value ------------------------- --------------------------
Name Exercise(#) Realized(1)($) Exercisable Unexercisable Exercisable Unexercisable
------------------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David C. King . . . . . . 85,000 $ 2,196,875 236,814 79,709 $ 4,709,003 $ 1,254,719
Brian Button . . . . . . 10,000 241,875 34,166 48,333 543,112 558,763
Keith E. Glover . . . . . 10,000 265,938 34,167 49,166 705,848 638,646
Juan Grau . . . . . . . . 32,199 714,032 25,208 30,208 427,299 441,198
Warren Hackbarth . . . . 5,000 157,188 23,541 31,458 377,917 378,021
</TABLE>
- ------------------
(1) Value realized represents the difference between the exercise price of
the options and the value of the underlying securities on the date of
exercise.
(2) Represents the difference between the exercise price of the options
and the closing price of the Company's Common Stock on December 31,
1996 of $23.00 per share.
-20-
<PAGE> 23
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
is comprised of Messrs. Chin, Denend and Mortenson. The Committee is
responsible for determining the Company's executive compensation policies and
incentive compensation for employees and consultants to the Company. The
Committee also evaluates the performance of the Company's executive officers
against the Company's overall objectives.
The Company's policy is that executive compensation should meet two
objectives: (1) to ensure that the compensation and incentives provided to the
executive officers are closely aligned with the Company's financial performance
and stockholder value and (2) to attract and retain, through a competitive
compensation structure, those key executives critical to the long-term success
of the Company.
To ensure the first objective is met, remuneration is tied to the
Company's stock price performance by granting stock options to key executive
officers. The Committee believes that the grant of an equity interest serves
to link management interests with stockholder interests and to motivate
executive officers to make long-term decisions that are in the best interests
of the Company and the stockholders. The Committee considers stock option
grants to executive officers based on various factors, including (i) each
officer's responsibilities, (ii) any changes in such responsibilities, (iii)
past option grants and each officer's current equity interest in the Company
and (iv) performance. In consideration for his performance during 1995 and
1996, the Committee granted the Chief Executive Officer options to purchase an
aggregate of 17,500 shares of the Company's Common Stock in January and October
of 1996. In addition to stock options, executives are eligible to participate
in the Purchase Plan pursuant to which stock may be purchased at 85% of the
fair market value at the beginning and end of each offering period (with the
amount of deduction equal to up to a maximum of 10% of salary).
The second objective of the overall executive compensation policy is
addressed by a salary and bonus policy which is based on consideration of the
salaries and total compensation of executive officers in similar positions with
comparable companies in the industry, the qualifications and experience of each
executive officer, the Company's financial performance during the past year and
each officer's performance against objectives related to their areas of
responsibility. The Committee periodically reviews individual base salaries of
executive officers, and adjusts salaries based on individual job performance
and changes in the officer's duties and responsibilities. In making salary
decisions, the Committee exercises its discretion and judgment based on these
factors. No specific formula is applied to determine the weight of each
factor. Based upon the forgoing, the Chief Executive Officer's salary was
established at $192,164 for 1996.
The Committee believes that another key element of executive
compensation should be the variable portion provided by annual cash incentive
plans. The bonus award portion of the executive officers' compensation is
dependent primarily on the Company's financial performance and achievement of
specified corporate objectives as determined by the Board. The Company's
executive officer annual bonus plan is designed such that if the Company
performs above its stated objectives, bonus awards may be above the award
target. If the Company performs below its stated objectives, bonus awards may
be significantly reduced, and may be eliminated altogether if performance is
below defined thresholds. The corporate performance measures currently used
for annual executive bonus awards are actual total revenue and income from
operations compared with the target total revenue and income from operations
approved each year by the Board of Directors. A substantially smaller portion
of each executive's annual bonus is based on performance against individual
objectives.
The Committee has considered the potential impact of Section 162(m) of
the Internal Revenue Code of 1986, as amended, and proposed regulations
thereunder (the "Section"). The Section limits the federal income tax
-21-
<PAGE> 24
deductibility of compensation paid to the Company's chief executive officer and
to each of the other four most highly compensated executive officers. For this
purpose, compensation can include, in addition to cash compensation, the
difference between the exercise price of stock options and the value of the
underlying stock on the date of exercise. Under this legislation, the Company
may deduct compensation with respect to any of these individuals only to the
extent that during any fiscal year such compensation does not exceed $1 million
or meets certain other conditions (such as stockholder approval). The
Company's policy is to qualify, to the extent reasonable, its executive
officers' compensation for deductibility under applicable tax laws. However,
the Committee believes that its primary responsibility is to provide a
compensation program that will attract, retain and reward the executive talent
necessary to achieve the Company's objectives. Consequently, the Committee
recognizes that the loss of a tax deduction could be necessary in certain
circumstances.
Respectfully Submitted by the Compensation
Committee of the Board of Directors:
Raymond Chin
Leslie G. Denend
G. Russell Mortenson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee has a relationship that would
constitute an interlocking relationship with executive officers or directors of
another entity.
-22-
<PAGE> 25
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total return to the stockholders of the Company's Common Stock with
the cumulative return of the Nasdaq Composite Index and the Montgomery
Securities 500 Growth Stock Index for the period commencing December 15, 1993
(the date the Company's Common Stock first traded on the Nasdaq National
Market) and ending on December 31, 1996. The total stockholder return assumes
$100 invested at the beginning of the period in the Common Stock of the
Company, the Nasdaq Composite Index and Montgomery Securities 500 Growth Stock
Index. Historical stock price is not necessarily indicative of future stock
performance.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Proxim Nasdaq Montgomery
<S> <C> <C> <C>
12/15/93 100 100 100
Dec-93 90 103 103
Mar-94 97 98 99
Jun-94 76 93 90
Sep-94 56 101 108
Dec-94 47 100 115
Mar-95 56 108 128
Jun-95 88 124 151
Sep-95 140 138 187
Dec-95 197 139 201
Mar-96 279 146 217
Jun-96 447 157 243
Sep-96 319 162 251
Dec-96 256 171 241
</TABLE>
-23-
<PAGE> 26
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file certain reports of ownership with the Securities and
Exchange Commission (the "SEC") and with the National Association of Securities
Dealers, Inc. Such officers, directors and stockholders are also required by
SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. To the best of the Company's knowledge, all Section 16(a) filing
requirements applicable to its officers, directors and ten-percent stockholders
were complied with. In making this statement, the Company has relied solely on
written representations of its directors and executive officers and any ten-
percent stockholders, and copies of the reports they filed with the SEC.
OTHER MATTERS
Proxim knows of no other matters to be submitted to the stockholders
at the Annual Meeting. If any other matters properly come before the
stockholders at the Annual Meeting, it is the intention of the persons named on
the enclosed proxy card to vote the shares they represent as the Board of
Directors may recommend. For business to be properly brought before the Annual
Meeting by a stockholder, the Company's bylaws provide that a stockholder must
have given timely notice thereof in writing to the Secretary of the Company.
To be timely, a stockholder's notice must have been delivered to or mailed and
received at the principal executive offices of the Company not less than one
hundred twenty (120) calendar days in advance of the date specified in the
Company's proxy statement released to the stockholders in connection with the
previous year's Annual Meeting of Stockholders.
Dated: April 15, 1997
By Order of the Board of Directors
Jeffrey D. Saper
Secretary
-24-
<PAGE> 27
APPENDIX #1
PROXIM, INC.
1995 LONG-TERM INCENTIVE PLAN
The following constitutes the provisions of the 1995 Long-Term
Incentive Plan of Proxim, Inc., as amended, effective upon the approval of the
stockholders of the Company on May 19, 1997.
1. Purpose of the Plan. The purpose of the Proxim, Inc. 1995
Long-Term Incentive Plan is to enable Proxim, Inc. to provide an incentive to
eligible employees, consultants and officers whose present and potential
contributions are important to the continued success of the Company, to afford
these individuals the opportunity to acquire a proprietary interest in the
Company, and to enable the Company to enlist and retain in its employment the
best available talent for the successful conduct of its business. It is
intended that this purpose will be effected through the granting of (a) stock
options, (b) stock purchase rights to buy restricted stock, (c) stock
appreciation rights, (d) performance shares and (e) stock unit awards.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or such of its
Committees as shall be administering the Plan, in accordance with Section 5 of
the Plan.
(b) "Applicable Laws" means the requirements relating to
the administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a Committee appointed by the Board
in accordance with Section 5 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Proxim, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services.
<PAGE> 28
(i) "Continuous Status as an Employee or Consultant"
means that the employment or consulting relationship with the Company, any
Parent, Subsidiary, or, where applicable, any affiliated companies, is not
interrupted or terminated. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, any successor, or, where
applicable, any affiliated companies. A leave of absence approved by the
Company shall include sick leave, military leave, or any other personal leave
approved by an authorized representative of the Company. For purposes of
Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, on the ninety-first day following such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent, Subsidiary or where
applicable, entities affiliated with the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(n) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a
Share of Common Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in Common Stock) on the
last market trading day prior to the day of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
-2-
<PAGE> 29
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value shall be determined in good faith by
the Administrator.
(o) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means any Option that is
not an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing
certain terms and conditions of an individual Option, Stock Purchase Right,
SAR, Performance Share or Stock Unit Award grant. The Notice of Grant is part
of the corresponding agreement.
(r) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the
Plan.
(t) "Option Agreement" means a written agreement between
the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(u) "Optioned Stock" means the Common Stock subject to an
Option or Right.
(v) "Optionee" means an Employee or Consultant who holds
an outstanding Option or Right.
(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "Payment Value" means the dollar amount assigned to a
Performance Share which shall be equal to the Fair Market Value of the Common
Stock on the day of the Administrator's determination under Section 9 with
respect to the applicable Performance Cycle.
(y) "Performance Cycle" or "Cycle" means the period of
years selected by the Administrator during which the performance is measured
for the purpose of determining the extent to which an award of Performance
Shares has been earned.
(z) "Performance Goals" means the objectives established
by the Administrator for a Performance Cycle, for the purpose of determining
the extent to which Performance Shares that have been contingently awarded for
such Cycle are earned.
-3-
<PAGE> 30
(aa) "Performance Share" means an award granted pursuant
to Section 9 of the Plan expressed as a share of Common Stock.
(bb) "Plan" means this 1995 Long-Term Incentive Plan.
(cc) "Restricted Stock" means shares of Common Stock
subject to a Restricted Stock Purchase Agreement acquired pursuant to a grant
of Stock Purchase Rights under Section 8 below.
(dd) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(ee) "Right" means and includes SARs, Performance Shares,
Stock Unit Awards and Stock Purchase Rights granted pursuant to the Plan.
(ff) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or
any successor rule thereto, as in effect when discretion is being exercised
with respect to the Plan.
(gg) "SAR" means a stock appreciation right granted
pursuant to Section 7 of the Plan.
(hh) "SAR Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
SAR grant. The SAR Agreement is subject to the terms and conditions of the
Plan.
(ii) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 12 of the Plan.
(jj) "Stock Purchase Right" means the right to purchase
Common Stock pursuant to Section 8 of the Plan, as evidenced by a Notice of
Grant.
(kk) "Stock Unit Award" means an award of Common Stock or
units granted under Section 10.
(ll) "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility and Code Section 162(m) Limitation.
(a) Eligibility. Nonstatutory Stock Options and Rights
may be granted to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. If
-4-
<PAGE> 31
otherwise eligible, an Employee or Consultant who has been granted an Option or
Right may be granted additional Options or Rights.
(b) Code Section 162(m) Limitation. The following
limitation shall apply to grants of Options, Stock Purchase Rights and Stock
Unit Awards to Employees:
(i) No Employee shall be granted, in any fiscal
year of the Company, Options, Stock Purchase Rights and Stock Unit Awards to
purchase more than 200,000 Shares.
(ii) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 12.
(iii) If an Option, Stock Purchase Right or Stock
Unit Award is canceled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in Section 12),
the canceled Option, Stock Purchase Right or Stock Unit Award will be counted
against the limit set forth in Section 3(b)(i). For this purpose, if the
exercise price of an Option, Stock Purchase Right or Stock Unit Award is
reduced, the transaction will be treated as a cancellation of the Option, Stock
Purchase Right or Stock Unit Award and the grant of a new Option, Stock
Purchase Right or Stock Unit Award.
4. Stock Subject to the Plan. The total number of Shares
reserved and available for distribution under the Plan is one million seven
hundred fifty thousand (1,750,000) Shares. Subject to Section 12 of the Plan,
if any Shares that have been optioned under an Option cease to be subject to
such Option (other than through exercise of the Option), or if any Option or
Right granted hereunder is forfeited or any such award otherwise terminates
prior to the issuance of Common Stock to the participant, the shares that were
subject to such Option or Right shall again be available for distribution in
connection with future Option or right grants under the Plan; provided,
however, that Shares that have actually been issued under the Plan, whether
upon exercise of an Option or Right, shall not be returned to the Plan and
shall not become available for future distribution under the Plan, except that
if Shares of Restricted Stock are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.
5. Administration.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. The Plan may
be administered by different committees with respect to different groups of
Directors, Officers, and Employees.
(ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted
hereunder as "performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a Committee of two or
more "outside directors" within the meaning of Section 162(m) of the Code.
-5-
<PAGE> 32
(iii) Rule 16b-3. To the extent desirable to
qualify transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided
above, the Plan shall be administered by (A) the Board or (B) a Committee,
which committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator shall have
the authority, in its discretion:
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to
whom Options and Rights may be granted hereunder;
(iii) to determine whether and to what extent
Options and Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each Option and Right granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Right
or the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the
Plan;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan;
(ix) to determine whether and under what
circumstances an Option or Right may be settled in cash instead of Common Stock
or Common Stock instead of cash;
(x) to reduce the exercise price of any Option or
Right;
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(xi) to modify or amend each Option or Right
(subject to Section 14 of the Plan);
(xii) to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Option or
Right previously granted by the Administrator;
(xiii) to institute a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price;
(xiv) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The
Fair Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
(xv) to determine the terms and restrictions
applicable to Options and Rights and any Restricted Stock; and
(xvi) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The
Administrator's decisions, determinations and interpretations shall be final
and binding on all Optionees and any other holders of Options or Rights.
6. Duration of the Plan. The Plan shall remain in effect until
terminated by the Board under the terms of the Plan, provided that in no event
may Incentive Stock Options be granted under the Plan later than 10 years from
the date the Plan was adopted by the Board.
7. Options and SARs.
(a) Options. The Administrator, in its discretion, may
grant Options to eligible participants and shall determine whether such Options
shall be Incentive Stock Options or Nonstatutory Stock Options. Each Option
shall be evidenced by a Notice of Grant which shall expressly identify the
Options as Incentive Stock Options or as Nonstatutory Stock Options, and be in
such form and contain such provisions as the Administrator shall from time to
time deem appropriate. Without limiting the foregoing, the Administrator may
at any time authorize the Company, with the consent of the respective
recipients, to issue new Options or Rights in exchange for the surrender and
cancellation of outstanding Options or Rights. Option agreements shall contain
the following terms and conditions:
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(i) Exercise Price; Number of Shares. The per
Share exercise price for the Shares issuable pursuant to an Option shall be
such price as is determined by the Administrator; provided, however, that in
the case of an Incentive Stock Option, the price shall be no less than 100% of
the Fair Market Value of the Common Stock on the date the Option is granted,
subject to any additional conditions set out in Section 7(a)(iv) below. In the
case of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
The Notice of Grant shall specify the number of Shares
to which it pertains.
(ii) Waiting Period and Exercise Dates. At the
time an Option is granted, the Administrator will determine the terms and
conditions to be satisfied before Shares may be purchased, including the dates
on which Shares subject to the Option may first be purchased. The
Administrator may specify that an Option may not be exercised until the
completion of the service period specified at the time of grant. (Any such
period is referred to herein as the "waiting period.") At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised, which shall not be earlier than the end of the waiting period, if
any, nor, in the case of an Incentive Stock Option, later than ten (10) years,
from the date of grant.
(iii) Form of Payment. The consideration to be
paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator (and, in the case
of an Incentive Stock Option, shall be determined at the time of grant) and
may, to the extent permitted by the Delaware General Corporation Law, consist
entirely of:
(1) cash;
(2) check;
(3) promissory note;
(4) other Shares which (1) in the case
of Shares acquired upon exercise of an option, have been owned by the Optionee
for more than six months on the date of surrender, and (2) have a Fair Market
Value on the date of surrender not greater than the aggregate exercise price of
the Shares as to which said Option shall be exercised;
(5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price;
(6) any combination of the foregoing
methods of payment; or
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(7) such other consideration and method
of payment for the issuance of Shares to the extent permitted by Applicable
Laws.
(iv) Special Incentive Stock Option Provisions.
In addition to the foregoing, Options granted under the Plan which are intended
to be Incentive Stock Options under Section 422 of the Code shall be subject to
the following terms and conditions:
(1) Dollar Limitation. To the extent
that the aggregate Fair Market Value of (a) the Shares with respect to which
Options designated as Incentive Stock Options plus (b) the shares of stock of
the Company, Parent and any Subsidiary with respect to which other incentive
stock options are exercisable for the first time by an Optionee during any
calendar year under all plans of the Company and any Parent and Subsidiary
exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.
For purposes of the preceding sentence, (a) Options shall be taken into account
in the order in which they were granted, and (b) the Fair Market Value of the
Shares shall be determined as of the time the Option or other incentive stock
option is granted.
(2) 10% Stockholder. If any Optionee to
whom an Incentive Stock Option is to be granted pursuant to the provisions of
the Plan is, on the date of grant, the owner of Common Stock (as determined
under Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company, then the following special provisions shall be
applicable to the Option granted to such individual:
(a) The per Share Option price of
Shares subject to such Incentive Stock Option shall not be less than 110% of
the Fair Market Value of Common Stock on the date of grant; and
(b) The Option shall not have a
term in excess of five (5) years from the date of grant.
Except as modified by the preceding provisions of this subsection 7(a)(iv) and
except as otherwise limited by Section 422 of the Code, all of the provisions
of the Plan shall be applicable to the Incentive Stock Options granted
hereunder.
(v) Other Provisions. Each Option granted under
the Plan may contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Administrator.
(vi) Buyout Provisions. The Administrator may at
any time offer to buyout for a payment in cash, promissory note or Shares, an
Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made.
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(b) SARs.
(i) In Connection with Options. At the sole
discretion of the Administrator, SARs may be granted in connection with all or
any part of an Option, either concurrently with the grant of the Option or at
any time thereafter during the term of the Option. The following provisions
apply to SARs that are granted in connection with Options:
(1) The SAR shall entitle the Optionee
to exercise the SAR by surrendering to the Company unexercised the
corresponding portion of the related Option. The Optionee shall receive in
Exchange from the Company an amount equal to the excess of (1) the Fair Market
Value on the date of exercise of the SAR of the Common Stock covered by the
surrendered portion of the related Option over (2) the exercise price of the
Common Stock covered by the surrendered portion of the related Option.
Notwithstanding the foregoing, the Administrator may place limits on the amount
that may be paid upon exercise of an SAR; provided, however, that such limit
shall not restrict the exercisability of the related Option.
(2) When an SAR is exercised, the
related Option, to the extent surrendered, shall cease to be exercisable.
(3) An SAR shall be exercisable only
when and to the extent that the related Option is exercisable and shall expire
no later than the date on which the related Option expires.
(4) An SAR may only be exercised at a
time when the Fair Market Value of the Common Stock covered by the related
Option exceeds the exercise price of the Common Stock covered by the related
Option.
(ii) Independent of Options. At the sole
discretion of the Administrator, SARs may be granted without related Options.
The following provisions apply to SARs that are not granted in connection with
Options:
(1) The SAR shall entitle the Optionee,
by exercising the SAR, to receive from the Company an amount equal to the
excess of (1) the Fair Market Value of the Common Stock covered by the
exercised portion of the SAR, as of the date of such exercise, over (2) the
Fair Market Value of the Common Stock covered by the exercised portion of the
SAR, as of the date on which the SAR was granted; provided, however, that the
Administrator may place limits on the aggregate amount that may be paid upon
exercise of an SAR.
(2) SARs shall be exercisable, in whole
or in part, at such times as the Administrator shall specify in the Optionee's
SAR agreement.
(iii) Form of Payment. The Company's obligation
arising upon the exercise of an SAR may be paid in Common Stock or in cash, or
in any combination of Common Stock and cash, to the extent permitted by
Delaware corporation law and as the Administrator, in its sole
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discretion, may determine. Shares issued upon the exercise of an SAR shall be
valued at their Fair Market Value as of the date of exercise.
(c) Method of Exercise.
(i) Procedure for Exercise; Rights as a
Stockholder. Any Option or SAR granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator and as shall
be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option or SAR shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance
with the terms of the Option or SAR by the person entitled to exercise the
Option or SAR and full payment for the Shares with respect to which the Option
is exercised has been received by the Company. Full payment may, as authorized
by the Administrator (and, in the case of an Incentive Stock Option, determined
at the time of grant) and permitted by the Option Agreement consist of any
consideration and method of payment allowable under subsection 7(a)(iii) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date
the stock certificate is issued, except as provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter shall be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised. Exercise of an SAR in any manner shall, to
the extent the SAR is exercised, result in a decrease in the number of Shares
which thereafter shall be available for purposes of the Plan, and the SAR shall
cease to be exercisable to the extent it has been exercised.
(ii) Termination of Employment or Consulting
Relationship. In the event an Optionee's Continuous Status as an Employee or
Consultant terminates other than upon the Optionee's death or Disability (but
not in the event of an Optionee's change of status from Employee to Consultant
(in which case an Employee's Incentive Stock Option shall automatically convert
to a Nonstatutory Stock Option on the date three (3) months and one day
following such change of status) or from Consultant to Employee), the Optionee
may exercise his or her Option or SAR, but only within such period of time as
is determined by the Administrator, not to exceed six (6) months (three (3)
months in the case of an Incentive Stock Option) from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration
of the term of such Option or SAR as set forth in the Option or SAR Agreement).
To the extent that Optionee was not entitled to exercise an Option or SAR at
the date of such termination, and to the extent that the Optionee does not
exercise such Option or SAR
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(to the extent otherwise so entitled) within the time specified herein, the
Option or SAR shall terminate.
(iii) Disability of Optionee. In the event an
Optionee's Continuous Status as an Employee or Consultant terminates as a
result of the Optionee's Disability, the Optionee may exercise his or her
Option or SAR, but only within twelve (12) months from the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration
of the term of such Option or SAR as set forth in the Option or SAR Agreement).
To the extent that Optionee was not entitled to exercise an Option or SAR at
the date of such termination, and to the extent that the Optionee does not
exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.
(iv) Death of Optionee. In the event of an
Optionee's death, the Optionee's estate or a person who acquired the right to
exercise the deceased Optionee's Option or SAR by bequest or inheritance may
exercise the Option or SAR, but only within twelve (12) months following the
date of death, and only to the extent that the Optionee was entitled to
exercise it at the date of death (but in no event later than the expiration of
the term of such Option or SAR as set forth in the Option or SAR Agreement). To
the extent that Optionee was not entitled to exercise an Option or SAR at the
date of death, and to the extent that the Optionee's estate or a person who
acquired the right to exercise such Option does not exercise such Option or SAR
(to the extent otherwise so entitled) within the time specified herein, the
Option or SAR shall terminate.
8. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid (provided that such
price is not less than the minimum price permitted by the Delaware General
Corporation Law), and the time within which the offeree must accept such offer,
which shall in no event exceed thirty (30) days from the date upon which the
Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock Purchase Agreement
in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator
determines otherwise, the Restricted Stock Purchase Agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to the Company. The repurchase option shall lapse at such rate
as the Administrator may determine.
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(c) Other Provisions. The Restricted Stock Purchase
Agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its
sole discretion. In addition, the provisions of Restricted Stock Purchase
Agreements need not be the same with respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase
Right is exercised, the purchaser shall have the rights equivalent to those of
a stockholder, and shall be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Stock Purchase Right is exercised, except as provided
in Section 12 of the Plan.
9. Performance Shares.
(a) The Administrator shall have sole and complete
authority to determine the Employees who shall receive Performance Shares, the
number of such shares for each Performance Cycle, the Performance Goals on
which each Award shall be contingent, the duration of each Performance Cycle,
and the value of each Performance Share. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other.
(b) The Administrator shall establish Performance Goals
for each Cycle on the basis of such criteria and to accomplish such objectives
as the Administrator may from time to time select. During any Cycle, the
Administrator may adjust the Performance Goals for such Cycle as it deems
equitable in recognition of unusual or nonrecurring events affecting the
Company, changes in applicable tax laws or accounting principles, or such other
factors as the Administrator may determine.
(c) As soon as practicable after the end of a Performance
Cycle, the Administrator shall determine the number of Performance Shares that
have been earned on the basis of performance in relation to the established
Performance Goals. Payment Values of earned Performance Shares shall be
distributed to the Participant or, if the Participant has died, to the
Participant's designated Beneficiary, as soon as practicable after the
expiration of the Performance Cycle and the Administrator's determination
above. The Administrator shall determine whether Payment Values are to be
distributed in the form of cash or shares of Common Stock.
(d) In the sole and complete discretion of the
Administrator, an Award granted under this Section 9 may provide the
Participant with dividends or dividend equivalents (payable on a current or
deferred basis) and cash payments in lieu of or in addition to an Award.
10. Stock Unit Awards.
(a) The Administrator shall have sole and complete
authority to grant Stock Unit Awards hereunder that can be in the form of
Common Stock or units (including restricted stock units), the value of which is
based, in whole or in part, on the value of Common Stock. Subject to the
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provisions of the Plan, Stock Unit Awards shall be subject to such terms,
restrictions, conditions, vesting requirements and payment rules (all of which
are sometimes hereinafter collectively referred to as "rules") as the
Administrator may determine in its sole and complete discretion at the time of
grant. The rules need not be identical for each Stock Unit Award.
(b) A Stock Unit Award may be granted subject to the
following rules:
(i) Unless determined otherwise by the
Administrator, any shares of Common Stock that are part of a Stock Unit Award
may not be assigned, sold, transferred, pledged or otherwise encumbered prior
to the date on which the shares are issued or, if later, the date provided by
the Administrator at the time of grant of the Stock Unit Award.
(ii) Stock Unit Awards may provide for the payment
of cash consideration by the person to whom such Award is granted or provide
that the Award, and any Common Stock to be issued in connection therewith, if
applicable, shall be delivered without the payment of cash consideration,
provided that for any Common Stock to be purchased in connection with a Stock
Unit Award the purchase price shall be at least 50% of the Fair Market Value of
such Common Stock on the date such award is granted.
(iii) Stock Unit Awards may relate in whole or in
part to certain performance criteria established by the Administrator at the
time of grant.
(iv) Stock Unit Awards may provide for deferred
payment schedules and/or vesting over a specific period of employment.
(v) In such circumstances as the Administrator
may deem advisable, the Administrator may waive or otherwise remove, in whole
or in part, any restriction or limitation to which a Stock Unit Award was made
subject at the time of grant.
(c) In the sole and complete discretion of the
Administrator, an Award pursuant to this Section 10 may provide the Participant
with dividends or dividend equivalents (payable on a current or deferred basis)
and cash payments in lieu of or in addition to an Award.
11. Non-Transferability of Options and Rights. Unless determined
otherwise by the Administrator, Options and Rights may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. If the Administrator makes an
Option or Stock Purchase Right transferable, such Option or Stock Purchase
Right shall contain such additional terms and conditions as the Administrator
deems appropriate.
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12. Adjustments Upon Changes in Capitalization, Dissolution,
Merger, Asset Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option and Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Rights have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option or Right, as well as the
price per share of Common Stock covered by each such outstanding Option or
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. 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 of Common Stock subject to an Option or Right.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an
Option or Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The
Administrator may, in the exercise of its sole discretion in such instances,
declare that any Option or Right shall terminate as of a date fixed by the
Administrator and give each Optionee the right to exercise his or her Option or
Right as to all or any part of the Optioned Stock, including Shares as to which
the Option or Right would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of
paragraph (d) hereof, in the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, (i) each outstanding Option and Right shall be assumed or an
equivalent Option or Right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation and (ii) twelve months of unvested
shares, if any, subject to such Option or Right shall vest and become fully
exercisable upon the Change in Control. In the event that the successor
corporation does not agree to assume the Option or Right or to substitute an
equivalent option or right, the Optionee shall have the right to exercise the
Option or Right as to all of the Optioned Stock, including Shares as to which
it would not otherwise be exercisable. If an Option or Right becomes
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Optionee shall be notified that the Option or Right shall
be exercisable for a period of fifteen (15) days from the date of such notice,
and the Option or Right will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option or Right shall be considered assumed
if, immediately following the merger or sale of assets, the Option or Right
confers the right to purchase, for each Share of Optioned Stock subject to the
Option or Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the
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merger or sale of assets by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation and the Optionee, provide for the consideration to be
received upon the exercise of the Option or Right, for each Share of Optioned
Stock subject to the Option or Right, to be solely common stock of the
successor corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
(d) Change in Control. At the time any Option or Right
is granted, the Administrator may, in its sole discretion, provide that in the
event of a "Change in Control" of the Company, as defined in paragraph (e)
below, then the following acceleration and valuation provisions shall apply:
(i) Such Option or Right outstanding on
the date such Change in Control is determined to have occurred that is not yet
exercisable and vested on such date shall become fully exercisable and vested;
or
(ii) Such Option or Right, to the extent
it is exercisable and vested (including any Option or Right that shall become
exercisable and vested pursuant to subparagraph (i) above), shall be terminated
in exchange for a cash payment equal to the Change in Control Price, (reduced
by the exercise price, if any, applicable to such Options or Rights). These
cash proceeds shall be paid to the Optionee or, in the event of death of an
Optionee prior to payment, to the estate of the Optionee or to a person who
acquired the right to exercise the Option or Right by bequest or inheritance.
(e) Definition of "Change in Control". For purposes of
this Section 12, a "Change in Control" means the happening of any of the
following:
(i) When any "person," as such term is
used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a
Subsidiary or a Company employee benefit plan, including any trustee of such
plan acting as trustee) files or becomes obligated to file a Schedule 13D under
the Exchange Act or any amendment thereto (the "Filing") reporting that such
person (or group of affiliated persons) is or has become the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing forty percent (40%) or more of the total
voting power represented by the Company's then outstanding voting securities,
and such person (or group) indicates in connection with such Filing any plans
or proposals to effect any of the transactions or events enumerated in Item 4
of Schedule 13D; or
(ii) A merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least sixty
percent (60%) of the total
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voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets; or
(iii) A change in the composition of the
Board of Directors of the Company occurring within a two-year period, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of the
Company as of the date the Plan is approved by the stockholders, or (B) are
elected, or nominated for election, to the Board of Directors of the Company
with the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company).
(f) Change in Control Price. For purposes of this
Section 12, "Change in Control Price" shall be, as determined by the
Administrator, (i) the highest Fair Market Value of a Share within the 60-day
period immediately preceding the date of determination of the Change in Control
Price by the Administrator (the "60-Day Period"), or (ii) the highest price
paid or offered per Share, as determined by the Administrator, in any bona fide
transaction or bona fide offer related to the Change in Control of the Company,
at any time within the 60-Day Period, or (iii) such lower price as the
Administrator, in its discretion, determines to be a reasonable estimate of the
fair market value of a Share.
13. Date of Grant. The date of grant of an Option or Right shall
be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Right, or such other later date as is
determined by the Administrator. Notice of the determination shall be provided
to each Optionee within a reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain
stockholder approval of any Plan amendment to the extent such approval is
determined by the Board to be necessary and desirable to comply with Applicable
Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
15. Conditions Upon Issuance of Shares.
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(a) Legal Compliance. Shares shall not be issued
pursuant to the exercise of an Option or Right unless the exercise of such
Option or Right and the issuance and delivery of such Shares shall comply with
all relevant provisions of Applicable Laws.
(b) Investment Representations. As a condition to the
exercise of an Option or Right, the Company may require the person exercising
such Option or Right to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.
16. Liability of Company. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. The Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after
the date the Plan is adopted. Such shareholder approval shall be obtained in
the degree and manner required under Applicable Laws.
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APPENDIX #2
PROXIM, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the 1993 Employee Stock
Purchase Plan of Proxim, Inc. as amended effective upon the approval of the
stockholders of the Company on May 19, 1997.
1. Purpose. The purpose of the Plan is to provide
employees of the Company and its Designated Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions.
It is the intention of the Company to have the Plan qualify as an "Employee
Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan, accordingly, shall be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Common Stock" shall mean the Common Stock of the
Company.
(d) "Company" shall mean Proxim, Inc., a Delaware
corporation.
(e) "Compensation" shall mean all base straight time
gross earnings, overtime, shift premium, incentive compensation, incentive
payments, bonuses, commissions and other compensation but shall not include
income recognized in connection with stock options.
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an
Employee of the Company for purposes of tax withholding under the Code whose
customary employment with the Company or any Designated Subsidiary is at least
twenty (20) hours per week. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds 90 days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship will
be deemed to have terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
<PAGE> 46
(i) "Exercise Date" shall mean the last day of each
Purchase Period.
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value
shall be the closing sale price for the Common Stock (or the mean of the
closing bid and asked prices, if no sales were reported), as quoted on such
exchange (or the exchange with the greatest volume of trading in Common Stock)
or system on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(2) If the Common Stock is quoted on the NASDAQ
system (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.
(4) For purposes of the Enrollment Date under the
first Offering Period under the Plan, the Fair Market Value of the Common Stock
shall be the Price to Public as set forth in the final prospectus filed with
the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.
(k) "Offering Period" shall mean the period of
approximately twenty-four (24) months during which an option granted pursuant
to the Plan may be exercised, commencing on the first Trading Day on or after
February 15 and August 15 of each year and terminating on the last Trading Day
in the periods ending twenty-four months later, except that the first Offering
Period shall be an extended Offering Period of approximately twenty-six months,
commencing with the date on which the Company's registration statement on Form
S-1 (or any successor form thereof) is declared effective by the Securities and
Exchange Commission and ending on the last Trading Day in the period ending
February 15, 1996. The second Offering Period under the Plan shall commence
with the first Trading Day on or after August 15, 1994. The duration of
Offering Periods may be changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
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(n) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date; provided,
however, that the first Purchase Period of the first Offering Period under the
Plan shall commence with the date on which the Company's registration statement
on Form S-1 (or any successor form thereof) is declared effective by the
Securities and Exchange Commission and end on the last Trading Day occurring in
the period ending August 15, 1994.
(o) "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for
issuance under the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated
Quotation (NASDAQ) System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)), who shall
be employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) which permits his or her rights to purchase stock under
all employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock
(determined at the fair market value of the shares at the time such option is
granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by
consecutive, overlapping Offering Periods with a new Offering Period commencing
on the first Trading Day on or after February 15 and August 15 each year, or on
such other date as the Board shall determine, and continuing thereafter until
terminated in accordance with Section 19 hereof; provided, however, that the
first Offering Period under the Plan shall be an extended Offering Period of
approximately twenty-six months, commencing with the first Trading Day on or
after the date on which the Company's registration statement on Form S-1 (or
any successor form thereof) is declared effective by the Securities and
Exchange Commission and ending on the last Trading Day in the period ending
February 15, 1996.
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The second Offering Period under the Plan shall commence with the first Trading
Day on or after August 15, 1994. The Board shall have the power to change the
duration of Offering Periods (including the commencement and termination dates
thereof) with respect to future offerings without shareholder approval if such
change is announced at least fifteen (15) days prior to the scheduled beginning
of the first Offering Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's payroll
office prior to the applicable Enrollment Date, unless a later time for filing
the subscription agreement is set by the Board for all eligible Employees with
respect to a given Offering Period.
(b) Payroll deductions for a participant shall commence
on the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable,
unless sooner terminated by the participant as provided in Section 11 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay
day during the Offering Period in an amount not exceeding ten percent (10%) of
the Compensation which he or she receives on each pay day during the Offering
Period, and the aggregate of such payroll deductions during the Offering Period
shall not exceed ten percent (10%) of the participant's Compensation during
said Offering Period.
(b) All payroll deductions made for a participant shall
be credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or
decrease (down to 0%) the rate of his or her payroll deductions during the
Offering Period by completing or filing with the Company a new subscription
agreement authorizing a change in payroll deduction rate. The Board may, in
its discretion, limit the number of participation rate changes during any
Offering Period. The change in rate shall be effective with the first full
payroll period following five (5) business days after the Company's receipt of
the new subscription agreement unless the Company elects to process a given
change in participation more quickly. A participant's subscription agreement
shall remain in effect for successive Offering Periods unless terminated as
provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof,
a participant's payroll deductions may be decreased to 0% at such time during
any Purchase Period which is scheduled to end during the current calendar
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year (the "Current Purchase Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan in a
prior Purchase Period which ended during that calendar year plus all payroll
deductions accumulated with respect to the Current Purchase Period equal
$21,250. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 11 hereof.
(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock.
At any time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an option to purchase on each Exercise Date during such Offering Period
(at the applicable Purchase Price) up to a number of shares of the Company's
Common Stock determined by dividing such Employee's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided that
in no event shall an Employee be permitted to purchase during each Purchase
Period more than a number of Shares determined by dividing $25,000 by the Fair
Market Value of a share of the Company's Common Stock on the Enrollment Date,
and provided further that such purchase shall be subject to the limitations set
forth in Sections 3(b) and 12 hereof. Exercise of the option shall occur as
provided in Section 8 hereof, unless the participant has withdrawn pursuant to
Section 10 hereof, and shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option for the purchase of
shares will be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated payroll deductions in his
or her account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
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<PAGE> 50
10. Restriction on Transfer of Shares. Shares of Common Stock
purchased upon exercise of a participant's option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or the laws of dissent or distribution for a period of six (6) months from
the Exercise Date. This restriction on transfer shall be earlier terminated in
the event of a participant's permanent disability or death, or upon the
involuntary transfer of the shares due to divorce, judicial declaration of
insolvency or bankruptcy or other form of involuntary transfer.
11. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not yet used
to exercise his or her option under the Plan at any time by giving written
notice to the Company in the form of Exhibit B to this Plan. All of the
participant's payroll deductions credited to his or her account will be paid to
such participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made
during the Offering Period. If a participant withdraws from an Offering Period,
payroll deductions will not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.
(b) Upon a participant's ceasing to be an Employee (as
defined in Section 2(g) hereof), for any reason, including by virtue of him or
her having failed to remain an Employee of the Company for at least twenty (20)
hours per week during an Offering Period in which the Employee is a
participant, he or she will be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option will be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 14 hereof, and such participant's option will be
automatically terminated.
12. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be six
hundred thousand (600,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18 hereof. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant will have no interest or voting right
in shares covered by his option until such option has been exercised.
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(c) Shares to be delivered to a participant under the
Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse.
14. Administration.
(a) Administrative Body. The Plan shall be administered by
the Board or a committee of members of the Board appointed by the Board. The
Board or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the
full extent permitted by law, be final and binding upon all parties. Members
of the Board who are eligible Employees are permitted to participate in the
Plan, provided that:
(1) Members of the Board who are eligible to
participate in the Plan may not vote on any matter affecting the administration
of the Plan or the grant of any option pursuant to the Plan.
(2) If a Committee is established to administer
the Plan, no member of the Board who is eligible to participate in the Plan may
be a member of the Committee.
(b) Rule 16b-3 Limitations. Notwithstanding the
provisions of Subsection (a) of this Section 14, in the event that Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor provision ("Rule 16b-3") provides specific
requirements for the administrators of plans of this type, the Plan shall be
only administered by such a body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no
discretion concerning decisions regarding the Plan shall be afforded to any
committee or person that is not "disinterested" as that term is used in Rule
16b-3.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more
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dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 11 hereof.
17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the Reserves as well as the price
per share of Common Stock covered by each option under the Plan which has not
yet been exercised shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. 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
of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Periods will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed
sale of all or substantially all of the assets of the Company, or the merger of
the Company with or into another corporation, each option under the Plan shall
be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in
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<PAGE> 53
the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Periods then in progress by setting a new
Exercise Date (the "New Exercise Date"). If the Board shortens the Offering
Periods then in progress in lieu of assumption or substitution in the event of
a merger or sale of assets, the Board shall notify each participant in writing,
at least ten (10) business days prior to the New Exercise Date, that the
Exercise Date for his option has been changed to the New Exercise Date and that
his option will be exercised automatically on the New Exercise Date, unless
prior to such date he has withdrawn from the Offering Period as provided in
Section 11 hereof. For purposes of this paragraph, an option granted under the
Plan shall be deemed to be assumed if, following the sale of assets or merger,
the option confers the right to purchase, for each share of option stock
subject to the option immediately prior to the sale of assets or merger, the
consideration (whether stock, cash or other securities or property) received in
the sale of assets or merger by holders of Common Stock for each share of
Common Stock held on the effective date of the transaction (and if such holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the sale of assets or merger
was not solely common stock of the successor corporation or its parent (as
defined in Section 424(e) of the Code), the Board may, with the consent of the
successor corporation and the participant, provide for the consideration to be
received upon exercise of the option to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock and the sale of assets or
merger.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time
and for any reason terminate or amend the Plan. Except as provided in Section
19 hereof, no such termination can affect options previously granted, provided
that an Offering Period may be terminated by the Board of Directors on any
Exercise Date if the Board determines that the termination of the Plan is in
the best interests of the Company and its shareholders. Except as provided in
Section 19 hereof, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any participant. To the extent
necessary to comply with Rule 16b-3 or under Section 423 of the Code (or any
successor rule or provision or any other applicable law or regulation), the
Company shall obtain shareholder approval in such a manner and to such a degree
as required.
(b) Without shareholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to change the
Offering Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly correspond
with amounts withheld from the participant's Compensation, and establish such
other limitations or procedures as the Board (or its committee) determines in
its sole discretion advisable which are consistent with the Plan.
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<PAGE> 54
21. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company. It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 20 hereof.
24. Additional Restrictions of Rule 16b-3. The terms and
conditions of options granted hereunder to, and the purchase of shares by,
persons subject to Section 16 of the Exchange Act shall comply with the
applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and
such options shall contain, and the shares issued upon exercise thereof shall
be subject to, such additional conditions and restrictions as may be required
by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
25. Automatic Transfer to Low Price Offering Period. To the
extent permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of
the Common Stock on any Exercise Date in an Offering Period is lower than the
Fair Market Value of the Common Stock on the Enrollment Date of such Offering
Period, then all participants in such Offering Period shall be automatically
withdrawn from such Offering Period immediately after the exercise of their
option on such Exercise Date and automatically re-enrolled in the immediately
following Offering Period as of the first day thereof.
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EXHIBIT A
PROXIM, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ________________________________________ hereby elects to participate
in the Proxim, Inc. 1993 Employee Stock Purchase Plan (the "Employee
Stock Purchase Plan") and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement
and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (not to exceed 10%) during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete "Proxim, Inc. 1993 Employee
Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms
of the Plan. I understand that the grant of the option by the Company
under this Subscription Agreement is subject to obtaining shareholder
approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and spouse only):
_______________________________________________________________________
________________.
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day of
the Offering Period during which I purchased such shares) or one year
after the Exercise Date, I will be treated for federal income tax
purposes as having received ordinary income at the time of such
disposition in an amount equal to the
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<PAGE> 56
excess of the fair market value of the shares at the time such shares
were purchased over the price which I paid for the shares. I HEREBY
AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE
OF ANY DISPOSITION OF MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH
ARISE UPON THE DISPOSITION OF THE COMMON STOCK. The Company may, but
will not be obligated to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of
Common Stock by me. If I dispose of such shares at any time after the
expiration of the 2-year and 1-year holding periods, I understand that
I will be treated for federal income tax purposes as having received
income only at the time of such disposition, and that such income will
be taxed as ordinary income only to the extent of an amount equal to
the lesser of (1) the excess of the fair market value of the shares at
the time of such disposition over the purchase price which I paid for
the shares, or (2) 15% of the fair market value of the shares on the
first day of the Offering Period. The remainder of the gain, if any,
recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase
Plan.
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<PAGE> 57
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)__________________________________________________________
(First) (Middle) (Last)
__________________________ _____________________________________
Relationship
_____________________________________
(Address)
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:
------------------- ----------------------------------------------------
Signature of Employee
----------------------------------------------------
Spouse's Signature (If beneficiary other than spouse)
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<PAGE> 58
EXHIBIT B
PROXIM, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Proxim, Inc.
1993 Employee Stock Purchase Plan which began on ____________, 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
-------------------------------------
-------------------------------------
-------------------------------------
Signature:
-------------------------------------
Date:
--------------------------------
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<PAGE> 59
APPENDIX #3
PROXIM, INC.
1994 DIRECTOR OPTION PLAN
The following constitutes the provisions of the 1994 Director Option
Plan of Proxim, Inc., as amended, effective upon the approval of the
stockholders of the Company on May 19, 1997.
1. Purposes of the Plan. The purposes of this 1994 Director
Option Plan are to attract and retain the best available personnel for service
as Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.
All options granted hereunder shall be "non-statutory stock
options."
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Proxim, Inc., a Delaware corporation.
(e) "Continuous Status as a Director" means the absence
of any interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and
of itself to constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a
Share of Common Stock shall be the closing sales price for such stock (or the
closing bid,
<PAGE> 60
if no sales were reported) as quoted on such system or exchange (or the exchange
with the greatest volume of trading in Common Stock) on the date of grant, as
reported in The Wall Street Journal or such other source as the Board deems
reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the bid and
asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.
(j) "Option" means a stock option granted pursuant to the
Plan.
(k) "Optioned Stock" means the Common Stock subject to an
Option.
(l) "Optionee" means an Outside Director who receives an
Option.
(m) "Outside Director" means a Director who is not an
Employee.
(n) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1994 Director Option Plan.
(p) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the Internal
Revenue Code of 1986.
3. Stock Subject to the Plan. Subject to the provisions of
Section 10 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 200,000 Shares (the "Pool") of Common
Stock. The Shares may be authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
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<PAGE> 61
(a) Procedure for Grants. The provisions set forth in
this Section 4(a) shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. All grants of
Options to Outside Directors under this Plan shall be automatic and
non-discretionary and shall be made strictly in accordance with the following
provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 15,000 Shares (the "First Option") on the date on
which such person first becomes a Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy.
Each Outside Director who first became a Director on or after January 1, 1994,
and received a First Option to Purchase 10,000 Shares, upon approval of this
Plan, as amended, by the stockholders of the Company, shall be granted an
Option to purchase 5,000 Shares.
(iii) After the First Option has been granted to an
Outside Director, such Outside Director shall thereafter be automatically
granted an Option to purchase 5,000 Shares (a "Subsequent Option") on January 1
of each year, provided, however, that such Subsequent Option shall be prorated
for the number of whole months that such Outside Director served on the Board
for the previous year.
(iv) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, any exercise of an Option made before the Company has
obtained stockholder approval of the Plan in accordance with Section 16 hereof
shall be conditioned upon obtaining such stockholder approval of the Plan in
accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder
shall be as follows:
(A) the term of the First Option shall
be ten (10) years.
(B) the First Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 8 hereof.
(C) the exercise price per Share shall
be 100% of the fair market value per Share on the date of grant of the First
Option.
(D) any First Option granted on or after
January 1, 1996, shall become exercisable in full with respect to one hundred
percent (100%) of the Optioned Stock one year after the date of grant.
(vi) The terms of a Subsequent Option granted
hereunder shall be as follows:
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<PAGE> 62
(A) the term of the Subsequent Option
shall be ten (10) years.
(B) the Subsequent Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 8 hereof.
(C) the exercise price per Share shall
be 100% of the fair market value per Share on the date of grant of the
Subsequent Option.
(D) any Subsequent Option granted on or
after January 1, 1996, shall become exercisable in full with respect to one
hundred percent (100%) of the Optioned Stock one year after the date of grant.
(vii) In the event that any Option granted under
the Plan would cause the number of Shares subject to outstanding Options plus
the number of Shares previously purchased under Options to exceed the Pool,
then the remaining Shares available for Option grant shall be granted under
Options to the Outside Directors on a pro rata basis. No further grants shall
be made until such time, if any, as additional Shares become available for
grant under the Plan through action of the stockholders to increase the number
of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside
Directors. All Options shall be automatically granted in accordance with the
terms set forth in Section 4 hereof. An Outside Director who has been granted
an Option may, if he is otherwise eligible, be granted an additional Option or
Options in accordance with such provisions.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his or her directorship at any time.
6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company as described in Section 16 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) in
the case of Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (y) have a
Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised, (iv) delivery
of a properly executed exercise notice together with such other documentation
as the Company and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale or loan proceeds
required to pay the exercise price, or (v) any combination of the foregoing
methods of payment.
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<PAGE> 63
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of
payment allowable under Section 7 of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. A share certificate for the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after exercise
of the Option. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors
must comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(c) Termination of Continuous Status as a Director. In
the event an Optionee's Continuous Status as a Director terminates (other than
upon the Optionee's death or total and permanent disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option,
but only within three (3) months from the date of such termination, and only to
the extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option
at the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(d) Disability of Optionee. In the event Optionee's
Continuous Status as a Director terminates as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), the Optionee may
exercise his or her Option, but only within twelve (12) months from the
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<PAGE> 64
date of such termination, and only to the extent that the Optionee was entitled
to exercise it at the date of such termination (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of termination, or if he or she does
not exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(e) Death of Optionee. In the event of an Optionee's
death, the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance may exercise the Option, but only within
twelve (12) months following the date of death, and only to the extent that the
Optionee was entitled to exercise it at the date of death (but in no event
later than the expiration of its ten (10) year term). To the extent that the
Optionee was not entitled to exercise an Option at the date of death, and to
the extent that the Optionee's estate or a person who acquired the right to
exercise such Option does not exercise such Option (to the extent otherwise so
entitled) within the time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution,
Merger, Asset Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Option and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." 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 an Option.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, to the extent that an
Option has not been previously exercised, it will terminate immediately prior
to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of
the Company with or into another corporation, or the sale of substantially all
of the assets of the Company, each outstanding Option shall be assumed or an
equivalent option shall be substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation does
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<PAGE> 65
not agree to assume the Option or to substitute an equivalent option, each
outstanding Option shall become fully vested and exercisable, including as to
Shares as to which it would not otherwise be exercisable, unless the Board, in
its discretion, determines otherwise. If an Option becomes fully vested and
exercisable in the event of a merger or sale of assets, the Board shall notify
the Optionee that the Option shall be fully exercisable for a period of thirty
(30) days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received
in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares).
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in
Section 4, the Board may at any time amend, alter, suspend, or discontinue the
Plan, but no amendment, alteration, suspension, or discontinuation shall be
made which would impair the rights of any Optionee under any grant theretofore
made, without his or her consent. In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act (or any other
applicable law or regulation), the Company shall obtain stockholder approval of
any Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated.
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section 4
hereof. Notice of the determination shall be given to each Outside Director to
whom an Option is so granted within a reasonable time after the date of such
grant.
13. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of such Option
and the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, state securities laws, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment
and without any present intention to sell or distribute such
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<PAGE> 66
Shares, if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.
14. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be
subject to approval by the stockholders of the Company at or prior to the first
annual meeting of stockholders held subsequent to the granting of an Option
hereunder. Such stockholder approval shall be obtained in the degree and
manner required under applicable state and federal law.
-8-
<PAGE> 67
DETACH HERE PRX F
P PROXIM, INC.
R
O PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y ANNUAL MEETING OF STOCKHOLDERS. MAY 19, 1997
The undersigned stockholder of Proxim, Inc. (the "Company"), hereby
appoints David C. King and Keith E. Glover and each of them, with power of
substitution to each, true and lawful attorneys, agents and proxyholders of the
undersigned, and hereby authorizes them to represent and vote, as specified
herein, all the shares of Common Stock of the Company held of record by the
undersigned on April 4, 1997, at the 1997 Annual Meeting of Stockholders of the
Company to be held on Monday, May 19, 1997 at 10:00 a.m., at the Sunnyvale
Hilton Inn, 1250 Lakeside Drive, Sunnyvale, California 94086 and any
adjournments or postponements thereof.
-------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-------------
<PAGE> 68
DETACH HERE PRX F
Please mark
[X] votes as in
this example.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED. IN
THE ABSENCE OF ANY DIRECTION, THE SHARES WILL BE VOTED FOR PROPOSAL 1, 2, 3, 4
AND 5. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT DATED APRIL 15, 1997.
1. ELECTION OF DIRECTORS
NOMINEES: Raymond Chin, Leslie G. Denand, Michael D. Kaufman, David C. King and
G. Russell Mortenson.
FOR WITHHELD
[ ] [ ]
[ ]______________________________________
For all nominees except as noted above
Signature: _______________________ Date: _____________________
2. AMENDMENT TO 1995 LONG-TERM INCENTIVE PLAN FOR AGAINST ABSTAIN
To approve an amendment to the Company's 1995 [ ] [ ] [ ]
Long-Term Incentive Plan to increase the
number of shares reserved for issuance
thereunder by 500,000 shares.
3. AMENDMENT TO 1993 EMPLOYEE STOCK PURCHASE PLAN FOR AGAINST ABSTAIN
To approve an amendment to the Company's 1993 [ ] [ ] [ ]
Employee Stock Purchase Plan to increase the
number of shares reserved for issuance thereunder
by 200,000 shares.
4. AMENDMENT TO 1994 DIRECTORS OPTION PLAN FOR AGAINST ABSTAIN
To approve an amendment to the Company's 1994 [ ] [ ] [ ]
Directors Option Plan to increase the number of
shares reserved for issuance thereunder by
100,000 shares.
5. APPOINTMENT OF INDEPENDENT ACCOUNTANTS FOR AGAINST ABSTAIN
To ratify the appointment of Price Waterhouse LLP [ ] [ ] [ ]
as independent accountants of the Company for
the fiscal year ending December 31, 1997.
6. In their discretion, the proxyholders are authorized to vote upon such other
business as may properly come before the meeting or any adjournments or
postponements thereof.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY WHETHER YOU PLAN
TO ATTEND THE MEETING OR NOT. IF YOU DO ATTEND, YOU MAY VOTE IN PERSON IF YOU
DESIRE.
Please sign exactly as name appears hereon. Joint owners should each sign.
Trustee and others acting in a representative capacity should indicate the
capacity in which they sign and give their full title. If a corporation, please
sign in full corporate name by an authorized officer. If a partnership please
sign in partnership name by an authorized person.
Signature: _______________________ Date: _____________________
