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:
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Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
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Anaren Microwave, Inc.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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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.
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(4) Date Filed:_________________________________________________________________
ANAREN MICROWAVE, INC.
6635 Kirkville Road
East Syracuse, New York 13057
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on November 19, 1998
-------------------------
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 19, 1998, at 11:00 a.m.
Eastern Standard Time at the Syracuse Marriott, 6302 Carrier Parkway, East
Syracuse, New York 13057, for the following purposes:
(1) To elect seven directors, for the term of one year and until their
successors have been elected and qualified;
(2) To approve amendments to the Company's Incentive Stock Option Plan;
(3) To approve amendments to the Company's 1989 Nonstatutory 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 23, 1998
will be entitled to notice of and to vote at the Meeting.
Enclosed is the annual report for the fiscal year ended June 30, 1998,
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
Dated: September 30, 1998
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 30, 1998, 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 19, 1998 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) by 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 proposed amendments to
the Company's Incentive Stock Option Plan, 1989 Nonstatutory Stock Option Plan
and Certificate of Incorporation.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on September 23, 1998, the record date stated in
the accompanying Notice, the Company had outstanding 5,462,292 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 2,731,147 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 23, 1998 (except as otherwise
indicated):
Number of Shares
Name and Address of Common Stock Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ----------------- -------------------- --------
Global Securities, Inc. .............. 732,800 13.42%
P.O. Box 560
Sudbury, MA 01776
Carl W. Gerst, Jr .................... 334,931(2) 6.09%
c/o Anaren Microwave, Inc.
6635 Kirkville Road
East Syracuse, NY 13057
- ----------
(1) Except as otherwise indicated, as of September 23, 1998 all of such shares
are owned with sole voting and investment power.
(2) Includes 61,931 shares held in trust for, or owned by, Mr. Gerst's family
and relatives and includes 40,000 shares which Mr. Gerst has the right to
acquire within 60 days pursuant to outstanding stock options.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of September 23,
1998, 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 of Common Stock Percent
of Beneficial Owner Beneficially Owned(1) of Class
- ------------------- -------------------- --------
Hugh A. Hair ......................... 108,350(2) 1.99%
Carl W. Gerst, Jr .................... 334,931(3) 6.09%
Abraham Manber ....................... 0 --
Lawrence A. Sala ..................... 38,200(4) *
Dale F. Eck .......................... 10,000(5) *
Herbert I. Corkin .................... 7,500(6) *
Gert R. Thygesen ..................... 26,500(7) *
Joseph E. Porcello ................... 19,490(8) *
Stanley S. Slingerland ............... 34,559(9) *
Dr. David Wilemon .................... 9,000(10) *
All Directors and Officers
as a Group (9 persons) ............ 588,530(11) 10.51%
- ----------
* Indicates less than 1%
(1) Except as otherwise indicated, as of September 23, 1998, all of such shares
are owned with sole voting and investment power.
(2) Includes 27,300 shares owned by Mr. Hair's wife.
2
(3) Includes 61,931 shares held in trust for, or owned by, Mr. Gerst's family
and relatives and includes 40,000 shares which Mr. Gerst has the right to
acquire within 60 days pursuant to outstanding stock options.
(4) Includes 33,000 shares which Mr. Sala has the right to acquire within 60
days pursuant to outstanding stock options.
(5) Includes 10,000 shares which Mr. Eck has the right to acquire within 60
days pursuant to outstanding stock options.
(6) 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 732,800 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.
(7) Includes 18,500 shares which Mr. Thygesen has the right to acquire within
60 days pursuant to outstanding stock options.
(8) Includes 18,500 shares which Mr. Porcello has the right to acquire within
60 days pursuant to outstanding stock options.
(9) Includes 7,000 shares which Mr. Slingerland has the right to acquire within
60 days pursuant to outstanding stock options.
(10) Includes 9,000 shares which Dr. Wilemon has the right to acquire within 60
days pursuant to outstanding stock options.
(11) Includes 136,000 shares which all directors and officers as a group have
the right to acquire within 60 days pursuant to outstanding stock options.
3
ITEM ONE
ELECTION OF DIRECTORS
Seven directors are to be elected for the ensuing year and until their
successors are elected and qualified. The shares represented by the enclosed
proxy will be voted for the nominees for directors set forth herein who shall
constitute the entire Board of Directors.
If any nominee for director should be unavailable to serve, it is intended
that the persons named in the accompanying form of proxy will vote the shares
represented by such proxy for another person duly nominated by the Board of
Directors in such nominee's stead or if no other person is so nominated, to vote
such shares only for the remaining nominees. All nominees for director set forth
herein have consented to serve, and the Company's Board of Directors believes
they will serve, as directors.
Certain Information Concerning Nominees for Directors
Set forth below is certain information concerning the nominees for
election as directors. The information has been furnished to the Company by such
persons:
Year
Name, Age, Nature of First Principal
Positions and Offices Became Occupation, Experience
Held with the Company Director and Other Directorships
- --------------------- -------- --------------------------------
Hugh A. Hair, 63 .................... 1968 Mr. Hair has been actively
Chairman of the Board engaged in the Company's
business since its founding
in 1967. Mr. Hair served as
President of the Company from
its founding until May 1995
and as Chief Executive
Officer from its founding
until September 1997. Mr.
Hair has served as Chairman
of the Board for more than
the past five years.
Carl W. Gerst, Jr., 61 .............. 1968 Mr. Gerst has been actively
Chief Technical Officer, Treasurer, engaged in the Company's
Vice Chairman business since its founding
in 1967. Mr. Gerst served as
Executive Vice President from
the Company's founding 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.
Lawrence A. Sala, 35 ................ 1995 Mr. Sala has been President of
President, Chief Executive Officer the Company since May 1995
and Director and has served as Chief
Executive Officer since
September 1997. Prior to May
1995, Mr. Sala served as Vice
President of Marketing.
Abraham Manber, 69 .................. 1971 Mr. Manber was President of
Director Amtech Patent Licensing Corp.
from 1979 until his
retirement in March 1993.
4
Year
Name, Age, Nature of First Principal
Positions and Offices Became Occupation, Experience
Held with the Company Director and Other Directorships
- --------------------- -------- --------------------------------
Herbert I. Corkin, 76 ............... 1989 Mr. Corkin has been Chairman of
Director the Board of 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.
Dale F. Eck, 55 ..................... 1995 Mr. Eck was Vice President of
Director Finance and 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, 61 ............... 1997 Dr. Wilemon has been a Professor
Director of 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. Dr. Wilemon has
also been a frequent speaker
at the University of
Wisconsin - College of
Engineering Professional
Development since 1978.
5
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 each of the
last three fiscal years ended July 1, 1996, June 30, 1997 and June 30, 1998 of
each person who served as the Company's Chief Executive Officer during the most
recent fiscal year 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 All
Name and ----------------------- Underlying Other Com-
Principal Salary Bonus Options(6) pensation(7)
Position Year ($) ($) (#) ($)
- --------- ------ ---------- ----------- ----------- -------------
Hugh A. Hair ................... 1998 $225,000 $25,000 0 $14,011
Chairman of the 1997 225,000 0 0 12,876
Board(1) 1996 225,000 0 0 10,521
Carl W. Gerst, Jr. ............. 1998 225,000 25,000 0 11,180
Chief Technical 1997 225,000 0 0 10,146
Officer, Vice 1996 225,000 0 0 9,086
Chairman and Treasurer(2)
Lawrence A. Sala ............... 1998 207,693 60,008 15,000 11,592
President and Chief 1997 161,827 0 35,000 10,878
Executive Officer(3) 1996 128,084 0 5,000 2,233
Gert R. Thygesen, .............. 1998 125,127 20,323 3,000 3,307
Vice President of 1997 120,462 0 2,500 2,739
Operations(4) 1996 115,570 0 0 2,006
Joseph E. Porcello, ............ 1998 97,885 5,334 2,500 1,468
Vice President of 1997 92,683 0 2,500 1,390
Finance(5) 1996 83,885 0 0 1,258
- ----------
(1) Mr. Hair also served as the Company's President until May 1995 and as the
Company's Chief Executive Officer until September 1997.
(2) Mr. Gerst served as the Company's Executive Vice President until May 1995
when he was elected to the position which he currently holds, Chief
Technical Officer.
(3) Mr. Sala was elected President of the Company in May 1995. He was named
Chief Executive Officer in September 1997.
(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. Porcello served as the Company's Director of Finance from prior to 1990
until May 1995 when he was elected to the position which he currently
holds, Vice President of Finance.
(6) The table reflects the number of shares which are subject to incentive
stock options granted to Messrs. Sala, Thygesen and Porcello pursuant to
the Company's Incentive Stock Option Plan.
(7) 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.
6
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:
Percent
of Total Potential Realizable Value
Number of Options at Assumed Annual Rates
Securities Granted to of Stock Price Appreciation
Underlying Employees Exercise or for Option Term(1)
Options in Fiscal Base Price Expiration ---------------------------
Name Granted Year ($/sh) Date 5%($) 10%($)
----- --------- ---------- ---------- --------- ------ -------
Hugh A. Hair ............... 0 0% -- -- -- --
Carl W. Gerst, Jr. ......... 0 0 -- -- -- --
Lawrence A. Sala ........... 15,000 20 $19.875 11/10/07 $187,489 $473,134
Gert R. Thygesen ........... 3,000 4 19.875 11/10/07 37,498 95,027
Joseph E. Porcello ......... 2,500 3 19.875 11/10/07 31,248 79,189
- ----------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5%
and 10% compounded annually from the date the respective options are
granted to their expiration date.
Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values
The following table sets forth certain information for the named executive
officers with respect to (i) stock options exercised in fiscal year 1998, (ii)
the number of stock options held at the end of fiscal year 1998, and (iii) the
value of in-the-money stock options at the end of fiscal year 1998.
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Options at June 30, 1998(#) Options At June 30, 1998(1)($)
Acquired On Value ------------------------------- -----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
----- ----------- ------------ ----------- ------------ ----------- -------------
Hugh A. Hair .......... 75,000 $920,625 0 0 $ 0 $ 0
Carl W. Gerst, Jr. .... 35,000 319,375 40,000 0 545,000 0
Lawrence A. Sala ...... 19,000 329,063 33,000 62,000 333,203 425,373
Gert R. Thygesen ...... 17,800 387,200 23,700 17,000 247,286 146,844
Joseph E. Porcello .... 7,000 125,125 18,500 12,500 189,336 103,344
- ----------
(1) Amount represents the difference between the aggregate exercise price of
the options and a $15.00 market price of the underlying Common Stock on
June 30, 1998.
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 sponsored by a recognized
bargaining unit. 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 $141,981 for fiscal 1998.
7
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
Final
Average Annual Estimated Annual Pension Payable
Compensation Based on Years of Service Indicated
--------------- --------------------------------------------------------------------------
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
175,000 .......... 16,875 22,500 28,125 33,750 39,375
200,000 .......... 16,875 22,500 28,125 33,750 39,375
225,000 .......... 16,875 22,500 28,125 33,750 39,375
250,000 .......... 16,875 22,500 28,125 33,750 39,375
275,000 .......... 16,875 22,500 28,125 33,750 39,375
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 Porcello, is $160,000 for 1998. These
benefit and compensation limits are indexed to increases in the Consumer Price
Index.
The credited years of service as of June 30, 1998 under the Pension Plan
for each of Messrs. Hair and Gerst are 25, and for Messrs. Sala, Thygesen and
Porcello are 13, 17 and 21, respectively.
Change-in-Control Arrangements
Since November 1988, the Company has maintained a plan for severance
compensation to employees after a hostile takeover (the "Severance Plan"). The
Severance Plan defines a hostile takeover to include, among others, the
following events, if not approved by two-thirds of the members of the Board of
8
Directors in office immediately prior to any such event: (1) the election of
directors not nominated by the Board of Directors; or (2) a business
combination, such as a merger. All full time employees who had completed at
least two years of continuous employment with the Company on the effective date
of the Severance Plan became participants therein. After the effective date,
nonparticipating full-time employees become participants as they complete two
years of continuous full-time employment with the Company. A severance benefit
is payable under the plan if a participant's employment with the Company
terminates, voluntarily or involuntarily, within two years after a hostile
takeover for reasons such as reduction in compensation, discontinuance of
employee benefit plans without replacement with substantially similar plans,
change in duties or status, certain changes in job location and involuntary
termination of employment for reasons other than just cause. For participants
who have completed two but less than five years, the benefit is equal to the
employee's annual compensation during the year immediately preceding the
termination of employment. For employees who have completed five or more years
of continuous full-time employment, the benefit is equal to two and nine-tenths
times the employee's annual compensation during the 12 months ending on the date
of termination of employment, but may not exceed 2.99 times average annual
compensation during the preceding five years. Annual compensation is defined for
purposes of the Severance Plan as the amount of an employee's wages, salary,
bonuses and other incentive compensation. Benefits are payable in a lump sum not
less than ten days after termination of employment.
To date, the Company is not aware of any event which would trigger the
provisions of the Severance Plan. The Severance Plan is due to expire, pursuant
to its terms, in November 1998.
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
profitability. 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 the specified 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 6 for Messrs. Sala,
Thygesen and Porcello represent amounts awarded pursuant to the Incentive Plan.
9
Compensation of Directors
The Company currently pays each director who is not an operating officer
of the Company $7,500 per year and reimburses each such director for the
reasonable expenses incurred in attending meetings of the Board of Directors.
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.
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, providing for his continuing employment by the Company until June
30, 2000 or such earlier date as may result pursuant to the terms of the
agreement. 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 provides for
a base annual salary of $225,000 or such greater amount as the Board may
determine, and Mr. Hair is also eligible for incentive bonuses and participation
in certain insurance plans. In addition, 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 agreement terminates
automatically in the event of Mr. Hair's death, and the Company may terminate
the agreement for specified cause as defined in the agreement. In the event that
Mr. Hair's employment with the Company is terminated other than for cause, the
Company will be obligated to pay Mr. Hair his base salary through June 30, 2000,
plus the deferred compensation benefits described above.
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.
10
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 and stock
option grants. Option grants have been made pursuant to the Company's Incentive
Stock Option Plan which was approved by the Shareholders of the Company at the
1995 Annual Meeting of Shareholders held on December 6, 1995, and may be made in
the future pursuant to the Incentive Stock Plan as amended by the Board of
Directors on August 18, 1998, subject to approval 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.
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 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:
Abraham Manber Dr. David Wilemon
Dale F. Eck
11
Performance Graph
The following performance graph compares the total shareholder return of
the Company's Common Stock to The NASDAQ National 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, 1993 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
[The following information was depicted as a line graph in the printed material]
Cumulative Total Return
6/30/93 6/2/94 6/1/95 6/30/96 6/30/97 6/30/98
------- ------ ------ ------- ------- -------
Anaren Microwave Inc. 100 129 323 348 684 774
NASDAQ Stock Market (U.S.) 100 103 145 173 210 278
NASDAQ Electronic Components 100 110 251 240 394 393
* $100 INVESTED ON 6/30/93 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 AMENDMENTS TO INCENTIVE STOCK OPTION PLAN
The Anaren Microwave, Inc. Incentive Stock Option Plan ("ISOP") was
approved by the Company's Shareholders at the Company's 1995 Annual
Shareholders' Meeting. The purpose of the ISOP is to enable the Company to
attract, retain and reward talented employees by offering equity-based
compensation opportunities, and to more closely align the interests of employees
with the interests of the Company's Shareholders.
On August 18, 1998, the Board of Directors approved amendments to the
ISOP, subject to approval by the Company's Shareholders at the Meeting. The
proposed amendments, which are described more fully below, would (i) increase
the number of shares which may be subject to options granted under the ISOP in
order to allow the Company to continue to fulfill the purposes of the ISOP as
described above, (ii) vest the full Board of Directors with authority to approve
grants under the ISOP, (iii) provide greater flexibility to employees in the
exercise of options granted under the ISOP, and (iv) provide the Board with
greater flexibility in fixing the termination date of options upon an employee's
death, retirement, disability or termination of employment for other reasons.
The following is a summary of the ISOP, as in effect prior to the proposed
amendments, together with a summary of the amendments proposed to be made to the
ISOP. These summaries are qualified in their entirety by reference to the
specific provisions of the ISOP and the proposed amendments, the full text of
which are available upon written request to: David M. Ferrara, Secretary, Anaren
Microwave, Inc. 6635 Kirkville Road, East Syracuse, New York 13057.
General Features of the ISOP
The ISOP is an executive compensation plan. Pursuant to the ISOP, eligible
employees of the Company 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 currently provides that it is to be administered by a committee
of disinterested persons consisting of at least two members of the Board of
Directors and other members appointed by the Board. The ISOP gives the committee
sole authority to designate from all executive officers and key employees of the
Company 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 committee 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, 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 ISOP may
13
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 (or until after six
months from the date of shareholder approval of the ISOP, in the case of options
which were granted subject to shareholder approval of the ISOP at the 1995
Annual Shareholders' Meeting). 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 and a stock certificate is
issued to him or her for such shares. No option granted under the ISOP is
exercisable by an employee 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 three 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 currently provides that options may be exercised by payment of
the exercise price (i) in cash or by certified check, (ii) by tender of shares
of Common Stock having a fair market value equal to the option price, or (iii)
by any combination of these methods.
Currently, 400,000 shares of Common Stock have been reserved for issuance
under the ISOP. 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. 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.
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 to 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
14
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.
Proposed Amendments to the ISOP
The proposed amendments to the ISOP, which have been approved by the Board
of Directors and upon which your vote will be requested at the Meeting, are
summarized below. If approved, the proposed Amendments will become effective as
of November 19, 1998.
Authorization of Additional Shares Available under the ISOP. As noted
above, 400,000 shares of Common Stock have been reserved for issuance under the
ISOP. Presently, 337,500 of such shares are subject to outstanding options
and/or were subject to previously granted options which have been exercised,
leaving only 62,500 shares available for issuance under the ISOP. In order for
the ISOP to be able to accomplish its purpose of enabling the Company to
continue to attract and retain highly qualified personnel, the Board has
recommended an increase in the number of shares available for issuance under the
ISOP. Accordingly, if approved by the Company's Shareholders at the Meeting, the
ISOP would be amended to raise the amount of shares available for issuance under
the ISOP from 400,000 to 900,000.
Change in Administration of ISOP. As noted above, the ISOP currently
provides that it is to be administered by a committee of disinterested persons
consisting of at least two Board members and other persons appointed by the
Board. If approved by the Shareholders at the Meeting, the ISOP would be amended
to require the affirmative vote of a majority of the full Board of Directors to
approve any grants under the ISOP. The Board contemplates that its Compensation
Committee, which presently consists of three non-employee directors, would
continue to make recommendations to the full Board as to specific grants to be
made under the ISOP, but a majority vote of the Board would be required to
approve the grants.
Method of Payment. As noted above, the ISOP currently allows employees to
exercise incentive stock options granted under the ISOP by payment of the
exercise price (i) in cash or by certified check, (ii) by tender of shares of
Common Stock, or (iii) by any combination of these methods. Effective February
22, 1998, the New York Business Corporation Law ("NYBCL") was amended to
diversify the permissible types of consideration that a New York business
corporation such as the Company may accept as consideration for shares of its
capital stock. Among other things, the NYBCL now provides that a New York
business corporation may accept a binding obligation to pay cash or perform
future services as valid consideration for the issuance of shares. In order to
take full advantage of the opportunities provided by the amended NYBCL
provisions, if approved by the Shareholders at the Meeting the ISOP would be
amended to allow participants to exercise options by any lawful method
acceptable to the Board in its discretion.
Flexibility in Option Termination Dates. As currently drafted, the ISOP
contains fixed requirements as to the dates on which options will terminate in
the event of an employee's death, retirement, disability or termination of
employment for other reasons. If approved by the Shareholders at the Meeting,
the ISOP would be amended to allow the Board flexibility to provide for
different option termination dates upon the occurrence of one of these
extraordinary events, even if all or part of an option, when exercised, may not
qualify as an "incentive stock option."
15
Awards Under the ISOP
The number of options which may be granted to specific employees in the
future under the ISOP cannot be determined at this time. The following table
sets forth the option grants received by the persons shown in the table during
the fiscal year ended June 30, 1998.
PLAN BENEFITS
Number of Units
Name and Position Dollar Value (2) (Shares of Common Stock)
- ----------------- --------------- ----------------------
Hugh A. Hair - Chairman
of the Board (1) ................ $ 0 0
Lawrence A. Sala - President
and Chief Executive Officer ..... 298,125 15,000
Carl W. Gerst, Jr. - Chief
Technical Officer, Vice
Chairman and Treasurer .......... 0 0
Gert R. Thygesen - Vice
President of Operations ......... 59,625 3,000
Joseph E. Porcello - Vice
President of Finance ............ 49,688 2,500
Executive Group ................. 407,438 20,500
Non-Executive Officer
Employee Group .................. 1,073,250 54,000
- ----------
(1) Mr. Hair also served as the Company's Chief Executive Officer until
September 1997.
(2) These amounts represent the aggregate exercise price of the options
granted. The per share exercise price of $19.875 was based on the market
value of the Common Stock on the date of grant.
Directors of the Company who are not also employees of the Company are not
eligible to participate in the ISOP.
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
amendments to the ISOP.
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 AMENDMENTS TO NONSTATUTORY STOCK OPTION PLAN
The Anaren Microwave, Inc. 1989 Nonstatutory Stock Option Plan ("NSOP")
was approved by the Company's Shareholders at the Company's 1989 Annual
Shareholders' Meeting. The purpose of the NSOP is to enable the Company to
attract, retain and reward talented directors, consultants and other persons who
are not employees of the Company by offering equity-based compensation
opportunities to such persons, and to induce such persons to exert their maximum
efforts toward the Company's success.
On August 18, 1998, the Board of Directors approved amendments to the
NSOP, subject to approval by the Company's Shareholders at the Meeting. The
proposed amendments, which are described more fully below, would (i) increase
the number of shares which may be subject to options granted under the
16
NSOP in order to allow the Company to continue to fulfill the purposes of the
NSOP described above, (ii) extend the term of the NSOP, (iii) vest the full
Board of Directors with authority to approve grants under the NSOP, and (iv)
provide greater flexibility to participants in the exercise of options granted
under the NSOP.
The following is a summary of the NSOP, as in effect prior to the proposed
amendments, together with a summary of the amendments proposed to be made to the
NSOP. These summaries are qualified in their entirety by reference to the
specific provisions of the NSOP and the proposed amendments, the full text of
which are available upon written request to: David M. Ferrara, Secretary, Anaren
Microwave, Inc. 6635 Kirkville Road, East Syracuse, New York 13057.
General Features of the NSOP
The NSOP is an executive compensation plan. Pursuant to the NSOP, eligible
directors, consultants and other persons rendering services to the Company may
be granted "nonstatutory stock options" (i.e., options that are not "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code)
to purchase shares of Common Stock.
The NSOP currently provides that it is to be administered by the Company's
Board of Directors or by a committee appointed by the Board. The NSOP gives the
Board or committee sole authority to designate from all eligible persons those
individuals who may participate in the NSOP, and to determine the number of
shares to be optioned to each person, the exercise price for such shares and the
period of time during which each option shall be exercisable. Options granted
under the NSOP may have a term of up to ten years. In designating eligible
participants and in determining the number and terms of the stock options to be
granted to eligible individuals, the Board or committee 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.
Notwithstanding the foregoing, a director's participation in the NSOP is
subject to the following limitations: (a) no director may receive options under
the NSOP at any time or from time to time for more than 50,000 shares in the
aggregate; (b) the exercise price of such options must be equal to the fair
market value of the shares on the date of grant; (c) the period of each such
option must be five years; (d) each such option is exercisable immediately upon
the date of grant; and (e) the periods during which a director may be granted an
option are as follows: (i) the 15 day period commencing on the fifth day
following the public release of the Company's earnings for the next preceding
fiscal quarter; and (ii) the 15 day period commencing on the fifth day following
the release of the Company's earnings for the next preceding fiscal year.
Options granted under the NSOP 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. Options granted under the NSOP are
exercisable by an optionee only during the optionee's relationship with the
Company and for a period of three months after termination of such relationship,
or 12 months after a termination due to disability. If an optionee dies, an
option may be exercised by the employee's executive, personal representative or
heir at any time within one year after the optionee's death. In no event may an
option be exercised after the expiration of the option term.
17
The NSOP currently provides that options may be exercised by payment of
the exercise price (i) by check payable to the Company, (ii) by tender of shares
of Common Stock having a fair market value equal to the option price, or (iii)
by any combination of these methods.
Currently, 100,000 shares of Common Stock have been reserved for issuance
under the NSOP. Any shares which are subject to purchase under options which
terminate or expire may become subject to subsequent options which may be
granted. The NSOP 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.
Although the Board may terminate, modify or amend the NSOP, 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 NSOP (except pursuant to
a stock split, stock dividend or similar transaction), or alter the class of
persons eligible to receive options under the NSOP.
General Federal Income Tax Consequences
An optionee will not recognize any taxable income at the time a
nonstatutory stock option is granted under the NSOP, and the Company will not be
entitled to a federal income tax deduction at that time. Upon the exercise of
such an option, ordinary income will be recognized by the optionee in an amount
equal to the excess of the fair market value of the shares purchased at the time
of such exercise over the aggregate option price. The Company will be entitled
to a corresponding federal income tax deduction. Upon any subsequent sale of the
shares, the optionee will generally recognize a taxable capital gain or loss
based upon the difference between the per share fair market value at the time of
exercise and the per share selling price at the time of the subsequent sale of
the shares.
The foregoing discussion is only a summary of certain aspects of the
highly complex federal income tax rules applicable to participants in the NSOP,
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.
Proposed Amendments to the NSOP
The proposed amendments to the NSOP, which have been approved by the Board
of Directors and upon which your vote will be requested at the Meeting, are
summarized below. If approved, the proposed Amendments will become effective as
of November 19, 1998.
Authorization of Additional Shares Available under the NSOP. As noted
above, 100,000 shares of Common Stock have been reserved for issuance under the
NSOP. Presently, all of such shares are subject to outstanding options and/or
were subject to previously granted options which have been exercised, leaving no
shares available for issuance under the NSOP. In order for the NSOP to be able
to accomplish its purpose of enabling the Company to continue to attract and
retain highly qualified directors, consultants and other non-employee personnel,
the Board has recommended an increase in the number of shares available for
issuance under the NSOP. Accordingly, if approved by the Company's Shareholders
at the Meeting, the NSOP would be amended to raise the amount of shares
available for issuance under the NSOP from 100,000 to 250,000.
Extension of Term of Plan. The NSOP currently provides that it will expire
on August 23, 1999, ten years from the original adoption date. In order to
facilitate continued use of the NSOP to accomplish the purposes described above,
the Board of Directors has recommended extending the term of the NSOP.
18
Accordingly, if approved by the Company's Shareholders at the Meeting, the term
of the NSOP would be extended until August 18, 2008, ten years from the date
that the Board authorized the proposed amendments to the NSOP.
Change in Administration of NSOP. As noted above, the NSOP currently
provides that it is to administered by the Board of Directors or by a committee
appointed by the Board. If approved by the Shareholders at the Meeting, the NSOP
would be amended to require the affirmative vote of a majority of the full Board
of Directors to approve any grants under the NSOP. The Board contemplates that a
committee designated by the Board would continue to make recommendations to the
full Board as to specific grants to be made under the NSOP, but a majority vote
of the Board would be required to approve the grants.
Method of Payment. As noted above, the NSOP currently allows employees to
exercise stock options granted under the NSOP by payment of the exercise price
(i) by check payable to the Company, (ii) by tender of shares of Common Stock of
the Company, or (iii) by any combination of these methods. Effective February
22, 1998, the New York Business Corporation Law ("NYBCL") was amended to
diversify the permissible types of consideration that a New York business
corporation such as the Company may accept as consideration for shares of its
capital stock. Among other things, the NYBCL now provides that a New York
business corporation may accept a binding obligation to pay cash or perform
future services as valid consideration for the issuance of shares. In order to
take full advantage of the opportunities provided by the amended NYBCL
provisions, if approved by the Shareholders at the Meeting the NSOP would be
amended to allow participants to exercise options by any lawful method
acceptable to the Board in its discretion.
Awards Under the NSOP
The number of options which may be granted to specific employees in the
future under the NSOP cannot be determined at this time. The following table
sets forth the option grants received by the persons shown in the table during
the fiscal year ended June 30, 1998.
PLAN BENEFITS
Number of Units
Name and Position Dollar Value (2) (Shares of Common Stock)
- ----------------- --------------- ----------------------
Dr. David Wilemon,
Director ........................ $178,875 9,000
Non-Executive Director
Group (1) ....................... 178,875 9,000
- ----------
(1) Persons who are employees of the Company, including Messrs. Hair, Gerst,
Sala, Thygesen and Porcello, are not eligible to participate in the NSOP.
(2) These amounts represent the aggregate exercise price of the options
granted. The per share exercise price of $19.875 was based on the market
value of the Common Stock on the date of grant.
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
amendments to the NSOP.
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.
19
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.
Presently, the Company has 5,939,792 shares of Common Stock issued and
outstanding or subject to options granted leaving 6,060,208 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 12,000,000 to 25,000,000.
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 a 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon the Company's review of copies of reports received by
the Company pursuant to Section 16(a) of the Securities Exchange Act of 1934,
and the written representations of its incumbent directors and officers and
beneficial owners of more than 10% of the Company's Common Stock, the Company
believes that, for the fiscal year ended June 30, 1998, its officers, directors
and the beneficial owner of more than 10% of the Common Stock complied with the
filing requirements under Section 16(a) of the Securities Exchange Act of 1934.
20
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
During the fiscal year ended June 30, 1998, KPMG Peat Marwick 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 Peat Marwick LLP to
provide assistance in the preparation of federal income and state franchise tax
returns.
The independent certified public accountant selected by management to
audit the Company's books and records for the current fiscal year is the firm of
KPMG Peat Marwick LLP, 113 South Salina Street, Syracuse, New York, which firm
has been the Company's principal accountant for the past 25 years. It is
anticipated that a representative of KPMG Peat Marwick 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 nine meetings. No current director attended fewer than 75% of the
aggregate number of meetings.
During the fiscal year ended June 30, 1998, the Company's Compensation
Committee consisted of Herbert I. Corkin, Dale F. Eck and Abraham Manber,
through February 5, 1998. Dr. David Wilemon replaced Herbert I. Corkin on the
Compensation Committee effective February 6, 1998. 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, 1998, the Compensation Committee held one meeting.
The Company's Audit Committee consists of Carl W. Gerst, Jr., Dale F. Eck
and Herbert I. Corkin. The Audit Committee held one meeting during the last
fiscal year. The function of the Audit Committee is to review the Company's
annual audit with the Company's independent accountant. The Company has not
appointed a nominating committee of the Board of Directors.
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 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.
21
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in the
Company's Proxy Statement relating to the 1999 Annual Meeting of Shareholders,
such proposal must be received by the Company by May 31, 1999.
David M. Ferrara
Secretary
Date: September 30, 1998
Syracuse, New York
22
APPENDIX A
ANAREN MICROWAVE, INC.
INCENTIVE STOCK OPTION PLAN
(Including Proposed Amendments)
1. Purpose.
The Anaren Microwave, Inc. Incentive Stock Option Plan (the "Plan")
is intended to encourage ownership of the capital stock of Anaren Microwave,
Inc. (the "Company") among executive officers and other key employees of the
Company so as to provide an incentive to them to continue their employment with
the Company and exert their maximum efforts towards the Company's success. By
thus encouraging employees and promoting their continued association with the
Company, the Plan may be expected to benefit the Company and its shareholders.
2. Shares Subject to the Plan.
The total number of shares of the common stock of the Company, $.01
par value per share (the "Common Stock"), which may be subject to options
granted under the Plan shall be 900,000 in the aggregate, subject to adjustment
as provided in Section 8. The Company shall at all times while the Plan is in
force reserve such number of authorized and unissued or treasury shares of
Common Stock as will be sufficient to satisfy the requirement of outstanding
options granted under the Plan. In the event any option granted under the Plan
shall expire or terminate for any reason without having been exercised in full
or shall cease for any reason to be exercisable in whole, or in part, the
unpurchased shares of Common Stock subject thereto shall again be available for
option under the Plan.
3. Administration of the Plan.
(a) The Plan shall be administered by a committee (the "Committee").
Prior to the effective date of Amendment #1 to the Plan, the Committee shall
consist of disinterested persons appointed by the Board of Directors of the
Company as constituted from time to time. Upon the approval of Plan Amendment #1
by the shareholders of the Company, the full Board of Directors of the Company
shall be the "Committee" for purposes of the Plan. All options granted pursuant
to the Plan on or after the effective date of Amendment #1 shall be subject to
the approval of the full Board of Directors of the Company.
(b) The Committee shall have the authority, in its sole discretion
and from time to time, to: (i) designate the employees or classes of employees
eligible to participate in the Plan; (ii) determine the individuals to whom, and
the time or times at which, options shall be granted, and the number of shares
of Common Stock to be subject to each option; (iii) to interpret the Plan and to
prescribe, amend and rescind rules and regulations relating to the Plan; (iv)
determine the terms and provisions of the respective option grants (which need
not
be identical) consistent with their being "incentive stock options" as provided
in Section 422 of the Code; and (v) make all other determinations and take all
other actions necessary or advisable for the implementation and administration
of the Plan. Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and any determination by a
majority of the members of the Committee shall be deemed to have been made by
the whole Committee. No member of the Committee shall be liable for any action
taken or decision made in good faith relating to the Plan or any award
thereunder.
4. Eligibility.
(a) Participants in the Plan shall be selected by the Committee from
the executive officers and other key employees of the Company or of a parent or
subsidiary (within the meaning of Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code")), of the Company. In
making this selection and in determining the amount and terms of any options
granted, the Committee may take into account the nature of the services rendered
by such individuals, their present and potential contributions to the Company's
success, and such other factors as the Committee, in its sole discretion, shall
deem relevant. Notwithstanding the foregoing, no option shall be granted to any
individual who owns (within the meaning of Section 422(b)(6) and 424(d) of the
Code) at the time the option is granted, more than 10% of the total combined
voting power or value of all classes of stock of the Company or a parent or
subsidiary of the Company, except as provided in Section 4 (b) of the Plan.
(b) Notwithstanding the provisions of Section 4 (a) above, an option
may be granted, consistent with the other terms of the Plan, to an employee who
owns (within the meaning of Sections 422 (b) (6) and 424 (d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or a parent or subsidiary of the Company if, at the time such option is
granted, the option price is an amount which equals or exceeds 110% of the fair
market value of the Common Stock subject to the option, and such option by its
terms is not exercisable more than five (5) years after it is granted.
(c) Nothing contained in the Plan shall be construed to limit the
right of the Company to grant options otherwise than under the Plan.
(d) Subject to Section 4 (e) below, if options have been granted
under the Plan, additional options may be granted from time to time to a holder
of such an option, and options may be granted from time to time to one or more
employees who have not previously been granted options under the Plan.
(e) The aggregate fair market value of the Common Stock, with
respect to which options are exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000. For purposes of this Section
3 (e) of the Plan, (i) options shall be taken into account in the order in which
they were granted, (ii) the fair market value of any
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Common Stock shall be determined as of the time the option with respect to such
Common Stock was granted, and (iii) the term "Common Stock" shall mean any stock
of the Company or of its parent or subsidiary (within the meaning of Sections
424 (e) and (f) of the Code) with respect to which the optionee has been granted
incentive stock options (as defined in Section 422 of the Code).
5. Terms of Options.
All options granted under the Plan are intended to qualify as
"incentive stock options" under the provisions of Section 422 of the Code. The
terms of each option granted under the Plan shall be determined by the Committee
consistent with the provisions of the Plan, including the following:
(a) The purchase price of the shares of the Common Stock subject to
each option shall not be less than the fair market value of the Common Stock at
the time such option is granted. Such fair market value shall be determined by
the Committee and, if the Common Stock is listed on a national securities
exchange or traded on the over-the-counter market, shall be the closing sale
price of the Common Stock on such exchange, or on the over-the-counter market as
quoted in the National Association of Securities Dealers Automated Quotation
System (presently the NASDAQ National Market System), as the case may be, on the
day on which the option is granted or, on the next business day, if such date is
not a business day.
(b) An option granted under the Plan shall not be exercisable until
the expiration of six months from the date of its grant and in the case of a
grant which is conditioned upon subsequent shareholder approval of the Plan, six
months from the date of such shareholder approval. Unless otherwise provided in
any option grant under the Plan, 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 granted under the Plan shall become
exercisable in cumulative fashion on the first through fifth anniversary dates
of the grant of the option. In no case may an option be exercised as to less
than one hundred (100) shares at any one time (or the remaining shares covered
by the option if less than one hundred (100)).
(c) Each option granted under the Plan shall by its terms expire and
shall not be exercisable after the expiration of ten years from the date of its
grant (unless a shorter period is provided by the Committee or another Section
of this Plan) and shall be subject to earlier termination as expressly provided
in Section 6 hereof.
(d) An option granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its principal office (attention
of the Vice President of Finance) of written notice of the number of shares with
respect to which the option is being exercised accompanied by payment in full of
the purchase price of such shares. Payment for
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such shares may be made (as determined by the Committee) (i) in cash, (ii) by
certified check payable to the order of the Company in the amount of such
purchase price, (iii) by delivery of Common Stock to the Company having a fair
market value equal to said purchase price, or (iv) by any combination of the
methods of payment described in (i) through (iii) above. Notwithstanding the
foregoing of this Section 5(d), the Committee shall have the authority and
discretion to accept any other method(s) of payment for shares upon the exercise
of an option granted pursuant to the Plan, provided such method(s) of payment
is/are permitted by law and is/are consistent with the option being an incentive
stock option under Code Section 422.
(e) The holder of an option shall have none of the rights of a
shareholder with respect to the shares covered by his option until such shares
shall be issued to him upon the exercise of his option.
(f) No option granted under the Plan shall be transferable otherwise
than by will or the laws of descent and distribution and any option may be
exercised during the lifetime of the holder thereof only by him. No option
granted under the Plan shall be subject to execution, attachment or other
process.
6. Death, Retirement or Disability or Termination of Employment for
Other Reasons.
(a) Upon the death of a holder of an option under the Plan, any
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 both within the remaining option term and within one year after
the optionee's death. The provisions of this section shall apply notwithstanding
the fact that the optionee's employment may have terminated prior to death, but
only to the extent of any options exercisable on the date of death.
(b) Upon the termination of employment of a holder of an option
under the Plan by reason of the disability (within the meaning of Section
22(e)(3) of the Code) of such holder, such option may be exercised, to the
extent such options were exercisable at the date of such termination of
employment, provided that such exercise occurs both within the remaining option
term and within the one year period following the date of such termination of
such optionee's employment as a result of such disability.
(c) Upon the termination of the employment of a holder of an option
under the Plan by reason of such holder's retirement, such holder may exercise
any options, to the extent such options were exercisable at the date of such
termination of employment, provided that such exercise occurs both within the
remaining option term and within the three month period after the date of
termination of employment due to retirement.
(d) Except as provided in subsections (a), (b) or (c) of this
Section 6, upon
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the termination of the employment of a holder of an option, all options, to the
extent not previously exercised, shall terminate and become null and void
immediately upon such termination of the holder's employment.
(e) Notwithstanding the option termination dates described in the
foregoing of this Section 6, the Committee may provide for different option
termination dates in any option grant under the Plan, even if part or all of the
option, when exercised, may not qualify as an "incentive stock option" (within
the meaning of Code Section 422).
7. Leave of Absence.
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect of any leave of
absence taken by the recipient of any option. Without limiting the generality of
the foregoing, the Committee shall be entitled to determine (i) whether or not
any such leave of absence shall constitute a termination of employment within
the meaning of the Plan and (ii) the impact, if any, of any such leave of
absence on the grant of options under the Plan theretofore made to any recipient
who takes such leave of absence.
8. Adjustment upon Changes in Capitalization.
(a) In the event that the outstanding Common Stock is hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock splitup, combination or exchange of shares and the like,
or dividends payable in shares of the Common Stock, an appropriate adjustment
shall be made by the Committee in the aggregate number of shares available under
the Plan and in the number of shares and price per share subject to outstanding
options. If the Company shall be reorganized, consolidated or merged with
another corporation, or if all or substantially all of the assets of the Company
shall be sold or exchanged, the holder of an option shall at the time of
issuance of the stock under such a corporate event, be entitled to receive upon
the exercise of his option the same number and kind of shares of stock or the
same amount of property, cash or securities as he would have been entitled to
receive upon the happening of any such corporate event as if he had been,
immediately prior to such event, the holder of the number of shares covered by
his option, provided, however, that in any of such events the Committee shall
have the discretionary power to take any action necessary or appropriate to
prevent the option granted herein from being disqualified as an "incentive stock
option" under the provisions of section 422 of the Code.
(b) Any adjustment in the number of shares shall apply
proportionately to only the unexercised portion of any option granted hereunder.
If fractions of a share would result from any such adjustment, the adjustment
shall be revised to the next lower whole number of shares.
9. Further Conditions of Exercise.
(a) Unless prior to the exercise of the option the shares of Common
Stock issuable upon such exercise have been registered with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, the
notice of exercise shall be
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accompanied by a representation or agreement of the individual exercising the
option to the Company to the effect that such shares are being acquired for
investment and not with a view to the resale or distribution thereof or such
other documentation as may be required by the Company unless in the opinion of
counsel to the Company such representation, agreement or documentation is not
necessary to comply with the said Act.
(b) The Company shall not be obligated to deliver any shares of the
Common Stock until they have been listed on each securities exchange on which
the Common Stock may then be listed or until there has been qualification under
or compliance with such state or federal laws, rules or regulations as the
Company may deem applicable.
10. Effective Date and Term; Termination, Modification and Amendment.
(a) The Plan shall become effective on the date of its adoption by
the Board of Directors of the Company and the Plan (but not options granted
under the Plan) shall terminate ten (10) years from the date of its adoption by
the Board. No option shall be granted after termination of the Plan. The Plan
shall be submitted to the Company's shareholders for approval at the annual
meeting of the shareholders next succeeding the adoption of the Plan by the
Board and in no event later than twelve months of the date the Plan is adopted
by the Board. The grant of any options prior to the date that the Plan is
approved by the shareholders shall be conditioned upon subsequent shareholder
approval of the Plan.
(b) The Plan may from time to time be terminated, modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock entitled to vote thereon.
(c) The Committee may, without further action by the shareholders
and without receiving further consideration from the participants, amend the
Plan or condition or modify grants of options under the Plan in response to
changes in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to the Plan or to comply with NASD rules or
requirements.
(d) The Committee may at any time and from time to time terminate or
modify or amend the Plan in any respect, except that without shareholder
approval the Committee may not (i) increase the maximum number of shares of
Common Stock which may be issued under the Plan (other than increases pursuant
to Section 8), (ii) extend the period during which any option may be granted or
exercised, or (iii) extend the term of the Plan. The termination or any
modification or amendment of the Plan, except as provided in subsection (c),
shall not without the consent of a participant, affect his or her rights under
an award previously granted to him or her.
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APPENDIX B
ANAREN MICROWAVE, INC.
1989 NONSTATUTORY STOCK OPTION PLAN
(Including Proposed Amendments)
I. DEFINITIONS, PURPOSES AND ELIGIBILITY
A. Definitions
Unless otherwise specified or unless the context otherwise requires, the
following terms have the following meanings:
1. "Board of Directors" or "Board" means the Board of Directors of
Anaren Microwave, Inc.
2. "Code" means the United States Internal Revenue Code of 1986, as
amended.
3. "Company" means Anaren Microwave, Inc., and any of its subsidiaries.
4. "Option" means an option granted under the Plan.
5. "Optionee" means a person to whom one or more Options are granted
under the Plan.
6. "Plan" means this 1989 Nonstatutory Stock Option Plan.
7. "Shares" means the Common Stock, $.01 par value of Anaren Microwave,
Inc., or any shares of capital stock into which the Shares are changed or for
which they are exchanged within the provisions of Article V of the Plan.
B. Purposes of the Plan
The Plan is intended to encourage ownership of Shares among directors,
consultants and other persons rendering services to the Company and its
subsidiaries who are not also full-time employees, and to induce such persons to
exert their maximum efforts toward the Company's success.
C. Eligibility
Options may be granted under the Plan to members of the Company's Board of
Directors, consultants to the Company and other persons rendering services to
the Company who are not also full time employees of the Company.
II. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Options may be granted from
time to time shall be 250,000. The Shares to be issued shall be made available
either from authorized but unissued Shares or Shares reacquired by the Company.
If any Option granted under the Plan shall expire, be canceled or terminate
without being exercised in whole or in part, new Options may be granted covering
the shares not purchased.
III. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors as such Board may
be composed from time to time. The Board shall have the authority, in its
discretion, to determine the persons to whom, and the time or times at which and
the terms upon which, Options shall be granted and may be exercised, and the
number of shares to be subject to each Option, the exercise price of Options,
and to interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provision of the respective
Option agreements (which need not be identical) and to make all other
determinations and take all other actions necessary or advisable for the
administration of the Plan. All Options granted pursuant to the Plan shall be
subject to the approval of the full Board. The Board of Directors'
determinations on the matters referred to in this paragraph shall be conclusive.
IV. TERMS AND CONDITIONS OF OPTIONS
Any Option granted under the Plan shall be in such form as the Board may
from time to time approve. Any such option shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the Plan, as the Board shall deem desirable. Any Option
granted prior to the approval by the Company's shareholders of the Plan shall be
granted subject to such approval.
(a) Grant Period. The periods during which the Board may grant Options to
any person who is a member of the Board of Directors are as follows: (i) the
fifteen (15) day period commencing on the fifth (5th) day following the public
release of the Company's earnings for the next preceding fiscal quarter; and
(ii) the fifteen (15) day period commencing on the fifth (5th) day following the
release of the Company's earnings for the next preceding fiscal year. Options
may be granted to persons who are not members of the Board of Directors from
time to time and at such times as the Board may determine.
-2-
(b) Option Price. The purchase price of each of the Shares purchasable
under any Option shall be determined by the Board.
(c) Option Period. Except with respect to Options granted to members of
the Board of Directors of the Company as to which the provisions of Article IV
(f) shall govern, the period of each Option shall be fixed by the Board, but no
Option shall be exercisable after the expiration of ten years from the date the
Option is granted.
(d) Exercise of Option. Except as provided in Paragraph (e), an Option may
be exercised in whole at any time or in part from time to time during the option
period, by giving written notice of exercise to the Company specifying the
number of Shares to be purchased, together with payment in full of the purchase
price. Payment may be made by any method(s) acceptable to the Board in its
discretion, including (i) by a certified check payable to the order of the
Company, (ii) by the tendering of Shares to the Company having a fair market
value equal to the purchase/exercise price, and (iii) any combination of
certified checks and Shares. If Shares are tendered as partial or full payment,
the fair market value of such Shares shall be equal to the closing price of the
Shares as reported on the principal national stock exchange on which the Shares
may be traded on the day immediately preceding the day of receipt of the Shares
by the Company, or if no sale of Shares has been made on any securities exchange
on that date, the fair market value shall be determined by reference to such
price for the next preceding day on which a sale occurred. During such time as
the Shares are not listed on a national securities exchange, the fair market
value of the Shares shall be the mean between the closing "bid" and "ask" prices
of the Shares as quoted by the National Association of Securities Dealers
Automated Quotation System for the day preceding receipt by the Company of the
Shares, and if no "bid" and "ask" prices are quoted for such day, the fair
market value shall be determined by reference to such prices on the next
preceding day on which such prices were quoted. An Optionee shall have the
rights of a shareholder only with respect to Shares for which certificates have
been issued.
(e) Termination of Relationship-Death. Each Option granted under the Plan
shall be exercisable in the case of a director, consultant or other person
rendering services to the Company who is not a full-time employee only while a
director, consultant or part-time employee of the Company or a subsidiary, and
for a period of three months after termination of such employment, directorship,
or consultancy, or within twelve (12) months if the termination is due to
disability. If an Optionee dies, the Option may be exercised, to the extent that
the Optionee was entitled to exercise it at the date of death, by an executor,
personal representative or heir, as the case may be, at any time within a period
of one (1) year after the Optionee's death. Nothing herein shall be construed to
permit an Option to be exercised after the termination of the term of the
Option. An Optionee's rights or Options under this Plan are exercisable, during
the Optionee's lifetime, only by the Optionee and such rights or options may not
be sold, pledged, assigned or transferred in any manner other than by will or
the laws of descent and distribution. Any attempt to sell, pledge, assign or
transfer such rights or options shall be void and without effect.
-3-
(f) Options to Directors. Options granted to directors shall be subject to
the following additional terms and conditions: (1) No director shall receive
Options at any time or from time to time for more than 50,000 Shares in the
aggregate; (2) The exercise price of Options shall be equal to the fair market
value of the Shares determined on the date of grant; (3) The period of each
Option shall be five (5) years; and (4) An Option shall be exercisable
immediately.
V. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If the Shares are changed by reason of stock dividends, recapitalization,
mergers, consolidations, split-ups, combinations or exchanges of shares and the
like, the aggregate number and class of Shares available under the Plan and the
maximum number of shares to which options may be granted to any individual shall
be appropriately adjusted by the Board, and, in the case of each Option
outstanding at the time of any such action, the number and class of shares which
may thereafter be purchased pursuant thereto and the exercise price of each
Option shall be adjusted to such extent as may be determined by the Board, whose
determination shall be conclusive.
VI. LEAVE OF ABSENCE
The Board shall determine the extent to which military or Government
service or leave of absence for any other reason shall constitute termination of
employment, directorship or consultancy for the purposes of the Plan or any
Option.
VII. GOVERNMENT REGULATIONS
The Plan, the grant and exercise of Options and the obligations of the
Company to sell and deliver Shares under such Options shall be subject to all
applicable Federal and state laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company shall
not be required to issue or deliver any certificate or certificates for Shares
prior to (i) the admission of such Shares to listing on any stock exchange on
which the Shares may then be listed; and (ii) the completion of any registration
or other qualification under any state or Federal law or rulings or regulations
of any governmental body, which the Company shall, in its sole discretion,
determine to be necessary or advisable.
VIII. TERMINATION OF THE PLAN
The Plan shall become effective on August 24, 1989, provided that it is
subsequently approved by the Company's shareholders, and shall terminate on
August 18, 2008 (which termination date is ten years from the date the Board
authorized Amendment #1 to the Plan). The Plan may be terminated at an earlier
date by the Board of Directors; provided, however, that any such earlier
termination shall not affect any Options granted prior to the date of such
termination.
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IX. AMENDMENT OF THE PLAN
The Plan may be amended by the Board of Directors provided, however, that
no such amendment may increase the number of Shares for which Options may be
granted (except as provided by Article V) and no such amendment may alter the
designation of the class of persons eligible to receive Options under the Plan
unless such amendment is approved by the stockholders of the Company. No
amendment shall affect any Options previously granted unless such amendment
shall expressly so provide and unless any Optionee to whom an Option has been
granted who would be adversely affected by such amendment consents in writing.
X. PARTICIPATION AND EMPLOYMENT RELATIONSHIP
The adoption of this Plan shall not be deemed to give any employee,
consultant or director of the Company any right to be granted an option to
purchase Shares, except to the extent and upon such terms and conditions as may
be determined by the Board. Nothing herein contained shall be deemed to prevent
the Company from terminating the employment, consultancy or directorship of an
Optionee.
XI. GOVERNING LAW
This Plan and all determinations made and actions taken pursuant hereto,
shall be governed by the laws of the State of New York and construed in
accordance therewith.
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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 Syracuse Marriott, 6302 Carrier Parkway, East Syracuse, New York on
Thursday, November 19, 1998 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 23, 1998 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:
PROPOSAL 1: ELECTION OF DIRECTORS
FOR all nominees |_| WITHHOLD AUTHORITY to |_|
listed below vote for all nominees
(except as marked listed below.
to the contrary).
Nominees: Hugh A. Hair, Carl W. Gerst, Jr., Abraham Manber, Lawrence A. Sala,
Herbert I. Corkin, Dale F. Eck and Dr. David Wilemon.
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the above list.)
PROPOSAL 2: APPROVAL OF AMENDMENTS TO INCENTIVE STOCK OPTION PLAN
FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL 3: APPROVAL OF AMENDMENTS TO NONSTATUTORY STOCK OPTION PLAN
FOR |_| AGAINST |_| ABSTAIN |_|
PROPOSAL 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 PROPOSALS 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 PROMPTLY USING
THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED.