<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
AIRNET COMMUNICATIONS CORPORATION
(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:
(4) Date Filed:
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AIRNET COMMUNICATIONS CORPORATION
100 RIALTO PLACE
SUITE 300
MELBOURNE, FLORIDA 32901
TELEPHONE: (321) 953-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 2000
The Annual Meeting of Stockholders of AirNet Communications Corporation (the
"Company") will be held at the Hilton Airport Hotel, 200 Rialto Place,
Melbourne, Florida, at 10:00 a.m., on Tuesday, June 20, 2000, for the following
purposes:
1. To elect nine Directors to the Board of Directors, with three
Directors elected for a one-year term, three Directors elected for a
two-year term and three Directors elected for a three-year term;
2. To approve the proposed Seventh Amended and Restated Certificate of
Incorporation, which has been revised to delete outdated and unnecessary
provisions from the Sixth Amended and Restated Certificate of
Incorporation;
3. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year; and
4. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on April 21, 2000 are
entitled to notice of and to vote at this Annual Meeting or any postponements or
adjournments of this Annual Meeting. A list of those stockholders will be
available for examination by any stockholder of the Company during ordinary
business hours for 10 days before this Annual Meeting at the principal offices
of the Company at 100 Rialto Place, Suite 300, Melbourne, Florida 32901.
ALL STOCKHOLDERS OF THE COMPANY ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY MAIL THE ACCOMPANYING PROXY CARD IN THE POSTAGE PAID ENVELOPE
PROVIDED. RETURNING THE PROXY CARD WILL NOT PREVENT YOU FROM VOTING IN PERSON AT
THIS ANNUAL MEETING SHOULD YOU SO DESIRE. AS EXPLAINED IN THE PROXY STATEMENT,
YOU MAY WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS ACTUALLY VOTED AT THE
MEETING.
Beneficial owners of stock held by banks, brokers or investment plans (in
"street name") will need proof of ownership to be admitted to this Annual
Meeting. A recent brokerage statement or letter from your broker or bank are
examples of proof of ownership.
By Order of the Board of Directors,
/s/ Gerald Y. Hattori
Gerald Y. Hattori, Secretary
May 1, 2000
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AIRNET COMMUNICATIONS CORPORATION
100 Rialto Place, Suite 300
Melbourne, Florida 32901
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 2000
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of AirNet Communications Corporation ("AirNet" or the
"Company") for the Annual Meeting of Stockholders to be held on Tuesday, June
20, 2000 at 10:00 a.m. at the Hilton Airport Hotel, 200 Rialto Place, Melbourne,
Florida 32901, and any adjournments thereof. The enclosed proxy, if properly
executed and returned, may be revoked at any time before it is exercised by
delivering to the Secretary of the Company a duly executed written notice of
revocation, by delivering a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not, by itself, revoke a proxy.
Shares represented by valid proxies will be voted in accordance with the
specifications in the proxies. If no specifications are made, the proxies will
be voted FOR the candidates nominated by the Board of Directors, FOR the
approval of the Seventh Amended and Restated Certificate of Incorporation and
FOR the ratification of the selection of Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year.
The Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, containing financial statements for that year and prior periods, is being
mailed with this proxy statement.
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as filed with the Securities and Exchange Commission ("SEC"),
except for exhibits, will be furnished without charge to any stockholder upon
written request to the Company Secretary, AirNet Communications Corporation, 100
Rialto Place, Suite 300, Melbourne, Florida 32901.
The approximate date on which this proxy statement and accompanying proxy are
first being sent or given to security holders is May 1, 2000.
VOTING SECURITIES AND VOTES REQUIRED
At the close of business on April 21, 2000, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of __________
shares of Common Stock of the Company, $.001 par value per share ("Common
Stock"), constituting all of the outstanding voting stock of the Company.
Holders of Common Stock are entitled to one vote per share.
The holders of a majority of the shares of Common Stock outstanding and entitled
to vote at the Annual Meeting will constitute a quorum for the transaction of
business at the Annual Meeting. Shares of Common Stock represented in person or
by proxy (including shares which abstain or do not vote with respect to one or
more of the matters presented for stockholder approval) will be counted for
purposes of determining whether a quorum exists at the Annual Meeting.
1. The affirmative vote of the holders of a plurality of the shares of
Common Stock represented at the Annual Meeting in person or by proxy is
required for the election of directors;
2. The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock is required for the approval of the
proposed Seventh Amended and Restated Certificate of Incorporation; and
3. The affirmative vote of the holders of a majority of the shares of
Common Stock represented at the Annual Meeting in person or by proxy is
required for the ratification of the selection of Deloitte & Touche LLP
as the Company's independent auditors for the current fiscal year.
Shares that abstain from voting as to a particular matter, and shares held in
"street name" by a broker or nominee who indicates on a proxy that he or she
does not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and also will not
be counted as shares voted on such matter. Accordingly, abstentions and "broker
non-votes"
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will have no effect on the voting on matters, such as the ones presented
for stockholder approval at this Annual Meeting (other than the proposal to
approve the proposed Seventh Amended and Restated Certificate of Incorporation,
which vote is based on the number of outstanding shares of Common Stock), that
require the affirmative vote of a certain percentage of the shares voting on the
matter.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of Directors at nine for the coming
year. The nine persons named below have been nominated by the Board of Directors
for election at the Annual Meeting as Directors of the Company to serve for the
term corresponding to the class into which such director has been assigned. Each
of the nominees has indicated his willingness to continue to serve, if elected,
as a Director.
Unless otherwise directed, the persons named in the proxy intend to vote for the
election of these nominees. If any nominee is unable to serve, proxies will be
voted for such other candidates as may be nominated by the Board of Directors.
Votes may be cast for the election of the nominees or withheld. Votes that are
withheld will be excluded from the vote. Since the affirmative vote of the
holders of a plurality of the Common Stock represented at the meeting in person
or by proxy will be required to elect directors, withheld votes will have the
effect of negative votes.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
THE NOMINEES.
NOMINEES FOR ELECTION AT 2000 ANNUAL MEETING
CLASS I
The following nominees assigned to this class are nominated for a term to expire
at the third succeeding Annual Meeting of Stockholders following their election,
to serve until their successors are duly elected and qualified or until their
death, resignation or removal.
G. Michael Kirby, 45, has been a Director since March 8, 2000. Mr. Kirby has
more than 20 years of experience in sales and management with both Cisco
Systems, Inc. and Wang Laboratories, Inc. He is currently Vice President,
Worldwide Software Sales for Cisco. In his ten years at Cisco, Mr. Kirby has
played leading roles in many market initiatives of the commercial marketplace,
including developing and driving the initial field strategy for the Service
Provider market. Subsequent to that, he was named Area Vice President for the
Eastern United States, followed by a promotion to Vice President, Americas
Operations. Mr. Kirby holds a B.S. degree in Economics from Temple University.
Leslie D. Shroyer, 55, has been employed by Motorola, Inc. since 1984. Most
recently, from 1997 through January 2000, Mr. Shroyer served as Senior Vice
President and Chief Information Officer for Motorola. In prior Motorola
assignments, he was the General Manager of the Internet Software Products
Division and responsible for the development of Motorola's voice-over IP network
equipment. Mr. Shroyer also served as the General Manager of a cellular business
unit that developed and deployed nationwide wireless data communications
infrastructure in the U.S., Canada, U.K., Germany, Japan, Singapore, Malaysia,
China and Australia. Mr. Shroyer is currently on leave of absence from Motorola
and expects to retire from Motorola in April 2000. Mr. Shroyer is a member of
the board of directors of Click Commerce, Inc., a privately held
business-to-business e-commerce company currently in registration for an initial
public offering. Mr. Shroyer is also a member of the board of directors and the
Interim President and CEO of Warrantycheck.com, a privately held early stage
business-to-business e-commerce company. Prior to 1984, Mr. Shroyer was employed
by Texas Instruments for 12 years in a variety of information technology (IT)
and product development assignments. Mr. Shroyer holds Bachelors of Engineering
Science and Masters of Management Science degrees from the University of Texas.
J. Douglass Mullins, 51, has served as a Director since the Company's inception
in January 1994. He served as Chairman of the Board from October 1996 until
April 1998 and he served as Chairman from March 1999 until October 1999. Mr.
Mullins was acting Chief Executive Officer between February 3, 1997 and March
10, 1997. Mr. Mullins also served as Secretary and Treasurer during 1994. Since
1993, Mr. Mullins has been President of Venture First Associates of Melbourne,
Inc., a venture capital firm, and general partner of HVFM-I, L.P., one of the
AirNet stockholders. Since 1984, Mr. Mullins has been involved with numerous
ventures in the telecommunication and imaging markets and sits on the boards of
most of these venture companies. Mr. Mullins received a Bachelor of Science
degree from Georgia Institute of Technology with highest honors and holds a
Master of Business Administration from Harvard Business School.
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CLASS II
The following nominees assigned to this class are nominated for a term to expire
at the second succeeding Annual Meeting of Stockholders following their
election, to serve until their successors are duly elected and qualified or
until their death, resignation or removal.
R. Lee Hamilton, Jr., 41, has served as President since April 1998 and as Chief
Executive Officer since January 1999. He joined us in July 1996 as Vice
President of Engineering and Operations. In April 1998 he was elected President
and Chief Operating Officer, a position he held until January 1999. Prior to
joining us, Dr. Hamilton held several executive positions at Motorola, Inc.,
from 1990 to 1996, most recently as General Manager for Systems Transmission
Products. Prior to joining Motorola, Dr. Hamilton was a Professor in the
Electrical Engineering Department at The Ohio State University, where he managed
a research program in wireless communications systems. He holds a Ph.D. in
Electrical Engineering from Purdue University, and a B.S. in Electrical
Engineering from Virginia Polytechnic Institute and State University.
Bruce R. DeMaeyer, 61, has served as a Director since January 1996.
Since 1992, Mr. DeMaeyer has been President of Great Western Teleconsulting,
focusing primarily on the domestic and international wireless
telecommunications marketplace. Prior to founding Great Western
Teleconsulting, Mr. DeMaeyer served as President of Ameritech Mobile
Communications. Mr. DeMaeyer received a B.S. in Electrical Engineering from
Illinois Institute of Technology.
James W. Brown, 48, has served as a Director since November 1997 as the designee
of SCP Private Equity Partners, L.P., one of the Company's AirNet stockholders,
and as Chairman since October 1999. Mr. Brown has been a Partner of SCP Private
Equity Management, L.P., which manages a $265 million private equity investment
fund, since its inception in 1996. Mr. Brown has also been a Managing Director
of CIP Capital Management, Inc. since 1994. From 1989 until 1994, Mr. Brown was
Chief of Staff to the Governor of Pennsylvania. During his public career, he
also served as Pennsylvania Secretary of General Services, chairman of the
Pennsylvania Higher Education Facilities Authority, chairman of the Pennsylvania
Public School building Authority and chairman of the Finance Committee of the
Pennsylvania Housing Finance Agency. Mr. Brown also served as a trustee of the
$15 billion Pennsylvania State Employees' Retirement System. Since 1991, Mr.
Brown has been an adjunct professor at Villanova University, where he teaches an
honors seminar on political campaigns and elections. Mr. Brown received a J.D.
from the University of Virginia, where he was an editor of the Virginia Journal
of International Law, and a B.A., magna cum laude, from Villanova University's
Honors Program.
CLASS III
The following nominees assigned to this class are nominated for a term to expire
at the first succeeding Annual Meeting of Stockholders following their election,
to serve until their successors are duly elected and qualified or until their
death, resignation or removal.
Joel P. Adams, 42, has served as a Director since the inception of the Company
in January 1994 and as Vice Chairman since October 1999. Mr. Adams has served
since 1987 as Vice President of Fostin Capital Corporation and is the founder
and a general partner of Adams Capital Management, L.P., a national venture
capital firm established in 1994 with offices in Austin, Texas, Palo Alto,
California, Philadelphia and Pittsburgh, Pennsylvania. Adams Capital currently
manages $250 million and invests in first-stage telecommunications and
information technology companies. In addition, Mr. Adams serves as a Director of
NetSolve, Inc., a public company, and currently serves on several private
company boards. Mr. Adams graduated with distinction from Carnegie Mellon
University, earning an M.S. in Industrial Administration. His B.S. in Nuclear
Engineering is from the State University of New York at Buffalo.
Robert M. Chefitz, 40, has served as a Director since January 1997. Mr. Chefitz
is a General Partner and Vice President of Patricof & Co. Ventures, Inc., an
affiliate of some of our stockholders. He joined the firm in 1987 and was
admitted as a General Partner in 1991. Previously, Mr. Chefitz was a Senior
Associate with Golder, Thomas & Cressey Co. of Chicago, a venture capital firm.
Mr. Chefitz received an M.B.A. from Columbia University and a B.A. from
Northwestern University.
Richard G. Coffey, 39, has served as a Director since August 1998 as the
designee of Tandem PCS Investments, CP, and of the Commpany's stockholders.
Since 1996, Mr. Coffey has been the Managing Director of Tandem Investments,
Inc., a private equity firm located in West Hartford, Connecticut, and since
1998 a Managing Member of Tandem GSM Capital, LLC, the Special Limited Partner
of Tandem PCS Investments, L.P. Prior to founding Tandem, Mr. Coffey was
Director of Private Investments for the Pennsylvania Public School Employees'
Retirement Systems from 1992 to 1996. Mr. Coffey received an M.B.A. from The
Darden School of the University of Virginia and an A.B. from Princeton
University.
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Compensation Committee
and a Nominating Committee.
The Audit Committee currently consists of Messrs. Coffey (Chairman), Chefitz,
DeMaeyer, and Harrison. The current principal responsibilities of the Audit
Committee are (a) to review (i) the Company's financial statements contained in
filings with the Securities and Exchange Commission, (ii) matters relating to
the examination of the Company by its independent auditors, accounting
procedures and controls, and (iii) the use and security of the Company's liquid
assets through the review of the Treasurer's function, and (b) to recommend the
appointment of independent accountants to the Board for its consideration and
approval, subject to ratification by the stockholders. The Audit Committee held
six meetings during 1999.
The Compensation Committee currently consists of Messrs. Adams (Chairman),
Brown, Coffey, and Dr. Hamilton. The current principal responsibilities of the
Compensation Committee are (a) to make recommendations with respect to executive
officer and senior management compensation and incentive compensation
programs; (b) subject to limitations set forth in the plans, to
administer the Company's stock option plans including the issuance of stock in
connection with the Company's incentive bonus plans; and (c) to review
management development and succession programs. The Compensation Committee held
eight meetings during 1999.
The Nominating Committee currently consists of Messrs. Mullins (Chairman),
Adams, Brown, and Dr. Hamilton. The current principal responsibilities of the
Nominating Committee are to recommend nominees to fill vacancies on the Board,
newly created directorships and expired terms of directors. The Nominating
Committee does not consider nominees recommended by the Company's stockholders.
However, a stockholder may submit a nomination of a candidate for election to
the Board of Directors to the Company's Secretary. See "Stockholder Proposals
and Nominations" below. The Nominating Committee held eight meetings during
1999.
During 1999, the Board of Directors held 22 meetings. All members of the Board
of Directors except Messrs. DeMaeyer and Chefitz attended at least 75% of the
aggregate number of meetings of the Board of Directors and the Committees of
which they were members held during their tenure.
COMPENSATION OF DIRECTORS
Non-employee directors are entitled to receive option grants and other awards
under the 1999 Equity Incentive Plan. Non-employee directors are currently
entitled to receive an award of nonqualified stock options every three years,
the amount of which is determined by the board of directors in its sole
discretion. These director options will have an exercise price equal to the fair
market value of our common stock when granted and will vest in 36 equal monthly
installments provided the director has attended at least 75% of board of
director meetings in the 12 months preceding each vesting date, with exception
for special circumstances. Unvested options for a particular year will vest on a
pro rata basis if a director leaves or is removed from office, provided he met
the attendance requirement for the portion of the year he served as a director.
All directors will be reimbursed for expenses incurred in attending meetings of
the board of directors and its committees. In September 1999, each non-employee
director received non-qualified stock options to purchase 7,533 shares of our
common stock at an exercise price of $8.63 per share. In September 1999, we also
issued to Mr. DeMaeyer 7,649 shares of our common stock in satisfaction of
$66,000 of accrued fees due to him for his services as a director under our
prior policy of cash compensation of $1,500 per meeting for independent
directors.
SECURITY OWNERSHIP
The following table sets forth certain information with respect to the ownership
of the Company's Common Stock as of April 12, 2000 by (i) persons known by the
Company to be beneficial owners of more than 5% of its Common Stock, (ii) the
directors and nominees for election as directors of the Company, (iii) the
executive officers of the Company named in the Summary Compensation Table, and
(iv) all executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
----------------------
BENEFICIAL OWNER SHARES (2) PERCENT
---------------- ---------- -------
<S> <C> <C>
SCP Private Equity Partners, LP
800 The Safeguard Building 435 Devon Park Drive
Wayne, PA 19087......................................................... 3,814,794 (3) 16.1%
Funds managed by:
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Adams Capital Management, Inc.
518 Broad Street Sewickley, PA 15143................................... 2,701,050 (4) 11.5%
Harris Corporation.
1025 West NASA Boulevard
Melbourne, FL 32919.................................................... 2,353,673 (5) 10.0%
Tandem PCS Investments, LP.
c/o Live Cycles Holding Co.,
1981 McGill College Avenue, 7th Floor
Montreal, Quebec H3A 1G1, Canada........................................ 2,310,903 (6) 9.8%
Funds managed by:
Patricof & Co. Ventures, Inc.
445 Park Avenue New York, NY 10022...................................... 2,211,078 (7) 9.4%
HVFM-I, LP.
c/o Venture First Associates of Melbourne, Inc.
1901 S. Harbor City Boulevard, Suite 501
Melbourne, FL 32901..................................................... 1,743,485 (8) 7.4%
Joel P. Adams........................................................... 2,701,050 (9) 11.5%
James W. Brown.......................................................... 3,814,794 (10) 16.1%
Robert M. Chefitz....................................................... 2,212,961 (11) 9.4%
Richard G. Coffey....................................................... 2,310,903 (12) 9.8%
Bruce R. DeMaeyer....................................................... 24,462 (13) *
Milo D. Harrison........................................................ 34,992 (14) *
G. Michael Kirby........................................................ 9,834 (15) *
J. Douglass Mullins..................................................... 1,743,485 (16) 7.4%
Leslie D. Shroyer....................................................... --
R. Lee Hamilton, Jr..................................................... 219,712 (17) *
Mark G. Demange......................................................... 20,387 (18) *
Glenn A. Ehley.......................................................... 64,571 (19) *
Gerald Y. Hattori....................................................... 20,387 (20) *
All executive officers and directors as a group
(15 persons)............................................................ 13,181,805 54.8%
* Indicates less than 1%
</TABLE>
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be the beneficial owner of a security if such person, directly or
indirectly, has or shares the power to vote or direct the voting of such
security or the power to dispose or direct the disposition of such security. A
person is also deemed to be a beneficial owner of any securities if that person
has the right to acquire beneficial ownership within 60 days after April 12,
2000. Accordingly, more than one person may be deemed to be a beneficial owner
of the same securities. Each beneficial owner has sole voting and investment
power with respect to the shares listed in the table, unless otherwise
indicated by footnote.
(2) Information is as of April 12, 2000.
(3) As reported in the Schedule 13D filed on behalf of SCP Private Equity
Partners, L.P., of this amount 3,642,130 shares are beneficially held by SCP
Private Equity Partners, L.P., which amount includes 204,443 shares issuable
upon exercise of a warrant; 169,799 shares are beneficially held by CIP Capital,
L.P., and 1,400 shares and options for 1,883 shares exercisable within 60 days
after April 12, 2000 are beneficially held by James W. Brown. SCP, CIP and Mr.
Brown have sole voting and dispositive power with respect to each of their
respective shares, and Mr. Brown has shared voting and dispositive powers as to
3,814,794 shares.
(4) As reported in the Schedule 13G filed on behalf of Adams Capital Management,
L.P. ("ACM"), of this amount 1,641,874 shares are beneficially held by ACM, and
ACM has shared voting and dispositive power with respect to these shares. This
amount also includes 785,700 shares
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beneficially held by The P/A Fund, L.P., 271,593 shares beneficially held
by Fostin Capital Associates II, and options for 1,883 shares exercisable
within 60 days after April 12, 2000.
(5) As reported in the Schedule 13G filed on behalf of Harris Corporation, this
amount includes 169,173 shares issuable upon exercise of a warrant. Harris
Corporation has sole voting and dispositive power with respect to such shares.
(6) As reported in the Schedule 13G filed on behalf of Tandem PCS Investments,
L.P., this amount includes 163,555 shares issuable upon exercise of a warrant
and options for 1,883 shares exercisable within 60 days after April 12, 2000.
(7) As reported in the Schedule 13G filed on behalf of Patricof & Co. Venture,
Inc. ("Patricof"), this amount includes 994,392 shares beneficially held by APA
Excelsior III, L.P., 378,958 shares beneficially held by APA Excelsior
III/Offshore, L.P., 785,700 shares beneficially held by The P/A Fund, L.P.,
which is co-managed by APA Pennsylvania Partners II and Fostin Capital Partners
II (see footnotes 4 and 9), and 52,028 shares beneficially held by Landmark
Equity Partners V, L.P. Patricof has shared voting and dispositive power with
respect to 2,159,050 shares.
(8) As reported in the Schedule 13G filed on behalf of HVFM-I, L.P., this amount
includes 1,742,135 shares beneficially held by HVFM-I, L.P. HVFM-I, L.P.,
VFAM-I, L.L.C. and Mr. Mullins have shared voting and dispositive power with
respect to such shares. This amount also includes options for 1,883 shares
exercisable within 60 days after April 12, 2000.
(9) As reported in the Schedule 13G filed on behalf of Adams Capital Management,
L.P. ("ACM"), of this amount 1,641,874 shares are beneficially held by ACM, and
ACM has shared voting and dispositive power with respect to these shares. This
amount also includes 785,700 shares beneficially held by The P/A Fund, L.P.,
271,593 shares beneficially held by Fostin Capital Associates II, and options
for 1,883 shares exercisable within 60 days after April 12, 2000. Mr. Adams is
the President of Adams Capital Management, which manages the assets of Fostin
Capital Corp. which is a general partner of Adams Capital Management, L.P. and
of Fostin Capital Partners II, which is a general partner of The P/A Fund, L.P.
Mr. Adams is also Vice President of Fostin Capital Corp. Mr. Adams disclaims
beneficial ownership of all such shares except to the extent of his pecuniary
interest therein.
(10) As reported in the Schedule 13D filed on behalf of SCP Private Equity
Partners, L.P., of this amount 3,642,130 shares are beneficially held by SCP
Private Equity Partners, L.P., which amount includes 204,443 shares issuable
upon exercise of a warrant; 169,799 shares are beneficially held by CIP Capital,
L.P., and 1,400 shares and options for 1,883 shares exercisable within 60 days
after April 12, 2000 are beneficially held by James W. Brown. SCP, CIP and Mr.
Brown have sole voting and dispositive power with respect to each of their
respective shares, and Mr. Brown has shared voting and dispositive powers as to
3,814,794 shares. Mr. Brown is a Partner of SCP Private Equity Partners, L.P.
and Managing Director of CIP Capital, L.P. Mr. Brown disclaims beneficial
ownership of all such shares except to the extent of his pecuniary interest
therein.
(11) As reported in the Schedule 13G filed on behalf of Patricof & Co. Venture,
Inc. ("Patricof"), this amount includes 994,392 shares beneficially held by APA
Excelsior III, L.P., 378,958 shares beneficially held by APA Excelsior
III/Offshore, L.P., 785,700 shares beneficially held by The P/A Fund, L.P.,
which is co-managed by APA Pennsylvania Partners II and Fostin Capital Partners
II (see footnotes 4 and 9), and 52,028 shares beneficially held by Landmark
Equity Partners V, L.P. Patricof has shared voting and dispositive power with
respect to 2,159,050 shares. This amount also includes options for 1,883 shares
exercisable within 60 days after April 12, 2000. Mr. Chefitz is a Senior Vice
President of Patricof & Co. Venture, Inc., which acts as the investment manager
for CIN Venture Nominees, Ltd. Mr. Chefitz disclaims beneficial ownership of all
such shares except to the extent of his pecuniary interest therein.
(12) As reported in the Schedule 13G filed on behalf of Tandem PCS Investments,
L.P., this amount includes 163,555 shares issuable upon exercise of a warrant
and options for 1,883 shares exercisable within 60 days after April 12, 2000.
Mr. Coffey is a Managing Member of the Special Limited Partner of Tandem PCS
Investments, LP. Mr. Coffey disclaims beneficial ownership of such shares except
to the extent of his pecuniary interest therein.
(13) Includes options for 8,513 shares exercisable within 60 days after April
12, 2000.
(14) Includes options for 4,849 shares exercisable within 60 days after April
12, 2000 and 885 shares issuable upon exercise of a warrant.
(15) Includes options for 834 shares exercisable within 60 days after April 12,
2000.
(16) As reported in the Schedule 13G filed on behalf of HVFM-I, L.P., this
amount includes 1,742,135 shares beneficially held by HVFM-I, L.P. HVFM-I, L.P.,
VFAM-I, L.L.C. and Mr. Mullins have shared voting and dispositive power with
respect to such shares. This amount also includes options for 1,883 shares
exercisable within 60 days after April 12, 2000. Mr. Mullins is the President
and one of two directors of Venture First Associates of Melbourne, Inc. the
general partner of HVFM-I, L.P. Mr. Mullins disclaims beneficial ownership of
all such shares except to the extent of his pecuniary interest therein.
(17) Includes options for 98,403 shares exercisable within 60 days after April
12, 2000.
(18) Includes options for 9,387 shares exercisable within 60 days after April
12, 2000.
(19) Includes options for 23,270 shares exercisable within 60 days after April
12, 2000.
(20) Includes options for 19,387 shares exercisable within 60 days after April
12, 2000.
-8-
<PAGE> 9
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
R. Lee Hamilton, Jr.(1).......................... 41 President and Chief Executive Officer, Director
Gerald Y. Hattori................................ 48 Vice President of Finance, Chief Financial Officer,
Treasurer and Secretary
Glenn A. Ehley................................... 38 Senior Vice President of Worldwide Sales and Marketing
Timothy J. Mahar................................. 52 Vice President of Marketing and Business Development
Mark G. Demange.................................. 39 Vice President of Engineering
William J. Lee................................... 44 Vice President of Services
</TABLE>
(1) Biographical information pertaining to Dr. Hamilton is presented above
under "Nominees for Election at 2000 Annual Meeting."
Gerald Y. Hattori has served as Vice President of Finance and Chief
Financial Officer since March 1999 and as Treasurer and Secretary since
September 1999. Prior to joining us, Mr. Hattori was Vice President of Finance,
Chief Financial Officer and Treasurer of Nexar Technologies, Inc., a
manufacturer of personal computers, since October 1996. From September 1987 to
October 1996, Mr. Hattori served as Corporate Controller of Sipex Corporation, a
manufacturer of analog semiconductors. Mr. Hattori holds an M.B.A. from New
Hampshire College and a B.S. degree in Business Administration/Accounting from
Merrimack College.
Glenn A. Ehley has served as Vice President of Sales and Marketing since
August 1997. Mr. Ehley joined the Company in July 1995 and served as Director of
Marketing. Prior to joining the Company, Mr. Ehley served in several positions
at Siemens Stromberg-Carlson, most recently as Senior Product Marketing Manager.
Mr. Ehley received an M.B.A. and M.S. in Computer Engineering from Florida
Atlantic University and received a B.S. in Computer Science from Illinois
Benedictine College.
Timothy J. Mahar has served as Vice President of Marketing and Business
Development since February 2000. Prior to joining the Company, Mr. Mahar served
in several sales and marketing management positions at Siemens Information and
Communications Networks since 1992. From October 1998 to February 2000 he served
as Vice President of Sales and Business Development and from October 1997 to
October 1998 as Vice President of Business Solutions. Mr. Mahar holds an M.S. in
Electrical Engineering and a B.S. in Computer Engineering from the University of
Wisconsin - Milwaukee.
Mark G. Demange has served as Vice President of Engineering since
February 1999. Prior to joining the Company, Mr. Demange served in several
positions at Zenith Electronics Corp. from October 1996 to February 1999, most
recently as Vice President and General Manager of the Cable Modem Business Unit.
From June 1989 to October 1996, Mr. Demange held several engineering management
positions in Motorola's Wireless Data Group. Mr. Demange holds an M.B.A. from
Northern Illinois University, an M.S. in Electrical Engineering from Midwest
College of Engineering and a B.S. in Electrical Engineering from Southern
Illinois University. Mr. Demange serves on the board of directors of the
Ministry Potential Discerner, a not-for-profit Illinois corporation with
headquarters in Stickney, Illinois. In this role, he acts as technology advisor
to the corporation.
William J. Lee has served as Vice President of Services since October
1999. Mr. Lee joined the Company in June 1999 as Director of Services. From
January 1985 to June 1999, Mr. Lee served in several capacities with Siemens
Information and Communications Networks, most recently as Director of Systems
Integrations Services. Prior to joining Siemens, Mr. Lee was a Lecturer at the
Midwest College of Engineering in Northern Illinois and held various positions
with AT&T Network Systems. Mr. Lee holds a B.S. in Computer Science from
Northern Illinois University.
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<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information concerning
compensation awarded to, earned by, or paid to (i) the Company's then Chief
Executive Officer and (ii) the four highest compensated executive officers who
were serving as executive officers at the end of fiscal 1999 (collectively, the
"Named Executive Officers") for services rendered in all capacities with respect
to the Company's fiscal years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards(1)
------------------- ------------
Securities All Other
Name and Fiscal Salary Bonus Underlying Compensation
Principal Position Year ($) ($) Options(#) ($)(2)
------ ------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
R. Lee Hamilton, Jr......................... 1999 222,173 38,961 346,491 --
President, Chief 1998 178,154 -- 19,585 --
Executive Officer and 1997 138,789 52,500 97,744 --
Director
Glenn A. Ehley ............................. 1999 148,824 20,195 75,324 140,806
Senior Vice President of 1998 117,231 -- 10,546 27,978
Worldwide Sales and 1997 106,333 5,500 57,350 34,793
Marketing
Mark G. Demange............................. 1999 150,514 60,000 77,545 --
Vice President of 1998 -- -- -- --
Engineering 1997 -- -- -- --
Gerald Y. Hattori........................... 1999 125,866 60,000 77,545 --
Vice President of Finance, 1998 -- -- -- --
Chief Financial Officer, 1997 -- -- -- --
Treasurer and Secretary
</TABLE>
(1) Figures in this column show the number of options for AirNet Common
Stock granted. The Company did not grant any restricted stock awards or
stock appreciation rights to any of the Named Executive Officers during
the years shown.
(2) Represents performance-based sales commissions. See "Compensation
Committee Report on Executive Compensation" below.
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<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of stock
options to the Named Executive Officers during the fiscal year ended December
31, 1999:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------
% OF TOTAL
OPTIONS EXERCISE
SECURITIES GRANTED TO OF
UNDERLYING EMPLOYEES IN BASE
OPTION/SARS FISCAL PRICE
NAME GRANTED(#) YEAR 1999 ($/SH)
---- ---------- --------- ------
<S> <C> <C> <C>
R. Lee Hamilton, Jr..................... 316,361 24 % $2.39
........................................ 30,130 2 % $8.629
Glenn R. Ehley.......................... 75,324 6 % $2.39
Gerald Y. Hattori....................... 77,545 6 % $2.39
Mark G. Demange......................... 77,545 6 % $2.39
INDIVIDUAL GRANTS
----------------------------------------
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM(1)
------------------------------------------------
ORIGINAL
EXPIRATION
NAME DATE 0%($) 5%($)(2) 10%($)(2)
---- ---- ----- -------- ---------
<S> <C> <C> <C> <C>
R. Lee Hamilton, Jr..................... 1/19/09 398,615 1,124.811 2,238,937
........................................ 9/01/09 101.538 328,921 677,772
Glenn R. Ehley.......................... 2/16/09 94,908 267,812 533,080
Gerald Y. Hattori....................... 3/22/09 97,707 275,709 548,798
Mark G. Demange......................... 3/08/09 97,707 275,709 548,798
</TABLE>
(1) Options vest in four equal annual installments. The options in this
table expire ten years after grant.
(2) These columns show the hypothetical value of the options granted at
the end of the option terms if the price of the AirNet Common Stock were
to appreciate annually by 5% and 10%, respectively, based on the grant
date value of the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information regarding stock option
exercises by the Named Executive Officers during the fiscal year ended December
31, 1999, and stock options held by the Named Executive Officers at December 31,
1999:
<TABLE>
<CAPTION>
NO. OF SECURITIES
UNDERLYING UNEXERCISED
SHARES OPTIONS HELD AT
ACQUIRED FISCAL YEAR-END
ON VALUE -----------------------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) (#)
---- --- --- --- ---
<S> <C> <C> <C> <C>
R. Lee Hamilton, Jr.................. 7,533 $104,962 113,274 375,595
Glenn R. Ehley....................... 15,834 $220,625 30,698 104,318
Gerald Y. Hattori.................... 0 $0 0 77,545
Mark G. Demange...................... 0 $0 0 77,545
VALUE OF UNEXERCISED,
IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (2)
-----------------------------------------
EXERCISABLE UNEXERCISABLE
NAME ($) ($)
---- --- ---
<S> <C> <C>
R. Lee Hamilton, Jr.................. $4,007,010 $ 12,613,321
Glenn R. Ehley....................... $1,078,687 $ 3,579,844
Gerald Y. Hattori.................... $0 $ 2,635,366
Mark G. Demange...................... $0 $ 2,635,366
</TABLE>
(1) Calculated based on the fair market value of the Company's stock on
the date of exercise minus the exercise price, multiplied by the number
of shares issued upon exercise of the options.
(2) Calculated by determining the difference between the exercise price
of the options and $36.375, the closing price of the Company's Common
Stock on December 31, 1999.
EMPLOYMENT AND OTHER COMPENSATORY ARRANGEMENTS
In October 1999, the Company entered into an Employee Noncompete and
Post-Termination Benefits Agreement with Dr. Hamilton. Pursuant to this
Agreement, Dr. Hamilton agreed that he will not compete with the Company for a
period of one year following any termination of his employment, and the Company
agreed to continue to provide him with his regular weekly salary and benefits
during the one year noncompetition period so long as his termination was not for
cause. Notwithstanding the foregoing, Dr. Hamilton may elect to terminate the
noncompetition period after nine months, in which case his right to continue
receiving salary and benefits would also terminate. The Agreement also provides
for accelerated vesting and an extended exercise period with respect to stock
options held by Dr. Hamilton at the time of termination of his employment
without "cause" or for "good reason" (each as defined in the Agreement).
In addition, the Company and each of Messrs. Ehley, Hattori, Demange, and Dr.
Hamilton have entered into an Amendment of the Incentive Stock Option Agreements
to which each named executive officer is a party (the "Amendment"). Upon the
occurrence of a
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<PAGE> 12
"termination event" or a "change in control" (each as defined in
the Amendment), the Amendment provides in each case for accelerated vesting and
an extended exercise period with respect to the stock options held by each such
executive officer.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, the Company completed the following transactions involving members
of the Board of Directors and also completed its initial public offering (the
"IPO"). At the closing of the IPO on December 10, 2000, the Company's shares of
preferred stock, including the preferred stock held by each incumbent member of
the Board of Directors and each investment fund represented by a member of the
Board of Directors, outstanding before the closing of the IPO were automatically
converted into shares of Common Stock.
1999 Bridge Financing
In early June 1999, the Company closed on loans in an aggregate amount of
$800,000 from certain existing stockholders or related affiliates as follows:
The P/A Fund, L.P., APA Excelsior III, L.P., Coutts & Co. (Jersey) Ltd.,
Custodian for APA Excelsior III/Offshore, L.P. and CIN Venture Nominees, Ltd.
($200,000); HVFM-I, L.P. ($200,000); Adams Capital Management, L.P. ($200,000);
and SCP Private Equity Partners ($200,000). The loans were evidenced by demand
promissory notes and accrued interest at the prime rate plus 2% per annum. The
demand notes were canceled and exchanged for convertible promissory notes as
part of the initial closing of our convertible promissory notes and warrant
offering.
In mid-June 1999, the Company closed on $6.0 million of convertible promissory
notes along with warrants to purchase approximately 490,663 shares of Common
Stock. In July and August 1999, the Company closed on an additional $338,187 of
convertible promissory notes along with warrants to purchase approximately
27,656 shares of Common Stock. All of the warrants have an exercise price of
$3.67 per share. The purchasers of the convertible promissory notes and
warrants, all of whom are existing stockholders, invested in this offering as
follows: SCP Private Equity Partners ($2,500,000); Adams Capital Management,
Inc. ($600,000); The P/A Fund, L.P., APA Excelsior III, L.P., Coutts & Co.
(Jersey) Ltd., Custodian for APA Excelsior III/Offshore, L.P. and CIN Venture
Nominees, Ltd. ($300,000); HVFM-I, L.P. ($600,000); Tandem PCS Investments, L.P.
($2,000,000); Milo D. Harrison ($10,817); and other existing investors
($338,187). Mr. Harrison is currently a Director of the Company. The convertible
promissory notes were secured by a security interest in all of the AirNet
assets.
The principal and accrued interest under the outstanding convertible promissory
notes was automatically converted into shares of Series G Preferred Stock upon
the closing of the Series G financing.
Series G Financing
In September 1999, the Company raised $30.0 million in gross proceeds
from the sale of Series G Preferred Stock to 45 investors, at a per share
purchase price of $0.13, including conversion of principal and accrued interest
under $6.3 million of the convertible promissory notes issued in the 1999 bridge
financing. The lead outside investors in the Series G offering were Mellon
Ventures, Inc. ($5,000,000), Peak Telecommunications Investments, LLC
($3,987,157) and Peak Telecommunications Investments II, LLC ($2,199,907) and
Damac Investors Inc. ($1,000,000) and Damac Investors (III) Inc. ($1,000,000)
Milo D. Harrison ($107), and a substantial portion of the funding was provided
by existing stockholders, including Tandem PCS Investments, L.P. ($48,027),
HVFM-I, L.P. ($2,442,308), Adams Capital Management, L.P. ($490,045), SCP
Private Equity Partners ($1,860,034.25), The P/A Fund, L.P. ($2,401), APA
Excelsior III, L.P. ($142,953), Coutts & Co. (Jersey) Ltd., Custodian for APA
Excelsior III/Offshore, L.P. ($1,228), CIN Venture Nominees, Ltd. ($173) and
Harris Corporation ($4,252,313).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is a report of the Compensation Committee of the board of
directors describing the compensation policies applicable to the executive
officers during the year ended December 31, 1999. The Compensation Committee
recommends salaries, incentives and other forms of compensation for directors
and officers, administers the Company's incentive compensation and benefit
plans, including stock plans, and recommends policies relating to such incentive
compensation and benefit plans. Executive officers who are also directors have
not participated in deliberations or decisions involving their own compensation.
COMPENSATION PHILOSOPHY
The general philosophy of the Compensation Committee is to provide executive
compensation programs, including salary, bonus and equity incentive programs,
that will enhance the profitability of the company and its stockholder value by
aligning the financial interests of the Company's executives with those of its
stockholders. The responsibilities of the Compensation Committee are (i) to make
recommendations with respect to executive officer and senior management
compensation and incentive compensation
-12-
<PAGE> 13
programs; (ii) subject to limitations, to administer the Company's stock
option plans including the issuance of stock in connection with the Company's
incentive bonus plans; and (iii) to review management development and succession
programs.
The overall goal of the Compensation Committee is to ensure that compensation
policies are consistent with the Company's strategic business objectives and
provide incentives for the attainment of these objectives. The compensation
program includes three components:
- - Base salary, which is intended to provide a stable annual salary at a level
consistent with individual contributions.
- - Variable pay, which links bonus and other short-term incentives to the
performance of the Company and the individual executive.
- - Stock ownership and similar long-term incentives, which encourage actions to
maximize stockholder value.
In addition, Mr. Ehley receives sales commissions.
Another goal of the Compensation Committee is to ensure that the Chief Executive
Officer and other executives are compensated in a manner that is consistent with
the Company's compensation strategy, that is competitive with other companies in
the industry and that is equitable within the Company. The Compensation
Committee believes that compensation programs must be structured to attract and
retain talented executives.
BASE SALARY
It is the Compensation Committee's policy to position base executive salaries
annually at levels that are competitive within the industry, with consideration
for industry standards, individual performance and scope of responsibility in
relation to other officers and key executives within the Company. These factors
are considered subjectively in the aggregate, and none of the factors is
accorded a specific weight. In selected cases, other factors may also be
considered.
In establishing compensation guidelines with respect to base salary, the Company
utilized data from various surveys prepared by independent firms to assist it in
setting salary levels competitive with those of other industry companies. While
it is the Compensation Committee's intent to continue to review periodically
base salary information to monitor competitive ranges within the applicable
market, including consideration of the Company's geographic location and
individual job responsibilities, it is further the intent of the Compensation
Committee to maintain a close relationship between the Company's performance and
the base salary component of its executive officers' compensation.
PERFORMANCE BONUSES
The Compensation Committee also sets the bonuses of the executive officers and
consults with the Chief Executive Officer, who is a member of the Committee,
regarding the Company's bonus policies. Currently, the Company maintains certain
bonus programs for key corporate employees for the payment of cash bonuses based
on a combination of company performance in relation to predetermined objectives
and/or individual executive performance during the year. The purpose of these
programs is (i) to offer incentives to key management to (A) reward them for
achieving financial goals and (B) further the alignment of interests of key
management with our stockholders, and (ii) to provide incentives to operations
management to maintain a high level of profitability and asset utilization and
to achieve our financial goals in individual markets. Bonuses for key corporate
employees are based on the achievement of certain financial and operational
objectives, and each executive participant's bonus award is calculated as a
percentage of base salary, pro-rated by length of service during the year, and
ranges from 2.5% to 25% of base salary.
During the early months of each year, the Compensation Committee establishes
financial and operational target objectives for the year. Individual payouts in
relation to targeted objectives are adjusted upward or downward based on the
Company's overall performance in relation to those objectives. A
commission-based sales executive is eligible for 50% of the performance bonus
which such executive would have achieved.
SALES COMMISSIONS
Mr. Ehley is awarded commissions based on the level of sales which he attains of
the Company's products. The sales commissions are paid on each sale and are
calculated as up to 1% of the dollar value of such sale. In addition, Mr. Ehley
is paid a commission of 50% of the sales commissions earned by his sales force
(i.e., up to an additional 0.5%). The Company pays out the applicable portion of
a sales commission only after attainment of each contractual milestone.
STOCK OPTIONS AND OTHER AWARDS
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<PAGE> 14
The Compensation Committee utilizes stock options and other equity awards as a
key incentive because they provide executives with the opportunity to become
stockholders and thereby share in the long-term appreciation in the value of the
Company's Common Stock. The Compensation Committee believes that the management
employees should be rewarded with a proprietary interest in the Company for
continued outstanding long-term performance and to attract, motivate and retain
qualified and capable executives. The Compensation Committee believes these
awards are beneficial to the Company and the stockholders because they directly
align the interests of the executives with those of other stockholders.
The Board of Directors adopted the AirNet Communications Corporation 1999 Equity
Incentive Plan, effective as of September 1, 1999. Under the 1999 Plan, the
Compensation Committee, or such other committee of the Board of Directors as it
may designate, may grant, at its discretion, awards to participants in the form
of non-qualified stock options, incentive stock options, a combination thereof,
stock appreciation rights, restricted shares, performance awards or other equity
incentives. The maximum number of shares subject to the 1999 Plan is currently
3,206,842 shares.
The Compensation Committee determines the awards, if any, to be granted from
time to time to executives pursuant to the 1999 Plan. Substantially all of the
awards have been incentive stock options, which are granted at no less than the
prevailing market value. Accordingly, these awards will only benefit executives
if the price of the Common Stock increases over the term of the applicable
option. The Company's stock options typically vest ratably over a period of four
years. Options are granted as compensation for performance and as an incentive
to promote the future growth and profitability of the Company. In determining
the relationship between the options to be granted to executive employees and
the compensation paid by competitors to their executives, the Compensation
Committee takes into account the outstanding options already held by each
individual executive officer, and the projected value of the options based on
historical and assumed appreciation rates of the shares of Common Stock.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The compensation for R. Lee Hamilton, Jr., the Company's Chief Executive
Officer, is determined based on a number of factors, including comparative
salaries of chief executive officers of competitive companies, Dr. Hamilton's
individual performance and the Company's performance as measured against the
stated objectives. The 1999 compensation of Dr. Hamilton consisted of base
salary, bonus and option grants. in establishing the 1999 bonus for Dr.
Hamilton, the Compensation Committee considered (i) his oversight of operating
performance of the Company, (ii) his oversight of the financial performance of
the Company, and (iii) his success in meeting key strategic goals.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee has considered the impact of Section 162(m) of the
Internal Revenue Code adopted under the Omnibus Budget Reconciliation Act of
1993, which section disallows a deduction for any publicly held corporation for
individual compensation exceeding $1 million in any taxable year for the Chief
Executive Officer and four other most highly compensated executive officers,
unless such compensation meets the requirements for the "performance-based"
exception to the general rule. Since the cash compensation paid by the Company
to each of its executive officers is expected to be well below $1 million and
the Company believes that options granted under the 1999 Plan will meet the
requirements for qualifying as performance-based, the compensation committee
believes that this section will not affect the tax deductions available to the
Company. It will be the Compensation Committee's policy to qualify, to the
extent reasonable, the executive officers' compensation for deductibility under
applicable tax law.
APRIL 19, 2000
RESPECTFULLY SUBMITTED,
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
JOEL P. ADAMS, CHAIRMAN
JAMES W. BROWN,
RICHARD G. COFFEY AND
R. LEE HAMILTON, JR.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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<PAGE> 15
No interlocking relationship exists between the Board of Directors or the
Compensation Committee and the Board of Directors or Compensation Committee of
any other company, nor has any such interlocking relationship existed in the
past. Messrs. Brown, Adams, Chefitz, Coffey, and Mullins are affiliated with SCP
Private Equity Partners, L.P., Adams Capital Management, Inc., Patricof & Co.
Ventures, Inc., Tandem PCS Investments, L.P., HVFM-I, L.P., respectively, which
each holds more than 5% of the outstanding and issued shares of the Company's
Common Stock. See "Certain Relationships and Related Transactions" above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by persons ("Reporting
Persons") required to file such reports pursuant to Section 16(a) of the
Exchange Act, the Company believes that all filings required to be made by
Reporting Persons of the Company were timely made in accordance with the
requirements of the Exchange Act.
PROPOSAL NO. 2
RESTATEMENT OF THE CERTIFICATE OF INCORPORATION
On March 21, 2000, the Board of Directors unanimously adopted the Seventh
Amended and Restated Certificate of Incorporation, a copy of which is attached
as Appendix B, to delete from the Sixth Amended and Restated Certificate of
Incorporation (the "Current Charter") provisions relating to the rights,
preferences, privileges and restrictions of the Company's voting convertible
preferred stock which expired as a result of the Company's initial public
offering of its Common Stock in December 1999 (the "IPO") and other provisions
which have expired or are no longer applicable to the Company.
Pursuant to the provisions of the Current Charter, all shares of the Company's
convertible preferred stock which were outstanding at the time of the IPO (the
"Pre-IPO Convertible Preferred Stock") were automatically converted into shares
of the Company's Common Stock, and all rights, preferences, privileges and
restrictions relating to the Pre-IPO Convertible Preferred Stock and certain
provisions relating to shares of the Company's common stock which were
outstanding prior to the IPO expired and are no longer applicable. The Current
Charter further provides that following the IPO, the Company is no longer
authorized to issue shares of the Pre-IPO Convertible Preferred Stock and the
Company's capital structure shall consist of 50,000,000 authorized shares of
Common Stock and 10,000,000 authorized shares of "blank check" Preferred Stock,
with each class of stock having rights, preferences, privileges and restrictions
separate and distinct from the shares of each respective class which were
outstanding prior to the IPO.
Since the rights, preferences, privileges and restrictions relating to the
Pre-IPO Preferred Stock and certain pre-IPO rights and restrictions relating to
the Company's Common Stock have expired and are no longer applicable and the
Company is no longer authorized to issue shares of the Pre-IPO Convertible
Preferred Stock, the Board of Directors believes that the provisions relating to
these rights, preferences, privileges and restrictions should be deleted from
the Current Charter. This will eliminate any confusion with the Company's
capital structure following the IPO and provide for a more concise Certificate
of Incorporation.
For the reasons stated above, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE PROPOSED SEVENTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP as the
Company's independent auditors for the current fiscal year. Although stockholder
approval of the Board of Directors' selection of Deloitte & Touche LLP is not
required by law, the Board of Directors believes that it is advisable to give
stockholders an opportunity to ratify this selection. If this proposal is not
approved at the Annual Meeting, the Board of Directors may reconsider its
selection.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and will also be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR.
STOCKHOLDERS PROPOSALS AND NOMINATIONS
Proposals on matters appropriate for stockholder consideration consistent with
the regulations of the Securities and Exchange Commission submitted by
stockholders must be received at AirNet's principal executive offices on or
before December 31, 2000. A
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<PAGE> 16
timely proposal will be included in the proxy materials and form of proxy
for consideration by the stockholders at the 2001 Annual Meeting.
A stockholder wishing to nominate a candidate for election should deliver a
written notice of nomination to the Company's Secretary at the address below for
receipt no later than December 31, 2000. The notice of nomination is required to
contain certain information about both the nominee and the stockholder making
the nomination as set forth in the Company's bylaws. The stockholder is also
required to attend the meeting in person or by proxy to nominate the person or
persons specified in the notice. A nomination which does not comply with all the
requirements set forth in the bylaws will not be considered.
Stockholder proposals or nominations may be mailed to Gerald Y. Hattori,
Secretary, AirNet Communications Corporation, 100 Rialto Place, Suite 300,
Melbourne, Florida 32901.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters which
may come before the meeting. It is the intention of the persons named in the
enclosed proxy to vote the proxy in accordance with their best judgment if any
other matters should properly come before the meeting, including voting for
election of a Director in place of any person named in the proxy who may not be
available for election.
The cost of soliciting proxies will be borne by the Company. The solicitation of
proxies by mail may be followed by solicitation of certain stockholders by
officers, Directors, or employees of the Company by telephone or in person.
If you may not be present at the meeting, it would be appreciated if you would
complete, date, and sign the enclosed proxy and return it promptly in the
enclosed envelope.
Melbourne, Florida
May 1, 2000
-16-
<PAGE> 17
APPENDIX A
AIRNET COMMUNICATIONS CORPORATION
PROXY
Proxy for the Annual Meeting of Stockholders to be held on June 20, 2000.
The undersigned, revoking all prior proxies, hereby appoint(s) Joel P.
Adams, James W. Brown, Richard G. Coffey, Robert M. Chefitz, Bruce R. DeMaeyer,
R. Lee Hamilton, Jr., and G. Michael Kirby, and each of them, with full power of
substitution, as proxies to represent and vote, as designated herein, all shares
of Common Stock of AirNet Communications Corporation (the "Company") which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held at the Hilton Airport Hotel,
200 Rialto Place, Melbourne, Florida, 32901 on June 20, 2000 at 10:00 a.m.,
local time, and at any adjournment thereof.
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. Attendance of the undersigned at the meeting or any
adjournment thereof will not be deemed to revoke this proxy unless the
undersigned shall revoke this proxy in writing before it is exercised or
affirmatively indicate his intent to vote in person.
1. To elect nine Directors to the Board of Directors, with three Directors
elected for a three-year term, three Directors elected for a two-year term and
three Directors elected for a one-year term:
Class I: G. Michael Kirby, Leslie D. Shroyer, J. Douglass Mullins
Class II: R. Lee Hamilton, Jr., Bruce R. DeMaeyer, James W. Brown
Class III: Joel P. Adams, Robert M. Chefitz, Richard G. Coffey
[_] FOR ALL [_] WITHHOLD AUTHORITY
NOMINEES TO VOTE FOR ALL NOMINEES
[_] FOR ALL NOMINEES EXCEPT FOR THE FOLLOWING:
2. To approve the proposed Seventh Amended and Restated Certificate of
Incorporation of the Company:
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the selection of Deloitte & Touche LLP as the Company's independent
auditors for the current fiscal year:
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE> 18
Please sign exactly as name appears hereon. When shares
are held by joint owners, both should sign. When signing
as attorney, executor, administrator, trustee or
guardian, please give title as such. If a corporation or
a partnership, please sign by authorizing person.
Signature:
--------------------------
Date:
-------------------------------
Signature:
--------------------------
Date:
-------------------------------
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY
<PAGE> 19
APPENDIX B
AIRNET COMMUNICATIONS CORPORATION
PROPOSED SEVENTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
<PAGE> 20
SEVENTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AIRNET COMMUNICATIONS CORPORATION
<PAGE> 21
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I......................................................................................................................1
ARTICLE II.....................................................................................................................1
ARTICLE III....................................................................................................................1
ARTICLE IV.....................................................................................................................1
A. CLASSES OF STOCK............................................................................................................1
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF COMMON STOCK............................................................1
1. Dividends...............................................................................................................1
2. Stock Split, Reclassification, etc......................................................................................2
3. Liquidation.............................................................................................................2
4. Voting..................................................................................................................2
5. No Pre-emptive or Subscription Rights...................................................................................2
C. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF PREFERRED STOCK.........................................................2
ARTICLE V......................................................................................................................3
ARTICLE VI.....................................................................................................................3
ARTICLE VII....................................................................................................................4
ARTICLE VIII...................................................................................................................4
ARTICLE IX.....................................................................................................................4
ARTICLE X......................................................................................................................4
</TABLE>
-i-
<PAGE> 22
SEVENTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AIRNET COMMUNICATIONS CORPORATION
Pursuant to the provisions of Sections 242 and 245 of the General Corporation
Law of Delaware, the undersigned Corporation adopts the following Seventh
Amended and Restated Certificate of Incorporation:
FIRST: The name of the Corporation is AirNet Communications
Corporation (the "Corporation").
SECOND: The following Seventh Amended and Restated Certificate of
Incorporation was adopted by the Board of Directors and the stockholders of the
Corporation in accordance with Sections 242 and 245 of the General Corporation
Law of Delaware.
The Restated Certificate of Incorporation of the Corporation (originally filed
under the name of Overture Systems, Inc. incorporated on January 11, 1994), as
previously amended, is hereby deleted in its entirety and is amended and
restated as follows:
ARTICLE I
The name of the Corporation is AirNet Communications Corporation.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at The Prentice-Hall Corporation System, Inc., 1013 Centre Road, in the
City of Wilmington, County of New Castle. The name of the registered agent at
such address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is 60,000,000 shares, consisting of
two classes of capital stock:
A. CLASSES OF STOCK. The aggregate number of shares of capital
stock which the Corporation shall have authority to issue 60,000 shares,
consisting of two classes of capital stock:
(a) 50,000,000 shares of Common Stock, par
value $.001 per share ("Common Stock");
(b) 10,000,000 shares of Preferred Stock,
par value $.01 per share ("Preferred
Stock").
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF COMMON STOCK.
Notwithstanding any provision to the contrary contained herein, the rights,
preferences, privileges and restrictions granted to and imposed upon Common
Stock are set forth in this ARTICLE IV.B. Except as otherwise expressly provided
in this ARTICLE IV.B., all shares of Common Stock shall be identical and shall
entitle the holders thereof to the same rights and privileges.
1. Dividends. When, as and if dividends on Common Stock are declared
by the Corporation's Board of Directors, whether payable in cash, in property or
in securities of the Corporation, the holders of Common Stock shall be entitled
to share equally in and to receive, in accordance with the number of shares of
Common Stock held by each such holder, all such dividends.
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<PAGE> 23
Dividends payable under this Article IV.B. shall be paid to the
holders of record of the outstanding Common Stock as their names shall appear on
the stock register of the Corporation on the record date fixed by the Board of
Directors of the Corporation in advance of declaration and payment of each
dividend. Any Common Stock issued as a dividend pursuant to this Article IV.B.
shall, when so issued, be duly authorized, validly issued, fully paid and
non-assessable and free of all liens and charges. The Corporation shall not
issue fractions of Common Stock on payment of such dividend but shall issue a
whole number of shares to such holder of Common Stock rounded up or down in the
Corporation's sole discretion to the nearest whole number, without compensation
to the stockholder whose fractional share has been rounded down or from any
stockholder whose fractional share has been rounded up.
Notwithstanding anything contained herein to the contrary, no
dividends on Common Stock shall be declared by the Corporation's Board of
Directors or paid or set apart for payment by the Corporation at any time that
such declaration, payment, or setting apart is prohibited by applicable law.
2. Stock Split, Reclassification, etc. The Corporation shall not in
any manner subdivide (by any stock split, reclassification, stock dividend,
recapitalization or otherwise) or combine the outstanding shares of one class of
Common Stock unless the outstanding shares of all classes of Common Stock shall
be proportionately subdivided or combined.
3. Liquidation. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation, after payment shall
have been made to holders of outstanding Preferred Stock, if any, of the full
amount of which they are entitled pursuant to this Certificate of Incorporation
and any resolutions that may be adopted from time to time by the Corporation's
Board of Directors, in accordance with Article IV.C. below (for the purpose of
fixing the voting rights, designations, preferences and relative participating,
optional or other special rights of any class or series of Preferred Stock), the
holders of Common Stock shall be entitled, to the exclusion of the holders of
Preferred Stock, if any, to share ratably, in accordance with the number of
shares of Common Stock held by each such holder, in all remaining assets of the
Corporation available for distribution among the holders of Common Stock,
whether such assets are capital, surplus, or earnings. For the purposes of this
Article IV.B., neither the consolidation or merger of the Corporation with or
into any other corporation or corporations in which the stockholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation), nor the sale, lease or transfer by
the Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation as those
terms are used in this Article IV.B.
4. Voting. Each holder of Common Stock shall be entitled to one vote
for each share of such stock issued and outstanding and registered in such
holder's name and shall be entitled to vote upon such matters and in such manner
as may be provided by Delaware law and this Certificate of Incorporation.
5. No holder of Common Stock shall be entitled to pre-emptive or
subscription rights.
C. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF PREFERRED
STOCK. Shares of Preferred Stock may be issued from time to time in one or more
series as may be determined by the Board of Directors of the Corporation.
Subject to the provisions of this Certificate of Incorporation and this Article
IV.C., the Board of Directors of the Corporation is authorized to determine or
alter the rights, preferences, privileges and restrictions granted to or imposed
upon any wholly unissued class or series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the Board of
Directors of the Corporation originally fixing the number of shares constituting
any such additional series, to increase or decrease (but not below the number of
shares of such series then outstanding) the number of shares of any such
additional series subsequent to the issue of shares of that series.
Authorized and unissued shares of Preferred Stock may be issued with
such designations, voting powers, preferences and relative participating
optional or other special rights, and qualifications, limitations and
restrictions
2
<PAGE> 24
on such rights, as the Board of Directors of the Corporation may
authorize by resolutions duly adopted prior to the issuance of any shares of any
class or series of Preferred Stock, including, but not limited to: (i) the
distinctive designation of each series and the number of shares that will
constitute such series; (ii) the voting rights, if any, of shares of such series
and whether the shares of any such series having voting rights shall have
multiple votes per share; (iii) the dividend rate on the shares of such series,
any restriction, limitation or condition upon the payment of such dividends,
whether dividends shall be cumulative and the dates on which dividends are
payable; (iv) the prices at which, and the terms and conditions on which, the
shares of such series may be redeemed, if such shares are redeemable; (v) the
purchase or sinking fund provisions, if any, for the purchase or redemption of
shares of such series; (vi) any preferential amount payable upon shares of such
series in the event of the liquidation, dissolution or winding-up of the Company
or the distribution of its assets; and (vii) the prices or rates of conversion
at which, and the terms and conditions on which, the shares are convertible.
Any and all Preferred Stock issued and for which full consideration
has been paid or delivered shall be deemed fully paid stock and the holder
thereof shall not be liable for any further payment thereon.
ARTICLE V
The Board of Directors shall have the power, in addition to the
stockholders, to make, repeal, alter, amend and rescind any or all of the bylaws
of the Corporation.
ARTICLE VI
The Board of Directors shall be constituted as follows:
(i) The number of directors which will constitute the whole Board of
Directors of the Corporation shall be fixed exclusively by one or more
resolutions adopted by the Board of Directors of the Corporation or as otherwise
provided in the bylaws of the Corporation.
(ii) At the first annual meeting of stockholders following the
Corporation's fiscal year ended December 31, 1999, the nominees for directors
shall be divided into three classes, as nearly equal in number as possible,
designated as Class I, Class II, and Class III, respectively, and assigned to
such classes in accordance with a resolution or resolutions adopted by the Board
of Directors. At such annual meeting of stockholders, (i) the Class I directors
shall be nominated for election for a term to expire at the third succeeding
annual meeting of stockholders following their election; (ii) the Class II
directors shall be nominated for election for a term to expire at the second
succeeding annual meeting of stockholders following their election, and (iii)
the Class III directors shall be nominated for election for a term to expire at
the first annual meeting of stockholders following their election. At each
succeeding annual meeting of stockholders, directors shall be elected for a term
to expire at the third succeeding annual meeting of stockholders following their
election to succeed the directors of the class whose terms expire at such annual
meeting.
(iii) Notwithstanding the foregoing provisions of this ARTICLE VI,
each director shall serve until his successor is duly elected and qualified or
until his death, resignation or removal. Neither the Board of Directors nor any
individual director may be removed without cause. Subject to any limitation
imposed by law, any individual director or directors may be removed with cause
by the holders of a majority of the voting power of the corporation entitled to
vote at an election of directors. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
(iv) In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors shall have the power to make, adopt, amend or
repeal the Bylaws, or adopt new Bylaws for this Corporation, by a resolution
adopted by a majority of the directors.
(v) Vacancies in the Board of Directors may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director.
3
<PAGE> 25
(vi) Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
ARTICLE VII
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the General Corporation Law of Delaware)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the bylaws of the Corporation.
ARTICLE VIII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of Title 8 of the General Corporation
Law of Delaware, or (iv) for any transaction from which the director derived any
improper personal benefit. The foregoing sentence notwithstanding, if the
General Corporation Law of Delaware is hereafter amended to authorize further
limitations of the liability of a director of a corporation, then a director of
the Corporation, in addition to the circumstances in which a director is not
personally liable set forth in the preceding sentence, shall not be liable to
the fullest extent permitted by the General Corporation Law of Delaware as so
amended. Any repeal or modification of the foregoing provisions of this Article
VIII by the stockholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation existing at the time of such
repeal or modification.
ARTICLE IX
The Corporation shall indemnify and hold harmless any director and
officer of the Corporation from and against any and all expenses and liabilities
that may be imposed upon or incurred by such person in connection with, or as a
result of, any proceeding in which such person may become involved, as a party
or otherwise, by reason of the fact that such person is or was such a director
or officer of the Corporation, whether or not such person continues to be such
at the time such expenses and liabilities shall have been imposed or incurred.
It is the intention of this Article IX to provide indemnification to the fullest
extent permitted by the laws of the State of Delaware, as they may be amended
from time to time.
ARTICLE X
Subject to the provisions contained herein, the Corporation reserves
the right to amend, alter, change or repeal any provision contained in this
Seventh Amended and Restated Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
This Seventh Amended and Restated Certificate of Incorporation was
duly adopted in accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware by the Board of Directors and
the stockholders of the Corporation.
I, THE UNDERSIGNED, being the President and Chief Executive Officer
of the Corporation, hereby declare, under penalties of perjury, that this is the
act and deed of the Corporation and the facts herein stated are true, and
accordingly, I have executed this Seventh Amended and Restated Certificate of
Incorporation as of the ____ day of June, 2000.
AIRNET COMMUNICATIONS CORPORATION
By:
----------------------------------------
4
<PAGE> 26
Print Name: R. Lee Hamilton, Jr.
-------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------------
ATTESTED
- ---------------------------------------
Janice L. Fitzgerald
Assistant Secretary
5
