<PAGE>
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
ANCOR COMMUNICATIONS, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
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:
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(4) Date Filed:
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Notes:
<PAGE>
ANCOR COMMUNICATIONS, INCORPORATED
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
MAY 20, 1998
TO THE SHAREHOLDERS OF ANCOR COMMUNICATIONS, INCORPORATED:
Notice is hereby given that the Annual Meeting of Shareholders of Ancor
Communications, Incorporated will be held at 3:30 p.m. on Wednesday, May20,
1998, at the Crown Plaza Northstar Hotel (formerly, the Omni Northstar Inn), 618
Second Avenue South, Minneapolis, Minnesota, for the following purposes:
1. To elect two directors to serve on the Board of Directors.
2. To vote upon a proposal to amend the Ancor Communications,
Incorporated 1994 Long-Term Incentive and Stock Option Plan to
increase the number of shares of Common Stock authorized for issuance
thereunder.
3. To approve an amendment to the Company's Second Amended and Restated
Articles of Incorporation to increase the number of authorized shares
of the Company's Common Stock from 20,000,000 to 40,000,000.
4. To approve the issuance of Common Stock of the Company upon conversion
of the Company's Series C Convertible Preferred Stock.
5. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 3,1998 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
We encourage you to take part in the affairs of your Company either in
person or by executing and returning the enclosed proxy.
By Order of the Board of Directors,
/s/ Steven E. Snyder
Steven E. Snyder
Secretary
Dated: April 20, 1998
SHAREHOLDERS ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY AND TO RETURN IT
IN THE ENCLOSED ENVELOPE WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING.
<PAGE>
ANCOR COMMUNICATIONS, INCORPORATED
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Ancor Communications, Incorporated for use
at the Annual Meeting of Shareholders of the Company to be held on May 20, 1998,
at 3:30 p.m. at the Crown Plaza Northstar Hotel (formerly, the Omni Northstar
Inn), 618 Second Avenue South, Minneapolis, Minnesota, and at any adjournment
thereof. A shareholder giving the enclosed proxy may revoke it at any time
before the vote is cast at the annual meeting. Shares represented by a proxy
will be voted in the manner directed by a shareholder. If no direction is made,
the proxy will be voted for the election of the nominees for director named in
this Proxy Statement and for the other proposals set forth in this Proxy
Statement. This Proxy Statement and the accompanying form of proxy are being
sent or given to shareholders beginning on or about April 20, 1998 along with
the Company's 1997 Annual Report to Shareholders.
Only shareholders of record at the close of business on April 3, 1998 are
entitled to notice of and to vote at the meeting or at any adjournment thereof.
On April 3, 1998, there were 11,919,163 shares of Common Stock of the Company
outstanding. Generally, the affirmative vote of a majority of the shares of
Common Stock present and entitled to vote on each matter is required for the
election of each director nominee and the approval of each other matter to be
acted upon. However, if the shares present and entitled to vote on that item of
business would not constitute a quorum for the transaction of business at the
meeting, then the item must be approved by a majority of the voting power of the
minimum number of shares that would constitute such a quorum. Each share is
entitled to one vote. Cumulative voting is not permitted. Shares voted as
abstentions on any matter (or a "withhold vote for" as to a director) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting and as unvoted, although
present and entitled to vote, for purposes of determining the approval of each
matter as to which the shareholder has abstained. Consequently, abstentions and
withheld votes have the same effect as a no vote. If a broker submits a proxy
that indicates the broker does not have discretionary authority as to certain
shares to vote on one or more matters, those shares will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum at the meeting, but will not be considered as present and entitled
to vote with respect to such matters.
The Board of Directors knows of no matters other than those that are
described in this Proxy Statement that may be brought before the meeting.
However, if any other matters are properly brought before the meeting, persons
named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters.
All expenses in connection with the solicitation of proxies will be paid by
the Company. In addition to solicitation by mail, officers, directors and
regular employees of the Company who will receive no extra compensation for
their services, may solicit proxies by telephone, facsimile or personal calls.
The Company's principal executive offices are located at 6130 Blue Circle
Drive, Minnetonka, Minnesota 55343.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that directors of the
Company shall be divided into three classes, as nearly equal in number as
reasonably possible. The term of office of the first class of directors will
expire at the annual meeting of shareholders in 1998, the term of the second
class of directors will expire at the annual meeting of shareholders in 1999 and
the term of the third class of directors will expire at the annual meeting of
shareholders in 2000. Directors elected at each annual meeting of shareholders
will be of the same class as the directors whose terms expire at such annual
meeting of shareholders, and shall be elected to hold office for a term expiring
at the third succeeding annual meeting of shareholders and until their
successors are elected and shall qualify.
Vacancies and newly created directorships resulting from an increase in the
number of directors may be filled by a majority of the directors then in office
and the directors so chosen will hold office until the next election of the
class for which such directors shall have been chosen.
At the Annual Meeting of Shareholders to be held May 20, 1998, the term of
office of Gerald Bestler and Paul Lidsky will expire. Messrs. Bestler and Lidsky
(the "Nominees") have been nominated to be elected to the Board of Directors for
additional three year terms which will expire at the annual meeting of
shareholders in 2001. The Board of Directors recommends that the shareholders
elect the Nominees as directors of the Company for the ensuing three year
period. It is intended that the persons named as proxies in the enclosed form of
proxy will vote the proxies received by them for the election of the Nominees,
unless otherwise directed. The Nominees have indicated a willingness to serve,
but in case either of them is not a candidate at the meeting, which is not
presently anticipated, the proxies named in the enclosed form of proxy may vote
for a substitute nominee in their discretion.
Information regarding the directors of the Company is set forth below:
EXPIRATION
NAME AGE OF TERM
- ---------------------- --- ---------
Kenneth E. Hendrickson 57 2000
Amyl Ahola+ 53 1999
Gerald M. Bestler+ 67 1998
John F. Carlson* 59 2000
Thomas F. Hunt, Jr.+ 48 1999
Paul F. Lidsky* 45 1998
- ----------------
*Denotes a member of the Audit Committee.
+Denotes a member of the Compensation Committee.
Kenneth E. Hendrickson has served as the Company's Chief Executive
Officer and as a director of the Company since August 1997 and has served as the
Chairman of the Board of Directors since September 1997. Mr. Hendrickson was an
independent consultant from 1996 to August 1997. Prior thereto, Mr. Hendrickson
was Executive Vice President and General Manager of the Microcomputer Products
Group of Western Digital Corporation, a disk drive company, from 1993 to 1996.
Mr. Hendrickson was Vice President of Operations and Quality of Overland Data
Corp., a tape drive company from 1992 to 1993 and was President of Archive
Technology, another tape drive company, from 1990 to 1992.
Amyl Ahola has served as a director of the Company since October 1997.
Mr. Ahola has been the President and Chief Operating Officer of TeraStor
Corporation since 1997 and prior thereto served as its Executive Vice President,
Marketing. From 1992 to 1996, Mr. Ahola was Vice President of Seagate
-2-
<PAGE>
Technology, a disk drive company, initially responsible for corporate
development, then marketing, product line management and corporate strategy.
Gerald M. Bestler has been a director of the Company since May 1990. Mr.
Bestler is retired. He was formerly Executive Vice President of BMC Industries
Inc., an optical and electronic components manufacturer. Mr. Bestler is also a
director of Innovex, Inc., a precision electromagnetic products and
photo-processing equipment manufacturer.
John F. Carlson has served as a director of the Company since September
1997. Mr. Carlson has been the Chairman and Chief Financial Officer of Excorp
Medical, Inc., a medical technology company, from 1996 to 1998. Prior thereto,
Mr. Carlson was with Cray Research, Inc., a supercomputer manufacturer from 1976
to 1995, serving as Chairman and Chief Executive Officer from 1993 to 1995,
President and Chief Operating Officer from 1991 to 1993 and Chief Financial
Officer from 1984 to 1991. Mr. Carlson is also on the Board of Directors of TSI,
Incorporated and Ultradata Corporation.
Thomas F. Hunt, Jr. has been a director of the Company since May 1993. Mr.
Hunt has served as President of Capital Dimensions, Inc., a venture capital
investment company, since 1987. Prior to co-founding Capital Dimensions, Mr.Hunt
served as President of Control Data Community Venture Fund, Inc. and served as
Assistant General Counsel for Control Data Corporation.
Paul F. Lidsky has served as a director of the Company since October 1997.
Mr. Lidsky has been the President and Chief Executive Officer of OneLink
Communications, Inc., a telecommunications company, since 1997, Prior thereto,
Mr. Lidsky was Executive Vice President of Strategy and Business Development of
Norstan, Inc., a comprehensive technology services company, from 1992 to 1997.
Mr. Lidsky is also a director of OneLink Communications, Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MESSRS. BESTLER AND LIDSKY.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During the fiscal year ended December 31, 1997, the Board of Directors met
four times. All of the directors attended more than 75% of the aggregate of all
meetings of the Board of Directors and meetings of the committees on which they
served. The Board of Directors and its committees also act from time to time by
written consent in lieu of meetings.
The Board of Directors of the Company has standing audit and compensation
committees which have a current membership as indicated in the foregoing
section. The Board of Directors has no standing nominating committee.
The audit committee makes recommendations as to the selection of auditors
and their compensation, and reviews with the auditors the scope of the annual
audit, matters of internal control and procedure and the adequacy thereof, the
audit results and reports and other general matters relating to the Company's
accounts, records, controls and financial reporting. During fiscal 1997, the
audit committee held one meeting.
The compensation committee reviews and recommends to the Board of Directors
the compensation guidelines for executive officers and other key personnel and
the composition and levels of participation in incentive compensation plans,
fringe benefits and retirement benefits for all employees. During fiscal 1997,
the compensation committee held three meetings.
-3-
<PAGE>
EXECUTIVE OFFICERS
NAME AGE POSITION
---- --- --------
Kenneth E. Hendrickson 57 Chief Executive Officer
Calvin G. Nelson 45 President
Steven E. Snyder 41 Chief Financial Officer and Secretary
See the biographical information on Mr. Hendrickson under "Election of
Directors."
Calvin G. Nelson was named President of the Company effective April 16,
1997 and prior to such time served as the Company's Vice President, Engineering
since July 1995. Prior to joining Ancor, Mr. Nelson was employed by ADC
Telecommunications, Inc. since 1979, serving as Vice President - Engineering
since 1990.
Steven E. Snyder has been the Chief Financial Officer and Secretary of the
Company since October 1997. Prior to joining the Company, Mr. Snyder was the
Director of Finance, from 1996 to 1997, and the Controller, from 1995 to 1996,
of Cray Research, Inc., which was acquired by Silicon Graphics Inc. in April
1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors and persons who beneficially own more than ten percent
(10%) of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors, and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers, directors and
holders of 10% or more of the Company's Common Stock, the Company believes that
all Section 16(a) filing requirements applicable to its executive officers,
directors and 10% shareholders were satisfied except that two transactions for
Calvin Nelson were reported late due to an administrative error.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee is responsible for establishing compensation policies
for all executive officers of the Company, including the four most highly
compensated executive officers named in the accompanying tables (the "Named
Executives Officers"). The members of the Compensation Committee are Messrs.
Ahola, Bestler and Hunt. The Compensation Committee establishes the total
compensation for the executives officers in light of these policies. The
Compensation Committee is composed entirely of outside Directors.
The objectives of the Company's executive compensation program are:
1. to attract, retain and motivate superior talent and reward individual
performance;
2. to support the achievement of the Company's financial and strategic
goals; and
-4-
<PAGE>
3. through stock based compensation, align the executive officers'
interests with those of the shareholders of the Company.
The following report addresses the Company's executive compensation policies and
discusses factors considered by the Compensation Committee in determining the
compensation of the Company's Chief Executive Officer and other executive
officers for the year ended December 31, 1997.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Compensation Committee's executive compensation policies are designed to
provide competitive levels of compensation that integrate pay with the Company's
annual and long term performance goals, reward the achievement of corporate
goals, recognize individual initiative and achievements, and assist the Company
in attracting and retaining qualified executives. The Company's executive
officers are paid base salaries that are subject to annual cost-of-living
increases, along with periodic adjustments to make such salaries competitive
with other similar sized companies in the high-technology industry. The
Company's executive officers are also given the opportunity to participate in
certain other broad-based employee benefit plans. The Company's use of stock
option grants as a key component of its executive compensation plans reflects
the Compensation Committee's position that stock ownership by management and
stock based compensation arrangements are beneficial in aligning management's
and shareholders' interests to enhance shareholder value. The Compensation
Committee believes that a greater reliance on stock-based incentives is
appropriate for the Company's current stage of development.
EXECUTIVE INCENTIVE PROGRAM
In 1997, the Company established an executive incentive program which sets forth
guidelines for awarding discretionary executive incentive pay for fiscal 1997
performance. The executive incentive program is comprised of two components: (1)
a group incentive based on Company revenue goals and (2) individual objectives.
Although the executive incentive program sets forth certain Company revenue and
individual goals, payments under the executive incentive program are within the
Company's sole discretion and do not represent any contractual or other
obligation on the part of the Company to pay any bonus. Bonus payments under the
executive incentive program are based on all aspects of an executive employee's
performance and the Company's overall financial ability to pay any such bonuses.
No payments were made based on the Company's 1997 performance, and a payment of
$20,044 was paid to one of the named executive officers other than the Chief
Executive Officer based on achievement of individual performance goals during
fiscal 1997.
STOCK OPTIONS
Stock options awarded under the Company's 1994 Incentive and Stock Option Plan
are intended as incentive compensation and have historically been granted to
officers and other key employees to attract, retain and motivate the talent
necessary to the Company to achieve its objectives. The Company's policy is to
not grant stock options annually, but to review each individual's stock option
position, at which point the Compensation Committee may or may not grant
additional options in its discretion. Stock option grants totaling 358,500 and
360,000 were granted to 73 employees and three executive officers, respectively,
during 1997 in connection with the hiring of new employees and as a reward for
individual contributions to the Company.
-5-
<PAGE>
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Kenneth E. Hendrickson has served as the Company's Chief Executive Officer since
August 1997. Compensation for Mr. Hendrickson during 1997, as reflected in the
Summary Compensation Table set forth herein, consisted of base compensation, and
the grant of stock options. Mr. Hendrickson's base compensation is equal to
$160,000 annually. Mr. Hendrickson's annual base salary is the same as the
annual base salary of the Company's former Chief Executive Officer at the time
he ceased acting in that capacity. In setting Mr. Hendrickson's annual base
salary, the Compensation Committee considered the salaries paid to Chief
Executive Officers of other development stage, high-technology company's and the
Company's resources. The Compensation Committee determined that in order to
attract the best possible candidate for the position, it was necessary to offer
a significant equity incentive in the form of stock options. The Compensation
Committee determined that stock options should be an significant element of the
compensation package in order to align the executive's interests with those of
the Company and its shareholders. Therefore, Mr. Hendrickson was granted a stock
option to purchase 200,000 shares of the Company's Common Stock on the date he
was named as the Company's Chief Executive Officer. The stock option vests over
time, with the first one-third of the shares vesting six months after the date
of grant, the second one-third vesting on the first anniversary of the date of
grant and the remaining shares vesting on the second anniversary of the date of
grant. The options have an exercise price of $9.875, the fair market value of
the Common Stock on the date of grant.
Mr. Hendrickson is also eligible to participate in the Company's Executive
Incentive Program described above.
At this time the Committee has no formal written plan for CEO compensation
separate and apart from the Company's general compensation philosophy and the
executive incentive program. Until a plan specific to the CEO is developed, CEO
compensation will be based on corporate and individual performance, consistent
with guidelines applicable to all key employees.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Amyl Ahola Gerald Bestler Thomas Hunt
-6-
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to or earned in
fiscal years 1995, 1996 and 1997 by the Company's Chief Executive Officer and
each other executive officer who earned salary and bonus in excess of $100,000
during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION(5)
FISCAL ---------------- ---------------
NAME YEAR SALARY BONUS OPTIONS
- ---- ---- ------ ----- -------
<S> <C> <C> <C> <C>
Kenneth E. Hendrickson (1)
Chief Executive Officer ..................... 1997 $ 59,692 $ 0 200,000
Calvin G. Nelson (2)
President...................................... 1997 $142,482 $20,044 100,000
......................................... 1996 110,000 31,500 30,000
......................................... 1995 52,885 10,000 70,000
Steven E. Snyder (3)
Chief Financial Officer and Secretary.......... 1997 $ 26,442 $ 0 60,000
Lee B. Lewis (4)
Vice President, Administration................ 1997 $114,963 $ 0 0
......................................... 1996 110,000 16,500 50,000
......................................... 1995 107,308 2,500 15,000
</TABLE>
- ----------------------
(1) Mr. Hendrickson joined the Company in August, 1997.
(2) Mr. Nelson joined the Company in July 1995.
(3) Mr. Snyder joined the Company in October 1997.
(4) Mr. Lewis served as the Company's Chief Financial Officer until October
1997. Mr. Lewis resigned in February 1998.
(5) No restricted stock was held by the named executive officers as of December
31, 1997.
-7-
<PAGE>
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS GRANTED FOR OPTION TERM
UNDERLYING OPTIONS TO EMPLOYEES EXERCISE EXPIRATION --------------------
GRANTED IN FISCAL 1997 PRICE DATE 5% 10%
------------------ --------------- ------ ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mr. Hendrickson... 200,000(1) 27.8% $9.875 Aug. 14, 2004 $804,023 $1,873,716
Mr. Nelson........ 100,000(2) 13.9 $5.125 Apr. 16, 2004 $208,639 $ 486,218
Mr. Snyder ....... 60,000(3) 8.4 $ 7.75 Oct. 22, 2004 $189,302 $ 441,153
Mr. Lewis......... -- -- -- -- -- --
</TABLE>
- -------------------------
(1) Grant made August 14, 1997 pursuant to the 1994 Long-Term Incentive and
Stock Option Plan. The options become exercisable with respect to one-third
of the shares six months after the date of grant and an additional
one-third of the shares on each of the first two anniversaries of the date
of grant and expires on the seventh anniversary of the date of grant. The
options are nontransferable and become immediately exercisable in full upon
a change of control of the Company.
(2) Grant made April 16, 1997 pursuant to the 1994 Long-Term Incentive and
Stock Option Plan. The options become exercisable with respect to one-third
of the shares on the first anniversary date of grant and an additional
one-third of the shares on each subsequent anniversary date and expire on
the seventh anniversary date. The options are nontransferable and become
immediately exercisable in full upon a change of control of the Company.
(3) Grant made October 22, 1997 pursuant to the 1994 Long-Term Incentive and
Stock Option Plan. The options become exercisable with respect to one-third
of the shares on the first anniversary date of grant and an additional
one-third of the shares on each subsequent anniversary date and expire on
the seventh anniversary date. The options are nontransferable and become
immediately exercisable in full upon a change of control of the Company.
Option Values. The following table summarizes the value of the options held
at the end of fiscal 1997 by the executive officers named in the Summary
Compensation Table above.
AGGREGATE OPTION EXERCISES
IN FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT END OF OPTIONS AT END OF
FISCAL 1997 FISCAL 1997 (1)
------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mr. Hendrickson.................. 0 200,000 $ 0 $ 0
Mr. Nelson....................... 80,000 120,000 0 0
Mr. Snyder....................... 0 60,000 0 0
Mr. Lewis........................ 56,666 43,334 35,329 2,501
</TABLE>
- --------------------
(1) Value based on the difference between the closing price of the Company's
Common Stock as reported by the Nasdaq Small Cap Market on December 31,
1997 ($4.313) and the option exercise price per share multiplied by the
number of shares subject to the option.
-8-
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company received $500 for each
regular meeting of the Board of Directors they attended in 1997. In addition,
pursuant to the Non-Employee Director Stock Option Plan (the "Director Plan"),
each non-employee director was entitled to receive an option to purchase 1,000
shares of Common Stock on the first business day of each fiscal year in which
such director remained a director. In September 1997, the Board of Directors
amended the Director Plan to increase the number of shares subject to the annual
option grant from 1,000 shares to 6,000 shares per year effective in 1998 and
eliminated the cash payment for attendance at meetings. In addition, the
amendment provides for an automatic grant of an option to purchase 12,000 shares
on the date any new director is first elected to the Board of Directors. In
October 1997, the Board of Directors further amended the Director Plan to
provide that the two non-employee directors who were not newly elected to the
board after the amendment were entitled to receive additional stock options such
that following such grant each such director held options to purchase a total of
12,000 shares.
Directors who are also employees of the Company do not receive any
additional compensation for serving on the Board of Directors.
EMPLOYMENT AGREEMENTS
The Company and Kenneth E. Hendrickson are parties to a letter agreement
dated July 25, 1997, pursuant to which the Company agreed to employ Mr.
Hendrickson as the Company's Chief Executive Officer. Pursuant to the terms of
the letter agreement, Mr. Hendrickson is entitled to a severance payment equal
to one year's salary and to full vesting of any stock options in the event his
employment with the Company is terminated without cause.
The Company and Steven E. Snyder are parties to a letter agreement dated
September 23, 1997, pursuant to which the Company agreed to employ Mr. Snyder as
the Company's Chief Financial Officer. Pursuant to the terms of the letter
agreement, Mr. Snyder is entitled to a severance payment equal to six month's
salary and in the event his employment with the Company is terminated without
cause and, in such an event, any stock options held by Mr. Snyder would continue
to vest pursuant to their terms during the six months following such
termination.
-9-
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock since the Company's initial public offering on May 3,
1994 with the cumulative total return on the Total Return Index for the Nasdaq
Stock Market (U.S. Companies) and the Total Return Index for Nasdaq
Non-Financial Stocks over the same period (assuming the reinvestment of $100 in
each on May 3, 1994 and the reinvestment of all dividends).
<TABLE>
<CAPTION>
MAY 3, 1994 DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996 DECEMBER 31, 1997
----------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Ancor $100 $129 $134 $320 $99
Communications
Total Return $100 $103 $145 $178 $219
Index for the
Nasdaq Stock
Market (U.S.
Companies)
Total Return $100 $103 $143 $174 $204
Index for
Nasdaq
Non-Financial
Stocks
</TABLE>
-10-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of April 3, 1998 by: (i)
each director of the Company, (ii)each executive officer of the Company named in
the Summary Compensation Table, (iii)all directors and executive officers of the
Company as a group and (iv)each person or entity known by the Company to own
beneficially more than five percent of the Company's Common Stock. Unless noted
below, the address of each of the following shareholders is the same as the
Company.
BENEFICIAL OWNERSHIP (1)
------------------------
NAME SHARES PERCENT
- ---- -------- -------
Kenneth E. Hendrickson (2).................... 86,666 *
Calvin G. Nelson (3).......................... 111,966 *
Steven E. Snyder ............................. 2,000 *
Amyl Ahola ................................... 0 0%
Gerald M. Bestler (4)......................... 5,000 *
John F. Carlson............................... 0 0
Thomas F. Hunt, Jr. (5)....................... 5,000 *
Paul F. Lidsky............................... 0 0
Lee B. Lewis (6).............................. 69,223 *
All executive officers and
directors as a group (nine persons)(7)..... 291,856 2.4
International Business Machines
Corporation (8)............................ 790,000 6.6
11400 Barnet Road
Austin, Texas 78758
- --------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of April 1, 1998 are deemed outstanding for computing the
beneficial ownership percentage of the person holding such options but are
not deemed outstanding for computing the beneficial ownership percentage of
any other person. Except as indicated by footnote, the persons named in the
table above have the sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them.
(2) Includes 66,666 shares of Common Stock issuable upon exercise of
outstanding options for Mr. Hendrickson. Excludes shares owned by Mr.
Hendrickson's adult children, for which he disclaims beneficial ownership.
(3) Includes 91,666 shares of Common Stock issuable upon exercise of
outstanding options for Mr. Nelson.
(4) Includes 4,000 shares of Common Stock issuable upon exercise of outstanding
options for Mr. Bestler.
(5) Includes 3,000 shares of Common Stock issuable upon exercise of outstanding
options for Mr. Hunt.
(6) Includes 68,749 shares of Common Stock issuable upon exercise of
outstanding options for Mr. Lewis.
(7) Includes 249,082 shares of Common Stock issuable upon exercise of
outstanding options.
(8) Based upon information filed by International Business Machines Corporation
with the Securities and Exchange Commission on February 11, 1998.
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CERTAIN TRANSACTIONS
In June 1992, the Company and IBM entered into a Development and License
Agreement pursuant to which (i) the Company granted IBM a nonexclusive license
to its Fibre Channel technology, (ii) IBM agreed to pay royalties to the Company
on IBM's sales of products incorporating the licensed technology for a minimum
period of eighteen months after general availability of any products
incorporating that technology, (iii) the Company agreed to pay royalties to IBM
on sales of the Company's products for at least eighteen months after certain
volume levels were met, and (iv) the Company and IBM agreed to cooperate in the
development of certain technology and products. The Company believes that it has
benefitted from this cooperation through periodic, joint technology, design and
specification reviews and from IBM's design verification testing which provides
feedback used to help optimize product design and reliability. This cooperation
can be extended to new development projects if both the Company and IBM agree.
Also in June 1992, the Company and IBM entered into a Note and Warrant
Purchase Agreement pursuant to which IBM agreed to lend the Company $3,500,000,
the Company issued a promissory note representing the Company's borrowings under
such agreement (the "Note") and the Company issued IBM a warrant to purchase
2,736,164 shares of the company's Limited Common Stock, which is convertible
into Common Stock, at $1.28 per share (the "Warrant"). Pursuant to the Loan and
Warrant Purchase Agreement, IBM was granted certain registration rights. IBM has
the right, if it so chooses, to nominate one director for election to the
Company's Board of Directors as long as any amount of principal or interest
remains outstanding under the Note or IBM beneficially owns at least 600,000
shares of Common Stock. To date, IBM has not nominated a director to the
Company's Board of Directors. The Loan and Warrant Purchase Agreement also
provides that in the event IBM has chosen not to nominate a director for
election to the Company's Board of Directors, IBM will have the right to appoint
an observer to attend all meetings of the Company's Board of Directors. The Note
was paid in full in June 1996.
In connection with the Loan and Warrant Purchase Agreement, the Company,
IBM and the shareholders of the Company who then beneficially owned one percent
or more of the Company's Common Stock (the "Significant Shareholders") entered
into a Shareholders Agreement dated June 24, 1992 (the "Shareholder Agreement").
Pursuant to such agreement, each Significant Shareholder agreed that, in the
event IBM exercised its right under the Note and Warrant Purchase Agreement to
nominate a director for election to the Company's Board of Directors, he or she
would vote the shares of Common Stock held by such shareholder in favor of such
nominee. In addition, so long as there is outstanding principal of or interest
on the Note or IBM beneficially owns at least 615,637 shares of Common Stock,
Significant Shareholders, as defined, may not transfer any shares of Common
Stock to certain competitors of IBM without IBM's prior consent.
PROPOSAL TWO
TO APPROVE AMENDMENT TO THE
1994 LONG-TERM INCENTIVE AND STOCK OPTION PLAN
On January 21, 1998, the Board of Directors approved an amendment to the
Ancor Communications, Incorporated 1994 Long-Term Incentive and Stock Option
Plan (the "Plan"), subject to shareholder approval, to provide that the number
of shares of the Company's Common Stock available for issuance pursuant to
grants under the Plan at any time shall be changed from an overall limitation
equal to 13.5% of the then outstanding shares of Common Stock of the Company to
an overall limitation equal to 18% of the then outstanding shares of Common
Stock of the Company. In addition, the amendment provides that the number of
shares for which incentive stock options may be granted over the life of the
Plan shall be increased from 4,000,000 to 5,000,000.
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The Company continues to recruit key personnel and believes that stock
options or other grants under the Plan are an important element in attracting
highly skilled and qualified individuals. As such, the Company believes that the
amendment to the Plan can help it meet the competitive demands of attracting and
retaining a productive work force. Therefore, the Board of Directors believes
that it is desirable to amend the Plan to change the number of shares of the
Company's Common Stock which is authorized for issuance thereunder. A
description of the Plan is set forth below.
1994 LONG-TERM INCENTIVE AND STOCK OPTION PLAN
The Plan was approved by the Board of Directors and the shareholders of the
Company in March 1994. The Plan provides for the granting of stock options,
stock appreciation rights, restricted stock awards and performance awards to
officers, directors, employees, consultants and independent contractors of the
Company and its subsidiaries. The Company currently has six directors, three
executive officers and 72 employees. The Plan is administered by the
compensation committee of the Board of Directors (the "Committee").
The Committee has discretion to select the recipients of options and awards
and to establish the terms and conditions of each option and award, subject to
the provisions of the Plan and the applicable provisions of the Internal Revenue
Code. Options and awards granted under the plan are nontransferable except by
will or by the laws of descent and distribution, and are subject to various
other conditions and restrictions.
The Plan provides for the granting of both incentive stock options intended
to qualify for preferential treatment under Section 422 of the Internal Revenue
Code of 1986, as amended ("incentive options"), and nonqualified options that do
not qualify for such treatment ("non-statutory options"). The option price of an
incentive option granted under the Plan must not be less than the fair market
value of the Company's Common Stock on the date of the grant, and the term of an
incentive option must not exceed ten years. For an incentive option granted
under the Plan to an optionee who owns capital stock representing more than 10%
of the voting rights of the capital stock of the Company and its subsidiaries,
however, the option price must be at least 110% of the fair market value of the
Company's Common Stock on the date of the grant, and the term must not exceed
five years. Incentive options may only be granted to full or part-time employees
of the Company and its subsidiaries, including officers and directors.
Stock appreciation rights ("SARs") may be granted under the Plan at the
time of grant of an option or award under the Plan, or at any other time. Any
such SAR may be exercised subject to restrictions set forth in an agreement
representing such SAR and approved by the Committee. The SAR exercise amount may
be paid in cash, shares of the Company's Common Stock or a combination thereof.
At the time of an award of restricted stock under the Plan, a restricted
period is established for each participant. During the restricted period, the
restricted stock may not be transferred, encumbered or sold unless the Committee
may otherwise determine. The participant, as owner of such shares, will have the
rights of a stockholder, including the right to receive cash dividends and to
vote.
Performance awards under the Plan may be payable in cash, common shares
(including restricted stock), other securities, other awards or other property.
The value of each award will be determined by the Committee and will be payable
to, or exercisable by, the holder of the performance award upon his or her
achievement of the performance goals during the performance periods established
by the terms of the award.
The aggregate number of shares for which incentive stock options may be
exercised under the Plan shall not exceed 4,000,000 and the aggregate number of
shares of Common Stock awarded or for which options may be exercised under the
Plan may not exceed 13.5% of the issued and outstanding Common Stock of the
Company at any given time. If the amendment to the Plan is approved, the maximum
number of shares of Common Stock subject to options or awards under the Plan at
any time shall not exceed
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18% of the then outstanding Common Stock of the Company and the aggregate number
of shares for which incentive stock options may be exercised over the life of
the Plan shall not exceed 5,000,000 shares.
The Plan will expire in February 2004, unless terminated earlier by the
Board of Directors. No option or award may be granted after such termination,
but termination of the Plan shall not, without the consent of the optionee or
grantee, alter or impair any rights or obligations under any option or award
previously granted.
The grant of an option or SAR will result in no tax consequences for the
recipient or the Company or any subsidiary employing such individual (the
"employer"). The holder of an incentive stock option generally will have no
taxable income upon exercising the incentive stock option (except that the
alternative minimum tax may apply), and the employer generally will receive no
tax deduction when an incentive stock option is exercised. Upon exercise of a
stock option other than an incentive stock option, the optionee must recognize
ordinary income equal to the excess of the fair market value of the shares
acquired on the date of exercise over the option price, and the employer will
then be entitled to a tax deduction for the same amount. The tax consequences to
an optionee of a disposition of shares acquired through the exercise of an
option will depend on how long the shares have been held and upon whether such
shares were acquired by exercising an incentive stock option or non-statutory
stock option. Generally, there will be no tax consequence to the employer in
connection with a disposition of shares acquired under an option except that the
employer may be entitled to a tax deduction in the case of a disposition of
shares acquired under an incentive stock option before the applicable incentive
stock option holding period has been satisfied.
With respect to other awards granted under the Plan that are settled either
in cash, shares or other property that is either transferable or not subject to
a substantial risk of forfeiture, the holder of an award must recognize ordinary
income equal to the excess of (a) the cash or the fair market value of the
shares or other property received (determined as of the date of such settlement)
over (b) the amount (if any) paid for such shares or other property by the
holder of the award, and the employer will then be entitled to a deduction for
the same amount. With respect to awards that are settled in shares or other
property that is restricted as to transferability and subject to a substantial
risk of forfeiture, unless a special tax election is made to recognize ordinary
income upon receipt of the awards, the holder of the award must recognize
ordinary income equal to the excess of (i) the fair market value of the shares
or other property received (determined as of the first time the shares or other
property become transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier) over (ii) the amount (if any) paid by the participant
for such shares or other property, and the employer will then be entitled to a
deduction for the same amount.
Special rules apply in the case of individuals subject to Section 16(b) of
the Securities Exchange Act of 1934. In particular, under current law, shares
received pursuant to the exercise of a stock option, other purchase right, or
SAR may be treated as restricted as to transferability and subject to a
substantial risk of forfeiture for a period of up to six months after the date
of exercise. Accordingly, unless a special tax election is made, the amount of
ordinary income recognized and the amount of the employer's deduction may be
determined as of such date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO INCREASE THE
NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK WHICH ARE AUTHORIZED FOR ISSUANCE
UNDER THE PLAN.
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PROPOSAL THREE
APPROVE AN AMENDMENT TO THE COMPANY'S SECOND RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF THE COMPANY
The Board of Directors has determined that Article Three of the Company's
Second Restated Articles of Incorporation should be amended and has voted to
submit an amendment to the Company's shareholders for adoption. The proposed
amendment to Article Three would increase the number of authorized shares of
Common Stock, par value $.01, from 20,000,000 to 40,000,000. If the amendment is
approved by the Company shareholders, Section 1 of Article Three of the
Company's Second Restated Articles of Incorporation will read as follows:
1. AUTHORIZED SHARES. The total number of shares of capital stock which the
corporation is authorized to issue shall be 45,000,000 shares, consisting
of 40,000,000 shares of common stock, par value $.01 per share ("Common
Stock"), and 5,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock").
As of April 3, 1998, there were 11,919,163 shares of Common Stock
outstanding. In addition, the Company has a total of 7,601,193 shares reserved
for future issuance as follows: 1,609,087 shares reserved for issuance pursuant
to the Company's 1994 Long-Term Incentive and Stock Option Plan, 296,000 shares
reserved for issuance pursuant to the Company's Nonemployee Director Stock
Option Plan, 163,150 shares reserved for issuance pursuant to the Company's 1990
Stock Option Plan, 54,143 shares reserved for issuance pursuant to the Company's
Employee Stock Purchase Plan, 205,196 shares reserved for issuance pursuant to
outstanding options and warrants, 2,623,617 shares reserved for issuance upon
conversion of the Company's Series B Preferred Stock and options to purchase
Common Stock issued to holders of the Company's Series B Preferred Stock and
2,650,000 shares reserved for issuance upon conversion of the Company's Series C
Preferred Stock. As of April 1, 1998, there were 440 shares of Series B
Preferred Stock and 1,100 shares of Series C Preferred Stock outstanding.
Consequently, the Company currently has only 479,644 shares of Common Stock
available for future issuance.
The additional shares of Common Stock for which authorization is sought
would be a part of the existing class of Common Stock and, if and when issued,
would have the same rights and privileges as the shares of Common Stock
presently outstanding. Such additional shares would not (and the shares of
Common Stock presently outstanding do not) entitle the holders thereof to
preemptive or cumulative voting rights.
PURPOSES AND EFFECTS OF THE AMENDMENT
The Board of Directors believes that additional authorized shares of Common
Stock will enable the Company, as the need may arise, to issue additional shares
of stock pursuant to options and awards under the 1994 Plan as it is proposed to
be amended (see Proposal Two) and to take timely advantage of market conditions
and the availability of favorable financing and acquisition opportunities
without the delay and expense associated with convening a special shareholders'
meeting. The shares of Common Stock could be used for the grant of stock
options, acquisitions by the Company of businesses or properties, equity
financing, stock dividends and other general corporate purposes.
In addition, the terms of the Company's Series B and Series C Preferred
Stock provide that the number of shares of Common Stock issuable upon conversion
thereof, will increase in the event the market price of the Common Stock falls
below a certain level. In the event of a substantial decrease in the market
price of the Common Stock, the holders of the Series B and Series C Preferred
Stock may be entitled to receive a number of shares of Common Stock in excess of
the number of shares currently available and reserved for issuance upon
conversion thereof and in excess of the number of shares of Common Stock
currently authorized but not otherwise outstanding or reserved for issuance. In
order to ensure that there will at all times be a sufficient number of shares
available to issue upon conversion of the Series C Preferred Stock, the Company
is obligated by the terms thereof to have reserved and
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available a number of shares of Common Stock equal to 150% of the number of
shares issuable upon conversion of the Series C Preferred Stock at any point in
time. If the amendment to the Company's Second Restated Articles of
Incorporation to increase the number of authorized shares is approved, the
expense and delay associated with convening a special shareholders' meeting to
approve the authorization of additional shares in the event of such a decrease
in the market price of the Common Stock would be avoided. In addition, in the
event the Company is unable to obtain the shareholder approval sought hereunder,
the Company may be required to redeem a number of shares of Series C Preferred
Stock such that following such redemption, there are authorized and reserved for
issuance upon conversion of the Series C Preferred Stock a number of shares of
Common Stock equal to 150% of the number of shares so issuable.
Unless required by law or by the rules of any stock exchange on which the
Company's Common Stock may in the future be listed, no further authorized vote
by the shareholders will be sought for any issuance of shares of Common Stock.
Under existing Nasdaq Small Cap Market regulations, approval by a majority of
the holders of Common Stock would nevertheless be required in connection with a
transaction or series of related transactions that would result in the original
issuance of additional shares of Common Stock, other than in a public offering
for cash, (i) if the Common Stock (including securities convertible into or
exercisable for Common Stock) has, or will have upon issuance, voting power
equal to or in excess of 20% of the voting power outstanding before the issuance
of the Common Stock; (ii) if the number of shares of Common Stock to be issued
is or will be equal to or in excess of 20% of the number of shares outstanding
before the issuance of the Common Stock; or (iii) if the issuance would result
in a change in control of the Company.
Although the increase in authorized but unissued shares of Common Stock is
designed to enable the Company to issue additional stock options and awards
under the amendment to the 1994 Plan, to consider potential acquisitions, to
issue Common Stock upon conversion of the Series B and Series C Preferred Stock
pursuant to the terms thereof and to use for general corporate purposes, the
increase in the authorized but unissued shares of Common Stock could make a
change in control of the Company more difficult to achieve. Under certain
circumstances, such shares of Common Stock could be used to create voting
impediments to frustrate persons seeking to effect a takeover or otherwise gain
control of the Company. Such shares could be sold privately to purchasers who
might side with the Board of Directors in opposing a takeover bid that the Board
determines is not in the best interests of the Company and its shareholders.
The amendment also may have the effect of discouraging an attempt by
another person or entity, through acquisition of a substantial number of shares
of Common Stock, to acquire control of the Company with a view to effecting a
merger, sale of assets or a similar transaction, since the issuance of new
shares could be used to dilute the stock ownership of such person or entity.
Although the Board of Directors presently has no intention of doing so,
shares of authorized but unissued Common Stock could be issued to a holder who
would thereby have sufficient voting power to assure that any such business
combination or amendment to the Second Restated Articles of Incorporation would
not receive the shareholder vote required for approval thereof.
Although the Board of Directors has concluded that the potential benefits
of the proposed amendment outweighs its possible disadvantages, the Board asks
shareholders to consider, as the Board has done, those possible disadvantages.
Shareholders may find the issuance of shares of Common Stock disadvantageous to
the extent that it may be used to discourage takeovers that are not approved by
the Board but in which shareholders may receive for some or all of their shares
a substantial premium above market value at the time a tender offer is made.
Thus, shareholders who may wish to participate in such a tender offer may be
restricted in their opportunity to do so. In addition, because the proposed
amendment may enable the Company to discourage tender offers, the amendment may
make removal of the Board of Directors or management more difficult. To the
extent that the adoption of the proposed amendment renders less likely a merger
or other transaction opposed by the Company's incumbent Board
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of Directors, the effect of such adoption may be used to assist the Board of
Directors and management in retaining their current positions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S SECOND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL FOUR
APPROVE THE ISSUANCE OF COMMON STOCK UPON CONVERSION
OF THE COMPANY'S SERIES C PREFERRED STOCK
On February 19, 1998, the Company completed a private placement of
$11,000,000 of Series C Preferred Stock. The Series C Preferred Stock is
convertible into Common Stock of the Company, subject to certain restrictions,
at a variable conversion rate dependent upon the market price of the Common
Stock at the time of conversion. As a result of the variable conversion price,
the number of shares of Common Stock issuable upon conversion of the Series C
Preferred Stock can not be determined. On April 1, 1998, based upon the market
price of the Common Stock as of such date, the conversion price for the Series C
Preferred Stock was equal to $6.6178 per share and a total of 1,677,485 shares
of Common Stock would have been issuable upon conversion of all of the
outstanding shares of Series C Preferred Stock.
The terms of the Series C Preferred Stock require that the Company seek
shareholder approval of the issuance of a number of shares of Common Stock upon
conversion of the Series C Preferred Stock in excess of 20% of the outstanding
Common Stock (2,383,725 shares as of the closing date) in order to comply with
any applicable rules of the Nasdaq Stock Market, Inc. and the Pacific Stock
Exchange limiting the Company's ability to issue such shares absent such
approval.
SERIES C PREFERRED STOCK
The Series C Preferred Stock has a stated value of $10,000 per share, an
annual accretion rate of 8% and a term of three years.
The price at which the Series C Preferred Stock is convertible into Common
Stock is equal to the lower of (i) the Maximum Conversion Price (as defined
below) or (ii) the average of the three lowest closing bid prices of the Common
Stock during the applicable Pricing Period (as defined below). The Maximum
Conversion Price is equal to the $11.00 during the first year following the
closing date and following the first anniversary of the closing date is equal to
the lesser of $11.00 and the average closing bid price for the five Wednesdays
immediately preceding the first anniversary of the closing date. The applicable
Pricing Period is a number of consecutive trading days immediately preceding the
date of conversion of the Series C Preferred Stock initially equal to twelve and
increased by one additional consecutive trading day for each full calendar month
which has elapsed since February 19, 1998.
The Series C Preferred Stock is generally not convertible into Common Stock
until June 20, 1998 and thereafter the amount of Series C Preferred Stock that
may be converted in any month at a conversion price less than $11.00 per share
but greater than $8.275 per share may not exceed 30% of the Series C Preferred
Stock issued to the holder of the Series C Preferred Stock for each month
following June 20, 1998. The amount of Series C Preferred Stock that may be
converted in any month at a conversion price less than $8.275 may not exceed 15%
of the Series C Preferred Stock issued to the holder of the Series C Preferred
Stock for each month following June 20, 1998. The limitations on the amount of
Series C Preferred Stock that may be converted at any time do not apply upon the
occurrence of certain events.
The Series C Preferred Stock may be redeemed by the Company at any time
commencing one year following the closing date. The redemption price is equal to
the greater of (i) the number of shares issuable upon conversion of the Series C
Preferred Stock on the date of redemption times the current market price of the
Common Stock or (ii) the price determined by multiplying the total stated value
of
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the Series C Preferred Stock (including accretion) times a percentage ranging
from 125% to 130%, depending upon the date on which the Series C Preferred Stock
is redeemed.
The holders of the Series C Preferred Stock may require the Company to
redeem shares of Series C Preferred Stock held by them upon the occurrence of
certain events including: (i) a consolidation, merger or other business
combination or event resulting in a change of control of the Company, (ii) the
sale or transfer of all or substantially all of the assets of the Company, (iii)
a purchase, tender or exchange offer which would result in a change of control
of the Company, (iv) the Company's Common Stock is not traded on the Nasdaq
Small Cap or National Market or another national exchange, (v) the Company fails
to receive the shareholder approval sought hereunder or (vi) the Company's
breach of any significant covenant or other material term of the Series C
Preferred Stock.
In addition to the holders' ability to require to the Company to redeem
their shares of Series C Preferred Stock, the holders are entitled to certain
damages payable in cash or additional shares of Common Stock in the event the
Company breaches certain covenants, including its covenant to timely issue
certificates representing Common Stock upon conversion of the Series C Preferred
Stock and to timely register the resale of the Common Stock issuable upon
conversion of the Series C Preferred Stock.
The foregoing is a brief summary of certain of the material terms of the
Series C Preferred Stock and is not intended to be a complete description
thereof. For more complete information regarding the terms of the Series C
Preferred Stock, reference should be made to the Certificate of Designation of
Series C Preferred Stock filed as Exhibit 4.3 to the Company's Current Report on
8-K filed with the Securities and Exchange Commission on February 23, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVAL THE
ISSUANCE OF COMMON STOCK UPON CONVERSION OF THE SERIES C PREFERRED STOCK.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next annual meeting
must be received at the Company's principal executive offices, 6130 Blue Circle
Drive, Minnetonka, Minnesota 55343, not later than December 22, 1998.
By Order of the Board of Directors,
/s/ Steven E. Snyder
Steven E. Snyder
Secretary
Dated: April 20, 1998
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ANCOR COMMUNICATIONS, INCORPORATED
1994 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN
(AS AMENDED THROUGH JANUARY 21, 1998)
SECTION 1. PURPOSE OF PLAN AND EFFECT ON PRIOR PLANS.
(a) PURPOSE. This Plan shall be known as the "ANCOR COMMUNICATIONS,
INCORPORATED 1994 LONG-TERM INCENTIVE AND STOCK OPTION PLAN" and is hereinafter
referred to as the "Plan." The purpose of the Plan is to aid in maintaining and
developing personnel capable of assuring the future success of Ancor
Communications, Incorporated, a Minnesota corporation (the "Company"), to offer
such personnel additional incentives to put forth maximum efforts for the
success of the business, and to afford them an opportunity to acquire a
proprietary interest in the Company through stock options and other long-term
incentive awards as provided herein. Options granted under this Plan may be
either incentive stock options ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), or options that
do not qualify as Incentive Stock Options. Awards granted under this Plan shall
be SARs, restricted stock or performance awards as hereinafter described.
(b) EFFECT ON PRIOR PLANS. From and after the Effective Date (as defined in
Section 18 hereof) of the Plan, no stock options shall be granted under the
Company's 1990 Stock Option Plan. All outstanding stock options previously
granted under the 1990 Stock Option Plan shall remain outstanding in accordance
with the terms thereof.
SECTION 2. STOCK SUBJECT TO PLAN.
Subject to the provisions of Section 15 hereof, the stock to be subject to
options or other awards under the Plan shall be the Company's authorized common
stock, par value $.01 per share (the "Common Shares"). Such shares shall be
authorized but unissued shares. Subject to adjustment as provided in Section 15
hereof, the maximum number of shares of Common Stock subject to options or
awards under the Plan at any time shall not exceed 18% of the then outstanding
Common Stock of the Company and the aggregate number of shares for which
incentive stock options may be exercised over the life of the Plan shall not
exceed 5,000,000 shares. If an option or award under the Plan expires, or for
any reason is terminated or unexercised with respect to any shares, such shares
shall again be available for options or awards thereafter granted during the
term of the Plan.
SECTION 3. ADMINISTRATION OF PLAN.
(a) The Plan shall be administered by the Board of Directors of the Company
or a committee thereof. The members of any such committee shall be
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<PAGE>
appointed by and serve at the pleasure of the Board of Directors. (The group
administering the Plan shall hereinafter be referred to as the "Committee".)
(b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Shares covered by each option or award, (ii) to determine
the employees to whom and the time or times at which such options and awards
shall be granted and the number of shares to be subject to each, (iii) to
determine the form of payment to be made upon the exercise of an SAR or in
connection with performance awards, either cash, Common Shares of the Company or
a combination thereof, (iv) to determine the terms of exercise of each option
and award, (v) to accelerate the time at which all or any part of an option or
award may be exercised, (vi) to amend or modify the terms of any option or award
with the consent of the optionee, (vii) to interpret the Plan, (viii) to
prescribe, amend and rescind rules and regulations relating to the Plan, (ix) to
determine the terms and provisions of each option and award agreement under the
Plan (which agreements need not be identical), including the designation of
those options intended to be Incentive Stock Options, and (x) to make all other
determinations necessary or advisable for the administration of the Plan,
subject to the exclusive authority of the Board of Directors under Section 16
herein to amend or terminate the Plan. The Committee's determinations on the
foregoing matters, unless otherwise disapproved by the Board of Directors of the
Company, shall be final and conclusive.
(c) The Committee shall select one of its members as its Chair and shall
hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.
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SECTION 4. ELIGIBILITY AND GRANT.
(a) ELIGIBILITY. Incentive Stock Options may only be granted under this
Plan to any full or part-time employee (which term as used herein includes, but
is not limited to, officers and directors who are also employees) of the Company
and of its present and future subsidiary corporations within the meaning of
Section 424(f) of the Code (herein called "subsidiaries"). Full or part-time
employees, officers, consultants, directors (including directors who are not
employees of the Company) or independent contractors of the Company or one of
its subsidiaries shall be eligible to receive options which do not qualify as
Incentive Stock Options and awards. In determining the persons to whom options
and awards shall be granted and the number of shares subject to each, the
Committee may take into account the nature of services rendered by the
respective employees or consultants, their present and potential contributions
to the success of the Company and such other factors as the Committee in its
discretion shall deem relevant.
(b) GRANT OF ADDITIONAL OPTIONS. A person who has been granted an option or
award under this Plan may be granted additional options or awards under the Plan
if the Committee shall so determine; provided, however, that for Incentive Stock
Options to the extent the aggregate fair market value (determined at the time
the Incentive Stock Option is granted) of the Common Shares with respect to
which all Incentive Stock Options are exercisable for the first time by an
employee during any calendar year (under all plans described in subsection (d)
of Section 422 of the Code of his or her employer corporation and its parent and
subsidiary corporations) exceeds $100,000, such options shall be treated as
options that do not qualify as Incentive Stock Options. Nothing in the Plan or
in any agreement thereunder shall confer on any employee any right to continue
in the employ of the Company or any of its subsidiaries or affect, in any way,
the right of the Company or any of its subsidiaries to terminate his or her
employment at any time.
SECTION 5. PRICE.
The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Shares at the date of grant of such option. The
option price for options granted under the Plan that do not qualify as Incentive
Stock Options and, if applicable, the price for all awards shall also be
determined by the Committee. For purposes of the preceding sentence and for all
other valuation purposes under the Plan, the fair market value of the Common
Shares shall be as reasonably determined by the Committee. If on the date of
grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements
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of this Section 5 and in connection therewith shall take such action as it deems
necessary or advisable.
SECTION 6. TERM.
Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.
SECTION 7. EXERCISE OF OPTION OR AWARD.
(a) EXERCISABILITY. The Committee shall have full and complete authority to
determine whether an option or award will be exercisable in full at any time or
from time to time during the term thereof, or to provide for the exercise
thereof in such installments, upon the occurrence of such events (such as
termination of employment for any reason) and at such times during the term of
the option as the Committee may determine and specify in the option or award
agreement.
(b) NO VIOLATION OF STATE OR FEDERAL LAWS. The exercise of any option or
award granted hereunder shall only be effective at such time that the sale of
Common Shares pursuant to such exercise will not violate any state or federal
securities or other laws.
(c) METHOD OF EXERCISE. An optionee or grantee electing to exercise an
option or award shall give written notice to the Company of such election and of
the number of shares subject to such exercise. The full purchase price of such
shares shall be tendered with such notice of exercise. Payment shall he made to
the Company in cash (including bank check, certified check, personal check, or
money order), or, at the discretion of the Committee and as specified by the
Committee, (i) by delivering certificates for the Company's Common Shares
already owned by the optionee or grantee having a fair market value as of the
date of grant equal to the full purchase price of the shares, or (ii) by
delivering the optionee's or grantee's promissory note, which shall provide for
interest at a rate not less than the minimum rate required to avoid the
imputation of income, original issue discount or a below-market-rate loan
pursuant to Sections 483, 1274 or 7872 of the Code or any successor provisions
thereto, or (iii) a combination of cash, the optionee's or grantee promissory
note and such shares. The fair market value of such tendered shares shall be
determined as provided in Section 5 herein. The optionee's or grantee's
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promissory note shall be a full recourse liability of the optionee and may, at
the discretion of the Committee, be secured by a pledge of the shares being
purchased. Until such person has been issued the shares subject to such
exercise, he or she shall possess no rights as a shareholder with respect to
such shares.
SECTION 8. STOCK APPRECIATION RIGHTS.
(a) GRANT. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.
(b) EXERCISE. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares specified in the notice and which shall
further state what portion, if any, of the SAR exercise amount (hereinafter
defined) the holder thereof requests is to be paid in cash and what portion, if
any, is to be paid in Common Shares of the Company. The Committee promptly shall
cause to be paid to such holder the SAR exercise amount either in cash, in
Common Shares of the Company, or any combination of cash and shares as the
Committee may determine. Such determination may be either in accordance with the
request made by the holder of the SAR or in the sole and absolute discretion of
the Committee. The SAR exercise amount is the excess of the fair market value of
one share of the Company's Common Shares on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company's shares shall be determined as provided in
Section 5 herein.
SECTION 9. RESTRICTED STOCK AWARDS.
Awards of Common Shares subject to forfeiture and transfer restrictions may
be granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:
(a) GRANT OF RESTRICTED STOCK AWARDS. Each restricted stock
award made under the Plan shall be for such number of Common Shares as
shall be determined by the Committee and set forth in the agreement
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containing the terms of such restricted stock award. Such agreement
shall set forth a period of time during which the grantee must remain
in the continuous employment of the Company in order for the forfeiture
and transfer restrictions to lapse. If the Committee so determines, the
restrictions may lapse during such restricted period in installments
with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of
the Committee, set forth performance or other conditions that will
subject the Common Shares to forfeiture and transfer restrictions. The
Committee may, at its discretion, waive all or any part of the
restrictions applicable to any or all outstanding restricted stock
awards.
(b) DELIVERY OF COMMON SHARES AND RESTRICTIONS. At the time of
a restricted stock award, a certificate representing the number of
Common shares awarded thereunder shall be registered in the name of the
grantee. Such certificate shall be held by the Company or any custodian
appointed by the Company for the account of the grantee subject to the
terms and conditions of the Plan, and shall bear such a legend setting
forth the restrictions imposed thereon as the Committee, in its
discretion, may determine. The grantee shall have all rights of a
shareholder with respect to the Common Shares, including the right to
receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to
delivery of the stock certificate until the expiration of the
restricted period and the fulfillment of any other restrictive
conditions set forth in the restricted stock agreement with respect to
such Common Shares; (ii) none of the Common Shares may be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or
disposed of during such restricted period or until after the
fulfillment of any such other restrictive conditions; and (iii) except
as otherwise determined by the Committee, all of the Common Shares
shall be forfeited and all rights of the grantee to such Common Shares
shall terminate, without further obligation on the part of the Company,
unless the grantee remains in the continuous employment of the Company
for the entire restricted period in relation to which such Common
Shares were granted and unless any other restrictive conditions
relating to the restricted stock award are met. Any Common Shares, any
other securities of the Company and any other property (except for cash
dividends) distributed with respect to the Common Shares subject to
restricted stock awards shall be subject to the same restrictions,
terms and conditions as such restricted Common Shares.
(c) TERMINATION OF RESTRICTIONS. At the end of the restricted
period and provided that any other restrictive conditions of the
restricted stock award are met, or at such earlier time as otherwise
determined by the Committee, all restrictions set forth in the
agreement relating to the restricted
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stock award or in the Plan shall lapse as to the restricted Common
Shares subject thereto, and a stock certificate for the appropriate
number of Common Shares, free of the restrictions and the restricted
stock legend, shall be delivered to the grantee or his or her
beneficiary or estate, as the case may be.
SECTION 10. PERFORMANCE AWARDS.
The Committee is further authorized to grant performance awards. Subject to
the terms of this Plan and any applicable award agreement, a performance awards
granted under the Plan (i) may be denominated or payable in cash, Common Shares
(including, without limitation, restricted stock), other securities, other
awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee, in its discretion, and payable to, or
exercisable by, the holder of the performance awards, in whole or in part, upon
the achievement of such performance goals during such performance periods as the
Committee, in its discretion, shall establish. Subject to the terms of this Plan
and any applicable award agreement, the performance goals to be achieved during
any performance period, the length of any performance period, the amount of any
performance award granted, and the amount of any payment or transfer to be made
by the grantee and by the Company under any Performance award shall be
determined by the Committee.
SECTION 11. INCOME TAX WITHHOLDING AND TAX BONUSES.
(a) WITHHOLDING OF TAXES. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee. In order to assist an optionee or
grantee in paying all federal and state taxes to be withheld or collected upon
exercise of an option or award which does not qualify as an Incentive Stock
Option hereunder, the Committee, in its absolute discretion and subject to such
additional terms and conditions as it may adopt, shall permit the optionee or
grantee to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the shares otherwise to be delivered upon exercise of such
option or award with a fair market value, determined in accordance with Section
5 herein, equal to such taxes or (ii) delivering to the Company Common Shares
other than the shares issuable upon exercise of such option or award with a fair
market value, determined in accordance with Section 5, equal to such taxes.
(b) TAX BONUS. The Committee shall have the authority, at the time of grant
of an option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options
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or awards granted hereunder. The amount of any such payments shall be determined
by the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.
SECTION 12. ADDITIONAL RESTRICTIONS.
The Committee shall have full and complete authority to determine whether
all or any part of the Common Shares of the Company acquired upon exercise of
any of the options or awards granted under the Plan shall be subject to
restrictions on the transferability thereof or any other restrictions affecting
in any manner the optionee's or grantee's rights with respect thereto, but any
such restriction shall be contained in the agreement relating to such options or
awards.
SECTION 13. TEN PERCENT SHAREHOLDER RULE.
Notwithstanding any other provision in the Plan, if at the time an option
is otherwise to be granted pursuant to the Plan the optionee owns directly or
indirectly (within the meaning of Section 424(d) of the Code) Common Shares of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent or subsidiary
corporations, if any (within the meaning of Section 422(b)(6) of the Code), then
any Incentive Stock Option to be granted to such optionee pursuant to the Plan
shall satisfy the requirements of Section 422(c)(5) of the Code, and the option
price shall be not less than 110% of the fair market value of the Common Shares
of the Company determined as described herein, and such option by its terms
shall not be exercisable after the expiration of five (5) years from the date
such option is granted.
SECTION 14. NON-TRANSFERABILITY.
No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option shall be exercisable
only by such optionee or grantee.
SECTION 15. DILUTION OR OTHER ADJUSTMENTS.
If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the
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Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.
SECTION 16. AMENDMENT OR DISCONTINUANCE OF PLAN.
The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 15 no amendment of the Plan, however, shall
without shareholder approval: (i) increase the maximum number of shares under
the Plan as provided in Section 2 herein, (ii) decrease the minimum price
provided in Section 5 herein, (iii) extend the maximum term under Section 6, or
(iv) modify the eligibility requirements for participation in the Plan. The
Board of Directors shall not alter or impair any option or award theretofore
granted under the Plan without the consent of the holder of the option.
SECTION 17. TIME OF GRANTING.
Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee or the Board of Directors (other than the execution and
delivery of an option or award agreement), shall constitute the granting of an
option or award hereunder.
SECTION 18. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) The Plan was approved by the Board of Directors on March 3, 1994 and
shall be effective upon (i) the completion of the Company's initial registered
public offering on Form SB-2, and (ii) the approval by the shareholders of the
Company (the "Effective Date").
(b) Unless the Plan shall have been discontinued as provided in Section 15
hereof, the Plan shall terminate March 2, 2004. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
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PROXY
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ANCOR COMMUNICATIONS, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated April 20, 1998, appoints Kenneth E. Hendrickson and Steven E.
Snyder proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote, as
designated below, all shares of Common Stock of Ancor Communications,
Incorporated which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Ancor Communications, Incorporated to be held on May 20, 1998,
at the Crown Plaza Northstar Hotel (formerly the Omni Northstar Hotel), 618
Second Avenue South, Minneapolis, Minnesota at 3:30 p.m., and any adjournment
thereof. Each of the matters set forth below has been proposed by the Company.
1. ELECTION OF DIRECTORS.
[_] FOR each of the following nominees [_] WITHHOLD AUTHORITY to vote for
each of the following nominees
TO WITHHOLD AUTHORITY TO VOTE FOR A SPECIFIC NOMINEE, PLACE A LINE THROUGH
SUCH NOMINEE'S NAME BELOW:
Gerald M. Bestler Paul F. Lidsky
2. PROPOSAL TO AMEND THE ANCOR COMMUNICATIONS, INCORPORATED 1994 LONG-TERM
INCENTIVE AND STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON
STOCK AUTHORIZED FOR ISSUANCE THEREUNDER
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S SECOND AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF THE COMPANY'S COMMON STOCK
[_] FOR [_] AGAINST [_] ABSTAIN
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4. PROPOSAL TO APPROVE THE ISSUANCE OF COMMON STOCK OF THE COMPANY UPON
CONVERSION OF THE COMPANY'S SERIES C CONVERTIBLE PREFERRED STOCK
[_] FOR [_] AGAINST [_] ABSTAIN
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO ACT UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL OF THE ABOVE ITEMS. Please sign exactly as your name appears
hereon. Jointly owned shares will be voted as directed if one owner signs
unless another owner instructs to the contrary, in which case the shares will
not be voted. If signing in a representative capacity, please indicated title
and authority.
Dated: ____________, 1998
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Signature
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Signature if held
jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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