SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ENDWAVE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
Title of each class of securities to which transaction applies:
Aggregate number of securities to which transaction applies:
Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
Proposed maximum aggregate value of transaction:
Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:
Form, Schedule or Registration Statement No.:
Filing Party:
Date Filed:
ENDWAVE CORPORATION
321 Soquel Way
Sunnyvale, CA 94085
----------------
Notice of Annual Meeting of Stockholders
to be held on June 1, 2001
----------------
TO THE STOCKHOLDERS OF ENDWAVE CORPORATION:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Endwave
Corporation, a Delaware corporation (the "Company"), will be held on Friday,
June 1, 2001, at 10:00 a.m. local time, at the Hyatt Rickeys, at 4219 El Camino
Real in Palo Alto, California, for the following purposes:
1. To elect two directors to hold office until the 2004 Annual Meeting
of Stockholders;
2. To ratify the selection of Ernst & Young LLP as independent public
auditors of the Company for its fiscal year ending December 31, 2001; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 20, 2001 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Julianne M. Biagini
Julianne M. Biagini
Corporate Secretary
Sunnyvale, California
April 24, 2001
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT ATTENDANCE AT THE MEETING WILL NOT BY ITSELF REVOKE
A PROXY. FURTHERMORE, IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR
OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE
RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
ENDWAVE CORPORATION
321 Soquel Way
Sunnyvale, CA 94085
----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
June 1, 2001
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Endwave Corporation, a Delaware corporation (the "Company" or "Endwave"), for
use at the Annual Meeting of Stockholders to be held on June 1, 2001, at 10:00
a.m. local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Hyatt Rickeys, at 4219
El Camino Real, in Palo Alto, California. The Company intends to mail this
proxy statement and accompanying proxy card on or about April 30, 2001 to all
stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, facsimile,
telegram or personal solicitation by directors, officers or other regular
employees of the Company. No additional compensation will be paid to directors,
officers or other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of shares of the Company's Common Stock at the close
of business on April 20, 2001 will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on April 20, 2001, the Company had
outstanding and entitled to vote 34,154,027 shares of Common Stock. Each holder
of record of the Company's Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards
establishment of the required quorum, but are not counted for any purpose in
determining whether a matter has been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office at 321
Soquel Way, Sunnyvale, California 94085, Attention: Secretary, a written notice
of revocation or
1
a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Please note, however, that attendance at the
meeting will not by itself revoke a proxy. Furthermore, if the shares are held
of record by a broker, bank or other nominee and the stockholder wishes to vote
at the meeting, the stockholder must obtain from the record holder a proxy
issued in the stockholder's name.
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 Annual
Meeting of Stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is December 28, 2001. Stockholders who wish to submit a
stockholder's proposal or a nomination for director that is not to be included
in the Company's proxy statement and proxy for the 2002 Annual Meeting must
ensure that such proposal or nomination is delivered to, or mailed and received
at the Company not later than March 3, 2002, nor earlier than February 1, 2002.
Stockholders are also advised to review the Company's By-Laws, which contain
additional requirements with respect to advance notice of stockholder proposals
and director nominations.
2
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors shall be divided into three classes with each class having a
three-year term. Vacancies on the Board may be filled by the affirmative vote
of the holders of a majority of the voting power of the then outstanding shares
of Common Stock or by the affirmative vote of a majority of the remaining
directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the authorized number of directors on the
Board) shall serve for the remainder of the full term of the class of directors
in which the vacancy occurred and until such director's successor is elected
and has been duly qualified or until his earlier death, resignation or removal.
The Board of Directors is presently composed of six members. There are two
in the class whose term of office expires in 2001. One nominee for election to
this class, Dr. Esfandiar Lohrasbpour, is a director of the Company who was
previously appointed by the Board of Directors of the Company prior to the
closing of the Company's initial public offering on October 20, 2000. The other
nominee for election to this class, Ms. Carol Herod Sharer, was nominated and
elected to the Board of Directors on April 16, 2001 following the resignation
on the same date of Mr. Timothy Hannemann, a member of the Board of Directors
from March 2000 until his resignation. If elected at the Annual Meeting, each
of the nominees would serve until the 2004 annual meeting and until his or her
successor is elected and has qualified, or until such director's earlier death,
resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such
shares will be voted for the election of such substitute nominee as the Board
of Directors may propose. Each person nominated for election has agreed to
serve if elected, and the Board of Directors has no reason to believe that any
nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting. The age specified for each director is as of March 1, 2001.
Nominees for Election for a Three-Year Term Expiring at the 2004 Annual Meeting
Esfandiar Lohrasbpour
Dr. Lohrasbpour, age 48, has served as director of Endwave since April 1999.
Dr. Lohrasbpour is a Managing Director with INVESCO Private Capital, a money
management firm he joined in 1998. Dr. Lohrasbpour focuses on technology
investments primarily with a communication orientation. Prior to joining
INVESCO, he worked for AT&T from 1982 until 1998. Dr. Lohrasbpour holds a B.A.
in mathematics from Berea College, an M.S. in operations research from the
University of North Carolina at Chapel Hill and a Ph.D. in operations research
from the School of Engineering at the University of California, Los Angeles.
Carol Herod Sharer
Ms. Sharer, age 50, was nominated and elected as a director of Endwave in
April 2001. Ms. Sharer is Chief Executive Officer of McKinley Marketing
Partners, Inc., a company she helped found, and has held such position since
1996. Prior to founding McKinley Marketing Partners, from 1993 to 1995, Ms.
Sharer was an independent contractor, working primarily with regional Bell
operating companies. From 1991 to 1993 Ms. Sharer held various positions at
MCI, most recently as Senior Vice President for Program Management and
Planning. Ms. Sharer holds a B.A. in Economics from Florida International
University and an MBA from George Washington University with a concentration in
finance. Ms. Sharer serves as a member of the board of directors of Pagoo
Incorporated and is a member of the business, finance and technology committee
for the Los Angeles Unified School District.
3
The two candidates receiving the highest number of affirmative votes cast at
the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE
Directors Continuing in Office Until the 2002 Annual Meeting
Wes Bush
Mr. Bush, age 39, has served as a director of Endwave since March 2000. Mr.
Bush has served as Vice President and Group Deputy General Manager for TRW
Ventures, a division of TRW's Space and Electronics Group since March 2000. He
has served in various management capacities for TRW since 1987, including
within TRW's Space and Electronics Group. Mr. Bush holds a B.S. and an M.S. in
electrical engineering from the Massachusetts Institute of Technology and is a
graduate of the Executive Management Program of the University of California,
Los Angeles. Mr. Bush serves as a member of the board of directors of
Astrolink.
Robert D. Pavey
Mr. Pavey, age 58, has served as a director of Endwave since May 1994. Mr.
Pavey has served as a General Partner of Morgenthaler Ventures since January
1970. Mr. Pavey holds a B.A. in physics from The College of William and Mary,
an M.S. in metallurgical engineering from Columbia University, and an M.B.A.
from Harvard Business School. Mr. Pavey serves as a member of the board of
directors of Commonfund, Entivity, Ignis Optics, Lamina Ceramics, LightChip,
Lightwave Microsystems, New Focus, Paratek Microwave and VSK Photonics.
Directors Continuing in Office Until the 2003 Annual Meeting
Edward A. Keible, Jr.
Mr. Keible, age 57, has served as the Company's President and Chief
Executive Officer and as a director since January 1994. From 1973 until 1993,
Mr. Keible held various positions at Raychem Corporation, culminating in the
position of Senior Vice President with specific oversight of Raychem's
International and Electronics Groups. Mr. Keible has been awarded three patents
in the fields of electronics and communications. Mr. Keible holds a B.A. in
engineering sciences and a B.E. and an M.E. in materials science from Dartmouth
College and an M.B.A. from Harvard Business School. Mr. Keible currently serves
on the board of directors of the American Electronics Association.
Edward C.V. Winn
Mr. Winn, age 62, has served as a director of Endwave since July 2000. From
March 1992 to January 2000, Mr. Winn served in various capacities with TriQuint
Semiconductor, a semiconductor manufacturer, most recently as Executive Vice
President, Finance and Administration and Chief Financial Officer. Previously,
Mr. Winn served in various capacities with Avantek, most recently as Product
Group Vice President. Mr. Winn received a B.S. in Physics from Rensselaer
Polytechnic Institute and an M.B.A. from Harvard Business School. Mr. Winn
serves as a member of the board of directors of OmniVision Technologies, Inc.
Board Committees and Meetings
During the fiscal year ended December 31, 2000, the Board of Directors held
12 meetings. From time to time the Board of Directors also acts by unanimous
written consent. The Board has standing Audit and Compensation Committees, and
does not have a standing nominating committee.
4
During fiscal 2000, each Board member attended 75% or more of the aggregate
of the meetings of the Board and the committees on which he served, held during
the period for which he was a director or committee member, respectively.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation for the Company's executive officers, awards stock
options and stock bonuses to eligible executives, employees and consultants
under the Company's 2000 Equity Incentive Plan (the "2000 Plan"), and otherwise
determines compensation levels and performs such other functions regarding
compensation as the Board may delegate. During fiscal 2000, the Compensation
Committee was composed of two non-employee directors: Mr. Pavey, Chairman of
the Committee, and Mr. Bush. The Compensation Committee met seven times during
fiscal 2000.
The Audit Committee's responsibilities include the following: to meet with
the Company's independent auditors at least annually to review the scope and
results of the annual audit; recommend to the Board the independent auditors to
be retained for the Company; and receive and consider the auditors' comments as
to internal controls, accounting staff, management performance, and procedures
performed and results obtained in connection with the audit. During fiscal
2000, the Audit Committee was initially composed of two directors, Dr.
Lohrasbpour, Chairman of the Committee, and Mr. Hannemann (who has since
resigned from the Board), until July 2000 when the membership of the Audit
Committee was increased to three directors and Mr. Winn was elected and
appointed to the committee. In September 2000, Mr. Hannemann resigned as a
member of the Audit Committee and Mr. Pavey was elected and appointed to the
committee. All current members of the Audit Committee are independent directors
(as independence is defined in Rule 4200(a)(15) of the NASD listing standards).
The Audit Committee met one time during fiscal 2000. The Audit Committee has
adopted a written Audit Committee Charter that is attached hereto as Appendix
A.
5
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent public auditors for the fiscal year ending December 31, 2001. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement if he or she so
desires and will be available to respond to appropriate questions.
Fees for Services Performed by Ernst & Young LLP during Fiscal 2000
Audit Fees:
Fees for the audit of the Company's financial statements for the year ended
December 31, 2000 and review of the financial statements included in the
Company's quarterly report on Form 10-Q for the fiscal quarter ended September
30, 2000 totaled $195,000.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Ernst & Young LLP to provide advice to the
Company regarding financial information systems design and implementation
during the fiscal year ended December 31, 2000.
All Other Fees:
Other fees billed for services rendered during the fiscal year ended
December 31, 2000 were $660,260. Other fees generally includes fees for
services rendered in connection with registration statements filed by the
Company with the Securities and Exchange Commission during fiscal 2000 and
those for tax services.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent public auditors is not required by the Company's By-Laws
or other applicable legal requirement. However, the Board is submitting the
selection of Ernst & Young LLP to the stockholders for ratification as a matter
of good corporate practice. If the stockholders fail to ratify the selection,
the Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Board at its discretion may direct
the appointment of a different independent accounting firm at any time during
the year if it determines that such a change would be in the best interests of
the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares represented
and entitled to vote at the meeting will be required to ratify the selection of
Ernst & Young LLP as the Company's independent public auditors for the fiscal
year ending December 31, 2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 2
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 1, 2001 (see also footnote 8) by: (i)
each of the executive officers named in the Summary Compensation Table; (ii)
each director; (iii) all executive officers and directors of the Company as a
group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
Beneficial Ownership (1)
-------------------------------
Name and Address Number of Shares % of Total (2)
---------------- ---------------- --------------
TRW Inc....................................... 13,963,063 40.89%
1900 Richmond Road
Cleveland, OH 44124
Edward A. Keible, Jr. (3)..................... 1,032,059 2.95%
Julianne M. Biagini (4)....................... 200,553 *
Donald J. Dodson, Jr (5)...................... 326,050 *
John J. Mikulsky (6).......................... 293,050 *
James G. Bybokas (7).......................... 241,240 *
Wes Bush...................................... -- --
Carol Herod Sharer (8)........................ -- --
Esfandiar Lohrasbpour (9)..................... 1,486,354 4.35%
Robert D. Pavey (10).......................... 1,609,385 4.71%
Edward C.V. Winn (11)......................... 45,000 *
All directors and executive officers as a
group (16 persons)(12)....................... 6,193,662 16.79%
- --------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders of the Company and upon any Schedules 13D or 13G
filed with the Securities and Exchange Commission (the "Commission").
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, the Company believes that each
of the stockholders named in this table has sole voting and investment
power with respect to the shares indicated as beneficially owned.
(2) Applicable percentages are based on 34,151,481 shares outstanding on March
1, 2001, adjusted as required by rules promulgated by the Commission.
(3) Includes 813,247 shares issuable upon exercise of options exercisable
within 60 days of the date of this table. If exercised in full within 60
days of the date of this table, 657,687 shares would be subject to a
repurchase right by Endwave.
(4) Includes 4,937 shares held in a trust for the benefit of Ms. Biagini's
daughter. Also includes 166,384 shares issuable upon exercise of options
exercisable within 60 days of the date of this table. If exercised in full
within 60 days of the date of this table, 133,224 shares would be subject
to a repurchase right by Endwave.
(5) Represents shares issuable upon exercise of options exercisable within 60
days of the date of this table. If exercised in full within 60 days of the
date of this table, 262,976 shares would be subject to a repurchase right
by Endwave.
(6) Includes 272,269 shares issuable upon exercise of options exercisable
within 60 days of the date of this table. If exercised in full within 60
days of the date of this table, 172,829 shares would be subject to a
repurchase right by Endwave.
(7) Includes 194,740 shares issuable upon exercise of options exercisable
within 60 days of the date of this table. If exercised in full within 60
days of the date of this table, 139,300 shares would be subject to a
repurchase right by Endwave.
(8) In connection with Ms. Sharer's nomination and election to the Board of
Directors on April 16, 2001, she received an option grant exercisable for
40,000 shares.
7
(9) Includes 32,219 shares held by Chancellor Private Capital Offshore
Partners I, C.V., 343,674 shares held by Chancellor Private Capital
Offshore Partners II L.P., 208,870 shares held by Chancellor Private
Capital Partners III L.P. and 896,591 shares held by Citiventure 96
Partnership Ltd. INVESCO Private Capital, Inc. is the investment advisor
and manager to the Chancellor funds and Citiventure 96 Partnership Ltd.
Dr. Lohrasbpour, a director of Endwave, is a Managing Director of INVESCO
Private Capital, Inc. In such capacity, Dr. Lohrasbpour may be deemed to
have an indirect pecuniary interest in an indeterminate portion of the
shares beneficially owned by the Chancellor funds and Citiventure 96
Partnership Ltd. Dr. Lohrasbpour disclaims beneficial ownership of the
shares held by the Chancellor funds and Citiventure 96 Partnership Ltd.
within the meaning of Rule 13d-3 under the Securities Act of 1934. Also
includes 5,000 shares issuable upon exercise of options exercisable within
60 days of the date of this table.
(10) Includes 1,065,314 shares held by Morgenthaler Venture Partners III,
494,071 shares held by Morgenthaler Venture Partners IV, 10,000 shares
held by Morgenthaler Management Partners III and 5,000 shares held by
Morgenthaler Management Partners V. Mr. Pavey, a director of Endwave, is a
general partner of Morgenthaler Management Partners which is the manager
of the Morgenthaler funds. In such capacity, Mr. Pavey may be deemed to
have an indirect pecuniary interest in an indeterminate portion of the
shares beneficially owned by the Morgenthaler funds. Mr. Pavey disclaims
beneficial ownership of the shares held by the Morgenthaler funds within
the meaning of Rule 13d-3 under the Securities Act of 1934. Also includes
30,000 shares held by a Family Partnership. Also includes 5,000 shares
issuable upon exercise of options exercisable within 60 days of the date
of this table.
(11) Includes 40,000 shares issuable upon exercise of options exercisable
within 60 days of the date of this table. If exercised in full within 60
days of the date of this table, 32,500 shares would be subject to a
repurchase right by Endwave. On April 16, 2001, Mr. Winn also received an
option grant exercisable for 30,000 shares, not included in the above
table.
(12) See footnotes 3 through 11 above, as applicable. Includes 52,640 shares
held by executive officers not named in the Summary Compensation Table.
Also includes 959,971 shares issuable upon exercise of options exercisable
within 60 days of the date of this table held by these executive officers.
If exercised in full within 60 days of the date of this table, 612,448 of
those shares would be subject to a repurchase right by Endwave.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. Officers, directors and greater than
ten percent stockholders are required by the Commission's regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2000, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements, with the
exception noted below.
During fiscal 2000, Mr. Winn timely reported all transactions pursuant to
Section 16(a) of the Exchange Act, but inadvertently did not include in his
initial statement regarding beneficial ownership of securities of the Company
on Form 3 shares which he had the right to acquire upon exercise of his option
granted in July 2000 under the Company's 2000 Equity Incentive Plan. This error
was corrected by amending his previously filed Form 3 report.
8
EXECUTIVE COMPENSATION
Compensation of Directors
During fiscal 2000, the members of the Company's board of directors did not
receive cash compensation for their services as directors. In April 2001, the
Company adopted a policy whereby each non-employee director of the Company
would henceforth receive a fee of $1,000 for each board meeting attended, and
for each committee meeting attended in person by those board members serving on
committees of the board of directors occurring apart from a meeting of the full
board. The members of the board of directors are eligible for reimbursement for
their travel expenses incurred in connection with attendance at board and
committee meetings in accordance with Company policy. Non-employee directors
are eligible to participate in the Company's 2000 Non-Employee Director Plan
adopted in October 2000. Pursuant to the plan, all non-employee directors are
automatically granted an option to purchase 40,000 shares of common stock upon
their election to the Company's board of directors. The Company's incumbent
directors were granted their initial option grants upon consummation of the
Company's initial public offering; however Mr. Winn received his initial grant
under the Company's 2000 Equity Incentive Plan upon election to the Board in
July 2000 in lieu of a grant under the Company's Non-Employee Director Plan
upon consummation of the Company's initial public offering. The Company's non-
employee directors will also be granted an option to purchase an additional
10,000 shares of common stock each year following the date of the Company's
annual stockholder's meeting, provided that if any non-employee director has
not served in that capacity for the entire period since the preceding annual
stockholder's meeting, then the number of shares subject to the annual grant
will be reduced, pro rata, for each full quarter the person did not serve
during the previous period. All options under this plan expire after ten years
and have an exercise price equal to the fair market value on the date of grant.
These options vest over four years at the rate of 1/48 of the total grant per
month. The Company's directors are also eligible to participate in the
Company's 2000 Equity Incentive Plan and the Company's employee directors are
eligible to participate in the Company's 2000 Employee Stock Purchase Plan.
9
Compensation of Executive Officers
Summary of Compensation
The following table shows, for the fiscal years ended December 31, 2000 and
December 31, 1999, compensation awarded or paid to or earned by the Company's
Chief Executive Officer and its four other most highly compensated executive
officers (the "Named Executive Officers") for services rendered by them as
executive officers of the Company.
Summary Compensation Table
Long Term
Compensation
Annual Compensation (1) Awards
--------------------------------- ------------
Other Annual Securities
Name and Principal Compensation Underlying All Other
Position Year Salary ($) Bonus ($) (2)($) Options (#) Compensation ($)
------------------ ---- ---------- --------- ------------ ------------ ----------------
Edward A. Keible, Jr.... 2000 282,500 183,000 671 441,000 223(3)
President, Chief 1999 261,250 60,000 671 150,000
Executive Officer and
Director
Julianne M. Biagini..... 2000 134,833 72,393 80 80,000 1,657(3)
Chief Financial Officer 1999 113,500 22,000 69 50,000
and Senior Vice
President, Finance and
Administration
Donald J. Dodson, Jr
(4).................... 2000 161,667 59,000 176 252,300 2,346(5)
Chief Operating Officer
and Senior Vice
President, Operations
and Technology
John J. Mikulsky........ 2000 188,333 87,000 235 100,000 1,433(3)
Chief Marketing Officer 1999 171,250 35,000 235 62,500
and Senior Vice
President, Market and
Business Development
James G. Bybokas........ 2000 161,833 62,000 439 80,000 1,985(3)
Vice President, Sales 1999 147,833 24,000 439 50,000
and Marketing
- --------
(1) In accordance with rules promulgated by the Securities and Exchange
Commission, other annual compensation in the form of perquisites and other
personal benefits has been omitted where the aggregate amount of such
perquisites and other personal benefits constitutes less than the lesser of
$50,000 or 10% of the total annual salary and bonus for the named executive
officer for the fiscal year.
(2) Represents insurance premiums paid by Endwave with respect to group life
insurance for the benefit of the named executive officers.
(3) Represents matching contributions paid by Endwave under the Company's
401(k) plan to the named executive officers.
(4) Mr. Dodson commenced employment on April 3, 2000.
(5) Includes $1,375 in matching contributions paid by Endwave under the
Company's 401(k) plan and $971 in relocation payments paid by Endwave.
10
Stock Option Grants and Exercises
The following table sets forth information regarding options granted to each
of the named executive officers during the year ended December 31, 2000. The
information regarding stock options granted to named executive officers as a
percentage of total options granted to employees in 2000 is based on options to
purchase a total of 3,834,453 shares that were granted to employees,
consultants and directors in 2000, under the Company's 2000 Equity Incentive
Plan and 1992 Stock Option Plan. No stock appreciation rights, stock purchase
rights or restricted stock awards were granted during 2000.
Options were granted by the board of directors at an exercise price
determined by them to be the fair market value of the Company's common stock as
of the date of grant. In determining the fair market value of Endwave's common
stock the board of directors considered various factors, including Endwave's
financial condition and business prospects, its operating results, the absence
of a public market for its common stock prior to October 20, 2000 and the risks
normally associated with technology companies. Options typically vest ratably
on a quarterly basis over a four-year period.
The potential realizable values set forth in the table below are computed by
multiplying the number of shares of common stock subject to a given option by
the fair market value as of the grant date. The assumed 5% and 10% rates of
stock price appreciation are provided in accordance with rules of the SEC and
do not reflect the Company's estimate or projection of future stock price
growth. The assumed rate of 0% indicates the difference between the deemed fair
value of the common stock for financial statement presentation purposes and the
option exercise price of these options at the grant date.
Option Grants in Fiscal Year 2000
Number of % of Total Potential Realizable Value at
Securities Options Market Assumed Annual Rates of Stock
Underlying Granted to Price at Price Appreciation for Option
Options Employees Exercise Date of Term (3)
Granted in Fiscal Price Grant Expiration ------------------------------
Name (#)(1) Year (2) ($/Sh) ($/Sh) Date 0% 5% 10%
---- ---------- ---------- -------- -------- ---------- --------- --------- ----------
Edward A. Keible, Jr.... 440,000 11.47% 6.00 12.75 6/5/10 2,970,000 6,498,099 11,910,895
1,000 0.03% 14.00 14.00 7/25/10 0 8,805 22,312
Julianne M. Biagini..... 80,000 2.09% 6.00 12.75 6/5/10 540,000 1,181,473 2,165,617
Donald J. Dodson, Jr.... 252,300 6.60% 6.00 12.00 4/2/10 1,513,800 3,417,841 6,339,015
John J. Mikulsky........ 100,000 2.61% 6.00 12.75 6/5/10 675,000 1,476,841 2,707,022
James G. Bybokas........ 80,000 2.09% 6.00 12.75 6/5/10 540,000 1,181,473 2,165,617
- --------
(1) Options granted under the 1992 Stock Option Plan, if not assumed by the
surviving entity, will terminate if not exercised before a change in
control, as defined in the Company's 1992 Stock Option Plan. Options
granted under the 2000 Equity Incentive Plan, if not assumed by the
surviving entity, will fully vest upon a change in control, as defined in
the Company's 2000 Equity Incentive Plan.
(2) Based upon options to purchase 3,834,453 shares issued to employees in
fiscal year 2000.
(3) The potential realizable value is based on the term of the option at its
time of grant. It is calculated by assuming that the stock price on the
date of grant appreciates at the indicated rate, compounded annually for
the entire term of the option and the option is exercised solely on the
last day of its term for the appreciated price. These amounts represent
certain assumed rates of appreciation less the exercise price, in
accordance with the rules of the Commission, and do not reflect the
Company's estimate or projection of future stock price performance. Actual
gains, if any, are dependent on the actual future performance of the
Company's Common Stock and no gain to the optionee is possible unless the
stock price increases over the option term, which will benefit all
stockholders.
11
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth for each of the named executive officers the
shares acquired and the value realized on each exercise of stock options during
the year ended December 31, 2000 and the number and value of securities
underlying unexercised options held by the named executive officers at December
31, 2000. Also reported are values for "in-the-money" options that represent
the positive spread between the respective exercise prices of outstanding stock
options and the fair market value of the Company's Common Stock as of fiscal
2000 year end.
Number of Value of Unexercised
Securities Underlying in-the-Money Options
Value Unexercised Options at Fiscal Year-End
Shares Acquired Realized at Fiscal Year-End (#) ($)
Name on Exercise (#) ($)(1) Vested / Unvested (2) Vested / Unvested (3)
---- --------------- ---------- ---------------------- ---------------------
Edward A. Keible, Jr.... 166,313 $1,463,554 109,997 / $105,752 /
536,440 $289,714
Julianne M. Biagini..... 32,856 $ 289,758 23,589 / $ 26,161 /
111,555 $ 79,991
Donald J. Dodson, Jr.... -0- $ 0.00 31,537 / $ 0.00 /
220,763 $ 0.00
John J. Mikulsky........ 20,781 $ 182,873 85,266 / $114,576 /
146,453 $113,483
James G. Bybokas........ 2,750 $ 24,200 69,078 / $113,727 /
119,422 $ 95,135
- --------
(1) Based on a fair market value as of the date of exercise as determined for
accounting purposes in connection with the Company's initial public
offering, for options exercised prior to October 16, 2000, and the per
share closing market price on the date of exercise for options exercised
following October 16, 2000.
(2) Some of the shares are immediately exercisable; however, to the extent
shares are purchased prior to their vesting, these shares are subject to
repurchase by Endwave at the original exercise price paid per share upon
the optionee's cessation of service prior to vesting.
(3) Represents the fair market value of the underlying shares of the Company's
Common Stock as of December 31, 2000, less the exercise price.
Employment Agreements
In March 2000, in connection with the Company's merger with TRW Milliwave,
Inc., the Company's Board of Directors approved a plan providing for the
acceleration of vesting, under certain circumstances, of a percentage of the
stock options granted to the Company's officers under the Company's 1992 Stock
Option Plan and 2000 Equity Incentive Plan prorated based on years of
employment. Under the plan, an unvested portion of each officer's stock options
under the Company's 1992 Stock Option Plan and 2000 Equity Incentive Plan
becomes vested and exercisable if the Company undergoes a change in control, or
the officer is terminated without cause. In addition, severance benefits will
be paid to each officer if terminated without cause.
Compensation Committee Interlocks and Insider Participation
As noted above, the Compensation Committee consists of Messrs. Pavey and
Bush. Neither Mr. Pavey nor Mr. Bush is or has been an officer or employee of
the Company. No member of the compensation committee of the Company serves as a
member of the Company's Board of Directors or Compensation Committee of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors.
12
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF ENDWAVE
CORPORATION/1/
April 16, 2001
The Compensation Committee is composed of two non-employee directors,
consisting of Messrs. Pavey and Bush. The Compensation Committee is responsible
for, among other things, setting the compensation of executive officers,
including any stock based awards to such individuals under the Company's 2000
Equity Incentive Plan. The Compensation Committee annually evaluates the
performance, and determines the compensation, of the Chief Executive Officer
and the other executive officers of the Company based upon a mix of the
achievement of corporate goals, individual performance of the executive
officers and comparisons with other companies operating in the same industry.
The Chief Executive Officer provides recommendations to the Compensation
Committee, but is not present during the discussion of his own compensation.
Executive Compensation Principles
The Compensation Committee seeks to compensate executive officers in a
manner designed to achieve the primary interest of the Company's stockholders,
namely that of increased stockholder value. In furtherance of this goal, the
Compensation Committee determined a compensation package for fiscal 2000 that
considered both competitive and performance factors. Annual compensation of
executives of the Company is composed of salary, bonus and stock incentives, an
approach consistent with the compensation programs of other telecommunications
companies. A substantial portion of the cash compensation of each executive
officer is contingent upon the achievement of certain performance milestones by
the Company and the achievement of individual goals set for each executive
officer. Bonuses, therefore, could be substantial, could vary significantly
from year to year, and could vary significantly among executive officers. The
Company's Compensation Committee intends to continue to follow this approach in
the future and be guided by the same principles. Stock-based awards also
continue to be a part of the overall compensation for the Company's executive
officers, and are intended to further incentivize, as well as reward, the
executive officers.
Base Salary
The Compensation Committee determined salaries for fiscal 2001 for all
executive officers at its meeting on January 29, 2001. In adjusting the base
salary of the executive officers, the Compensation Committee examined both
competitive and qualitative factors relating to corporate and individual
performance. In many instances, assessment of qualitative factors necessarily
involved a subjective assessment by the Committee. In determining salary
adjustments for executive officers for fiscal 2001, the Compensation Committee
relied on the evaluation and recommendations by Mr. Keible of each officer's
responsibilities for fiscal 2001 and performance and accomplishments during
fiscal 2000, with the final determination of compensation for each executive
officer being determined by the Compensation Committee. In making its
determinations, the Compensation Committee utilizes the Radford Executive
survey, which provides a comparison of salaries of the Company's executive
officers to salaries listed for executive officers of companies that are
comparable in geographic location, size and industry.
- --------
/1 /This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
13
Bonuses
On the basis of goals relating to the Company's financial performance and
achievement of certain corporate goals, the Company's Compensation Committee,
establishes bonus targets for each officer of the Company at the beginning of
each fiscal year. Based on the attainment of corporate goals and analysis of
individual officers' contributions during the fiscal year, the Compensation
Committee determines final year-end bonuses, as appropriate, for the Company's
executive officers following the end of the Company's fiscal year.
Stock option grants to purchase 3,834,453 shares of the Company's common
stock were made with respect to the Company's fiscal 2000 year. Of that amount,
option grants to purchase 953,300 shares were awarded to the Named Executive
Officers.
Chief Executive Officer Compensation
In general, the factors utilized in determining Mr. Keible's compensation
were similar to those applied to the other executive officers in the manner
described in the preceding paragraphs; however, a significant percentage of his
potential earnings was and continues to be subject to consistent, positive,
long-term performance of the Company.
Long Term Incentives
The Company uses the 2000 Equity Incentive Plan to further align the
interests of stockholders and management by creating common incentives based on
the possession by management of a substantial economic interest in the long-
term appreciation of the Company's stock. In determining the number of stock
options to be granted to an executive officer, the Committee takes into account
the officer's position and level of responsibility within the Company, the
officer's existing equity holdings, the potential reward to the officer if the
stock appreciates in the public market, the incentives to retain the officer's
services for the Company, the competitiveness of the officer's overall
compensation package and the performance of the officer. Based on a review of
this mix of factors, in fiscal 2000 the Committee granted incentive stock
options to the executive officers of the Company as follows: Mr. Keible
(441,000 shares), Mr. Dodson (252,300 shares), Mr. Mikulsky (100,000 shares),
Mr. Bybokas (80,000 shares) and Ms. Biagini (80,000 shares).
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal tax purposes of no more than $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The Committee has determined that
stock options granted under the Company's 2000 Equity Incentive Plan with an
exercise price at least equal to the fair market value of the Company's Common
Stock on the date of grant shall be rated as "performance-based compensation."
Robert D. Pavey (Chairman)
Wes Bush
14
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS/2/
January 29, 2001
The Audit Committee of the Board of Directors of Endwave Corporation is
composed of three independent directors appointed by the Board of Directors
(each of which is independent under applicable NASD rules) and operates under a
written charter adopted by the Board of Directors in fiscal 2000 (see Exhibit A
to this Proxy Statement). The members of the Audit Committee are Dr.
Lohrasbpour (Chairman of the Committee), Mr. Pavey and Mr. Winn. The Audit
Committee recommends to the Board of Directors the selection of the
Corporation's independent auditors.
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Company's annual report on
Form 10-K with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In
addition, the Audit Committee has discussed with the independent auditors the
auditors' independence from management and the Company including the matters in
the written disclosures required by the Independence Standards Board and
considered the compatibility of nonaudit services with the auditors'
independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plan for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Audit Committee held one meeting during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Company's annual
report on Form 10-K for the year ended December 31, 2001 for filing with the
Securities and Exchange Commission. The Audit Committee and the Board have also
recommended the selection of the Company's independent auditors.
Esfandiar Lohrasbpour (Chairman)
Robert D. Pavey
Edward C.V. Winn
- --------
/2 /This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
15
Performance Measurement Comparison/3/
The following graph shows the value as of December 31, 2000 of an investment
of $100 in cash on October 17, 2000, as the first day of regular trading on
Nasdaq of the Company's Common Stock, or each of (i) the Company's Common
Stock, (ii) the Nasdaq Stock Market Index (U.S. Companies) and (iii) the Nasdaq
Telecommunications Index. All values assume reinvestment of the full amount of
dividends paid, if any, and are calculated daily as of the end of each trading
day:
Endwave Corporation
Proxy Performance Graph
For the Fiscal Year ended 12/31/00
[PROXY PERFORMANCE GRAPH]
Endwave Nasdaq Nasdaq Endwave Nasdaq Nasdaq
Date Corporation Composite Telecommunications Date Corporation Composite Telecommunications
10/17/00 100.00 100.00 100.00 11/22/00 91.56 85.73 79.98
10/18/00 101.33 98.68 95.92 11/24/00 89.33 90.37 84.74
10/19/00 108.44 106.37 103.45 11/27/00 76.44 89.62 83.85
10/20/00 120.00 108.38 105.64 11/28/00 70.89 85.10 79.08
10/23/00 132.44 107.93 105.51 11/29/00 72.89 84.22 77.47
10/24/00 136.89 106.40 104.85 11/30/00 66.22 80.83 74.59
10/25/00 120.89 100.49 95.41 12/1/00 71.11 82.31 77.98
10/26/00 107.56 101.81 94.59 12/4/00 70.22 81.39 78.28
10/27/00 106.67 102.00 97.14 12/5/00 77.33 89.91 86.03
10/30/00 107.11 99.30 94.85 12/6/00 24.00 87.01 84.88
10/31/00 102.22 104.84 100.47 12/7/00 18.22 85.65 84.06
11/1/00 104.00 103.72 97.76 12/8/00 24.00 90.77 89.27
11/2/00 100.89 106.69 99.09 12/11/00 25.78 93.81 91.76
11/3/00 116.89 107.39 99.98 12/12/00 24.00 91.22 89.18
11/6/00 120.00 106.29 97.59 12/13/00 21.33 87.83 88.62
11/7/00 119.11 106.28 97.83 12/14/00 24.00 84.90 84.86
11/8/00 119.11 100.55 93.40 12/15/00 24.00 82.55 82.92
11/9/00 114.22 99.58 92.65 12/18/00 23.56 81.66 81.88
11/10/00 110.67 94.24 88.39 12/19/00 22.67 78.15 76.69
11/13/00 104.44 92.31 88.11 12/20/00 21.78 72.58 70.58
11/14/00 118.67 97.64 93.55 12/21/00 21.56 72.81 68.65
11/15/00 116.89 98.49 94.03 12/22/00 21.78 78.32 73.72
11/16/00 107.56 94.33 90.28 12/26/00 21.78 77.58 73.09
11/17/00 106.67 94.19 89.44 12/27/00 21.78 79.01 75.75
11/20/00 103.11 89.47 85.07 12/28/00 23.56 79.58 76.22
11/21/00 107.56 89.34 84.58 12/29/00 22.22 76.87 74.61
- -------
/3/This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
16
CERTAIN TRANSACTIONS
Indemnification
The Company's By-Laws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and
other agents to the extent not prohibited by Delaware law. The By-Laws also
require the Company to advance litigation expenses in the case of stockholder
derivative actions or other actions, against an undertaking by the indemnified
party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification.
Issuance of Shares and Grant of Registration Rights to TRW, Inc.
In connection with the Company's merger with TRW Milliwave Inc. ("TRW
Milliwave") in March 2000, a formerly wholly owned subsidiary of TRW Inc.
("TRW"), the Company issued 13,963,063 shares of its preferred stock to TRW,
which shares converted into an equal number of the Company's Common Stock upon
the closing of the Company's initial public offering on October 20, 2000. In
addition, the Company granted registration rights to TRW with respect to these
shares under the Company's existing Registration Rights Agreement. For more
information regarding this agreement, see "Description of Capital Stock--
Registration Rights" contained in the Company's Registration Statement on Form
S-1 declared effective by the Securities and Exchange Commission on October 16,
2000.
Transactions with TRW
In connection with the Company's merger with TRW Milliwave in March 2000,
Endwave also entered into the agreements with TRW described below.
The Company entered into a supply agreement, which provides for the purchase
from TRW of specified gallium arsenide devices. The supply agreement provides
for discounted per wafer pricing for the Company when the Company orders
specified levels of these gallium arsenide devices and provides for increased
pricing when it orders less than that volume of devices. The quantities and
prices specified are quarterly amounts and the prices, both discounted and
standard pricing, decrease throughout the life of the contract. In the year
ended December 31, 2000, the Company purchased devices from TRW under this
agreement for an aggregate amount of $11.6 million, which includes $2.8 million
for inventory acquired upon the Company's merger with TRW Milliwave.
The Company also entered into a services agreement for the provision of
technical support related to the production of products by the Company
incorporating TRW-produced devices, which also includes licensed rights to
related later developed intellectual property. As of December 31, 2000, the
Company had incurred total expenses of approximately $781,000 under this
agreement.
The financial terms of each of the Company's supply and services agreements
with TRW are at least as favorable as would have been gained in arms length
negotiations with an unrelated third party.
In March 2000, the Company also entered into three agreements with TRW to
provide RF subsystems in fulfillment of two agreements between TRW and Nokia,
and one agreement between TRW and Nortel Networks. One of TRW's agreements with
Nokia, and TRW's agreement with Nortel Networks were terminated as of December
31, 2000, as well as the Company's corresponding agreements with TRW. As of
December 31, 2000, the Company had one remaining agreement with TRW relating to
a development agreement between TRW and Nokia. All obligations under TRW's
agreement with Nokia, and the Company's corresponding agreement with TRW are
expected to be complete in July 2001. These agreements with TRW which
corresponding to TRW's agreements with Nokia and Nortel Networks contained
warranty and product liability provisions relating to products delivered by the
Company to Nokia and Nortel Networks under the Company's agreements with TRW.
In the year ended December 31, 2000, the Company had recognized
17
revenues of approximately $10.1 million and $5.3 million attributable to the
TRW agreements relating to Nortel Networks and Nokia, respectively.
In connection with the above agreements, the Company entered into a license
agreement providing for the use of TRW intellectual property in products the
Company produced for Nokia and Nortel Networks pursuant to the Company's
agreements with TRW relating to these customers as described above.
For additional details about the Company's existing agreements with TRW, see
"Business--TRW Relationship" contained in the Company's Registration Statement
on Form S-1 effective on October 16, 2000.
For a transition period following the Company's merger, as an accommodation,
TRW provided the Company's Diamond Springs, California facility with cash
management services. These services included providing funds to the Diamond
Springs facility to cover operating expenses. This practice was discontinued in
the third quarter of fiscal 2000.
18
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Julianne M. Biagini
Julianne M. Biagini
Corporate Secretary
April 24, 2001
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December 31, 2000 is
available without charge upon written request to: Investor Relations, Endwave
Corporation, 321 Soquel Way, Sunnyvale, CA 94085.
19
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
Purpose and Policy
The purpose of the Audit Committee of the Board of Directors of Endwave
Corporation, a Delaware corporation (the "Company"), shall be to provide
assistance and guidance to the Board in fulfilling its oversight
responsibilities to the Company's stockholders with respect to the Company's
corporate accounting and reporting practices as well as the quality and
integrity of the Company's financial statements and reports. The policy of the
Audit Committee, in discharging these obligations, shall be to maintain and
foster an open avenue of communication between the Audit Committee and the
independent auditors, the Company's financial management and internal auditors.
Composition and Organization
The Audit Committee shall initially consist of two members of the Board of
Directors, and shall be increased to consist of at least three members of the
Board of Directors prior to the listing of the Company's stock with the Nasdaq
National Market. Prior to such time as shares of the Company's stock may be
listed with the Nasdaq National Market, the members of the Audit Committee
shall satisfy the independence and experience requirements of the Nasdaq
National Market.
The Audit Committee shall hold such regular or special meetings as its
members shall deem necessary or appropriate. Minutes of each meeting of the
Audit Committee shall be prepared and distributed to each director of the
Company promptly after each meeting. The operation of the Audit Committee shall
be subject to the Bylaws of the Company as in effect from time to time and
Section 141 of the Delaware General Corporation Law.
Responsibilities
In fulfilling its responsibilities, the Audit Committee believes that its
functions and procedures should remain flexible in order to address changing
conditions most effectively. To implement the policy of the Audit Committee,
the Committee shall be charged with the following functions:
1. To recommend annually to the Board of Directors the firm of certified
public accountants to be employed by the Company as its independent
auditors for the ensuing year, which firm is ultimately accountable to
the Audit Committee and the Board, as representatives of the Company's
stockholders.
2. To review the engagement of the independent auditors, including the
scope, extent and procedures of the audit and the compensation to be
paid therefor, and all other matters the Audit Committee deems
appropriate.
3. To evaluate, together with the Board, the performance of the
independent auditors and, if so determined by the Audit Committee, to
recommend that the Board replace the independent auditors.
4. To receive written statements from the independent auditors delineating
all relationships between the auditors and the Company consistent with
Independence Standards Board Standard No. 1, to consider and discuss
with the auditors any disclosed relationships or services that could
affect the auditors' objectivity and independence and otherwise to
take, and if so determined by the Audit Committee, to recommend that
the Board take, appropriate action to oversee the independence of the
auditors.
5. At such time as shares of the Company's stock may be listed with the
Nasdaq National Market, to review, upon completion of the audit, the
financial statements to be included in the Company's Annual Report on
Form 10-K.
6. To discuss with the independent auditors the results of the annual
audit, including the auditors' assessment of the quality, not just
acceptability, of accounting principles, the reasonableness of
20
significant judgments, the nature of significant risks and exposures,
the adequacy of the disclosures in the financial statements and any
other matters required to be communicated to the Committee by the
independent auditors under generally accepted accounting standards.
7. To evaluate the cooperation received by the independent auditors during
their audit examination, including any restrictions on the scope of
their activities or access to required records, data and information.
8. To confer with the independent auditors and with the senior management
of the Company regarding the scope, adequacy and effectiveness of
internal accounting and financial reporting controls in effect.
9. To confer with the independent auditors and senior management in
separate executive sessions to discuss any matters that the Audit
Committee, the independent auditors or senior management believe should
be discussed privately with the Audit Committee.
10. To investigate any matter brought to the attention of the Audit
Committee within the scope of its duties, with the power to retain
outside counsel and a separate accounting firm for this purpose if, in
the judgment of the Audit Committee, such investigation or retention is
necessary or appropriate.
11. At such time as shares of the Company's stock may be listed with the
Nasdaq National Market, to prepare the report required by the rules of
the Securities and Exchange Commission to be included in the Company's
annual proxy statement.
12. To review and assess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval.
13. To report to the Board of Directors from time to time or whenever it
shall be called upon to do so.
14. To perform such other functions and to have such powers as may be
necessary or appropriate in the efficient and lawful discharge of the
foregoing.
21
PROXY
ENDWAVE CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
For The Annual Meeting of Stockholders
To be held June 1, 2001
The undersigned hereby appoints Edward A. Keible, Jr. and Julianne M.
Biagini, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, to vote all of the shares of stock of Endwave
Corporation, which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of Endwave Corporation to be held at the Hyatt Rickeys in Palo
Alto, California, on Friday, June 1, 2001 at 10:00 a.m. (local time), and at any
and all postponements, continuations and adjournments thereof, with all powers
that the undersigned would possess if personally present, upon and in respect of
the following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
(Continued on reverse side)
FOLD AND DETACH HERE
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD OF DIRECTORS RECOMMENDS A VOTE
THE NOMINEES FOR DIRECTOR LISTED BELOW. FOR PROPOSAL 2.
1. To elect two directors to hold office until the 2. To ratify the selection of Ernst & Young
2004 Annual Meeting of Stockholders. LLP as independent public accountants of the
Company for its fiscal year ending December 31,
Nominees: Esfandiar Lohrasbpour 2001.
Carol Herod Sharer
For all nominees,
except for nominees
For WITHHELD written below. For Against Abstain
[ ] [ ] [ ] [ ] [ ] [ ]
To withhold authority to vote for any nominee(s), PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE
write such nominee(s)' name(s) below. ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED
IN THE UNITED STATES.
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__________________________________________________________ Please sign exactly as your name appears hereon. If the stock
is registered in the names of two or more persons, each
should sign. Executors, administrators, trustees, guardians and
attorneys-in-fact should add their titles. If signer is a
corporation, please give full corporate name and have a duly
authorized officer sign, stating title. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated: ______________________________________________, 2001
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Signature(s)
FOLD AND DETACH HERE