SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by 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 Under Rule 14a-12
MULTILINK TECHNOLOGY CORPORATION
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
_______________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[LOGO] MULTILINK TECHNOLOGY CORPORATION
April 29, 2002
Dear Shareholder:
You are cordially invited to attend Multilink's Annual Meeting of
Shareholders, which will be held at the Holiday Inn-Somerset, located at 195
Davidson Avenue in Somerset, New Jersey, at 10:00 a.m. Eastern Time on
Thursday, May 30, 2002. The formal meeting notice and Proxy Statement are
attached.
At this year's Annual Meeting, shareholders will be asked to elect seven
directors, to ratify the appointment of Deloitte & Touche LLP to serve as the
Company's independent auditors for 2002, and to transact any other business
that may properly come before the meeting.
Whether or not you attend the Annual Meeting, it is important that your
shares be represented and voted at the meeting. Therefore, I urge you to sign,
date and promptly return the enclosed Proxy in the enclosed postage-paid
envelope. Returning your completed Proxy will ensure your representation at the
Annual Meeting.
We look forward to seeing you on May 30.
Sincerely,
/s/ Richard Nottenburg
Richard N. Nottenburg, Ph.D.
President, Chief Executive
Officer and Co-Chairman
MULTILINK TECHNOLOGY CORPORATION
300 Atrium Drive
Somerset, New Jersey 08873
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 2002
-----------------
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Multilink Technology Corporation, a California corporation (the
"Company"), will be held on Thursday, May 30, 2002 at 10:00 a.m. at the Holiday
Inn-Somerset, located at 195 Davidson Avenue, Somerset, New Jersey, for the
following purposes:
1. To elect seven directors to serve on the Company's Board of Directors
until the next Annual Meeting of Shareholders or until their successors are
duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2002; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All shareholders of record at the close of business on April 19, 2002 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting and
any adjournment(s) or postponement(s) thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. Whether or not you plan to attend, please sign and return the enclosed
Proxy as promptly as possible in the postage-paid envelope enclosed for your
convenience. Should you receive more than one Proxy because your shares are
registered in different names or addresses, please be sure to sign and return
each Proxy to assure that all of your shares will be voted. If your shares are
held of record by a broker, bank or other nominee, you will not be able to vote
in person at the Annual Meeting unless you have obtained and present a proxy
issued in your name from the record holder. Please see the discussion on page 2
of the Proxy Statement.
By Order of the Board of
Directors,
/s/ Eric Pillmore
Eric M. Pillmore
Senior Vice President of
Finance,
Chief Financial Officer and
Secretary
Somerset, New Jersey
April 29, 2002
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE, AND RETURN THE PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
MULTILINK TECHNOLOGY CORPORATION
300 Atrium Drive
Somerset, New Jersey 08873
(732) 537-3700
-----------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 2002
-----------------
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Multilink Technology Corporation, a California corporation ("Multilink" or the
"Company"), for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Thursday, May 30, 2002, and at any adjournment(s) or
postponement(s) thereof. The Annual Meeting will be held at 10:00 a.m. Eastern
Time at the Holiday Inn-Somerset, located at 195 Davidson Avenue, Somerset, New
Jersey. These proxy solicitation materials were mailed on or about April 29,
2002 to all shareholders of the Company entitled to vote at the Annual Meeting.
Voting; Quorum
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice and are described in more detail in
this Proxy Statement. On April 19, 2002, the record date for determination of
shareholders entitled to notice of and to vote at the Annual Meeting,
47,316,358 shares of the Company's Class A common stock, par value $0.0001 per
share, were issued and outstanding, and 27,000,000 shares of the Company's
Class B common stock, par value $0.0001 per share, were issued and outstanding.
No shares of the Company's preferred stock, par value $0.0001 per share, were
outstanding on the record date. The Class A common stock and the Class B common
stock are collectively referred to herein as the "common stock."
Holders of common stock will vote at the Annual Meeting as a single class on
all matters, with each holder of Class A common stock entitled to one vote per
share held, and each holder of Class B common stock entitled to ten votes per
share held.
In the election of directors, the seven nominees receiving the highest
number of affirmative votes shall be elected. The ratification of the
appointment of independent auditors requires the approval of the affirmative
vote of the holders of common stock representing a majority of the voting power
present or represented by proxy and voting at the Annual Meeting, which shares
voting affirmatively must also constitute at least a majority of the voting
power required to constitute a quorum. The presence at the Annual Meeting,
either in person or by proxy, of holders of shares of outstanding common stock
entitled to vote and representing a majority of the voting power of such shares
shall constitute a quorum for the transaction of business. Abstentions and
shares held by brokers that are present in person or represented by proxy but
that are not voted because the brokers were prohibited from exercising
discretionary authority ("broker non-votes") will be counted for the purpose of
determining whether a quorum is present for the transaction of business.
Abstentions and broker non-votes can have the effect of preventing approval of
a proposal where the number of affirmative votes, though a majority of the
votes cast, does not constitute a majority of the required quorum. All votes
will be tabulated by the inspector of election appointed for the Annual
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
The stock transfer books of the Company will remain open between the record
date and the date of the Annual Meeting. A list of shareholders entitled to
vote at the Annual Meeting will be available for inspection at the executive
offices of the Company.
1
Proxies
Should you receive more than one Proxy because your shares are registered in
different names or addresses, please be sure to sign, date and return each
Proxy to assure that all of your shares will be voted. Only Proxies that have
been signed, dated and timely returned will be counted in the quorum and voted.
If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the Proxy does not specify how the shares
represented thereby are to be voted, the Proxy will be voted IN FAVOR OF the
election of each of the seven nominees to the Board of Directors listed in the
Proxy, unless the authority to vote for the election of any such nominee is
withheld. If no contrary instructions are given, the Proxy will be voted IN
FAVOR OF the ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors. You may revoke or change your Proxy at any time
before the Annual Meeting by filing a notice of revocation or another signed
Proxy with a later date with the Secretary of the Company at the Company's
principal executive offices, located at 300 Atrium Drive, Somerset, New Jersey
08873. If you attend the Annual Meeting and vote by ballot, your Proxy will be
revoked automatically and only your vote at the Annual Meeting will be counted.
Please note, however, that if your shares are held of record by a broker, bank
or other nominee, you will not be able to vote in person at the Annual Meeting
unless you have obtained and present a proxy issued in your name from the
record holder.
Solicitation
The Company will bear the entire cost of the solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional solicitation materials furnished to the shareholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries
and custodians holding shares in their names that are beneficially owned by
others so that they may forward this solicitation material to such beneficial
owners. The Company may reimburse such persons for their reasonable expenses in
forwarding solicitation materials to beneficial owners. The original
solicitation of Proxies by mail may be supplemented by a solicitation by
personal contacts, telephone, telegram, facsimile, electronic or any other
means by directors, officers or employees of the Company. No additional
compensation will be paid to these individuals for any such services. Except as
described above, the Company does not presently intend to solicit proxies other
than by mail.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the 2003 Annual Meeting of Shareholders must be
received by the Company no later than December 30, 2002 in order that they may
be included in the proxy statement and form of proxy relating to that meeting.
In addition, the proxy solicited by the Board of Directors for the 2003 Annual
Meeting of Shareholders will confer discretionary authority to vote on any
shareholder proposal presented at that meeting, unless the Company receives
notice of such proposal on or before March 15, 2003. Please address any
shareholder proposals to the Secretary of the Company at the Company's
principal executive offices, located at 300 Atrium Drive, Somerset, New Jersey
08873.
2
PROPOSAL ONE:
ELECTION OF DIRECTORS
General
Seven directors are to be elected to the Company's Board of Directors at the
Annual Meeting to hold office until their successors are duly elected and
qualified. Each returned Proxy cannot be voted for a greater number of persons
than the nominees named (seven). Unless individual shareholders specify
otherwise, each returned Proxy will be voted for the election of the seven
nominees who are listed below. If, however, any of the nominees named herein is
unable to serve or declines to serve at the time of the Annual Meeting, the
persons named in the enclosed Proxy will exercise discretionary authority to
vote for substitutes. The nominees for election have agreed to serve if
elected, and management has no reason to believe that any of the nominees will
be unavailable to serve.
The following table sets forth certain information concerning the nominees
for directors of the Company as of April 19, 2002:
Director
Name Age since Positions with the Company
---- --- -------- --------------------------
Richard N. Nottenburg, Ph.D.(1) 48 1994 President, Chief Executive Officer and Co-
Chairman
Jens Albers, Ph.D.(1).......... 38 1994 Executive Vice President and Co-Chairman
Stephen R. Forrest, Ph.D.(2)... 51 1999 Director
G. Bradford Jones(3)........... 47 1999 Director
James M. Schneider(3).......... 49 2001 Director
John Walecka(2)................ 42 1999 Director
Edward J. Zander(2)(3)......... 55 2000 Director
- --------
(1) Member of the Option Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Unless otherwise instructed, the proxy holders will vote the Proxies
received by them IN FAVOR OF the election of each of the nominees named below.
Richard N. Nottenburg, Ph.D. co-founded the Company and has served as its
President, Chief Executive Officer and Co-Chairman since the Company's
inception in 1994. Dr. Nottenburg has over 20 years of experience in the design
and development of high bit-rate electronics. He is an internationally
recognized expert in advanced integrated circuit technologies and in the design
of fiber-optic communications integrated circuits. Dr. Nottenburg was an
associate professor of electrical engineering at the University of Southern
California from 1991 to 1999. From 1984 to 1991, Dr. Nottenburg worked at AT&T
Bell Labs (now Lucent Technologies, Inc.) and Bell Communications Research. In
1990, Dr. Nottenburg became a Distinguished Member of the technical staff of
AT&T Bell Labs. He received his doctoral degree in electrical engineering from
the Swiss Federal Institute of Technology.
Jens Albers, Ph.D. co-founded the Company and has served as its Co-Chairman
since 1994. Additionally, Dr. Albers currently serves as the Company's
Executive Vice President. Dr. Albers founded the Company's foreign subsidiaries
and previously worked as its Vice President for Business Development and Vice
President for European Operations and Strategic Planning. From 1993 to 1995,
Dr. Albers was a consultant, and, in 1994 and 1995, served as a Managing
Director for Micram Microelectronic GmbH, Bochum, Germany. From 1988 to 1997,
Dr. Albers worked in the Department for Semiconductor Devices and Circuits at
Ruhr-University in Bochum, Germany. Dr. Albers has extensive design and
development experience in fiber-optic communication
3
integrated circuits. He received his doctoral degree in electrical engineering
from Ruhr-University, Bochum, Germany.
Stephen R. Forrest, Ph.D. has been a director of the Company since June
1999. Dr. Forrest has been a professor of electrical engineering at Princeton
University since 1992 and served as the Chairman of Princeton's Department of
Electrical Engineering from 1997 to 2001. From 1992 to 1997, Dr. Forrest served
as the Director of the Center for Photonics and Optolectronic Materials at
Princeton University, and from 1989 to 1992, he served as the Director of the
National Center for Integrated Photonic Technology. From 1985 to 1992,
Dr. Forrest was professor of electrical engineering at the University of
Southern California. Dr. Forrest is the author of approximately 280 papers
published in professional journals and holds approximately 50 patents in the
areas of organic thin film materials and devices and semiconductor photonic
materials and devices. Dr. Forrest received his master's and doctoral degrees
in physics from the University of Michigan.
G. Bradford Jones has been a director of the Company since June 1999. Mr.
Jones is a founding partner of Redpoint Ventures, formed in October 1999, and a
general partner with Brentwood Venture Capital, a firm he joined in 1981. Mr.
Jones also currently serves on the board of directors of Stamps.com, Onyx
Acceptance Corporation and several other privately held companies. Mr. Jones
received his bachelor's degree in chemistry from Harvard University, his
master's degree in physics from Harvard University and his J.D. and M.B.A. from
Stanford University.
James M. Schneider has been a director of the Company since August 2001. Mr.
Schneider serves as Chief Financial Officer and Chief Accounting Officer at
Dell Computer Corporation, or Dell. Mr. Schneider joined Dell in September 1996
as Vice President and Chief Accounting Officer, was named Senior Vice President
in September 1998 and Chief Financial Officer in March 2000. For three years
prior to joining Dell, Mr. Schneider was at MCI Communications Corporation,
last serving as Senior Vice President of Corporate Finance. For 19 years prior
to joining MCI, Mr. Schneider was associated with Price Waterhouse LLP, serving
as a partner for 10 years. He is a member of the board of directors of Dell
Financial Services and General Communication Inc. Mr. Schneider earned a
bachelor's degree in accounting from Carroll College, Waukesha, Wisconsin, and
is a certified public accountant. Mr. Schneider is also a member of the
Financial Executives Institute.
John Walecka has been a director of the Company since June 1999. Mr. Walecka
is a founding partner of Redpoint Ventures, formed in October 1999, and a
general partner with Brentwood Venture Capital, a firm he joined in 1984. Mr.
Walecka also currently serves as a member of the board of directors of Vitria
Technology, Inc. and several privately held companies. Mr. Walecka received his
bachelor's degree and his master's degree in engineering from Stanford
University and an M.B.A. from the Stanford Graduate School of Business.
Edward J. Zander has been a director of the Company since October 2000, and
has more than 25 years of expertise in the computer business, including
extensive experience in engineering, marketing and executive management. Since
April 1999, Mr. Zander has served as President and Chief Operating Officer at
Sun Microsystems, or Sun, and was Vice President and Chief Operating Officer
from April 1998 to April 1999. Mr. Zander runs Sun's day-to- day business
operations, including: system products, storage products, software products and
platforms, enterprise services, network service provider services, iPlanet,
Sun's alliance with AOL's Netscape division, research and development,
including the office of the CTO, customer advocacy, and worldwide
manufacturing, purchasing, marketing and sales operations. In his previous
positions at Sun, Mr. Zander served as president of Sun Microsystems Computer
Company from February 1995 to April 1998, managing development, manufacturing
and marketing for the network computing systems organization, and as president
of Sun's software group from July 1991 to February 1995, developing and
marketing Solaris for enterprise and network computing applications. Before
joining Sun in October 1987 as vice president of corporate marketing, Mr.
Zander was vice president of marketing for Apollo Computer, developing
marketing strategies for the emerging workstation industry. He serves on the
boards of directors of the Jason Foundation for Education, Portal Software,
Inc., SeeCommerce, and the Advisory Boards of Rensselaer Polytechnic Institute,
or
4
R.P.I., and Boston University. Mr. Zander earned his bachelor's degree in
electrical engineering from R.P.I. and his M.B.A. from Boston University.
Board Meetings and Committees
The Board of Directors held nine meetings during the fiscal year ended
December 31, 2001 (the "2001 Fiscal Year"). The Board of Directors has an Audit
Committee, a Compensation Committee and an Option Committee. Each director
attended or participated in 75% or more of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees of the Board on which such director served
during the 2001 Fiscal Year. Members of the Board of Directors and its
committees also consulted informally with management from time to time and
acted by written consent without a meeting during the 2001 Fiscal Year.
Audit Committee. The Audit Committee of the Board of Directors currently
consists of three independent directors, Messrs. Jones, Schneider and Zander.
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing the financial
information that will be provided to the shareholders and others, the systems
of internal controls that management and the Board of Directors have
established, and the Company's audit and financial reporting process, and to
maintain free and open lines of communication among the Audit Committee, the
Company's independent auditors and management. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. However, the Audit
Committee does consult with the Company's management and the Company's
independent auditors prior to the presentation of financial statements to
shareholders and, as appropriate, initiates inquiries into various aspects of
the Company's financial affairs. In addition, the Audit Committee is
responsible for considering and recommending the appointment of, and reviewing
fee arrangements with, the Company's independent auditors. The Audit Committee
held five meetings during the 2001 Fiscal Year.
The Board adopted and approved a charter for the Audit Committee in
September 2000. A copy of the charter is attached hereto as Appendix A. The
Board has determined that all members of the Audit Committee are independent as
that term is defined in Rule 4200(a)(14) of the Marketplace Rules of the
National Association of Securities Dealers.
Compensation Committee. The Compensation Committee of the Board of
Directors currently consists of three directors, Dr. Forrest and Messrs.
Walecka and Zander. The Compensation Committee reviews and makes
recommendations to the Board regarding the Company's compensation policies and
all forms of compensation to be provided to executive officers and directors of
the Company, including, among other things, annual salaries and bonuses, and
stock option and other incentive compensation arrangements. In addition, the
Compensation Committee reviews bonus and stock compensation arrangements for
all other employees of the Company. The Compensation Committee administers and
makes stock option grants under the Discretionary Option Grant Program and
Stock Issuance Program with respect to the Company's executive officers and
Board members and the Salary Investment Option Grant Program under the
Company's 2000 Stock Incentive Plan, as amended. The Compensation Committee
also administers the Company's 2000 Employee Stock Purchase Plan. The
Compensation Committee held one meeting during the 2001 Fiscal Year.
Option Committee. The Option Committee of the Board of Directors currently
consists of two directors, Dr. Nottenburg and Dr. Albers. The Option Committee
is responsible for administering the Discretionary Option Grant Program and the
Stock Issuance Program under the 2000 Stock Incentive Plan with respect to
eligible individuals other than the Company's executive officers or directors.
The Option Committee held one meeting and acted on various occasions by
unanimous written consent without a meeting during the 2001 Fiscal Year.
5
Director Compensation
Directors of the Company do not receive cash compensation for their service
as directors. Under the Automatic Option Grant Program in effect under the 2000
Stock Incentive Plan, each new non-employee director will receive an option to
purchase 50,000 shares of Class A common stock upon joining the Board of
Directors. On the date of each Annual Meeting of Shareholders, each incumbent
non-employee director who is to continue to serve as a director will be granted
an option to purchase an additional 10,000 shares of Class A common stock,
provided that such individual has served as a non-employee director of the
Company for at least six months. Each grant under the Automatic Option Grant
Program will have an exercise price per share equal to the fair market value
per share of the Company's Class A common stock on the grant date, and will
have a maximum term of ten years, subject to earlier termination should the
optionee cease to serve as a member of the Board of Directors.
In connection with his election as a director, Dr. Forrest received an
option grant on October 7, 1999 for 200,000 shares of the Company's Class A
common stock at an exercise price per share of $0.55. In connection with his
election as a director, Mr. Zander received an option grant on October 25, 2000
for 150,000 shares of the Class A common stock at an exercise price per share
of $5.75. In connection with his election as a director, Mr. Schneider received
an option grant on September 19, 2001 for 150,000 shares of the Class A common
stock at an exercise price per share of $7.05. Messrs. Schneider and Zander
each received an additional option grant on February 22, 2002 for 75,000 shares
of the Class A common stock. The exercise price per share in effect under each
option is $2.50.
A portion of these options is immediately exercisable for all of the option
shares; however, any unvested shares purchased under the option will be subject
to repurchase by the Company, at the exercise price paid per share, should the
optionee cease service on the Board prior to vesting in those shares, The
shares subject to each option grant generally vest over (and the Company's
repurchase right will lapse over) three to four years; however, the shares
subject to each option grant will immediately vest in full under certain
circumstances as provided in the 2000 Stock Incentive Plan.
Required Vote
The seven nominees receiving the highest number of affirmative votes of the
outstanding shares of Class A common stock and Class B common stock, voting
together as a single class, present or represented by proxy and entitled to be
voted for them, shall be elected as directors. No Proxy may be voted for a
greater number of persons than seven.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote IN FAVOR OF the
election of each of the nominees listed above. Unless authority to do so is
withheld, the proxy holders named in each proxy will vote the shares
represented thereby in favor of the election of each of the nominees listed
above.
6
PROPOSAL TWO:
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of Deloitte & Touche LLP, independent public auditors for
the Company during the 2001 Fiscal Year, to serve in the same capacity for the
fiscal year ending December 31, 2002, and is asking the shareholders to ratify
this appointment. A representative of Deloitte & Touche LLP is expected to be
present at the Annual Meeting, will have the opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions.
Required Vote
The affirmative vote of the holders of common stock representing a majority
of the voting power of the outstanding Class A common stock and Class B common
stock, voting together as a single class, present or represented by proxy and
voting at the Annual Meeting, which shares voting affirmatively must also
constitute at least a majority of the voting power required to constitute a
quorum, is required to ratify the appointment of Deloitte & Touche LLP. In the
event that the shareholders do not ratify the selection of Deloitte & Touche
LLP, the appointment of the independent auditors will be reconsidered by the
Board of Directors. Even if the selection is ratified, the Board of Directors
in its discretion may direct the appointment of a different independent
auditing firm at any time during the year if the Board of Directors believes
that such a change would be in the best interests of the Company and its
shareholders.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote IN FAVOR OF the
ratification of the appointment of Deloitte & Touche LLP to serve as the
Company's independent auditors for the fiscal year ending December 31, 2002.
Unless authority to do so is withheld, the proxy holders named in each proxy
will vote the shares represented thereby in favor of the ratification of the
appointment of Deloitte & Touche LLP.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
expressly granted by the execution of the enclosed Proxy. The Proxy holders
shall vote at their discretion on any procedural matters that may come before
the Annual Meeting.
7
OWNERSHIP OF SECURITIES
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's common stock as of April
19, 2002 by (i) all persons known to the Company to beneficially own five
percent (5%) or more of either class of the Company's common stock, (ii) each
director of the Company, (iii) the executive officers named in the Summary
Compensation Table of the Executive Compensation and Other Information section
of this Proxy Statement, and (iv) all current directors and executive officers
as a group.
Shares and Percentage of
Class Beneficially Owned(1)
------------------------------------ Percentage
Class A Percent Class B Percent of Total
Common of Common of Voting
Name Stock Class Stock Class Power(2)
---- ---------- ------- ---------- ------- ----------
Directors and Executive Officers
Richard N. Nottenburg(3)(4)...................... 3,825,000 7.5% 15,820,000 58.6% 50.5%
Jens Albers(3)(5)................................ 3,450,000 6.8% 8,480,000 31.4% 1.1%
Eric M. Pillmore(6).............................. 611,665 1.3% -- -- *
Ronald M. Krisanda(7)............................ 131,021 * -- -- *
Joseph R. Cole(8)................................ 109,375 * -- -- *
G. Bradford Jones(9)............................. 23,139,200 46.5% -- -- 7.2%
John Walecka(10)................................. 23,189,200 46.6% -- -- 7.3%
Stephen R. Forrest(11)........................... 100,000 * -- -- *
Edward J. Zander(12)............................. 89,583 * -- -- *
James M. Schneider............................... 110,000 * -- -- *
All Directors and Executive Officers as a Group
(10 persons)(13)............................... 31,615,844 54.6% 15,820,000 58.6% 57.9%
5% Shareholders
Entities associated with Brentwood
Venture Capital(14)............................ 21,139,200 42.5% -- -- 6.6%
Matthias Bussmann(15)............................ 734,500 1.6% 5,480,000 20.3% 17.5%
International Business Machines Corporation(16).. 4,186,654 8.8% -- -- 1.3%
TRW, Inc.(17).................................... 1,250,000 2.6% 5,700,000 21.1% 18.4%
Entities associated with MeriTech Capital
Partners(18)................................... 3,750,000 7.9% -- -- 1.2%
- --------
* Represents less than one percent.
(1) The percentage of shares beneficially owned is based on 47,316,358 shares
of Class A common stock and 27,000,000 shares of Class B common stock
outstanding as of April 19, 2002. Beneficial ownership is determined in
accordance with the rules and regulations of the SEC. Shares of common
stock subject to options that are currently exercisable or exercisable
within 60 days after April 19, 2002 are deemed to be outstanding and
beneficially owned by the person holding such options for the purpose of
computing the number of shares beneficially owned and the percentage
ownership of such person, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table, and subject to applicable
community property laws, such persons have sole voting and investment
power with respect to all shares of the Company's common stock shown as
beneficially owned by them.
(2) Holders of Class A common stock are entitled to one vote per share and
holders of Class B common stock are entitled to ten votes per share. Each
share of Class B common stock is convertible at the option of the holder
into one share of Class A common stock and will, in general, automatically
convert into one share of Class A common stock upon sale or other transfer
to any person or entity other than a person or entity that owns or
controls an entity that owns Class B common stock.
(3) The address for Dr. Nottenburg and Dr. Albers is 300 Atrium Drive, 2nd
Floor, Somerset, New Jersey 08873.
8
(4) Includes 3,775,000 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002. Also includes 8,480,000
shares of Class B common stock owned by Dr. Albers over which Dr.
Nottenburg has sole voting power pursuant to a voting trust agreement
between Dr. Nottenburg and Dr. Albers. Dr. Nottenburg disclaims beneficial
interest in such shares.
(5) Includes 3,450,000 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002. Dr. Nottenburg has sole
voting power over Dr. Albers' shares of Class B common stock pursuant to a
voting trust agreement between Dr. Nottenburg and Dr. Albers. Dr.
Nottenburg disclaims beneficial interest in such shares.
(6) Consists of 608,888 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002.
(7) Consists of 130,000 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002.
(8) Consists of 109,375 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002.
(9) Mr. Jones is a general partner of entities affiliated with Brentwood
Venture Capital and entities affiliated with Redpoint Ventures. The shares
listed include (i) 18,700,000 shares of Class A common stock held by
entities affiliated with Brentwood Venture Capital, (ii) 2,439,200 shares
of Class A common stock issuable to entities affiliated with Brentwood
Venture Capital pursuant to currently exercisable warrants, and
(iii) 2,000,000 shares of Class A common stock held by entities affiliated
with Redpoint Ventures. Mr. Jones disclaims beneficial interest in the
shares held by these entities, except to the extent of his pecuniary
interest in these entities. The address for Mr. Jones is 11150 Santa
Monica Boulevard, Suite 1200, Los Angeles, California 90025.
(10) Mr. Walecka is a general partner of entities affiliated with Brentwood
Venture Capital and entities affiliated with Redpoint Ventures. The shares
listed include (i) 18,700,000 shares of Class A common stock held by
entities affiliated with Brentwood Venture Capital, (ii) 2,439,200 shares
of Class A common stock issuable to entities affiliated with Brentwood
Venture Capital pursuant to currently exercisable warrants, and (iii)
2,000,000 shares of Class A common stock held by entities affiliated with
Redpoint Ventures. Mr. Walecka disclaims beneficial interest in the shares
held by these entities, except to the extent of his pecuniary interest in
these entities. The address for Mr. Walecka is 11150 Santa Monica
Boulevard, Suite 1200, Los Angeles, California 90025.
(11) Consists of 100,000 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002.
(12) The shares listed include (i) 58,333 shares of Class A common stock held
by Mr. Zander and (ii) 31,250 shares of Class A common stock subject to an
option exercisable within 60 days of April 19, 2002.
(13) Includes 8,204,513 shares of Class A common stock subject to an option
exercisable within 60 days of April 19, 2002 and 2,439,200 shares of Class
A common stock issuable pursuant to currently exercisable warrants.
(14) Includes 20,505,000 shares of Class A common stock held by or issuable
pursuant to currently exercisable warrants to Brentwood Associates IX,
L.P. and 634,200 shares of Class A common stock held by or issuable
pursuant to currently exercisable warrants to Brentwood Affiliates Fund
III, L.P. The address for Brentwood Venture Capital is 11150 Santa Monica
Boulevard, Suite 1200, Los Angeles, California 90025.
(15) The address for Dr. Bussmann is 156 N. Citrus Avenue, Los Angeles,
California 90036.
(16) The address for International Business Machines Corporation is New Orchard
Road, Armonk, New York 10504.
(17) The address for TRW, Inc is 1900 Richmond Road, Cleveland, Ohio 44124.
(18) Consists of 3,690,000 shares of Class A common stock held by MeriTech
Capital Partners L.P. and 60,000 shares of Class A common stock held by
MeriTech Capital Affiliates, L.P. The address for MeriTech Capital
Partners is 285 Hamilton Avenue, Suite 200, Palo Alto, California 94301.
9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The following table sets forth certain information regarding all executive
officers of the Company as of April 19, 2002:
Name Age Positions with the Company
---- --- --------------------------
Richard N. Nottenburg, Ph.D. 48 President, Chief Executive Officer and Co-Chairman
Jens Albers, Ph.D........... 38 Executive Vice President and Co-Chairman
Eric M. Pillmore............ 48 Senior Vice President of Finance, Chief Financial Officer
and Secretary
Ronald M. Krisanda.......... 40 Senior Vice President of Operations
Joseph R. Cole.............. 38 Vice President of Worldwide Sales
The following is a brief description of the capacities in which each of the
executive officers has served during the past five years. The descriptions for
Dr. Nottenburg and Dr. Albers appear earlier in this Proxy Statement. See
"Election of Directors."
Eric M. Pillmore has served as the Company's Senior Vice President of
Finance, Chief Financial Officer and Secretary since joining the Company in
July 2000. From April 2000 to May 2000, he was Chief Financial Officer and Vice
President Finance and Administration for McData Corporation. From January 2000
to April 2000, he was Senior Vice President, Finance and Director, Broadband
Communications Sector of Motorola Corporation, the successor by acquisition to
General Instrument Corporation, or GI. From March 1996 to January 2000, Mr.
Pillmore worked for GI, ultimately holding the position of Senior Vice
President, Finance and Chief Financial Officer. From March 1996 to November
1996, Mr. Pillmore was Vice President, Finance of GI. From January 1994 to
February 1996, he was Manager, Finance of the Plastics Americas Division of
General Electric Company. He was Manager, Finance of GE Medical Systems Asia,
Ltd. from March 1992 to January 1994 and Director, Finance of GE/Yokogawa
Medical Systems, Ltd. from June 1991 to February 1994. Mr. Pillmore received
his bachelor's degree in business administration from the University of New
Mexico.
Ronald M. Krisanda has served as the Company's Senior Vice President of
Operations since joining the Company in November 2000. From January 2000 to
November 2000, he was Vice President and General Manager Asia Operations,
Broadband Communications Sector of Motorola Corporation, the successor by
acquisition to General Instrument Corporation, or GI, in January 2000. From May
1996 to December 1999, Mr. Krisanda worked for GI, ultimately holding the
position of Vice President and General Manager of General Instrument of Taiwan
Ltd. From May 1996 to June 1997, Mr. Krisanda was Director of Operations,
Digital Networks Systems of GI. From February 1990 to April 1996, Mr. Krisanda
worked for the Electronics Division of Ford Motor Company, ultimately holding
the position of Manager Advanced Manufacturing Technology. From September 1984
to January 1990, he worked for the Climate Control Division of Ford Motor
Company holding a variety of engineering, operations, and supply chain
positions. Mr. Krisanda received his bachelor's degree in mechanical
engineering from Clarkson University and his master's degree in manufacturing
systems engineering from Lehigh University.
Joseph R. Cole joined the Company in February 2001 as its Vice President of
Enterprise Accounts and became the Vice President of Worldwide Sales in
December 2001. From January 2000 to February 2001, he was the Enterprise
Business Director for Lucent Technologies at Cadence Design Systems. From
January 1998 to January 2000, Mr. Cole was a Partner and Vice President at
Strategic Sales Inc. From January 1997 to January 1998, Mr. Cole was National
Account Manager for Lucent Technologies at Cypress Semiconductor. From January
1993 to January 1997, Mr. Cole held various positions at Hitachi America, Ltd,
including Labs Manager for the Lucent Technologies account and Applications
Engineer. From June 1985 to January 1993, Mr. Cole held various positions at
AT&T Bell Laboratories including member of the technical staff. Mr. Cole
received his bachelor's degree in electronic engineering from Monmouth College
and his master's degree in computer science from Stevens Institute of
Technology.
10
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company whose
aggregate salary and bonus for the 2001 Fiscal Year were in excess of $100,000,
for services rendered in all capacities to the Company and its subsidiaries for
the fiscal years ended December 31, 1999, 2000 and 2001. The listed individuals
are hereinafter referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options(#) Compensation
- --------------------------- ---- --------- -------- ------------ ------------
Richard N. Nottenburg.................... 2001 286,585 250,000 -- 44,684(1)
President, Chief Executive 2000 250,071 218,000 -- 137,573(2)
Officer and Co-Chairman 1999 219,849 101,250 6,600,000 --
Jens Albers.............................. 2001 249,995 226,314 -- 36,882(4)
Executive Vice President 2000 235,195 281,064(3) -- 6,240
and Co-Chairman 1999 155,247 55,556 5,800,000 --
Eric M. Pillmore......................... 2001 225,000 112,500 -- 39,661(5)
Senior Vice President of Finance, 2000 99,519 100,000 1,000,000 --
Chief Financial Officer and Secretary
Ronald M. Krisanda....................... 2001 227,596 -- 200,000 55,525(6)
Senior Vice President of Operations 2000 17,308 100,000 400,000 --
Joseph R. Cole(7)........................ 2001 174,494 -- 350,000 11,296(8)
Vice President of Worldwide Sales
Craig S. Lewis(9)........................ 2001 225,865 -- 800,000 28,536(10)
Senior Vice President of Sales
- --------
(1) Includes tax preparation, car allowance and a matching contribution under
the Company's 401(k) plan.
(2) Includes relocation expenses.
(3) Includes $99,179 that pertains to 1998 but was not paid until 2000.
(4) Includes tax preparation, car allowance, insurance and a matching
contribution under the Company's 401(k) plan.
(5) Includes tax preparation and a matching contribution under the Company's
401(k) plan.
(6) Includes tax preparation, a matching contribution under the Company's
401(k) plan and relocation expenses.
(7) Mr. Cole joined the Company on February 26, 2001 and was appointed as Vice
President of Worldwide Sales in December 2001.
(8) Includes car allowance and a matching contribution under the Company's
401(k) plan.
(9) Mr. Lewis was appointed as Senior Vice President of Sales in January 2001
and his employment with the Company terminated in December 2001.
(10) Includes tax preparation and a matching contribution under the Company's
401(k) plan. The matching contribution was forfeited by Mr. Lewis upon
termination of his employment with the Company.
11
Option Grants in Last Fiscal Year
The following table provides information concerning the stock options
granted to the Named Executive Officers during the 2001 Fiscal Year. No stock
appreciation rights were granted to any of the Named Executive Officers during
the 2001 Fiscal Year.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at Assumed
Annual Rate of Stock Price Appreciation
Individual Grants for Option Term(4)
------------------------------------------ ---------------------------------------
Percent of
Number of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#)(1) Year(2) ($/Sh)(3) Date 0%($) 5%($) 10%($)
---- ---------- ---------- --------- ---------- ---------- ---------- ----------
Richard N. Nottenburg -- -- -- -- -- -- --
Jens Albers.......... -- -- -- -- -- -- --
Eric M. Pillmore..... -- -- -- -- -- -- --
Ronald M. Krisanda... 200,000 2.29% $5.75 2/27/11 $ 450,000 $1,456,231 $2,999,998
Joseph R. Cole....... 350,000 4.01% $5.75 2/27/11 $ 787,500 $2,548,405 $5,249,979
Craig S. Lewis....... 800,000 9.17% $5.75 1/16/11 $1,000,000 $4,521,810 $9,924,958
- --------
(1) The option granted to Mr. Krisanda becomes exercisable in four successive
yearly installments upon his completion of each year of service from
February 28, 2001 as follows: 30,000 shares on February 28, 2002, 40,000
shares on February 28, 2003, 60,000 shares on February 28, 2004 and 70,000
shares on February 28, 2005. The option granted to Mr. Cole becomes
exercisable in 48 successive equal monthly installments upon his completion
of each month of service from February 28, 2001. Mr. Lewis' employment with
the Company terminated in December 2001, and his options were not exercised
and have been canceled.
(2) Based on options to purchase an aggregate of 8,726,500 shares of Class A
common stock granted to the Company's employees and directors during the
year ended December 31, 2001.
(3) The options were granted at an exercise price equal to the fair market
value of the Company's Class A common stock determined in good faith by the
Company's Board of Directors.
(4) The assumed rates of appreciation are prescribed by the rules and
regulations of the SEC and do not represent the Company's estimate or
projection of the future trading prices of its common stock. The potential
realizable value is calculated based on the term of the option at its time
of grant (10 years). It is calculated assuming that the fair market value
of the Class A common stock on the date of grant was $8.00 for grants made
to Mr. Krisanda and Mr. Cole and $7.00 for grants made to Mr. Lewis and
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and the shares are sold
on the last day of its term for the appreciated stock price.
12
Aggregated Option Exercises and Fiscal Year End Values
The following table provides information with respect to the Named Executive
Officers, concerning the exercise of options during the 2001 Fiscal Year and
unexercised options held by them at the end of that fiscal year. None of the
Named Executive Officers exercised any stock appreciation rights during the
2001 Fiscal Year and no stock appreciation rights were held by the Named
Executive Officers at the end of such year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
Number of Securities
Shares Underlying Unexercised Value of Unexercised in-the-
Acquired Options at 2001 Year-End(#) Money Options at 2001 Year-End(2)
on Value --------------------------- ---------------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ----------- -------------
Richard N. Nottenburg -- -- 3,450,000 3,150,000 $20,913,500 $19,029,500
Jens Albers.......... -- -- 3,000,000 2,800,000 $18,175,000 $16,919,000
Eric M. Pillmore..... -- -- 472,221 527,779 $ 1,879,440 $ 2,100,560
Ronald M. Krisanda... -- -- 100,000 500,000 $ 73,000 $ 365,000
Joseph R. Cole....... -- -- 72,916 277,084 $ 53,229 $ 202,271
Craig S. Lewis(3).... -- -- 200,000 -- $ 146,000 --
- --------
(1) Based upon the market price of the purchased shares on the exercise date
less the option exercise price paid for those shares.
(2) Determined on the basis of the closing sales price per share of the
Company's Class A common stock on the Nasdaq National Market on the last
day of the 2001 Fiscal Year ($6.48 per share), less the option exercise
price payable per share.
(3) Mr. Lewis' employment with the Company terminated in December 2001. These
options were not exercised and have been canceled.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
None of the Named Executive Officers has an employment agreement with the
Company that governs the length of his service. Accordingly, the employment of
any such executive officer may be terminated at any time at the discretion of
the Company's Board of Directors.
In July 2000, the Company executed an offer letter with Eric Pillmore, the
Company's Senior Vice President and Chief Financial Officer. The letter
provides that if Mr. Pillmore is terminated for any reason other than "for
cause" (as defined in the letter), Mr. Pillmore would be eligible to receive
(i) a severance benefit in an amount equal to six months of his annual
compensation (base and bonus) as of the date of termination, (ii) six months of
continued coverage of benefit plans being offered to other executives as of the
date of termination, and (iii) the acceleration of six months of vesting of Mr.
Pillmore's stock options. If a change of control of the Company occurs within
90 days of Mr. Pillmore's termination without cause, the accelerated vesting
rights of Mr. Pillmore's options will be executed.
The Compensation Committee of the Company's Board of Directors, has the
authority to provide for accelerated vesting of the shares of common stock
subject to any outstanding options held by the Chief Executive Officer or any
other executive officer or any unvested share issuances actually held by such
individual, in connection with certain changes in control of the Company or the
subsequent termination of the officer's employment following the change in
control event.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors currently
consists of Dr. Forrest and Messrs. Walecka and Zander. None of these
individuals was an officer or employee of the Company at any time during the
2001 Fiscal Year or at any other time. No current executive officer of the
Company has ever served as a member of the board of directors or compensation
committee of any other entity that has or has had one or more executive
officers serving as a member of the Company's Board of Directors or
Compensation Committee.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to review and determine the
salaries and bonuses of executive officers of the Company, including the Chief
Executive Officer, and to establish the general compensation policies for such
individuals. The Compensation Committee believes that the compensation programs
for the executive officers should reflect the Company's performance and the
value created for its shareholders. In addition, the compensation programs
should support the short-term and long-term strategic goals and values of the
Company and should reward individual contributions to the Company's success.
The Company is engaged in a very competitive industry, and its success depends
upon its ability to attract and retain qualified executives through the
competitive compensation packages it offers to such individuals.
General Compensation Policy. The Compensation Committee's policy is to
provide the Company's executive officers with compensation opportunities that
are based upon their personal performance, the financial performance of the
Company and their contribution to that performance, and that are competitive
enough to attract and retain highly skilled individuals. Each executive
officer's compensation package is comprised of two elements: (i) a base salary
and targeted bonus that is commensurate with salaries and bonuses for similar
positions at peer companies, and (ii) long-term, stock-based incentive awards
designed to strengthen the mutuality of interests between the executive
officers and the shareholders. As an officer's level of responsibility
increases, a greater proportion of his or her total compensation will be
dependent upon the Company's financial performance and stock price appreciation
rather than base salary.
Factors. The principal factors that were taken into account in establishing
each executive officer's compensation package for the 2001 Fiscal Year are
described below. The Compensation Committee may, however, in its discretion
apply entirely different factors, such as different measures of financial
performance, or create different compensation elements, for future fiscal years.
Base Salary and Bonus. The base salary for each executive officer is
generally established on the basis of relative parity with other executive
officers of the Company. The Compensation Committee's policy is to target base
salary and bonus levels near the median of the estimated base salary and bonus
levels paid for similar positions at peer companies. Bonuses are established
with specific, measurable performance goals at the corporate level and for each
individual. In addition, the Compensation Committee attempts to ensure that
each executive officer's overall compensation is also substantially composed of
an equity interest in the Company. The philosophy behind this strategy is to
have a very substantial portion of each executive officer's total compensation
tied to the Company's performance and stock price appreciation in order to
create a greater incentive to create value for the Company's shareholders.
Long-Term Incentives. To date, long-term incentives have consisted solely
of grants of options to purchase the Company's Class A common stock. Generally,
stock option grants are made annually by the Compensation Committee to certain
of the Company's executive officers. Each grant is designed to align the
interests of the executive officer with those of the shareholders and provide
each individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. Each grant allows
the officer to acquire shares of the Company's Class A common stock at a fixed
price per share (the fair market value on the grant date) over a specified
period of time (up to ten years). Each option generally becomes exercisable in
a series of installments over a four-year period, contingent upon the officer's
continued employment with the Company. Accordingly, the option will provide a
return to the executive officer only if he remains employed by the Company
during the vesting period, and then only if the fair market value of the
underlying shares appreciates over the option term.
The size of the option grant to each executive officer is set by the
Compensation Committee at a level that is intended to create a meaningful
opportunity for stock ownership based upon the individual's current position
with the Company, the individual's personal performance in recent periods, and
his or her potential for future responsibility and promotion over the option
term. The Compensation Committee also takes into account the
14
number of unvested options held by the executive officer in order to maintain
an appropriate level of equity incentive for that individual. The relevant
weight given to each of these factors varies from individual to individual.
The Compensation Committee has established certain guidelines with respect
to the option grants made to the executive officers, but has the flexibility to
make adjustments to those guidelines at its discretion.
CEO and EVP Compensation. The Compensation Committee has set the base
salaries and targeted bonuses of Dr. Nottenburg, the Company's President and
Chief Executive Officer ("CEO"), and Dr. Albers, the Company's Executive Vice
President ("EVP"), at levels that it believes are near the median of base
salary and bonus levels of comparable officers of those companies with which
the Company competes for executive talent, due to the substantial equity
ownership interests of both the CEO and EVP in the Company. Because the CEO and
EVP each hold a significant equity stake in the Company, the Compensation
Committee believes that they have a significant incentive to continue
contributing to the Company's financial success because they will benefit from
any appreciation in the value of the Company's common stock.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held companies for
compensation paid to certain of their executive officers to the extent that
such compensation exceeds $1.0 million per covered officer in any fiscal year.
The limitation applies only to compensation that is not considered to be
performance-based. Non-performance-based compensation paid to the Company's
executive officers for the 2001 Fiscal Year did not exceed the $1.0 million
limit per officer, and the Compensation Committee plans to keep the
non-performance-based compensation to be paid to the Company's executive
officers for the 2002 Fiscal Year within that limit. The 2000 Stock Incentive
Plan has been structured so that any compensation deemed paid in connection
with the exercise of option grants made under that Plan with an exercise price
equal to the fair market value of the option shares on the grant date will
qualify as performance-based compensation that will not be subject to the $1.0
million limitation. Because it is unlikely that the cash compensation payable
to any of the Company's executive officers in the foreseeable future will
approach the $1.0 million limit, the Compensation Committee does not expect to
take any action to limit or restructure the elements of cash compensation
payable to the Company's executive officers. The Compensation Committee will
reconsider this decision should the individual cash compensation of any
executive officer ever approach the $1.0 million level.
It is the opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total remuneration
program to properly align the interests of each executive officer and the
interests of the Company's shareholders through the use of competitive and
equitable executive compensation in a balanced and reasonable manner, for both
the short and long-term.
Submitted by the Compensation Committee of the Company's Board of Directors:
Edward J. Zander
Stephen R. Forrest
John Walecka
15
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2001, which include the consolidated balance sheets of the Company as of
December 31, 2001 and 2000, and the related consolidated statements of
operations, shareholders' equity and cash flow for each of the three years in
the period ended December 31, 2001, and the notes thereto.
Composition. The Audit Committee of the Company's Board of Directors is
currently composed of three independent directors, as that term is defined in
Rule 4200(a)(14) of the listing standards of the National Association of
Securities Dealers, and operates under a written charter adopted by the Board
of Directors, a copy of which is attached hereto as Appendix A. The members of
the Audit Committee are Messrs. Jones, Schneider and Zander.
Responsibilities. The primary function of the Audit Committee is to assist
the Board of Directors in fulfilling its oversight responsibilities by
reviewing the financial information that will be provided to the shareholders
and others, the systems of internal controls that management and the Board of
Directors have established, and the Company's financial reporting process, and
to maintain free and open lines of communication among the Audit Committee, the
Company's independent auditors and management. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. However, the Audit
Committee does consult with management and the Company's independent auditors
prior to the presentation of financial statements to shareholders and, as
appropriate, initiates inquiries into various aspects of the Company's
financial affairs. In addition, the Audit Committee is responsible for
considering and recommending the appointment of, and reviewing fee arrangements
with, the Company's independent auditors.
Review with Management and Independent Auditors. The Audit Committee has
reviewed and discussed the Company's audited financial statements with
management and the Company's independent auditors, Deloitte & Touche LLP.
The Audit Committee has discussed with Deloitte & Touche LLP, the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, including, among other items, matters
related to the conduct of the audit of the Company's financial statements.
Deloitte & Touche LLP has provided to the Audit Committee the written
disclosures and the letter required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, and the Audit Committee
has discussed with Deloitte & Touche LLP its independence from the Company.
Conclusion. Based upon the reviews and discussions referred to above, the
Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001, as filed with the SEC.
Reappointment of Independent Auditors. In April 2002, the Audit Committee
recommended to the Board of Directors the reappointment of Deloitte & Touche
LLP, as the Company's independent auditors for the fiscal year ending December
31, 2002.
Submitted by the Audit Committee of the Company's Board of Directors:
G. Bradford Jones
James M. Schneider
Edward J. Zander
16
Audit and Related Fees
Audit Fees. The fees billed by Deloitte & Touche LLP for professional
services for the audit of the Company's annual consolidated financial
statements for the 2001 Fiscal Year, including the issuance of certain foreign
statutory reports, and the review of the consolidated financial statements
included in the Company's Quarterly Reports on Form 10-Q for the 2001 Fiscal
Year were $171,850.
Financial Information Systems Design and Implementation Fees. There were no
fees billed by Deloitte & Touche LLP to the Company for financial information
systems design and implementation fees for the 2001 Fiscal Year.
All Other Fees. The aggregate fees billed by Deloitte & Touche LLP for
services rendered to the Company, other than the services described above under
"Audit Fees" and "Financial Information Systems Design and Implementation
Fees", for the 2001 Fiscal Year were $971,474, including audit related services
of approximately $636,165 and non-audit services of $335,309. Audit related
services consist primarily of fees for SEC registration statement reviews
including registration statements associated with the Company's initial public
offering. Non-audit services include fees for tax consultation, tax preparation
and other consultations.
The Audit Committee has determined that the provision of services by
Deloitte & Touche LLP for financial information systems design and
implementation and all other fees is compatible with maintaining Deloitte &
Touche LLP's independence.
17
STOCK PERFORMANCE GRAPH
The Stock Performance Graph depicted below shows a comparison of cumulative
shareholder returns for the Company, the Nasdaq Stock Market (U.S.) Index and
the Nasdaq Electronic Components Index.
[CHART]
Multilink Technology Nasdaq Index Nasdaq Electronic Components
Corporation Index
June 21, 2001 $100.00 $100.00 $100.00
June 2001 $128.00 $105.00 $109.00
July 2001 $146.00 $98.00 $108.00
August 2001 $84.00 $88.00 $97.00
September 2001 $46.00 $73.00 $70.00
October 2001 $41.00 $82.00 $89.00
November 2001 $62.00 $94.00 $111.00
December 2001 $58.00 $95.00 $105.00
6/21/01 6/30/01 7/31/01 8/31/01 9/30/01 10/31/01 11/30/01 12/31/01
------- ------- ------- ------- ------- -------- -------- --------
MULTILINK TECHNOLOGY
CORPORATION............. 100 128 146 84 46 41 62 58
NASDAQ STOCK MARKET (U.S.) 100 105 98 88 73 82 94 95
NASDAQ ELECTRONIC
COMPONENTS INDEX........ 100 109 108 97 70 89 111 105
The graph covers the period from June 21, 2001, the first trading date of
the Company's Class A common stock, to December 31, 2001. The graph assumes
that $100 was invested on June 21, 2001 in the Company's Class A common stock
at the initial public offering price of $9.00 per share and in each index, and
that all dividends were reinvested. The Company has not paid or declared any
cash dividends on its Class A common stock. Shareholder returns over the
indicated period should not be considered indicative of future stock prices or
shareholder returns.
The preceding Stock Performance Graph, Compensation Committee Report and
Audit Committee Report, and the Audit Committee charter attached hereto as
Appendix A are not considered proxy solicitation materials and are not deemed
filed with the SEC. Notwithstanding anything to the contrary set forth in any
of the Company's previous filings made under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that might incorporate future filings made by the Company under those
statutes, the Stock Performance Graph, Compensation Committee Report, Audit
Committee Report and Audit Committee charter shall not be incorporated by
reference into any such prior filings or into any future filings made by the
Company under those statutes.
Certain Transactions
Since January 1, 2001 there has not been any transaction or series of
similar transactions to which the Company was or is a party in which the amount
involved exceeded or exceeds $60,000 and in which any
18
director, executive officer, holder of more than 5% of any class of the
Company's voting securities, or any member of the immediate family of any of
the foregoing persons had or will have a direct or indirect material interest,
other than the transactions described below.
Transactions with TRW. In June 1997, the Company entered into a supply
agreement with TRW pursuant to which TRW supplies the Company with a certain
number of processed Gallium Arsenide wafers annually for a fixed price per
wafer. The agreement was amended in June 1999 to revise the wafer delivery
requirement. In October 2000, the Company entered into a short-term foundry
agreement with TRW to purchase Indium Phosphide development wafers for a fixed
price per wafer. This agreement was amended in November 2000 and December 2000
to revise the number of development wafers to be purchased. The Company also
has a development agreement with TRW for Gallium Arsenide development materials
which was entered into in June 1995 and which has been amended several times
primarily to extend the term of the agreement and revise hourly time and
material labor rates.
Transactions with IBM. During May 2000, the Company entered into a series
of agreements with IBM. The Company's semiconductor development agreement with
IBM provides the Company with certain models and design kits for use in the
fabrication process to develop new integrated circuits. The Company provides
IBM with prototype designs, and IBM fabricates mask sets corresponding to the
Company's designs, schedules wafers starts and processes the wafers. In
exchange for IBM's development efforts and access to their fabrication process,
we make certain fixed payments to IBM. Under the Company's joint development
agreement with IBM, pursuant to which the Company licensed to IBM and IBM
licensed to the Company, certain technology, the Company and IBM jointly
develop integrated circuits. The Company and IBM are both permitted to sell the
jointly created products to third parties, subject to a fixed royalty fee
payable to the other party. In addition, during July 2001, the Company entered
into a volume purchase agreement with IBM pursuant to which IBM will provide
the Company with SiGe wafers for a fixed price per wafer. There are no minimum
purchase requirements under this agreement that expires in May 2005.
Investment in ASIP. In January 2001, the Company exercised its option to
purchase 833,333 shares of the Series B Convertible Preferred Stock of ASIP,
Inc. at an aggregate purchase price of $1,666,666 pursuant to the Series A
Convertible Preferred Stock Purchase and Option Agreement, dated as of July 17,
2000, between ASIP and the Company. The Company previously purchased 1,666,667
shares of ASIP's Series A preferred stock at an aggregate purchase price of
$833,334 pursuant to that same agreement.
In May 2001, the Company entered into a development and license agreement
with ASIP, pursuant to which ASIP will design, develop and prototype certain
optical components, and the Company will reimburse ASIP a maximum of $2,500,000
of its development expenses and consign up to $3,500,000 of equipment to ASIP,
which ASIP will later have the option to purchase at its then-depreciated
value. The agreement also provides that we will enter into a supply agreement
with ASIP upon ASIP's successful completion and delivery of the component
prototypes. During 2001, the Company paid research and development expenses of
$628,623 to ASIP under this agreement.
Dr. Stephen Forrest, one of the Company's directors, is a founder and
director of ASIP. Additionally, Dr. Richard Nottenburg, the Company's
Co-Chairman, President and Chief Executive Officer, and G. Bradford Jones and
John Walecka, two of the Company's directors, are each directors of ASIP.
Additionally, Messrs. Jones and Walecka are founding partners of entities
affiliated with Redpoint Ventures, another investor in the ASIP's Series A and
Series B stock purchase and option transactions.
Investment in IPAG. In July 2001, the Company entered into an investment
agreement with the shareholders of Innovative Processing AG ("IPAG"), an
optical components company located in Germany, pursuant to which the Company
purchased 26,230 shares, or approximately 18%, of IPAG's ordinary shares for an
aggregate purchase price of $343,247. In September 2001, the Company entered
into a development and license agreement with IPAG, pursuant to which IPAG will
design, develop and prototype certain optical
19
components, and the Company will reimburse IPAG a maximum of $770,000 of its
development expenses and consign up to approximately $500,000 of equipment to
IPAG, which IPAG will later have the option to purchase at its then-depreciated
value. The agreement also provides that the Company will enter into a supply
agreement with IPAG upon IPAG's successful completion and delivery of the
component prototypes. During 2001, the Company paid research and development
expenses of $570,860 to IPAG and expended less than $100,000 for capital items
under this agreement.
Dr. Albers, the Company's Executive Vice President and Co-Chairman, is a
member of the Board of Supervisors of IPAG, and, in connection with his service
on that board, Dr. Albers owns 2,500 of IPAG's ordinary shares. In addition,
Dr. Albers owns a 12.5% interest in and acts as a managing partner of AGITE!
S.p.A. ("AGITE!"), an investment fund that has also invested in IPAG. AGITE!
purchased 24,770 shares of IPAG's ordinary shares at the same price per share
as the Company.
Officer Loans. In January 2002, the Company entered into a full-recourse
promissory note with Dr. Albers, the Company's Executive Vice President and
Co-Chairman, to assist Dr. Albers with the purchase of a new home upon his
transfer from the Company's European headquarters in Germany to its California
facility. The note is for $483,231, bears interest at 5.5% per annum and is due
in January 2007 (including all accrued and unpaid interest). The note is
secured by a portion of Dr. Albers' Class B common stock pursuant to a pledge
agreement between the Company and Dr. Albers and is payable upon the earlier of
the stated due date or 30 days after Dr. Albers' employment with the Company
ceases.
Indemnification Agreements with Directors and Officers. In addition to the
indemnification provisions contained in the Company's Amended and Restated
Articles of Incorporation and Bylaws, the Company has entered into separate
indemnification agreements with each of its directors and officers. These
agreements require the Company, among other things, to indemnify each such
director or officer against expenses (including attorneys' fees), judgments,
fines and settlements (collectively, "Liabilities") paid by such individual in
connection with any action, suit or proceeding arising out of such individual's
status or service as a director or officer of the Company (other than
Liabilities arising from willful misconduct or conduct that is knowingly
fraudulent or deliberately dishonest) and to advance expenses incurred by such
individual in connection with any proceeding against such individual with
respect to which such individual may be entitled to indemnification by the
Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Class A common
stock to file with the SEC initial reports of ownership and reports of changes
in ownership of Class A common stock of the Company. The Company believes that,
based on the written representations of its directors and officers, and the
copies of reports filed with the SEC during the fiscal year ended December 31,
2001, its directors, officers and holders of more than 10% of the Company's
Class A common stock complied with the requirements of Section 16(a), except
for the late filing of a Form 3 by James Schneider in connection with his
election to the Company's Board of Directors and the late filing of a Form 3
and a Form 5 by Joseph Cole in connection with his appointment as an executive
officer of the Company.
Annual Report to Shareholders
A copy of the Annual Report to Shareholders of the Company for the 2001
Fiscal Year has been mailed concurrently with this Proxy Statement to all
shareholders entitled to notice of and to vote at the Annual Meeting. The
Annual Report is not incorporated into this Proxy Statement and is not
considered proxy solicitation material.
20
Form 10-K
On March 22, 2002 the Company filed with the SEC an Annual Report on Form
10-K for the 2001 Fiscal Year. Shareholders may obtain a copy of the Form 10-K
and any of the Company's other SEC reports, free of charge, by writing to
Investor Relations, Multilink Technology Corporation, 300 Atrium Drive, 2nd
Floor, Somerset, New Jersey 08873.
By Order of the Board of Directors,
/s/ Eric Pillmore
Eric M. Pillmore
Senior Vice President of
Finance,
Chief Financial Officer and
Secretary
Somerset, New Jersey
April 29, 2002
21
Appendix A--Audit Committee Charter
CHARTER OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS OF MULTILINK TECHNOLOGY CORPORATION
COMMITTEE The Board of Directors (the "Board") of Multilink
Technology Corporation (the "Corporation") has
established a standing committee to be known as
the Audit Committee (the "Committee").
OBJECTIVES The purpose of the Committee is to oversee the
Corporation's auditing, accounting and control
functions, including primary responsibility for
the financial reporting process of the
Corporation.
SCOPE OF ACTIVITIES To the full extent permitted by applicable law,
the Committee shall exercise the following powers
and duties:
(a) Recommend to the Board the firm of
independent auditors to be selected to audit
the Corporation financial statements;
(b) Meet with the Corporation's independent
auditors at least annually and review the
scope of the annual audit (inclusions and
exclusions), any open questions as to the
choice of acceptable accounting principles to
be applied and all other matters relating to
the auditors' relationship with the
Corporation;
(c) Advise the Board as to the auditors'
performance, including the scope and adequacy
of the auditors' review;
(d) Recommend, where appropriate, the removal or
replacement of the independent auditors;
(e) Review the Corporation's annual financial
statements, including the footnotes, and
discuss such statements with the auditors
prior to release of the Corporation's annual
report;
(f) Receive and consider the auditors' comments
and suggestions as to internal audit and
control procedures, adequacy of staff, and
other matters;
(g) Receive and review periodic reports of the
Corporation's internal audit staff; meet with
internal audit staff to review and approve
the internal audit staff to review and
approve the internal audit programs; review
the executive management's responses to
internal audit staff reports; review the
adequacy of the Corporation's internal audit
staff and report thereon to the Board;
(h) Approve non-audit services to be rendered to
the Corporation by the independent auditors,
if any, after considering the effect on audit
independence;
A-1
(i) Meet with the request and obtain reports and
information from such company officers,
employees, suppliers and others as the Audit
Committee shall determine to be necessary in
carrying out their duties as set forth above;
(j) Take, or recommend that the full board take,
appropriate action to oversee the
independence of the outside auditors;
(k) Receive and review periodic written
statements from the independent auditors
delineating all relationships between the
auditors and the company; and
(l) Engage in an active dialogue with the
auditors with respect to any disclosed
relationships or services that may impact the
objectivity and independence of the auditors.
COMPOSITION To the full extent permitted by applicable law,
the Committee's composition shall meet the
following requirements:
(a) The Committee is to be composed of such
number of Corporation directors as may be
appointed by the Board, but in no event less
than three (3).
(b) No Committee member shall be a full time
employee of the Corporation. All of the
Directors on the Committee shall be outside
directors who are independent of Corporation
management and are in a better position to
provide the independent point of view crucial
to this Committee's effectiveness.
(c) One of the members so appointed will be
designated by the Board as the Chairperson of
the Committee.
(d) One member of the Committee must have past
employment experience in finance or
accounting, requisite professional
certification in accounting, or any other
comparable experience or background which
results in the individual's financial
sophistication, including being or having
been a chief executive officer, chief
financial officer or other senior officer
with financial oversight responsibilities.
TERM The Board shall appoint the members of the
Committee to serve until their successors have
been duly designated. Members of the Committee
may be removed by the Board for any reason and at
any time.
VACANCIES Vacancies on the Committee shall be filled by
vote of the Board during its first meeting
following the occurrence of such vacancy.
MEETINGS The Committee shall hold regular meetings on such
days as it shall determine. Other meetings of the
Committee will be held at the request of the
Chairperson of the Committee or any two other
Committee members. Minutes shall be regularly
kept of the Committee proceedings, by a person
appointed by the Committee to do so.
A-2
AGENDA Prior to each regularly scheduled meeting, the
Committee will receive a prepared agenda for the
meeting. Other topics for discussion may be
introduced at the meeting at the request of any
Committee member.
ATTENDANCE Such corporate officers and other employees of
the Corporation, as the Committee may regularly
or from time-to-time designate, shall attend the
meetings.
OUTSIDE ASSISTANCE Subject to the prior approval of the Board, the
Committee is authorized to engage or employ such
outside professional or other services as in its
discretion may be required to fulfill its
responsibilities.
PROCEDURE The Committee may adopt rules for its meetings
and activities. In the absence of any such rules,
Committee actions shall be governed by the
Corporation's Bylaws and applicable law. In all
cases, a quorum of the Committee shall be a
majority of the persons then serving as members
of the Committee.
A-3
PROXY PROXY
MULTILINK TECHNOLOGY CORPORATION
CLASS A COMMON STOCK
Annual Meeting of Shareholders, May 30, 2002
This Proxy is Solicited on Behalf of the Board of Directors of
Multilink Technology Corporation
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Shareholders to be held May 30, 2002 and the
Proxy Statement, and appoints Richard N. Nottenburg and Eric M. Pillmore, and
each of them, the Proxy of the undersigned, with full power of substitution, to
vote all shares of Class A common stock of Multilink Technology Corporation (the
"Company") which the undersigned is entitled to vote, either on his or her own
behalf or on behalf of any entity or entities, at the Annual Meeting of
Shareholders of the Company to be held at the Holiday Inn-Somerset, located at
195 Davidson Avenue, Somerset, New Jersey 08873, on May 30, 2002 at 10:00 a.m.
Eastern Time and at any adjournment(s) or postponement(s) thereof, with the same
force and effect as the undersigned might or could do if personally present
thereat. The shares represented by this Proxy shall be voted in the manner set
forth on the reverse side.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
MULTILINK TECHNOLOGY CORPORATION
May 30, 2002
. Please Detach and Mail in the Envelope Provided .
- ------------------------------------------------------------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
WITHHOLD
AUTHORITY
FOR ALL FOR ALL
NOMINEES* NOMINEES* FOR AGAINST ABSTAIN
1. To elect seven [_] [_] Nominees: 2. To ratify the appointment [_] [_] [_]
directors to serve Richard N. Nottenburg, Ph.D. of Deloitte & Touche LLP
until the next Annual Meeting of Jens Albers, Ph.D. as the independent auditors
Shareholders or until their successors are Stephen R. Forrest, Ph.D. of the Company for the
duly elected and qualified: G. Bradford Jones fiscal year ending
James M. Schneider December 31, 2002.
*Instructions: To withhold a vote for an John L. Walecka
individual nominee, write the name of such Edward J. Zander 3. In accordance with the discretion of the proxy
nominee in the space provided below. Your holders, to act upon all matters incident to
shares will be voted for the remaining nominees. the conduct of the meeting and upon other
matters as may properly come before the
- --------------------------------------------------- meeting.
The Board of Directors recommends a vote IN
FAVOR OF the directors listed above and a vote
IN FAVOR OF each of the listed proposals. This
proxy, when properly executed, will be voted as
specified above. If no specification is made,
this proxy will be voted in favor of the
election of the directors listed above and in
favor of the other proposals.
Please print the name(s) appearing on each share
certificate(s) over which you have voting
authority:
_____________________________________
(Print name(s) on certificate)
This Proxy must be signed and dated to be valid.
Please sign your name(s) (Authorized Signature(s)) ____________________________________________ __________________ Dated:
_____________, 2002
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT OWNERS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY AUTHORIZED OFFICER, GIVING FULL TITLE. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON, GIVING FULL TITLE.
- ------------------------------------------------------------------------------------------------------------------------------------
PROXY PROXY
MULTILINK TECHNOLOGY CORPORATION
CLASS B COMMON STOCK
Annual Meeting of Shareholders, May 30, 2002
This Proxy is Solicited on Behalf of the Board of Directors of
Multilink Technology Corporation
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Shareholders to be held May 30, 2002 and the
Proxy Statement, and appoints Richard N. Nottenburg and Eric M. Pillmore, and
each of them, the Proxy of the undersigned, with full power of substitution, to
vote all shares of Class B common stock of Multilink Technology Corporation (the
"Company") which the undersigned is entitled to vote, either on his or her own
behalf or on behalf of any entity or entities, at the Annual Meeting of
Shareholders of the Company to be held at the Holiday Inn-Somerset, located at
195 Davidson Avenue, Somerset, New Jersey 08873, on May 30, 2002 at 10:00 a.m.
Eastern Time and at any adjournment(s) or postponement(s) thereof, with the same
force and effect as the undersigned might or could do if personally present
thereat. The shares represented by this Proxy shall be voted in the manner set
forth below.
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
MULTILINK TECHNOLOGY CORPORATION
May 30, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
WITHHOLD
AUTHORITY
FOR ALL FOR ALL
NOMINEES* NOMINEES* FOR AGAINST ABSTAIN
1. To elect seven [_] [_] Nominees: 2. To ratify the appointment [_] [_] [_]
directors to serve Richard N. Nottenburg, Ph.D. of Deloitte & Touche LLP
until the next Annual Meeting of Jens Albers, Ph.D. as the independent auditors
Shareholders or until their successors are Stephen R. Forrest, Ph.D. of the Company for the
duly elected and qualified: G. Bradford Jones fiscal year ending
James M. Schneider December 31, 2002.
*Instructions: To withhold a vote for an John L. Walecka
individual nominee, write the name of such Edward J. Zander 3. In accordance with the discretion of the proxy
nominee in the space provided below. Your holders, to act upon all matters incident to
shares will be voted for the remaining nominees. the conduct of the meeting and upon other
matters as may properly come before the
- --------------------------------------------------- meeting.
The Board of Directors recommends a vote IN
FAVOR OF the directors listed above and a vote
IN FAVOR OF each of the listed proposals. This
proxy, when properly executed, will be voted as
specified above. If no specification is made,
this proxy will be voted in favor of the
election of the directors listed above and in
favor of the other proposals.
Please print the name(s) appearing on each share
certificate(s) over which you have voting
authority:
_____________________________________
(Print name(s) on certificate)
This Proxy must be signed and dated to be valid.
Please sign your name(s) (Authorized Signature(s)) ____________________________________________ __________________ Dated:
_____________, 2002
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT OWNERS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY AUTHORIZED OFFICER, GIVING FULL TITLE. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON, GIVING FULL TITLE.
- ------------------------------------------------------------------------------------------------------------------------------------