SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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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
Anaren Microwave, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies.
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(2) Aggregate number of securities to which transaction applies:
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(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):
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[ ] Fee paid previously with preliminary materials.
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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:
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ANAREN MICROWAVE INC.
6635 Kirkville Road
East Syracuse, New York 13057
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on November 2, 2000
To the Holders of the Common Stock
of Anaren Microwave, Inc.:
PLEASE TAKE NOTICE, that the Annual Meeting of Shareholders of Anaren
Microwave, Inc. (the "Company") will be held on November 2, 2000, at 11:00 a.m.
Eastern Standard Time at the Wyndham Hotel, 6302 Carrier Parkway, East Syracuse,
New York 13057, for the following purposes:
(1) To elect two directors;
(2) To approve the Anaren Microwave, Inc. Incentive Stock Option Plan for
Key Employees, to replace the Company's existing Incentive Stock
Option Plan;
(3) To approve the Company-Wide Anaren Microwave, Inc. Stock Option Plan;
(4) To approve an amendment to the Company's Certificate of Incorporation
to authorize additional shares; and
(5) To transact such other business as may be properly brought before the
Meeting.
Shareholders of record as of the close of business on September 17, 2000
will be entitled to notice of and to vote at the Meeting.
Enclosed is the annual report for the fiscal year ended June 30, 2000,
along with a proxy statement and proxy. Shareholders who do not expect to attend
the Meeting are requested to sign and return the proxy in the enclosed envelope.
By Order of the Board of Directors
David M. Ferrara
Secretary and General Counsel
Dated: September 18, 2000
East Syracuse, New York
ANAREN MICROWAVE, INC.
6635 Kirkville Road
East Syracuse, New York 13057
This Proxy Statement is being mailed on or about September 18, 2000, to
the Shareholders of Anaren Microwave, Inc. ("Anaren" or the "Company") entitled
to receive the accompanying Notice of Annual Meeting of Shareholders and is
provided, by order of its Board of Directors, in connection with the
solicitation of proxies to be used at the Annual Meeting of Shareholders (the
"Meeting") of the Company to be held on November 2, 2000 at 11:00 a.m. and at
any adjournment or adjournments thereof, for the purposes set forth in the
Notice.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time prior to its exercise by (i) submitting a
subsequently dated proxy; or (ii) filing written notice of such revocation with
the Secretary of the Meeting. The proposals described in this Proxy Statement
will be presented by the Board of Directors of the Company. Where a choice is
specified with respect to a proposal, the shares represented by the proxy will
be voted in accordance with the specifications made. Where a choice is not so
specified, the shares represented by the proxy will be voted to elect the
nominees for director named herein, and to approve the Anaren Microwave
Incentive Stock Option Plan for Key Employees, the Company-wide Anaren Microwave
Stock Option Plan, and the proposed amendments to the Company's Certificate of
Incorporation.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on September 17, 2000, the record date stated in
the accompanying Notice, the Company had outstanding 11,024,960 shares of common
stock, $.01 par value (the "Common Stock"), each of which is entitled to one
vote with respect to each matter to be voted on at the Meeting. A majority of
the issued and outstanding shares of Common Stock present in person or by proxy,
a total of 5,512,480 shares, will be required to constitute a quorum for the
transaction of business at the Meeting. The Company has no class of voting stock
outstanding other than the Common Stock.
Abstentions and broker non-votes (as defined below) are counted as present
for the purpose of determining the presence or absence of a quorum for the
transaction of business. For the purpose of determining the vote required for
approval of matters to be voted on at the Meeting, shares held by Shareholders
who abstain from voting will be treated as being "present" and "entitled to
vote" on the matter and, thus, an abstention has the same legal effect as a vote
against the matter. However, in the case of a broker non-vote or where a
shareholder withholds authority from his proxy to vote the proxy as to a
particular matter, such shares will not be treated as "present" and "entitled to
vote" on the matter. Accordingly, a broker non-vote or the withholding of a
proxy's authority will have no effect on the outcome of the vote on the matter.
A "broker non-vote" refers to shares represented at the Meeting in person or by
proxy by a broker or nominee where such broker or nominee (i) has not received
voting instructions on a particular matter from the beneficial owner or persons
entitled to vote; and (ii) the broker or nominee does not have discretionary
voting power on such matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to persons
known to the Company to own beneficially more than 5% of the outstanding shares
of Common Stock of the Company, as of September 17, 2000 (except as otherwise
indicated).
Number of Shares
Name and Address of Common Stock Percent
of Beneficial Owner Beneficially Owned (1) of Class
- ------------------- ---------------------- --------
Kern Capital Management, LLC................................. 1,231,500(2) 11.2%
114 West 47th Street
Suite 1926
New York, NY 10036
AMVESCAP PLC................................................. 882,900(3) 8.0%
1315 Peachtree Street, N.E.
Atlanta, GA 30309
Bank of America Corporation.................................. 621,750(4) 5.6%
100 North Tryon Street
Charlotte, NC 28255
(1) Except as otherwise indicated, as of September 17, 2000 all of such shares
are owned with sole voting and investment power. Share numbers are based
solely on indicated filings as adjusted to account for the 50% stock
dividend paid as of June 9, 2000.
(2) Based solely on information contained in an Amendment to Schedule 13G
filed with the Securities and Exchange Commission on February 8, 2000,
Kern Capital Management, LLC has sole voting power with respect to
1,167,450 shares and sole dispositive power with respect to all shares
listed.
(3) Based solely on information contained in an Amendment to Schedule 13G
filed with the Securities and Exchange Commission on April 7, 2000,
AMVESCAP PLC has shared voting power and shared dispositive power with
respect to all shares listed.
(4) Based solely on information contained in an Amendment to Schedule 13G
filed with the Securities and Exchange Commission on February 2, 2000,
Bank of America Corporation (including certain of its subsidiaries) has
shared voting power and shared dispositive power with respect to all
shares listed.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of September 17,
2000, with respect to the beneficial ownership of the Company's Common Stock by
(i) each director and nominee for director who owned beneficially any shares of
Common Stock, (ii) each executive officer of the Company named in the Summary
Compensation Table under "Executive Compensation" below, and (iii) all directors
and executive officers of the Company as a group.
Number of Shares
Name and Address of Common Stock Percent
of Beneficial Owner Beneficially Owned (1) of Class
- ------------------- ---------------------- --------
Lawrence A. Sala.............................................. 123,550(2) 1.1%
Hugh A. Hair.................................................. 41,225(3) *
Carl W. Gerst, Jr............................................. 315,550(4) 2.9%
Gert R. Thygesen.............................................. 60,500(5) *
Mark P. Burdick............................................... 13,350(6) *
Dale F. Eck................................................... 26,250(7) *
Herbert I. Corkin............................................. 22,500(8) *
Dr. David Wilemon............................................. 24,750(9) *
Matthew Robison............................................... 17,750(10) *
Brian P. Kelly................................................ 15,000(11) *
All Directors, Nominees and Executive Officers
as a Group (10 persons)..................................... 647,025(12) 5.7%
* Indicates less than 1%
(1) Except as otherwise indicated, as of September 17, 2000 all of such shares
are owned with sole voting and investment power.
(2) Includes 89,000 shares which Mr. Sala has the right to acquire within 60
days pursuant to outstanding stock options, 9,750 shares of restricted
stock, and 5,000 shares owned by Mr. Sala's spouse.
(3) Includes 10,050 shares owned by Mr. Hair's spouse.
(4) Includes 6,750 shares owned by Mr. Gerst's spouse and 9,000 shares which
Mr. Gerst has the right to acquire within 60 days pursuant to outstanding
stock options.
(5) Includes 54,750 shares which Mr. Thygesen has the right to acquire within
60 days pursuant to outstanding stock options, and 2,250 shares of
restricted stock.
(6) Includes 10,350 shares which Mr. Burdick has the right to acquire within
60 days pursuant to outstanding stock options, and 3,000 shares of
restricted stock.
(7) Includes 11,250 shares which Mr. Eck has the right to acquire within 60
days pursuant to outstanding stock options.
(8) Includes 1,000 shares owned by The Entwistle Company, of which Mr. Corkin
is Chairman, Chief Executive Officer and a majority shareholder. Does not
include 250,700 shares owned by Global Securities, Inc. ("Global"), as to
which Mr. Corkin, the owner of 24% of the capital stock of Global,
disclaims beneficial ownership.
(9) Includes 24,750 shares which Dr. Wilemon has the right to acquire within
60 days pursuant to outstanding stock options.
(10) Includes 17,750 shares which Mr. Robison has the right to acquire within
60 days pursuant to outstanding stock options.
-3-
(11) Includes 15,000 shares which Mr. Kelly has the right to acquire within 60
days pursuant to outstanding stock options.
(12) Includes 231,850 shares which all directors and officers as a group have
the right to acquire within 60 days pursuant to outstanding stock options.
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ITEM ONE
ELECTION OF DIRECTORS
The first item to be acted upon at the Meeting is the election of
directors to hold office for terms of three years and until their respective
successors shall have been duly elected and qualified. Abraham Manber retired
from the Board of Directors effective June 30, 2000, and upon his retirement the
size of the Board was reduced to eight directors and the size of the class of
directors to be elected at the Meeting was reduced to two directors. The
nominees receiving a plurality of the votes represented in person or by proxy at
the Meeting will be elected directors.
The shares represented by all proxies in proper form which are received by
the Board prior to the election of directors at the Meeting will be voted "FOR"
the nominees listed below, unless authority is withheld in the space provided on
the enclosed proxy. In the event any nominee declines or is unable to serve, it
is intended that the shares represented by such proxies will be voted for a
successor nominee designated by the Board (or if no other person is so
designated, for the remaining nominee). All nominees have indicated a
willingness to serve, and the Board knows of no reason to believe that any
nominee will decline or be unable to serve if elected. The eight members of the
Board (including the nominees for re-election at the Meeting, if elected) are
expected to continue to serve on the Board until their respective terms expire.
Certain Information Concerning Nominees and Directors Continuing in Office
Set forth below is certain information concerning each nominee for
director to be elected at the Meeting and each director of the Company whose
term of office continues after the Meeting. The information has been furnished
to the Company by such persons.
Name, Age, Nature of Year First
Positions and Offices Became Principal Occupation,
Held with the Company Director Experience and Other Directorships
- --------------------- -------- ----------------------------------
Nominees (for terms to expire at Annual Meeting in 2003):
Carl W. Gerst, Jr., 63.................. 1968 Mr. Gerst served as Executive Vice
Chief Technical Officer, Treasurer, President from the Company's founding in
Vice Chairman 1967 until May 1995 when he became Chief
Technical Officer and Vice Chairman of the
Board. Mr. Gerst has also served as
Treasurer since May 1992.
Brian P. Kelly, 40...................... 1999 Mr. Kelly is a co-founder of Telergy, Inc.,
Nominee for Director a regional integrated telecommunications
provider, and has served as Chairman of the
Board of Directors and Chief Executive
Officer of Telergy since its inception in
April 1995.
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Directors Continuing in Office:
Terms Expiring at Annual Meeting in 2002:
Lawrence A. Sala, 37.................... 1995 Mr. Sala has been President of the Company
President, Chief Executive Officer since May 1995 and has served as Chief
and Director Executive Officer since September 1997.
Dale F. Eck, 57......................... 1995 Mr. Eck was Vice President of Finance and
Director Treasurer of The Entwistle Company, a
defense contractor, from 1978 until his
retirement in February 1997. Mr. Eck has
also served as a Director of The Entwistle
Company since 1978 and continues to serve
that company in such capacity. Mr. Eck has
provided consulting services to the Company
since March 1997.
Dr. David Wilemon, 63................... 1997 Dr. Wilemon has been a Professor of
Director Marketing and Innovation Management at the
Syracuse University School of Management
since 1966. He has also served as Director
of the Synder Innovation Management Program
at the University since 1980 and as
Co-Director of the Entrepreneurship and
Emerging Enterprises Program there, since
1993.
Terms Expiring at Annual Meeting in 2001:
Hugh A. Hair, 65........................ 1968 Mr. Hair, Chairman of the Board, served as
Chairman of the Board President of the Company from its founding
in 1967 until May 1995 and as Chief
Executive Officer from its founding until
September 1997.
Matthew Robison, 39..................... 1999 Mr. Robison has been Vice President Senior
Director Analyst-Technology of Ferris, Baker Watts
Incorporated since January 1999. Mr. Robison
previously served as a General Partner and
Analyst of Botti Brown Asset Management from
January 1997 until January 1999, and as Vice
President and Analyst for Montgomery
Securities from October 1994 until January
1997.
Herbert I. Corkin, 78................... 1989 Mr. Corkin has been Chairman of the Board of
Director The Entwistle Company, a defense contractor,
since 1959. Mr. Corkin also served as the
President of The Entwistle Company from 1959
through December 1993 and has served as its
Chief Executive Officer since December 1993.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain information with respect to
compensation, received in all capacities in which they served for the fiscal
years ended June 30, 1998, June 30, 1999 and June 30, 2000, for the Company's
Chief Executive Officer and each of the four other most highly compensated
officers during the most recent fiscal year.
Summary Compensation Table
Long Term
Compensation
Annual ------------
Compensation Securities
------------ Restricted Underlying All Other
Name and Salary Bonus Stock Awards(6) Options(7) Compensation(8)
Principal Position Year ($) ($) ($) (#) ($)
- ------------------ ---- --------- -------- ---------- ---------------------------------
Lawrence A. Sala 2000 $ 270,192 $130,625 $242,125 75,000 $17,590
President and Chief 1999 230,847 97,925 0 75,000 17,231
Executive Officer(1) 1998 207,693 60,008 0 22,500 11,592
Hugh A. Hair 2000 233,654 25,000 0 15,000 29,507
Chairman of the 1999 225,000 25,000 0 15,000 21,996
Board(2) 1998 225,000 25,000 0 0 14,011
Carl W. Gerst, Jr. 2000 233,654 25,000 0 30,000 32,131
Chief Technical 1999 225,000 25,000 0 15,000 19,029
Officer, Vice 1998 225,000 25,000 0 0 11,180
Chairman and
Treasurer(3)
Gert R. Thygesen, Vice 2000 139,846 32,568 55,875 9,000 3,496
President of 1999 129,923 29,043 0 15,000 3,739
Operations(4) 1998 125,127 20,323 0 4,500 3,307
Mark P. Burdick 2000 109,011 28,839 74,500 15,000 2,860
Vice President and
General Manager,
Wireless Group(5)
- ------------
(1) Mr. Sala was elected President of the Company in May 1995. He was named
Chief Executive Officer in September 1997.
(2) Mr. Hair also served as the Company's President until May 1995 and as the
Company's Chief Executive Officer until September 1997.
(3) Mr. Gerst served as the Company's Executive Vice President until May 1995
when he was elected to the position which he currently holds, Vice
Chairman, Chief Technical Officer and Treasurer.
(4) Mr. Thygesen served as one of the Company's Program Managers from 1990
through 1992 and as the Company's Operations Manager from 1992 until May
1995 when he was elected to the position which he currently holds, Vice
President of Operations.
(5) Mr. Burdick served as Business Unit Manager - Commercial Products from 1994
to 1999 when he was elected to the position which he currently holds, Vice
President and General Manager, Wireless Group.
(6) Indicates dollar value of restricted stock awards based upon the market
value of the Common Stock on the date of grant. As of June 30, 2000, Mr.
Sala held 9,750 shares of restricted stock with a then current market value
of $1,279,532; Mr. Thygesen held 2,250 shares of restricted stock with a
then current market value of $295,277; and Mr. Burdick held 3,000 shares of
restricted stock with a then current market value of $393,702. While the
Company does not currently pay cash dividends on its Common Stock, the
named
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executive officers are entitled to receive any dividends payable (in cash
or otherwise) on their restricted stock holdings.
(7) The table reflects the number of shares which are subject to incentive
stock options granted pursuant to the Company's Incentive Stock Option
Plan.
(8) All Other Compensation consists of contributions to the Company's 401(k)
Salary Savings Plan and, with respect to Messrs. Hair, Gerst and Sala,
reimbursement for premiums on life insurance policies owned by executive
officers.
Fiscal Year Option Grants
The following table sets forth certain information regarding options
granted by the Company during the last fiscal year to the individuals named in
the above compensation table, including information as to potential realizable
value of such options at assumed annual rates of stock price appreciation for
the ten-year terms of the options.
Number Potential Realizable Value
of at Assumed Annual Rates
Securities Percent of Total of Stock Price Appreciation
Underlying Options Granted for Option Term(1)
Options to Employees in Exercise or Expiration ---------------------------
Name Granted Fiscal Year Base Price ($/sh) Date 5%($) 10%($)
---- ------- ----------- ----------------- ---- ----- ----------
Lawrence A. Sala 75,000 19.5% $24.833 11/02/09 $1,171,315 $2,968,341
Hugh A. Hair 15,000 3.9% 24.833 11/02/09 234,263 593,668
Carl W. Gerst, Jr. 30,000 7.8% 24.833 11/02/09 468,526 1,187,337
Gert R. Thygesen 9,000 2.3% 24.833 11/02/09 140,558 356,201
Mark P. Burdick 15,000 3.9% 24.833 11/02/09 234,263 593,668
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date.
Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values
The following table sets forth certain information for the named executive
officers with respect to (i) stock options exercised in fiscal year 2000, (ii)
the number of stock options held at the end of fiscal year 2000, and (iii) the
value of in-the-money stock options at the end of fiscal year 2000.
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Options at June 30, 2000(#) Options at June 30, 2000(1)($)
Acquired on Value ----------------------------- ------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Lawrence A. Sala 45,000 $2,039,400 76,500 171,000 $9,533,635 $19,609,049
Hugh A. Hair 0 0 3,000 27,000 359,327 3,033,319
Carl W. Gerst, Jr. 27,000 823,499 3,000 42,000 359,327 4,629,329
Gert R. Thygesen 0 0 52,050 25,200 6,638,513 2,903,494
Mark P. Burdick 12,000 176,000 9,600 25,650 1,198,146 2,884,165
(1) Amount represents the difference between the aggregate exercise price of
the options and a $131.234 market price of the underlying Common Stock on
June 30, 2000.
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Pension Plan
The Company maintains a non-contributory Pension Plan for the benefit of
all employees over the age of 23 who have completed one year of service and who
are not covered by any other retirement plan. The Company pays all amounts
required to provide retirement income benefits. The Pension Plan provides fixed
benefits to be paid upon retirement at a specific age. Pension expense,
including amortization of prior service cost over 30 years, was $158,523 for
fiscal 2000.
The table below illustrates the estimated aggregate annual benefit that
would be payable to executive officers of the Company who are at least 65 years
of age at retirement, based on the formula in effect after June 30, 1992 and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") limits on
compensation and benefits after 15, 20, 25, 30 and 35 credited years of service;
for illustration purposes, the table assumes all years of service under the
current Pension Plan formula.
PENSION PLAN TABLE
Estimated Annual Pension Payable
Final Based on Years of Service Indicated
Average Annual ------------------------------------------------------------------------------
Compensation 15 Years 20 Years 25 Years 30 Years 35 Years
------------- -------- -------- -------- -------- --------
$100,000 $11,250 $15,000 $18,750 $22,600 $26,250
125,000 14,063 18,750 23,438 28,125 32,813
150,000 16,875 22,500 28,125 33,750 39,375
160,000 18,000 24,000 30,000 36,000 42,000
175,000 18,000 24,000 30,000 36,000 42,000
200,000 18,000 24,000 30,000 36,000 42,000
225,000 18,000 24,000 30,000 36,000 42,000
250,000 18,000 24,000 30,000 36,000 42,000
275,000 18,000 24,000 30,000 36,000 42,000
Under the terms of the Pension Plan, each member who is at least 65 years
of age at his retirement is entitled to a Normal Retirement Benefit (as defined
under the Pension Plan). The compensation used in determining the Pension Plan
benefit for executive officers is based upon their annual salary as shown on the
Summary Compensation Table above. The Normal Retirement Benefit is the aggregate
of:
A. 0.60% of average of highest five consecutive years compensation from
date of employment to June 30, 1992 multiplied by Benefit Service (as
defined under the Pension Plan) to June 30, 1992; plus
B. 0.75% of compensation for each year of Benefit Service thereafter;
but not less than the accrued benefit under the prior plan at June 30, 1992.
Employees who have attained at least twelve years of service and are at
least 55 years of age can retire and receive a proportionately reduced benefit.
Under ERISA, the maximum annual benefit payable at age 65 is $125,000. The
maximum compensation that could be considered for all participants, including
Messrs. Hair, Gerst, Sala, Thygesen and Burdick, is $160,000 for 2000. These
benefit and compensation limits are indexed to increases in the Consumer Price
Index.
-9-
The credited years of service as of June 30, 2000 under the Pension Plan
for each of Messrs. Hair and Gerst are 27, and for Messrs. Sala, Thygesen and
Burdick are 15, 19 and 18, respectively.
Management Incentive Plan
The Company has a Management Incentive Plan ("Incentive Plan") that is
designed to provide a meaningful annual financial incentive to management
employees to reward them for their contribution toward the Company's growth,
profitability and business development. Eligibility in the plan is limited to
key members of management who, because of their position, have the ability to
substantially impact the profitability and overall success of the Company.
Individual participants in the Incentive Plan are selected by the President on
an annual basis, subject to approval of the Board of Directors.
Under the Incentive Plan, each participant has a "target" bonus
opportunity in an amount equal to a specified percentage of his or her base
salary. Awards under the Incentive Plan are based on corporate, functional and
individual performance measured against pre-established targeted goals.
Corporate performance goals, which are set by the President and are subject to
Board approval, are based on factors including but not limited to earnings,
revenue, appreciation in stock value and order targets. Functional and
individual performance goals are based on each participant's functional
responsibilities, and are jointly established by the Company and the participant
prior to the beginning of the fiscal year. Fulfillment of corporate performance
goals must carry a weighting of at least 50% of the total incentive opportunity
for each employee, and participants who are officers of the Company may not
receive any bonus payment unless certain corporate performance goals are
attained.
Bonus payments under the Incentive Plan are made on or about September 1st
following the end of the fiscal year for which the bonus is earned. Bonus
amounts reflected in the Summary Compensation Table on page 7 for Messrs. Sala,
Thygesen and Burdick represent amounts awarded pursuant to the Incentive Plan.
Compensation of Directors
The Company currently pays each director who is not an employee of the
Company $10,000 per year plus $1,000 for each meeting attended, and reimburses
each such director for the reasonable expenses incurred in attending meetings of
the Board of Directors. In addition, non-employee directors are eligible to
receive stock options pursuant to the Company's Non Statutory Stock Option Plan.
Certain Agreements with Directors and Executive Officers
The Company has an employment agreement, dated July 1, 1997, with Lawrence
A. Sala, President and (as of September 1997) Chief Executive Officer of the
Company providing for Mr. Sala's employment as President of the Company until
November 30, 2001 or such earlier date as may result pursuant to the terms of
the agreement. The agreement provides for a base annual salary of $180,000 or
such greater amount as the Board of Directors may determine, plus annual
incentive bonuses and participation in certain insurance plans. The agreement
terminates automatically in the event of Mr. Sala's death and the Company may
terminate the agreement for specified cause as defined in the agreement.
The Company's arrangements with Mr. Sala provide that in the event Mr.
Sala's employment with the Company is terminated other than for cause, the
Company will be obligated to pay severance to Mr. Sala in an amount equal to the
greater of (i) two years' base salary plus payments in lieu of incentive bonus
payments in the aggregate amount of $100,000 or (ii) Mr. Sala's base salary for
the balance of the term of the agreement. In addition, the Company must defray
certain costs associated with obtaining new employment and relocation in
connection with such termination.
-10-
In the event that Mr. Sala's employment continues for the entire term of
the agreement and the Company and Mr. Sala are unable to negotiate a new
employment agreement, the Company will be obligated to pay severance to Mr. Sala
in an amount equal to two years' base salary at such date plus payments in lieu
of incentive bonus payments in the aggregate amount of $100,000.
The Company also has an employment agreement, dated October 6, 1997, with
Hugh A. Hair, which provided for his continuing employment by the Company until
June 30, 2000. Pursuant to the agreement, Mr. Hair is to continue to serve as
Chairman of the Company's Board of Directors, subject to re-election by the
Company's Shareholders and the Board of Directors, and will provide counsel to
the Company's President and Chief Executive Officer. The agreement requires the
Company to pay Mr. Hair deferred compensation equal to $65,000 per fiscal year,
beginning July 1, 2000 and continuing through June 30, 2015.
The Company has a consulting arrangement with Dale F. Eck, pursuant to
which Mr. Eck has agreed to provide financial and management consulting services
to the Company for a period of five years from March 1, 1997. The agreement
provides that Mr. Eck shall devote up to two days per month to the Company and
shall receive a monthly fee of $1,666.66 plus reimbursement of reasonable
business expenses incurred in activities undertaken on behalf of the Company.
The agreement is terminable by either party upon 12 months' prior notice.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee ("Committee") recommends to the Board of
Directors the compensation to be paid to the Company's executive officers on an
annual basis. The Committee has implemented an executive compensation philosophy
that seeks to relate executive compensation to corporate performance, individual
performance and creation of shareholder value. Historically, this has been
achieved through compensation programs which focus on both short and long-term
results.
In accordance with the Committee's executive compensation philosophy, the
major components of executive compensation have been base salary, performance
based bonuses stock option grants and restricted stock awards. Option grants
have been made pursuant to the Company's existing Incentive Stock Option Plan,
and will be made in the future pursuant to the Incentive Stock Option Plan for
Key Employees if this plan is approved by the Shareholders at the Meeting.
Beginning in fiscal year 1998, executive officers were also eligible to receive
bonuses pursuant to the Company's performance based Management Incentive Plan.
Restricted stock awards are made pursuant to the Company's Guidelines for Grants
of Restricted Stock Awards.
Salaries and incentive bonuses for executive officers are based on current
individual and organizational performance, affordability and competitive market
trends. For purposes of informing the Committee of competitive trends within the
electronics industry, the compensation data from the American Electronics
Association Compensation Survey is made available to the Committee. The
Committee also has access to compensation data from other comparable public
companies in the wireless and satellite communications markets. The salary trend
data used represents companies whose size and performance with respect to
revenue, earnings per share and stock price are similar to those of the Company.
The Company's executive officer salary ranges are positioned consistent with
industry averages.
Section 162(m) ("Section 162") of the Internal Revenue Code of 1986, as
amended (the "Code"), generally limits federal income tax deductions for
compensation paid after 1993 to the chief executive officer and the four other
most highly compensated officers of a company to $1 million per year, but
contains an exception for performance-based compensation that satisfies certain
conditions. The Company has not adopted an absolute policy regarding Section 162
as it does not anticipate its executive
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compensation to reach such levels in the foreseeable future. Nevertheless, the
Company is studying the implications of Section 162 on its compensation
programs. In making compensation decisions, the Company will consider the net
cost of compensation to it and whether it is practicable and consistent with
other compensation objectives to qualify the Company's incentive compensation
under the applicable exemption of Section 162. The Company recognizes that
deductibility of compensation payments must be one among a number of factors
used in ascertaining appropriate levels or modes of compensation, and that the
Company will make its compensation decisions based upon an overall determination
of what it believes to be in the best interests of its Shareholders.
The members of the Compensation Committee are:
Dale F. Eck
Brian P. Kelly
Dr. David Wilemon
Performance Graph
The following performance graph compares the total shareholder return of
the Company's Common Stock to The Nasdaq Stock Market (US) Index and the Nasdaq
Electronics Components Index. The graph assumes that $100 was invested in the
Company's Common Stock and each Index on June 30, 1995 and that all dividends
were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ANAREN, THE NASDAQ STOCK MARKET (US) INDEX
AND THE NASDAQ ELECTRONICS COMPONENTS INDEX
[GRAPHIC PRESENTATION OF PERFORMANCE GRAPH]
Cumulative Total Return
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
Anaren Microwave, Inc. 100 108 212 240 334 3149
Nasdaq Stock Market (U.S.) 100 128 156 206 296 437
Nasdaq Electronic Components 100 106 174 172 306 759
* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
Notwithstanding anything set forth in any of the Company's previous filings
under the Securities Act of 1933 or the Securities Exchange Act of 1934 which
might incorporate future filings, including this Proxy Statement, in whole or in
part, the preceding performance graph and the report of the Compensation
Committee shall not be deemed incorporated by reference into any such filings.
-12-
ITEM TWO
PROPOSAL TO APPROVE REPLACEMENT INCENTIVE
STOCK OPTION PLAN FOR KEY EMPLOYEES
The Board of Directors has approved the Anaren Microwave, Inc. Incentive
Stock Option Plan for Key Employees ("ISOP") to replace the Company's existing
Incentive Stock Option Plan, subject to approval by the Shareholders at the
Meeting. Like the existing Incentive Stock Option Plan, the purpose of the ISOP
is to enable the Company to attract, retain and reward talented executives and
other key employees by offering equity-based compensation opportunities, and to
more closely align the interests of these employees with the interests of the
Company's Shareholders. If the ISOP is approved by the Shareholders at the
Meeting, no new grants will be made pursuant to the existing Incentive Stock
Option Plan. Awards previously made under the existing plan will continue in
effect in accordance with their respective terms.
The following summary of the ISOP is qualified in its entirety by
reference to the specific provisions of the ISOP, the full text of which is
available upon written request to: David M. Ferrara, Secretary and General
Counsel, Anaren Microwave, Inc., 6635 Kirkville Road, East Syracuse, New York
13057.
General Features of the ISOP
The ISOP is an executive compensation plan for key employees of the
Company and its subsidiaries. Pursuant to the ISOP, eligible employees may be
granted options to purchase Common Stock. Options granted under the ISOP are
intended to qualify as "incentive stock options," as defined under Section 422
of the Internal Revenue Code. The ISOP is to be administered by the Board of
Directors. The ISOP gives the Board, upon recommendation by its Compensation
Committee, the authority to designate from all executive officers and key
employees of the Company and its subsidiaries those employees or classes of
employees who are eligible to participate in the ISOP, and to determine the
numbers and terms of the stock options to be granted to any particular
individual who is an eligible participant. In designating eligible participants
and in determining the number and terms of the stock options to be granted to
eligible individuals, the Board may take into account the nature of the services
rendered by such individuals, their present and potential contributions to the
Company's success and other relevant factors.
The option price for stock options granted under the ISOP may not be less
than the fair market value of the shares subject to the options on the date the
options are granted (or 110% of such value in the case of options granted to any
individual who is a 10% shareholder of the Company). Any shares which are
subject to purchase under options which terminate or expire may become subject
to subsequent options which may be granted.
Under the ISOP, if the aggregate fair market value of the stock
(determined as of the date the option pertaining to such stock was granted) with
respect to which options are exercisable for the first time by an employee
during any calendar year exceeds $100,000, then the options in excess of the
limit shall, to the extent provided in the grant agreement, (a) become
exercisable on the earliest date on which such limit will not be exceeded, or
(b) be treated as non-qualified stock options. Options granted under the ISOP
may have a term of up to ten years (five years in the case of options granted to
a 10% shareholder of the Company). An option is not exercisable until the
expiration of the six months from the date of its grant. Unless otherwise
provided in any option which is granted, following the expiration of the
applicable six month holding period, up to one fifth (ignoring fractional
shares) of the total number of shares subject to an option become exercisable in
cumulative fashion on the first through fifth anniversary dates of the grant.
Options granted to a participant remain exercisable notwithstanding the fact
that there remain previously granted incentive stock options which the
participant has not exercised.
Options granted under the ISOP are non-transferable, and the recipient of
an option has no rights as a shareholder with respect to the shares to which his
or her option relates until the option is exercised
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and a stock certificate is issued to him or her for such shares. No option
granted under the ISOP is exercisable by an employee more than 90 days after the
termination of the employee's employment, if the termination was for any reason
other than death, disability, or retirement. If an employee's termination of
employment is due to (i) the death of the employee, an option may be exercised
by the employee's estate no more than 12 months after such employee's death,
(ii) an employee's retirement, an option may be exercised no more than 12 months
after such employee's retirement, and (iii) an employee's disability, an option
may be exercised no more than 12 months following the date of termination as a
result of such disability. The ISOP provides that options may be exercised by
any lawful method acceptable to the Board in its discretion, including without
limitation payment of the exercise price in cash or by certified check, and/or
by tender of shares of Common Stock having a fair market value equal to the
option price.
Under the ISOP, 1,025,100 shares of Common Stock have been reserved for
issuance. This includes 275,100 shares reserved but unused under the Company's
existing Incentive Stock Option Plan. The ISOP provides for appropriate
adjustment of the number of shares available thereunder and of shares subject to
outstanding options in the event of any changes in the outstanding Common Stock
by reason of merger, stock split or similar events, or in the event of payment
of dividends in Common Stock. The term of the ISOP is for ten years, and will
expire on November 2, 2010 if not earlier terminated by the Board. Although the
Board may terminate, modify or amend the ISOP, the Board may not, without the
approval of the Company's Shareholders, increase the maximum number of shares of
Common Stock which may be issued under the ISOP, except pursuant to a stock
split, stock dividend or similar transaction. The number of options which may be
granted to specific employees in the future under the ISOP cannot be determined
at this time.
General Federal Income Tax Consequences
An optionee will not recognize any taxable income at the time a stock
option is granted under the ISOP, and the Company will not be entitled to a
federal income tax deduction at that time. Upon exercise of the option, no
ordinary income will be recognized by the holder of the option. The excess of
the fair market value of the shares at the time of exercise over the aggregate
option price will be an adjustment to alternative minimum taxable income for
purposes of the federal "alternative minimum tax" at the date of exercise. If
the optionee holds the shares for the greater of two years after the date the
option was granted or one year after the acquisition of such shares, the
difference between the aggregate option price and the amount realized upon
disposition of the shares will constitute a long term capital gain or loss, as
the case may be, and the Company will not be entitled to a federal income tax
deduction. If the shares are disposed of in a sale, exchange or other
"disqualifying disposition" within two years after the date of grant or within
one year after the date of exercise, the optionee will realize taxable ordinary
income in an amount equal the excess of the fair market value of the shares
purchased at the time of exercise over the aggregate option price (the "bargain
purchase element"), and the Company will be entitled to a federal income tax
deduction equal to such amount. The amount of any gain in excess of the bargain
purchase element realized upon a "disqualifying disposition" will be recognized
as capital gain to the holder. The Company will not be entitled to a federal
income tax deduction for the capital gain amount.
The foregoing discussion is only a summary of certain aspects of the
highly complex federal income tax rules applicable to participants in the ISOP,
and does not address other taxes which may affect an individual, such as state
and local income taxes, federal and state estate taxes, inheritance and gift
taxes and/or foreign taxes.
Vote Required for Approval
The affirmative vote of a majority of the shares of Common Stock
represented at the Meeting in person or by proxy is required for approval of the
ISOP.
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The Board of Directors recommends that Shareholders vote FOR this
proposal. Proxies solicited by the Board of Directors will be voted in favor of
the proposal unless Shareholders specify otherwise.
ITEM THREE
PROPOSAL TO APPROVE COMPANY-WIDE INCENTIVE STOCK OPTION PLAN
The Board of Directors has approved the Anaren Microwave, Inc. Stock
Option Plan (the "Company-Wide Plan"), subject to approval by the Shareholders
at the Meeting. The Company-Wide Plan is a broad-based plan designed to
encourage employees to focus on the Company's long term objectives, to enable
the Company to attract, retain and reward talented employees, and to link
employee and shareholder interests by enabling employees to acquire an equity
interest in the Company.
The following summary of the Company-Wide Plan is qualified in its
entirety by reference to the specific provisions of the Company-Wide Plan, the
full text of which is available upon written request to: David M. Ferrara,
Secretary and General Counsel, Anaren Microwave, Inc., 6635 Kirkville Road, East
Syracuse, New York 13057.
General Features of the Company-Wide Plan
The Company-Wide Plan is an incentive compensation plan for employees of
the Company and its subsidiaries. Pursuant to the Company-Wide Plan, eligible
employees may be granted options to purchase Common Stock. Options granted under
the Company-Wide Plan are intended to qualify as "incentive stock options," as
defined under Section 422 of the Internal Revenue Code. The Company-Wide Plan is
to be administered by the Board of Directors. The Company-Wide Plan gives the
Board, upon recommendation by its Compensation Committee, the authority to
designate from all employees of the Company and its subsidiaries those employees
or classes of employees who are eligible to participate in the Company-Wide
Plan, and to determine the numbers and terms of the stock options to be granted
to any particular individual who is an eligible participant. In designating
eligible participants and in determining the number and terms of the stock
options to be granted to eligible individuals, the Board may take into account
the nature of the services rendered by such individuals, their present and
potential contributions to the Company's success and other relevant factors. No
employee who has been granted options under the Company's ISOP for key employees
in a given fiscal year is eligible to receive a grant of options under the
Company-Wide Plan during that same fiscal year.
The option price for stock options granted under the Company-Wide Plan may
not be less than the fair market value of the shares subject to the options on
the date the options are granted (or 110% of such value in the case of options
granted to any individual who is a 10% shareholder of the Company). Any shares
which are subject to purchase under options which terminate or expire may become
subject to subsequent options which may be granted.
Under the Company-Wide Plan, the aggregate fair market value of the stock
(determined as of the date the option pertaining to such stock was granted) with
respect to which options are exercisable for the first time by an employee
during any calendar year may not exceed $100,000. Options granted under the
Company-Wide Plan may have a term of up to five years. An option is not
exercisable until the expiration of 36 months from the date of its grant. Unless
otherwise provided in any option which is granted, each option will become
exercisable on the third anniversary of the grant. Options granted to a
participant remain exercisable notwithstanding the fact that there remain
previously granted incentive stock options which the participant has not
exercised.
-15-
Options granted under the Company-Wide Plan are non-transferable, and the
recipient of an option has no rights as a shareholder with respect to the shares
to which his or her option relates until the option is exercised and a stock
certificate is issued to him or her for such shares. No option granted under the
Company-Wide Plan is exercisable by an employee more than 90 days after the
termination of the employee's employment, if the termination was for any reason
other than death, disability, or retirement. If an employee's termination of
employment is due to (i) the death of the employee, an option may be exercised
by the employee's estate no more than 12 months after such employee's death,
(ii) an employee's retirement, an option may be exercised no more than 12 months
after such employee's retirement, and (iii) an employee's disability, an option
may be exercised no more than 12 months following the date of termination as a
result of such disability. The Company-Wide Plan provides that options may be
exercised by any lawful method acceptable to the Board in its discretion,
including without limitation payment of the exercise price in cash or by
certified check, and/or by tender of shares of Common Stock having a fair market
value equal to the option price.
Under the Company-Wide Plan, 500,000 shares of Common Stock have been
reserved for issuance. The Company-Wide Plan provides for appropriate adjustment
of the number of shares available thereunder and of shares subject to
outstanding options in the event of any changes in the outstanding Common Stock
by reason of merger, stock split or similar events, or in the event of payment
of dividends in Common Stock. The term of the Company-Wide Plan is for ten
years, and will expire on November 2, 2010 if not earlier terminated by the
Board. Although the Board may terminate, modify or amend the Company-Wide Plan,
the Board may not, without the approval of the Company's Shareholders, increase
the maximum number of shares of Common Stock which may be issued under the
Company-Wide Plan, except pursuant to a stock split, stock dividend or similar
transaction. The number of options which may be granted to specific employees in
the future under the Company-Wide Plan cannot be determined at this time.
General Federal Income Tax Consequences
An optionee will not recognize any taxable income at the time a stock
option is granted under the Company-Wide Plan, and the Company will not be
entitled to a federal income tax deduction at that time. Upon exercise of the
option, no ordinary income will be recognized by the holder of the option. The
excess of the fair market value of the shares at the time of exercise over the
aggregate option price will be an adjustment to alternative minimum taxable
income for purposes of the federal "alternative minimum tax" at the date of
exercise. If the optionee holds the shares for the greater of two years after
the date the option was granted or one year after the acquisition of such
shares, the difference between the aggregate option price and the amount
realized upon disposition of the shares will constitute a long term capital gain
or loss, as the case may be, and the Company will not be entitled to a federal
income tax deduction. If the shares are disposed of in a sale, exchange or other
"disqualifying disposition" within two years after the date of grant or within
one year after the date of exercise, the optionee will realize taxable ordinary
income in an amount equal the excess of the fair market value of the shares
purchased at the time of exercise over the aggregate option price (the "bargain
purchase element"), and the Company will be entitled to a federal income tax
deduction equal to such amount. The amount of any gain in excess of the bargain
purchase element realized upon a "disqualifying disposition" will be recognized
as capital gain to the holder. The Company will not be entitled to a federal
income tax deduction for the capital gain amount.
The foregoing discussion is only a summary of certain aspects of the
highly complex federal income tax rules applicable to participants in the
Company-Wide Plan, and does not address other taxes which may affect an
individual, such as state and local income taxes, federal and state estate
taxes, inheritance and gift taxes and/or foreign taxes.
-16-
Vote Required for Approval
The affirmative vote of a majority of the shares of Common Stock
represented at the Meeting in person or by proxy is required for approval of the
Company-Wide Plan.
The Board of Directors recommends that Shareholders vote FOR this
proposal. Proxies solicited by the Board of Directors will be voted in favor of
the proposal unless Shareholders specify otherwise.
ITEM FOUR
PROPOSAL TO APPROVE INCREASE IN AUTHORIZED
SHARES OF COMMON STOCK OF THE COMPANY
The Board of Directors is recommending that the Shareholders take action
at the Meeting to approve an amendment to the Company's Certificate of
Incorporation to increase the total number of authorized shares of Common Stock.
As a result of the Company's public offering of Common Stock in the third
quarter of fiscal 2000 and the stock dividend effectuated as of June 9, 2000,
the Company now has 11,876,320 shares of Common Stock issued and outstanding or
subject to options granted leaving 13,123,680 shares available for issuance to
meet corporate needs. Accordingly, the Board of Directors has recommended that
action be taken to increase the number of authorized shares of Common Stock from
25,000,000 to 200,000,000.
The Board of Directors believes that the authorization of additional
shares of Common Stock is desirable and would provide future flexibility for the
Company. The increase in authorized shares would provide authorized Common Stock
for issuance from time to time as may be necessary in connection with future
financings, investment opportunities, acquisitions, the declaration of stock
dividends or stock splits, other distributions, or for other corporate purposes.
Although the Company has no present plans, understandings or agreements for
issuing the additional shares, it is necessary to have authorization for these
shares in order to enable the Company, as the need may arise, to take prompt
advantage of market conditions and the availability of favorable opportunities
without the delay and expense incident to the holding of a special shareholders'
meeting.
Under New York law, Shareholders are not entitled to dissenters' rights
with respect to the proposed amendment to the Company's Certificate of
Incorporation. Holders of Common Stock have no preemptive rights with respect to
any shares which may be issued in the future, and the issuance of additional
shares of Common Stock may, therefore, dilute the equity ownership position of
current Shareholders. In addition, although the increase in the number of
authorized shares is not intended for anti-takeover purposes, the additional
authorized shares may be issued by the Board of Directors without further
shareholder approval, and could (if consistent with the Board's fiduciary
responsibilities) be utilized to deter future attempts to gain control of the
Company.
The affirmative vote of the holders of the majority of the outstanding
shares of Common Stock is required for the approval of the proposed amendment to
the Company's Certificate of Incorporation.
The Board of Directors recommends that Shareholders vote FOR this
proposal. Proxies solicited by the Board of Directors will be voted in favor of
the proposal unless Shareholders specify otherwise.
-17-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock (collectively, "Reporting Persons") to file with the SEC
initial reports of ownership and reports of changes in ownership of the Common
Stock. Such persons are required by regulations of the SEC to furnish the
Company with copies of all such filings. Based on its review of the copies of
such filings received by it and written representations of Reporting Persons
with respect to the fiscal year ended June 30, 2000, the Company believes that
all Reporting Persons complied with all Section 16(a) filing requirements in the
fiscal year ended June 30, 2000.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
During the fiscal year ended June 30, 2000, KPMG LLP, the Company's
independent accountant, was retained by the Board of Directors to perform the
annual examination of the consolidated financial statements of the Company and
its subsidiaries. The Board also retained KPMG LLP to advise the Company and
perform appropriate financial due diligence in connection with acquisitions made
and considered by the Company and to provide assistance in the preparation of
federal income and state franchise tax returns.
KPMG LLP was also selected by management to audit the Company's books and
records for the current fiscal year. KPMG LLP has been the Company's independent
accountant for over 25 years. It is anticipated that a representative of KPMG
LLP will be present at the Annual Meeting of Shareholders and will have an
opportunity to make a statement and to answer questions of Shareholders.
BOARD MEETINGS AND COMMITTEES
During the Company's last fiscal year, the Board of Directors of the
Company held five meetings. No current director attended fewer than 75% of the
aggregate number of meetings of the Board and of any Committees on which he
served during such period.
The Company's Compensation Committee consists of Dale F. Eck, Brian P.
Kelly and Dr. David Wilemon. The function of the Compensation Committee is to
recommend to the Board of Directors competitive compensation plans for officers
and key employees. During the fiscal year ended June 30, 2000, the Compensation
Committee held two meetings.
The Company's Audit Committee consists of Herbert I. Corkin, Dale F. Eck
and Brian P. Kelly. The function of the Audit Committee is to review the
Company's annual audit with the Company's independent accountant. During the
fiscal year ended June 30, 2000, the Audit Committee held one meeting.
The Company's Nominating Committee consists of Lawrence A. Sala and
Matthew Robison. David M. Ferrara, the Company's Secretary and General Counsel,
serves as an ex officio member of the Committee. The function of the Nominating
Committee is to make recommendations to the Board for nominees to serve as
directors. The Nominating Committee will consider written recommendations from
Shareholders for nominees to serve on the Board that are sent to the Secretary
of the Company at the Company's main office. During the fiscal year ended June
30, 2000, the Nominating Committee held two meetings.
-18-
MISCELLANEOUS
Other Matters
As of the date of this Proxy Statement, management has no knowledge of any
business which will be presented for consideration at the Meeting other than
that described herein. Should any other matter properly come before the Meeting,
it is the intention of the persons named in the accompanying proxy to vote such
proxy in accordance with their best judgment.
Solicitation of Proxies
The entire expense of preparing, assembling and mailing the Proxy
Statement, form of proxy and other material used in the solicitation of proxies
will be paid by the Company. In addition to the solicitation of proxies by mail,
arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxy material to their principals, and the Company will
reimburse them for expenses in so doing. To the extent necessary to ensure
sufficient representation, officers and regular employees of the Company may
request, without additional compensation therefor, the return of proxies
personally or by telephone or telegram. The extent to which this will be
necessary depends entirely on how promptly proxies are received, and
Shareholders are urged to send their proxies without delay.
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in the
Company's Proxy Statement relating to the 2001 Annual Meeting of Shareholders,
such proposal must be received by the Company by May 21, 2001.
David M. Ferrara
Secretary and General Counsel
Date: September 18, 2000
Syracuse, New York
-19-
APPENDIX A
ANAREN MICROWAVE, INC.
INCENTIVE STOCK OPTION PLAN
FOR KEY EMPLOYEES
1. Purpose of the Plan. This Plan shall be known as the Anaren Microwave,
Inc. Incentive Stock Option Plan for Key Employees. The purpose of the Plan is
to attract and retain the best available personnel for positions of substantial
responsibility and to provide incentives to such personnel to promote the
success of the business of Anaren Microwave, Inc. and its subsidiaries. Except
as provided in Section 4 below, this Plan amends, restates and replaces the
Anaren Microwave, Inc. Incentive Stock Option Plan adopted in 1995.
All options granted under this Plan are intended to qualify as "incentive
stock options" pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended from time to time.
2. Definitions. As used herein, the following definitions shall apply:
"Board" means the Board of Directors of the Corporation.
"Common Stock" means the Common Stock, $.01 par value per share, of the
Corporation. Except as otherwise provided herein, all Common Stock issued
pursuant to the Plan shall have the same rights as all other issued and
outstanding shares of Common Stock, including, but not limited to, voting
rights, the right to dividends, if declared and paid, and the right to pro rata
distributions of the Corporation's assets in the event of liquidation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee described in Section 18 that
administers the Plan or, if no such committee has been appointed, the full
Board.
"Corporation" means Anaren Microwave, Inc., a New York corporation.
"Date of Grant" means the date on which an Option is granted pursuant
to this Plan or, if the Board or the Committee so determines, the date specified
by the Board or the Committee as the date the award is to be effective.
"Employee" means an individual who performs services for the
Corporation or a Subsidiary and who is treated by the Corporation or the
Subsidiary for payroll and employment tax purposes as a common law employee of
the Corporation or the Subsidiary. The term Employee shall not include any
individual who performs services for the Corporation or a Subsidiary as an
independent contractor or other non-employee classification, or any individual
who is treated by the Corporation or a Subsidiary for payroll and employment tax
purposes as a non-employee, even if any such individual is reclassified by a
court or regulatory agency as a common law employee of the Corporation or a
Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the option price for a share of Common Stock
subject to an Option.
"Fair Market Value" means the closing sale price (or average of the
quoted closing bid and asked prices if there is no closing sale price reported)
of the Common Stock on the trading day immediately prior to the date specified
as reported by the principal national exchange or trading system on which the
Common Stock is then listed or traded. If there is no reported price information
for the Common Stock, the Fair Market Value will be determined by the Board or
the Committee, in is sole discretion. In making such determination, the Board or
the Committee may, but shall not be obligated to, commission and rely upon an
independent appraisal of the Common Stock.
"Option" means a stock option granted pursuant to Section 6 of this
Plan.
"Optionee" means any Employee who receives an Option.
"Plan" means this Anaren Microwave, Inc. Stock Option Plan for Key
Employees, as amended from time to time.
"Subsidiary" means any now existing or hereinafter organized or
acquired company of which at least fifty percent (50%) of the issued and
outstanding voting stock is owned or controlled directly or indirectly by the
Corporation or through one or more Subsidiaries of the Corporation.
3. Term of Plan. The Plan has been adopted by the Board to be effective as
of November 2, 2000. To permit the granting of Options under the Code, and to
qualify awards of Options hereunder as "performance based" under Section 162(m)
of the Code, implementation of the Plan will be subject to approval by the
stockholders of the Corporation by the affirmative votes of the holders of a
majority of the shares of Common Stock issued and outstanding.
4. Shares Subject to the Plan. Except as otherwise provided in Section 17
hereof, the aggregate number of shares of Common Stock issuable upon the
exercise of Options granted pursuant to this Plan shall be 1,025,100 shares
(consisting of 750,000 newly issuable shares and 275,100 unissued shares
remaining in the Plan prior to this restatement). Such shares may either be
authorized but unissued shares or treasury shares. The Corporation shall, during
the term of this Plan, reserve and keep available a number of shares of Common
Stock sufficient to satisfy the requirements of the Plan. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, then the shares that were subject thereto shall, unless the Plan has
terminated, be available for the grant of additional Options under this Plan,
subject to the limitations set forth above.
2
5. Eligibility. Options may be granted under Section 6 of the Plan to such
Employees who are executive officers or other key employees of the Corporation
or its Subsidiaries as may be determined by the Board or the Committee. Subject
to the limitations and qualifications set forth in this Plan, the Board or the
Committee shall also determine the number of Options to be granted, the number
of shares subject to each Option grant, the exercise price or prices of each
Option, the vesting and exercise period of each Option, whether an Option may be
exercised as to less than all of the Common Stock subject thereto, and such
other terms and conditions of each Option, if any, as are consistent with the
provisions of this Plan. If the aggregate Fair Market Value (determined at the
Date of Grant of an Option) of the shares with respect to which Options are
exercisable for the first time by an Optionee during any calendar year (under
all such plans of the Optionee's employer corporation and its parent and
subsidiary corporations as defined in Section 424(e) and (f) of the Code, or a
corporation or a parent or subsidiary corporation of such corporation issuing or
assuming an Option in a transaction to which Section 424(a) of the Code applies
(collectively, such corporations described in this sentence are hereinafter
referred to as "related corporations")) shall exceed $100,000 or such other
amounts as from time to time provided in Section 422(d) of the Code or any
successor provision, then Options in excess of the limit shall, to the extent
provided in the implementing Option agreement, (a) become exercisable on the
earliest date on which such limit will not be exceeded, or (b) be treated as
non-qualified stock options that vest and become exercisable in accordance with
the implementing Option agreement.
6. Grant of Options. Except as provided in Section 18, the Board or the
Committee shall determine the number of shares of Common Stock to be offered
from time to time pursuant to Options granted hereunder and shall grant Options
under the Plan. The grant of Options shall be evidenced by Option agreements
containing such terms and provisions as are approved by the Board or the
Committee and executed on behalf of the Corporation by an appropriate officer.
7. Time of Grant of Options. The Date of Grant of an Option under the Plan
shall be the date on which the Board or the Committee awards the Option or, if
the Board or the Committee so determines, the date specified by the Board or the
Committee as the date the award is to be effective. Notice of the grant shall be
given to each Optionee promptly after the date of such grant.
8. Price. The Exercise Price for each share of Common Stock subject to an
Option granted pursuant to Section 6 of the Plan shall be determined by the
Board or the Committee at the Date of Grant; provided, however, that (a) the
Exercise Price for any Option shall not be less than 100% of the Fair Market
Value of the Common Stock at the Date of Grant, and (b) if the Optionee owns on
the Date of Grant more than 10 percent of the total combined voting power of all
classes of stock of the Corporation or its parent or any of its subsidiaries, as
more fully described in Section 422(b)(6) of the Code or any successor provision
(such stockholder is referred to herein as a "10-Percent Stockholder"), the
Exercise Price for any Option granted to such Optionee shall not be less than
110% of the Fair Market Value of the Common Stock at the Date of Grant.
3
9. Vesting. Subject to Section 11 of this Plan, and unless provided
otherwise in the applicable Option agreement, 20 percent of the shares subject
to each Option shall vest and become exercisable in cumulative fashion on the
first through fifth anniversaries of the Option's Date of Grant. Notwithstanding
the preceding sentence, each Option shall be fully vested and exercisable upon
the Optionee's retirement from the Corporation or a Subsidiary upon or after
attaining age 65. The Board or the Committee may, but shall not be required to,
permit acceleration of vesting or termination of forfeiture provisions upon any
sale of the Corporation or similar transaction. An Option agreement may contain
such additional or different provisions with respect to vesting as the Board or
the Committee may specify.
10. Exercise. An Optionee may pay the Exercise Price of the shares of
Common Stock as to which a vested Option is being exercised by the delivery of
cash, check or, at the Corporation's option, by the delivery of shares of Common
Stock having a Fair Market Value on the exercise date equal to the Exercise
Price. The Board also shall have the discretion to accept any other method(s) of
payment upon the exercise of an Option (including a "cashless exercise"),
provided such method(s) of payment is/are permitted by law and is/are consistent
with the purpose of the Plan.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any Option granted under
the Plan may be exercised by a broker-dealer acting on behalf of an Optionee if
(a) the broker-dealer has received from the Optionee or the Corporation a fully-
and duly-endorsed agreement evidencing such Option, together with instructions
signed by the Optionee requesting the Corporation to deliver the shares of
Common Stock subject to such Option to the broker-dealer on behalf of the
Optionee and specifying the account into which such shares should be deposited,
(b) adequate provision has been made with respect to the payment of any
withholding taxes due upon such exercise, and (c) the broker-dealer and the
Optionee have otherwise complied with Section 220.3(e)(4) of Regulation T, 12
CFR Part 220, or any successor provision.
11. When Options May be Exercised. No Option shall be exercisable at any
time after the expiration of ten (10) years from its Date of Grant; provided,
however, that if the Optionee with respect to a Option is a 10-Percent
Stockholder on the Date of Grant of such Option, then such Option shall not be
exercisable after the expiration of five (5) years from its Date of Grant. In
addition, if an Optionee ceases to be an employee of the Corporation or any
related corporation for any reason, such Optionee's vested Options shall not be
exercisable after (a) 90 days following the date such Optionee ceases to be an
employee of the Corporation or any related corporation, if such cessation of
service is not due to the death or permanent and total disability (within the
meaning of Section 22(e)(3) of the Code) of the Optionee, or the Optionee's
retirement from the Corporation or a Subsidiary upon or after attaining age 65,
or (b) twelve months following the date such Optionee ceases to be an employee
of the Corporation or any related corporation, if such cessation of service is
due to the death or permanent and total disability (as defined above) of the
Optionee, or the Optionee's retirement from the Corporation or a Subsidiary upon
or after attaining age 65. Upon the death of an Optionee, any vested Option
4
exercisable on the date of death may be exercised by the Optionee's estate or by
a person who acquires the right to exercise such Option by bequest or
inheritance or by reason of the death of the Optionee, provided that such
exercise occurs within both the remaining option term of the Option and twelve
months after the date of the Optionee's death. This Section 11 only provides the
outer limits of allowable exercise dates with respect to Options; the Board or
the Committee may determine that the exercise period for a Option shall have a
shorter duration than as specified above.
Except as otherwise provided in Sections 9 and 11, or as may be provided
in an applicable Option agreement, upon the termination of employment of an
Optionee, all Options granted to the Optionee, to the extent not previously
exercised, shall terminate and become null and void upon such termination of
employment.
12. Withholding of Taxes. The Board or the Committee shall make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of any taxes that the Corporation is required by any law or
regulation of any governmental authority to withhold in connection with any
Option including, but not limited to, withholding the issuance of all or any
portion of the shares of Common Stock subject to such Option until the Optionee
reimburses the Corporation for the amount it is required to withhold with
respect to such taxes, canceling any portion of such issuance in an amount
sufficient to reimburse the Corporation for the amount it is required to
withhold or taking any other action reasonably required to satisfy the
Corporation's withholding obligation.
13. Conditions Upon Issuance of Shares. The Corporation shall not be
obligated to sell or issue any shares upon the exercise of any Option granted
under the Plan unless the issuance and delivery of shares complies with all
provisions of applicable federal and state securities laws and the requirements
of any national exchange or trading system on which the Common Stock is then
listed or traded.
As a condition to the exercise of an Option, the Corporation may
require the person exercising the Option or receiving the grant to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of applicable federal and state
securities law.
The Corporation shall not be liable for refusing to sell or issue any
shares covered by any Option if the Corporation cannot obtain authority from the
appropriate regulatory bodies deemed by the Corporation to be necessary to sell
or issue such shares in compliance with all applicable federal and state
securities laws and the requirements of any national exchange or trading system
on which the Common Stock is then listed or traded. In addition, the Corporation
shall have no obligation to any Optionee, express or implied, to list, register
or otherwise qualify the shares of Common Stock covered by any Option.
No Optionee will be, or will be deemed to be, a holder of any Common
Stock subject to an Option unless and until such Optionee has exercised his or
her Option and paid the
5
purchase price for the subject shares of Common Stock. Each Option under this
Plan shall be transferable only by will or the laws of descent and distribution
and shall be exercisable during the Optionee's lifetime only by such Optionee.
14. Restrictions on Shares. Shares of Common Stock issued pursuant to the
Plan may be subject to restrictions on transfer under applicable federal and
state securities laws. The Board may impose such additional restrictions on the
ownership and transfer of shares of Common Stock issued pursuant to the Plan as
it deems desirable; any such restrictions shall be set forth in any Option
agreement entered into hereunder.
15. Modification of Options. Except as provided in Section 18 of this
Plan, at any time and from time to time, the Board or the Committee may execute
an instrument providing for modification, extension or renewal of any
outstanding Option, provided that no such modification, extension or renewal
shall impair the Option without the consent of the holder of the Option.
Notwithstanding the foregoing, in the event of such a modification,
substitution, extension or renewal of an Option, the Board or the Committee may
increase the exercise price of such Option if necessary to retain the qualified
status of such Option.
16. Effect of Change in Stock Subject to the Plan. In the event that each
of the outstanding shares of Common Stock (other than shares held by dissenting
stockholders) shall be changed into or exchanged for a different number or kind
of shares of stock of the Corporation or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise), or in the event a stock split or stock
dividend occurs, then there shall be substituted for each share of Common Stock
then subject to Options or available for Options the number and kind of shares
of stock into which each outstanding share of Common Stock other than shares
held by dissenting stockholders) shall be so changed or exchanged, or the number
of shares of Common Stock as is equitably required in the event of a stock split
or stock dividend, together with an appropriate adjustment of the Exercise
Price. The Board may, but shall not be required to, provide additional
anti-dilution protection to an Optionee under the terms of the individual's
Option agreement.
17. Administration.
(a) The Plan shall be administered by the Board or by a committee of
the Board comprised solely of two or more "outside directors" (within the
meaning of Treasury Regulation Section 1.162-27(e)(3)) appointed by the Board
(the "Committee"). Options may be granted under Section 6, only (i) by the Board
as a whole, or (ii) by a majority agreement of the members of the Committee;
provided that, if the Committee does not consist entirely of non-employee
directors (as defined in Rule 16b-3 under the Exchange Act), then Options may be
granted to an officer, director or 10% stockholder of the Corporation under
Section 6 only by the Board as a whole. Option agreements, in the forms as
approved by the Board or the Committee, and containing such terms and conditions
consistent with the provisions of this Plan as are
6
determined by the Board or the Committee, may be executed on behalf of the
Corporation by the Chairman of the Board, the President or any Vice President of
the Corporation. The Board or the Committee shall have complete authority to
construe, interpret and administer the provisions of this Plan and the
provisions of the Option agreements granted hereunder; to prescribe, amend and
rescind rules and regulations pertaining to this Plan; to suspend or discontinue
this Plan; and to make all other determinations necessary or deemed advisable in
the administration of the Plan. The determinations, interpretations and
constructions made by the Board or the Committee shall be final and conclusive.
No member of the Board or the Committee shall be liable for any action taken, or
failed to be taken, made in good faith relating to the Plan or any award
thereunder, and the members of the Board or the Committee shall be entitled to
indemnification and reimbursement by the Corporation in respect of any claim,
loss, damage or expense (including attorneys' fees) arising therefrom to the
fullest extent permitted by law.
(b) Although the Board or the Committee may suspend or discontinue the
Plan at any time, all Options must be granted within ten (10) years from the
effective date of the Plan or the date the Plan is approved by the stockholders
of the Corporation, whichever is earlier.
(c) Subject to any applicable requirements of Rule 16b-3 under the
Exchange Act or of any national exchange or trading system on which the Common
Stock is then listed or traded, the Board may amend any provision of this Plan
in any respect in its discretion.
(d) Nothing contained in the Plan shall be construed to limit the right
of the Board or the Corporation to grant options otherwise than pursuant to this
Plan.
18. Continued Employment Not Presumed. Nothing in this Plan or any
document describing it nor the grant of any Option shall give any Optionee the
right to continue in the employment of the Corporation or affect the right of
the Corporation to terminate the employment of any such person with or without
cause.
19. Liability of the Corporation. Neither the Corporation, its directors,
officers or employees or the Committee, nor any Subsidiary which is in existence
or hereafter comes into existence, shall be liable to any Optionee or other
person if it is determined for any reason by the Internal Revenue Service or any
court having jurisdiction that any Option granted hereunder does not qualify for
tax treatment as an incentive stock option under Section 422 of the Code.
20. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New York and the United States, as
applicable, without reference to the conflict of laws provisions thereof.
21. Severability of Provisions. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability shall not affect the remaining provisions of the Plan, but
such invalid, illegal or unenforceable provision shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
7
APPENDIX B
ANAREN MICROWAVE, INC.
STOCK OPTION PLAN
1. Purpose of the Plan. This Plan shall be known as the Anaren Microwave,
Inc. Stock Option Plan. The purpose of the Plan is to attract and retain
personnel and to provide incentives to such personnel to promote the success of
the business of Anaren Microwave, Inc. and its subsidiaries.
All options granted under this Plan are intended to qualify as "incentive
stock options" pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended from time to time.
2. Definitions. As used herein, the following definitions shall apply:
"Board" means the Board of Directors of the Corporation.
"Common Stock" means the Common Stock, $.01 par value per share, of the
Corporation. Except as otherwise provided herein, all Common Stock issued
pursuant to the Plan shall have the same rights as all other issued and
outstanding shares of Common Stock, including, but not limited to, voting
rights, the right to dividends, if declared and paid, and the right to pro rata
distributions of the Corporation's assets in the event of liquidation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee described in Section 18 that
administers the Plan or, if no such committee has been appointed, the full
Board.
"Corporation" means Anaren Microwave, Inc., a New York corporation.
"Date of Grant" means the date on which an Option is granted pursuant
to this Plan or, if the Board or the Committee so determines, the date specified
by the Board or the Committee as the date the award is to be effective.
"Employee" means an individual who performs services for the
Corporation or a Subsidiary and who is treated by the Corporation or the
Subsidiary for payroll and employment tax purposes as a common law employee of
the Corporation or the Subsidiary. The term Employee shall not include any
individual who performs services for the Corporation or a Subsidiary as an
independent contractor or other non-employee classification, or any individual
who is treated by the Corporation or a Subsidiary for payroll and employment tax
purposes as a non-employee, even if any such individual is reclassified by a
court or regulatory agency as a common law employee of the Corporation or a
Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the option price for a share of Common Stock
subject to an Option.
"Fair Market Value" means the closing sale price (or average of the
quoted closing bid and asked prices if there is no closing sale price reported)
of the Common Stock on the trading day immediately prior to the date specified
as reported by the principal national exchange or trading system on which the
Common Stock is then listed or traded. If there is no reported price information
for the Common Stock, the Fair Market Value will be determined by the Board or
the Committee, in is sole discretion. In making such determination, the Board or
the Committee may, but shall not be obligated to, commission and rely upon an
independent appraisal of the Common Stock.
"Option" means a stock option granted pursuant to Section 6 of this
Plan.
"Optionee" means any Employee who receives an Option.
"Plan" means this Anaren Microwave, Inc. Stock Option Plan, as amended
from time to time.
"Subsidiary" means any now existing or hereinafter organized or
acquired company of which at least fifty percent (50%) of the issued and
outstanding voting stock is owned or controlled directly or indirectly by the
Corporation or through one or more Subsidiaries of the Corporation.
3. Term of Plan. The Plan has been adopted by the Board to be effective as
of November 2, 2000. To permit the granting of Options under the Code, and to
qualify awards of Options hereunder as "performance based" under Section 162(m)
of the Code, implementation of the Plan will be subject to approval by the
stockholders of the Corporation by the affirmative votes of the holders of a
majority of the shares of Common Stock issued and outstanding.
4. Shares Subject to the Plan. Except as otherwise provided in Section 17
hereof, the aggregate number of shares of Common Stock issuable upon the
exercise of Options granted pursuant to this Plan shall be 500,000 shares. Such
shares may either be authorized but unissued shares or treasury shares. The
Corporation shall, during the term of this Plan, reserve and keep available a
number of shares of Common Stock sufficient to satisfy the requirements of the
Plan. If an Option should expire or become unexercisable for any reason without
having been exercised in full, then the shares that were subject thereto shall,
unless the Plan has terminated, be available for the grant of additional Options
under this Plan, subject to the limitations set forth above.
5. Eligibility. Options may be granted under Section 6 of the Plan to such
Employees of the Corporation or its Subsidiaries as may be determined by the
Board or the Committee; provided, however, that no Options shall be granted
during a fiscal year of the
2
Corporation pursuant to this Plan to any individual who has been granted options
during the same fiscal year pursuant to the Corporation's Incentive Stock Option
Plan for Key Employees. Subject to the limitations and qualifications set forth
in this Plan, the Board or the Committee shall also determine the number of
Options to be granted, the number of shares subject to each Option grant, the
vesting and exercise period of each Option, whether an Option may be exercised
as to less than all of the Common Stock subject thereto, and such other terms
and conditions of each Option, if any, as are consistent with the provisions of
this Plan. The aggregate Fair Market Value (determined at the Date of Grant of
an Option) of the shares with respect to which Options are exercisable for the
first time by an Optionee during any calendar year (under all such plans of the
Optionee's employer corporation and its parent and subsidiary corporations as
defined in Section 424(e) and (f) of the Code, or a corporation or a parent or
subsidiary corporation of such corporation issuing or assuming an Option in a
transaction to which Section 424(a) of the Code applies (collectively, such
corporations described in this sentence are hereinafter referred to as "related
corporations")) shall not exceed $100,000 or such other amounts as from time to
time provided in Section 422(d) of the Code or any successor provision.
6. Grant of Options. Except as provided in Section 18, the Board or the
Committee shall determine the number of shares of Common Stock to be offered
from time to time pursuant to Options granted hereunder and shall grant Options
under the Plan. The grant of Options shall be evidenced by Option agreements
containing such terms and provisions as are approved by the Board or the
Committee and executed on behalf of the Corporation by an appropriate officer.
7. Time of Grant of Options. The Date of Grant of an Option under the Plan
shall be the date on which the Board or the Committee awards the Option or, if
the Board or the Committee so determines, the date specified by the Board or the
Committee as the date the award is to be effective. Notice of the grant shall be
given to each Optionee promptly after the date of such grant.
8. Price. The Exercise Price for each share of Common Stock subject to an
Option granted pursuant to Section 6 of the Plan shall be determined by the
Board or the Committee at the Date of Grant; provided, however, that (a) the
Exercise Price for any Option shall not be less than 100% of the Fair Market
Value of the Common Stock at the Date of Grant, and (b) if the Optionee owns on
the Date of Grant more than 10 percent of the total combined voting power of all
classes of stock of the Corporation or its parent or any of its subsidiaries, as
more fully described in Section 422(b)(6) of the Code or any successor provision
(such stockholder is referred to herein as a "10-Percent Stockholder"), the
Exercise Price for any Option granted to such Optionee shall not be less than
110% of the Fair Market Value of the Common Stock at the Date of Grant.
9. Vesting. Subject to Section 11 of this Plan, and unless specified
otherwise by the Board or Committee in the applicable Option agreement, each
Option shall vest and become
3
exercisable on the third anniversary of its Date of Grant, provided that the
Optionee remains continuously employed by the Corporation or a Subsidiary as an
Employee from the Date of Grant through such third anniversary. Notwithstanding
the preceding sentence, each Option shall be fully vested and exercisable upon
the Optionee's retirement from the Corporation or a Subsidiary upon or after
attaining age 65. The Board or the Committee may, but shall not be required to,
permit acceleration of vesting or termination of forfeiture provisions upon any
sale of the Corporation or similar transaction. An Option agreement may contain
such additional or different provisions with respect to vesting as the Board or
the Committee may specify.
10. Exercise. An Optionee may pay the Exercise Price of the shares of
Common Stock as to which a vested Option is being exercised by the delivery of
cash, check or, at the Corporation's option, by the delivery of shares of Common
Stock having a Fair Market Value on the exercise date equal to the Exercise
Price. The Board also shall have the discretion to accept any other method(s) of
payment upon the exercise of an Option (including a "cashless exercise"),
provided such method(s) of payment is/are permitted by law and is/are consistent
with the purpose of the Plan.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, any Option granted under
the Plan may be exercised by a broker-dealer acting on behalf of an Optionee if
(a) the broker-dealer has received from the Optionee or the Corporation a fully-
and duly-endorsed agreement evidencing such Option, together with instructions
signed by the Optionee requesting the Corporation to deliver the shares of
Common Stock subject to such Option to the broker-dealer on behalf of the
Optionee and specifying the account into which such shares should be deposited,
(b) adequate provision has been made with respect to the payment of any
withholding taxes due upon such exercise, and (c) the broker-dealer and the
Optionee have otherwise complied with Section 220.3(e)(4) of Regulation T, 12
CFR Part 220, or any successor provision.
11. When Options May be Exercised. No Option shall be exercisable at any
time after the fifth anniversary of its Date of Grant. In addition, if an
Optionee ceases to be an employee of the Corporation or any related corporation
for any reason, such Optionee's vested Options shall not be exercisable after
(a) 90 days following the date such Optionee ceases to be an employee of the
Corporation or any related corporation, if such cessation of service is not due
to the death or permanent and total disability (within the meaning of Section
22(e)(3) of the Code) of the Optionee, or the Optionee's retirement from the
Corporation or a Subsidiary upon or after attaining age 65, or (b) twelve months
following the date such Optionee ceases to be an employee of the Corporation or
any related corporation, if such cessation of service is due to the death or
permanent and total disability (as defined above) of the Optionee, or the
Optionee's retirement from the Corporation or a Subsidiary upon or after
attaining age 65. Upon the death of an Optionee, any vested Option exercisable
on the date of death may be exercised by the Optionee's estate or by a person
who acquires the right to exercise such Option by bequest or inheritance or by
reason of the death of the Optionee, provided that such exercise occurs within
both the remaining option term of the Option and twelve months after the date of
the Optionee's death. This Section 11 only provides the outer limits of
allowable exercise dates with respect to
4
Options; the Board or the Committee may determine that the exercise period for
an Option shall have a shorter duration than as specified above.
Except as otherwise provided in Sections 9 and 11, or as may be provided
in an applicable Option agreement, upon the termination of employment of an
Optionee, all Options granted to the Optionee, to the extent not previously
exercised, shall terminate and become null and void upon such termination of
employment.
12. Withholding of Taxes. The Board or the Committee shall make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of any taxes that the Corporation is required by any law or
regulation of any governmental authority to withhold in connection with any
Option including, but not limited to, withholding the issuance of all or any
portion of the shares of Common Stock subject to such Option until the Optionee
reimburses the Corporation for the amount it is required to withhold with
respect to such taxes, canceling any portion of such issuance in an amount
sufficient to reimburse the Corporation for the amount it is required to
withhold or taking any other action reasonably required to satisfy the
Corporation's withholding obligation.
13. Conditions Upon Issuance of Shares. The Corporation shall not be
obligated to sell or issue any shares upon the exercise of any Option granted
under the Plan unless the issuance and delivery of shares complies with all
provisions of applicable federal and state securities laws and the requirements
of any national exchange or trading system on which the Common Stock is then
listed or traded.
As a condition to the exercise of an Option, the Corporation may
require the person exercising the Option or receiving the grant to make such
representations and warranties as may be necessary to assure the availability of
an exemption from the registration requirements of applicable federal and state
securities law.
The Corporation shall not be liable for refusing to sell or issue any
shares covered by any Option if the Corporation cannot obtain authority from the
appropriate regulatory bodies deemed by the Corporation to be necessary to sell
or issue such shares in compliance with all applicable federal and state
securities laws and the requirements of any national exchange or trading system
on which the Common Stock is then listed or traded. In addition, the Corporation
shall have no obligation to any Optionee, express or implied, to list, register
or otherwise qualify the shares of Common Stock covered by any Option.
No Optionee will be, or will be deemed to be, a holder of any Common
Stock subject to an Option unless and until such Optionee has exercised his or
her Option and paid the purchase price for the subject shares of Common Stock.
Each Option under this Plan shall be transferable only by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by such Optionee.
5
14. Restrictions on Shares. Shares of Common Stock issued pursuant to the
Plan may be subject to restrictions on transfer under applicable federal and
state securities laws. The Board may impose such additional restrictions on the
ownership and transfer of shares of Common Stock issued pursuant to the Plan as
it deems desirable; any such restrictions shall be set forth in any Option
agreement entered into hereunder.
15. Modification of Options. Except as provided in Section 18 of this
Plan, at any time and from time to time, the Board or the Committee may execute
an instrument providing for modification, extension or renewal of any
outstanding Option, provided that no such modification, extension or renewal
shall impair the Option without the consent of the holder of the Option.
Notwithstanding the foregoing, in the event of such a modification,
substitution, extension or renewal of an Option, the Board or the Committee may
increase the exercise price of such Option if necessary to retain the qualified
status of such Option.
16. Effect of Change in Stock Subject to the Plan. In the event that each
of the outstanding shares of Common Stock (other than shares held by dissenting
stockholders) shall be changed into or exchanged for a different number or kind
of shares of stock of the Corporation or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise), or in the event a stock split or stock
dividend occurs, then there shall be substituted for each share of Common Stock
then subject to Options or available for Options the number and kind of shares
of stock into which each outstanding share of Common Stock other than shares
held by dissenting stockholders) shall be so changed or exchanged, or the number
of shares of Common Stock as is equitably required in the event of a stock split
or stock dividend, together with an appropriate adjustment of the Exercise
Price. The Board may, but shall not be required to, provide additional
anti-dilution protection to an Optionee under the terms of the individual's
Option agreement.
17. Administration.
(a) The Plan shall be administered by the Board or by a committee of
the Board comprised solely of two or more "outside directors" (within the
meaning of Treasury Regulation Section 1.162-27(e)(3)) appointed by the Board
(the "Committee"). Options may be granted under Section 6, only (i) by the Board
as a whole, or (ii) by a majority agreement of the members of the Committee;
provided that, if the Committee does not consist entirely of non-employee
directors (as defined in Rule 16b-3 under the Exchange Act), then Options may be
granted to an officer, director or 10% stockholder of the Corporation under
Section 6 only by the Board as a whole. Option agreements, in the forms as
approved by the Board or the Committee, and containing such terms and conditions
consistent with the provisions of this Plan as are determined by the Board or
the Committee, may be executed on behalf of the Corporation by the Chairman of
the Board, the President or any Vice President of the Corporation. The Board or
the Committee shall have complete authority to construe, interpret and
administer the provisions of this Plan and the provisions of the Option
agreements granted hereunder; to prescribe, amend and rescind rules and
regulations pertaining to this Plan; to suspend or discontinue this Plan; and
6
to make all other determinations necessary or deemed advisable in the
administration of the Plan. The determinations, interpretations and
constructions made by the Board or the Committee shall be final and conclusive.
No member of the Board or the Committee shall be liable for any action taken, or
failed to be taken, made in good faith relating to the Plan or any award
thereunder, and the members of the Board or the Committee shall be entitled to
indemnification and reimbursement by the Corporation in respect of any claim,
loss, damage or expense (including attorneys' fees) arising therefrom to the
fullest extent permitted by law.
(b) Although the Board or the Committee may suspend or discontinue the
Plan at any time, all Options must be granted within ten (10) years from the
effective date of the Plan or the date the Plan is approved by the stockholders
of the Corporation, whichever is earlier.
(c) Subject to any applicable requirements of Rule 16b-3 under the
Exchange Act or of any national exchange or trading system on which the Common
Stock is then listed or traded, the Board may amend any provision of this Plan
in any respect in its discretion.
(d) Nothing contained in the Plan shall be construed to limit the right
of the Board or the Corporation to grant options otherwise than pursuant to this
Plan.
18. Continued Employment Not Presumed. Nothing in this Plan or any
document describing it nor the grant of any Option shall give any Optionee the
right to continue in the employment of the Corporation or affect the right of
the Corporation to terminate the employment of any such person with or without
cause.
19. Liability of the Corporation. Neither the Corporation, its directors,
officers or employees or the Committee, nor any Subsidiary which is in existence
or hereafter comes into existence, shall be liable to any Optionee or other
person if it is determined for any reason by the Internal Revenue Service or any
court having jurisdiction that any Option granted hereunder does not qualify for
tax treatment as an incentive stock option under Section 422 of the Code.
20. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New York and the United States, as
applicable, without reference to the conflict of laws provisions thereof.
21. Severability of Provisions. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability shall not affect the remaining provisions of the Plan, but
such invalid, illegal or unenforceable provision shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
7
PROXY ANAREN MICROWAVE, INC. PROXY
6635 Kirkville Road
East Syracuse, New York 13057
THIS IS YOUR PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ANAREN MICROWAVE,
INC.
The undersigned hereby (1) acknowledges receipt of the notice of the
Annual Meeting of Shareholders of Anaren Microwave, Inc. (the "Company") to be
held at the Wyndham Hotel, 6302 Carrier Parkway, East Syracuse, New York on
Thursday, November 2, 2000 at 11:00 A.M., local time and of the Proxy Statement
in connection therewith and (2) appoints Hugh A. Hair and Lawrence A. Sala and
each of them as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of common stock, $.01 par value, of Anaren Microwave, Inc. held of record
by the undersigned on September 17, 2000 at the Annual Meeting of Shareholders,
or any adjournment thereof. If any nominee for director should be unavailable to
serve, it is intended that all of the shares will be voted for such substitute
nominee as may be determined by the Board of Directors. The undersigned directs
that this Proxy be voted as follows:
ITEM 1: ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to vote for
(except as marked to the contrary). all nominees listed below.
--- ---
Nominees: Carl W. Gerst, Jr., Brian P. Kelly
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the above list.)
ITEM 2: APPROVAL OF ANAREN MICROWAVE, INC. INCENTIVE STOCK OPTION PLAN FOR
KEY EMPLOYEES
FOR AGAINST ABSTAIN
--- --- ---
ITEM 3: APPROVAL OF ANAREN MICROWAVE, INC. COMPANY-WIDE STOCK OPTION PLAN
FOR AGAINST ABSTAIN
--- --- ---
ITEM 4: APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE SHARES
OF AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
--- --- ---
In their discretion the proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
(Continued and to be dated and signed on the reverse)
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 THE ELECTION OF THE NOMINEES FOR DIRECTOR, AND FOR ITEMS 2, 3 AND 4.
IMPORTANT. Please sign exactly as name appears on this card. Each joint owner
should sign. Executors, administrators, trustees, etc. should give full title.
SIGNATURES:
Dated: , 19
------------------- ---
-------------------------------
Signature
-------------------------------
Please Print Name Here
-------------------------------
Signature
-------------------------------
Please Print Name Here
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY USING THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED.