SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities 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 by the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EZENIA! INC.
------------
(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 Rule 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction
applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
[EZENIA LOGO]
April 18, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders of Ezenia! Inc., which will be held at the offices of the Company,
Northwest Park, 63 Third Avenue, Burlington, Massachusetts 01803, on Wednesday,
May 30, 2001 at 10:00 a.m., EST.
The Notice of Annual Meeting of Shareholders and a Proxy Statement,
which describe the formal business to be conducted at the meeting, accompany
this letter. The Company's Annual Report to Shareholders is also enclosed for
your information.
All shareholders are invited to attend the Annual Meeting. To ensure
your representation at the Annual Meeting, however, you are urged to vote by
proxy by following one of these steps as promptly as possible:
(A) Complete, date, sign and return the enclosed Proxy Card (a
postage-prepaid envelope is enclosed for that purpose); or
(B) Vote via the Internet (see instructions on the enclosed Proxy
Card); or
(C) Vote via telephone (toll free) in the United States or Canada
(see instructions on the enclosed Proxy Card).
The Internet and telephone voting procedures are designed to
authenticate shareholders' identities, to allow shareholders to vote their
shares and to confirm that their instructions have been properly recorded.
Specific instructions to be followed by any registered shareholder interested in
voting via the Internet or telephone are set forth in the Proxy Card. YOUR
SHARES CANNOT BE VOTED UNLESS YOU DATE, SIGN, AND RETURN THE ENCLOSED PROXY
CARD, VOTE VIA THE INTERNET OR TELEPHONE OR ATTEND THE ANNUAL MEETING IN PERSON.
Regardless of the number of shares you own, your careful consideration of, and
vote on, the matters before the shareholders is important.
Very truly yours,
Khoa D. Nguyen
Chairman and
Chief Executive Officer
EZENIA! INC.
NORTHWEST PARK
63 THIRD AVENUE
BURLINGTON, MASSACHUSETTS 01803
---------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
---------------------
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Meeting") of Ezenia! Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, May 30, 2001 at
10:00 a.m., EST, at the offices of the Company, Northwest Park, 63 Third Avenue,
Burlington, Massachusetts 01803. The purposes of the Meeting shall be:
1. To elect two Class III directors to hold office for a three-year
term and until their respective successors have been duly elected
and qualified.
2. To approve an amendment to the Company's 1995 Employee Stock
Purchase Plan, increasing the number of shares issuable thereunder
from 600,000 shares to 900,000 shares.
3. To ratify the appointment of the firm of Ernst & Young LLP, as
independent auditors for the Company for the fiscal year ending
December 31, 2001.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record on the books of the Company at the close of
business on April 4, 2001 will be entitled to notice of and to vote at the
Meeting.
Please sign, date, and return the enclosed Proxy Card in the enclosed
envelope, or vote via telephone or the Internet (pursuant to the instructions on
the enclosed Proxy Card) at your earliest convenience. If you return the proxy
or vote via telephone or the Internet, you may nevertheless attend the Meeting
and vote your shares in person.
All shareholders of the Company are cordially invited to attend the
Meeting.
By Order of the Board of Directors
Stephen G. Bassett
Secretary
Burlington, Massachusetts
April 18, 2001
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE (I) SIGN, DATE, AND MAIL THE ENCLOSED
PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED FROM
WITHIN THE UNITED STATES OR (II) OTHERWISE VOTE YOUR SHARES BY TELEPHONE OR THE
INTERNET.
- --------------------------------------------------------------------------------
EZENIA! INC.
NORTHWEST PARK
63 THIRD AVENUE
BURLINGTON, MASSACHUSETTS 01803
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 30, 2001
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Ezenia! Inc. (the "Company") of proxies for use at
the Annual Meeting of Shareholders (the "Meeting") to be held on Wednesday, May
30, 2001 at 10:00 a.m., EST, at the offices of the Company, Northwest Park, 63
Third Avenue, Burlington, Massachusetts 01803, and any adjournments thereof.
Registered shareholders can vote their shares (1) by mailing their
signed Proxy Card, (2) via a toll-free telephone call from the U.S. or Canada or
(3) via the Internet. The telephone and Internet voting procedures are designed
to authenticate shareholders' identities, to allow shareholders to vote their
shares and to confirm that their instructions have been properly recorded. The
Company believes that the procedures that have been put in place are consistent
with the requirements of applicable law. Specific instructions to be followed by
any registered shareholder interested in voting via telephone or the Internet
are set forth on the enclosed Proxy Card.
Shares represented by duly executed proxies received by the Company
prior to the Meeting will be voted as instructed in the proxy on each matter
submitted to the vote of shareholders. If any duly-executed proxy is returned
without voting instructions with respect to one or more proposals, the persons
named as proxies thereon intend to vote all shares represented by such proxy FOR
each such proposal and at their discretion with respect to any other proposals
that may properly come before the Meeting. The persons named as proxies are
employees of the Company.
Any shareholder may revoke a proxy at any time prior to its exercise by
delivering a later-dated proxy, by making an authorized telephone or Internet
communication on a later date in accordance with the instructions on the
enclosed Proxy Card, by written notice of revocation to the Secretary of the
Company at the address of the Company set forth above, or by voting in person at
the Meeting. If a shareholder does not intend to attend the Meeting, any written
proxy or notice should be returned for receipt by the Company, and any
telephonic or Internet vote should be made, not later than the close of business
on May 29, 2001. The Company will bear the cost of solicitation of proxies
relating to the Meeting.
Only shareholders of record as of the close of business on April 4,
2001 (the "Record Date") will be entitled to notice of and to vote at the
Meeting and any adjournments thereof. As of the Record Date there were
13,791,880 shares (excluding treasury shares) of the Company's Common Stock,
$.01 par value (the "Common Stock"), issued and outstanding. Such shares of
Common Stock are the only voting securities of the Company. Shareholders are
entitled to cast one vote for each share of Common Stock held of record on the
Record Date.
An Annual Report to Shareholders, containing financial statements for
the fiscal year ended December 31, 2000, accompanies this Proxy Statement. The
mailing address of the Company's principal executive offices is Northwest Park,
63 Third Avenue, Burlington, Massachusetts 01803.
This Proxy Statement and the proxy enclosed herewith were first mailed
to shareholders on or about April 18, 2001.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 1, 2001 by (i) each person
who is known by the Company to own beneficially more than five percent of the
Company's Common Stock, (ii) each member of the Company's Board of Directors
(the "Board of Directors"), (iii) each of the Named Executive Officers (as
defined under "Summary Compensation" below) and (iv) all directors and executive
officers as a group.
DIRECTORS, OFFICERS AND 5% SHAREHOLDERS SHARES BENEFICIALLY OWNED
--------------------------------------- -------------------------
NUMBER PERCENT
------ -------
State of Wisconsin Investment Board (1) 2,563,000 18.57%
121 East Wilson Street
Madison, Wisconsin 53707
Wellington Management Company, LLP (2) 1,248,000 9.04%
75 State Street
Boston, Massachusetts 02109
Khoa D. Nguyen (3) 490,061 3.42%
William E. Foster (4) 69,650 *
John F. Keane, Jr. (5) 22,450 *
John A. McMullen (6) 12,450 *
Roy G. Perry (7) 18,450 *
Stephen G. Bassett (8) 45,031 *
Steven M. Chomicz (9) 26,094 *
Arthur J. Souza (10) 21,876 *
Edward C. Wade (11) 117,429 *
All executive officers and directors as a group
(9 persons)(12) 823,491 5.66%
- -----------------
* Less than 1%
(1) Based on information contained in Schedule 13G/A filed by the State of
Wisconsin Investment Board on February 9, 2001.
(2) Based on information contained in Schedule 13G/A filed by Wellington
Management Company, LLP on February 13, 2001.
(3) Includes 424,877 shares that Mr. Nguyen has the right to acquire within 60
days of March 1, 2001 by the exercise of stock options.
(4) Includes 56,650 shares that Mr. Foster has the right to acquire within 60
days of March 1, 2001 by the exercise of stock options.
(5) Includes 12,450 shares that Mr. Keane has the right to acquire within 60
days of March 1, 2001 by the exercise of stock options.
(6) Represents shares that Mr. McMullen has the right to acquire within 60 days
of March 1, 2001 by the exercise of stock options.
(7) Includes 12,450 shares that Mr. Perry has the right to acquire within 60
days of March 1, 2001 by the exercise of stock options.
(8) Includes 42,031 shares that Mr. Bassett has the right to acquire within 60
days of March 1, 2001 by the exercise of stock options.
(9) Represents shares that Mr. Chomicz has the right to acquire within 60 days
of March 1, 2001 by the exercise of stock options.
(10) Represents shares that Mr. Souza has the right to acquire within 60 days of
March 1, 2001 by the exercise of stock options.
(11) Includes 43,063 shares that Mr. Wade has the right to acquire within 60
days of March 1, 2001 by the exercise of stock options.
(12) Includes 651,941 shares that directors and executive officers of the
Company have the right to acquire within 60 days of March 1, 2001 by the
exercise of stock options.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation in each of the last three fiscal years for the Company's
Chief Executive Officer and the next four most highly compensated executive
officers (the "Named Executive Officers").
ANNUAL COMPENSATION
------------------------------------------ LONG TERM
OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- --------------- ---------- ---------------
KHOA D. NGUYEN 2000 240,000 132,000 -- 250,000 1,497 (1)
President and 1999 200,000 120,000 -- 235,500 2,400 (1)
Chief Executive Officer 1998 200,000 120,000 -- 150,000 --
STEPHEN G. BASSETT 2000 175,000 91,000 (3) -- 150,000 (4) --
Chief Financial Officer, 1999 (2) 34,469 -- -- -- --
Treasurer and Secretary
STEVEN M. CHOMICZ 2000 (5) 172,296 (6) 10,000 (7) -- 110,000 (8) 547 (1)
Vice President of
Worldwide Sales
ARTHUR J. SOUZA 2000 139,961 25,200 -- 69,500 2,279 (1)
Vice President of Marketing 1999 (9) 114,615 5,000 -- 10,500 2,279 (1)
and Business Development
EDWARD C. WADE 2000 140,000 22,500 -- 40,000 2,485 (1)
Vice President of 1999 139,974 30,000 -- 18,000 2,400 (1)
Manufacturing 1998 130,000 19,600 -- 7,500 2,244 (1)
- -----------
(1) Represents the dollar amount of the Company's matching contribution under
the Company's 401(k) Plan.
(2) Mr. Bassett joined the Company in November 1999.
(3) Includes a $15,000 signing bonus.
(4) Includes 100,000 options granted upon the commencement of employment as
Chief Financial Officer.
(5) Mr. Chomicz commenced employment with the Company in March 2000.
(6) Consists of $123,365 in base salary and $48,931 in commissions.
(7) Represents amount paid as a signing bonus.
(8) Includes 80,000 options granted upon the commencement of employment.
(9) Mr. Souza commenced employment with the Company in January 1999 and in July
2000 Mr. Souza became an executive officer of the Company.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual stock
option grants made to each of the Named Executive Officers during fiscal 2000.
INDIVIDUAL GRANTS
----------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
OPTIONS TOTAL OPTIONS STOCK PRICE APPRECIATION
GRANTED GRANTED TO EXERCISE FOR OPTION TERM (1)
-------- EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME DATE (#) FISCAL YEAR ($/SH) (2) DATE 5% 10%
---- ---- --- ------------- ---------- ---- -- ---
Khoa D. Nguyen 2/00 250,000 10.3601% 9.125 2/10 1,434,666 3,635,725
Stephen G. Bassett 1/00 100,000 6.2161% 7.75 1/10 487,393 1,235,150
7/00 50,000 4.00 7/10 125,779 318,748
Steven M. Chomicz 3/00 80,000 4.5584% 10.25 3/10 515,694 1,306,869
7/00 30,000 4.00 7/10 75,467 191,249
Arthur J. Souza 2/00 29,500 2.8801% 6.75 2/10 125,229 317,354
7/00 40,000 4.00 7/10 100,623 254,999
Edward C. Wade 2/00 40,000 1.6576% 6.75 2/10 169,802 430,310
- -----------
(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on the Securities and Exchange Commission rules. Actual gains,
if any, on stock option exercises are dependent on the future performance
of the Common Stock, the timing of such exercises and the option holder's
continued employment through the vesting period. The amounts reflected in
this table may not accurately reflect or predict the actual value of the
stock options.
(2) All options were granted at fair market value as determined by the Board of
Directors of the Company on the date of the grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning each exercise of
stock options by each of the Named Executive Officers during fiscal 2000 and the
value of unexercised "in-the-money" options at the end of that fiscal year.
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END(1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE (#) EXERCISABLE/UNEXERCISABLE ($)
---- ------------ ------------ ----------------------------- ---------------------------------
Khoa D. Nguyen -- -- 371,094 / 489,406 0 / 0
Stephen G. Bassett -- -- 0 / 150,000 0 / 0
Steven M. Chomicz -- -- 0 / 110,000 0 / 0
Arthur J. Souza -- -- 11,687 / 68,313 0 / 0
Edward C. Wade -- -- 34,062 / 56,438 0 / 0
- -----------
(1) Based on the closing price on the Nasdaq National Market System for a share
of Common Stock on December 29, 2000 of $1.125.
OTHER BENEFIT PLANS
The Company currently provides certain benefits to its eligible
employees (including its executive officers) through the benefit plans described
below:
1991 STOCK INCENTIVE PLAN. The Company maintained an Amended and
Restated 1991 Stock Incentive Plan (the "1991 Stock Incentive Plan") to attract
and retain the best available personnel for positions of substantial
responsibility and to provide additional incentives to certain employees,
officers and consultants to contribute to the success of the Company. By its
terms, the 1991 Stock Incentive Plan terminated in March 2001. No additional
awards may be granted under the 1991 Stock Incentive Plan, but outstanding
awards will continue to remain in effect in accordance with their terms.
1995 EMPLOYEE STOCK PURCHASE PLAN. The Company maintains a 1995
Employee Stock Purchase Plan (the "ESPP") to provide incentive to employees and
to encourage ownership of Common Stock by all eligible employees of the Company
and its subsidiaries. Employees of the Company may participate in the ESPP by
authorizing payroll deductions generally over a six month period, with the
proceeds being used to purchase shares of Common Stock for the participant at a
discounted price. The ESPP is intended to be an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code. The ESPP is discussed in greater
depth under the heading "Proposal No. 2" in this Proxy Statement.
2001 STOCK INCENTIVE PLAN. The Board of Directors has approved and
adopted a 2001 Stock Incentive Plan (the "2001 Stock Incentive Plan"). The
primary purpose of the 2001 Stock Incentive Plan is to enable the Company to
continue issuing shares of the Company's Common Stock to existing personnel and
to attract and retain qualified employees, officers, directors, advisors and
consultants through grants of stock options, restricted stock awards or stock
grants. The Company's officers and directors represent less than a majority of
the participants in the 2001 Stock Incentive Plan and may not receive a majority
of the grants thereunder.
SAVINGS PLAN. The Company sponsors a savings plan for its employees
which has been qualified under Section 401(k) of the Internal Revenue Code.
Eligible employees are permitted to contribute to the 401(k) plan through
payroll deductions within statutory and plan limits. Contributions from the
Company are made at the discretion of the Board of Directors. Beginning in 1997,
the Board of Directors authorized the Company to match a portion of its
employees' contributions to the plan, and in 1997, 1998, 1999 and 2000 the
Company made a matching contribution of 30% of employee contributions to the
extent employee contributions equaled 5% or more of such employee's gross
compensation. The Company maintains comparable plans under local laws and
regulations for its non-U.S. employees.
EMPLOYMENT AGREEMENTS
The Company has entered into an agreement with Mr. Nguyen that provides
for certain benefits in the event of a termination of his employment without
cause and upon the occurrence of certain events. Under the agreement, in the
event the Company elects to terminate Mr. Nguyen's employment or to diminish his
status, other than for cause, Mr. Nguyen shall be entitled to receive, (i) for a
period of twelve months a salary equal to the highest annualized salary rate in
effect for him within the previous twelve months and (ii) his then-current
targeted annual incentive bonus. The agreement also provides for certain
benefits in the event of a change in control. In the event of a change in
control, the outstanding options held by Mr. Nguyen under the Company's option
plans shall become exercisable in full. The agreement further provides that if
Mr. Nguyen is terminated or his status is diminished (other than for cause)
within twenty four months after a change in control, Mr. Nguyen is entitled to
an immediate payment of two times his base compensation for the fiscal year
immediately preceding the termination or change, plus two times his targeted
annual bonus for the fiscal year then in effect.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Compensation Committee").
The Compensation Committee is composed of William E. Foster and John A.
McMullen, two independent directors who were appointed to the Compensation
Committee in February 2000. The Compensation Committee establishes and
administers the Company's executive compensation policies and plans and
administers the Company's stock option and other equity-related employee
compensation plans. The Compensation Committee considers internal and external
information in determining officers' compensation, including outside survey
data.
COMPENSATION PHILOSOPHY
The Company's compensation policies for executive officers are based on
the belief that the interests of executives should be closely aligned with those
of the Company's shareholders. The compensation policies are designed to achieve
the following objectives:
o Offer compensation opportunities that attract highly qualified
executives, reward outstanding initiative and achievement, and
retain the leadership and skills necessary to build long-term
shareholder value.
o Maintain a significant portion of executives' total compensation
at risk, tied to both the annual and long-term financial
performance of the Company and the creation of shareholder value.
o Further the Company's short and long-term strategic goals and
values by aligning compensation with business objectives and
individual performance.
COMPENSATION PROGRAM
The Company's executive compensation program has three major integrated
components, base salary, annual incentive awards, and long-term incentives.
BASE SALARY. Base salary levels for executive officers are determined
annually by reviewing the competitive pay practices of networking companies of
similar size and market capitalization, the skills, performance level, and
contribution to the business of individual executives, and the needs of the
Company. Overall, the Compensation Committee believes that base salaries for
executive officers are approximately competitive with median base salary levels
for similar positions in these networking companies.
INCENTIVE AWARDS. The Company's executive officers are eligible to
receive cash bonus awards designed to motivate executives to attain short-term
and longer-term corporate and individual management goals. The Compensation
Committee establishes quarterly and annual incentive opportunities for each
executive officer in relation to his or her base salary. Awards under this
program are based on the attainment of specific Company performance measures
established by the Compensation Committee early in the fiscal year, and by the
achievement of specified individual objectives and the degree to which each
executive officer contributes to the overall success of the Company and the
management team. In 2000, the formula for these bonuses was based on a
combination of individual objectives and Company revenue and profitability
objectives. The Company's performance generally met the objectives set by the
Compensation Committee in 2000.
LONG-TERM INCENTIVES. The Compensation Committee believes that stock
options are an excellent vehicle for compensating its officers and employees.
The Company has provided long-term incentives through its Amended and Restated
1991 Stock Incentive Plan and plans to do so in the future through the 2001
Stock Incentive Plan. The purpose of long-term incentive stock options is to
create a direct link between executive compensation and increases in shareholder
value. The 1991 Stock Incentive Plan terminated in March 2001. No additional
awards may be granted under the 1991 Stock Incentive Plan, but outstanding
awards will continue to remain in effect in accordance with their terms. Future
awards
will be granted under the 2001 Stock Incentive Plan. Stock options are generally
granted at fair market value and vest in installments, generally over four
years. When determining option awards for an executive officer, the Compensation
Committee considers the executive's current contribution to Company performance,
the anticipated contribution to meeting the Company's long-term strategic
performance goals, and industry practices and norms. Long-term incentives
granted in prior years and existing levels of stock ownership are also taken
into consideration. Because the receipt of value by an executive officer under a
stock option is dependent upon an increase in the price of the Company's Common
Stock, this portion of the executive's compensation is directly aligned with an
increase in shareholder value.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's base salary, annual incentive award and
long-term incentive compensation are determined by the Compensation Committee
based upon the same factors as those employed by the Compensation Committee for
executive officers generally. Mr. Nguyen's annualized base salary for the year
ended December 31, 2000 was $240,000. The Chief Executive Officer may also be
entitled to an annual cash bonus depending on the Company's achievement of
certain performance objectives, including certain growth milestones in sales and
earnings during a fiscal year, as compared to the preceding fiscal year. Any
such cash bonus will be computed on a formula basis established by the
Compensation Committee. For the year ended December 31, 2000, Mr. Nguyen was
paid a cash bonus of $132,000.
Section 162(m) of the Internal Revenue Code limits the tax deduction to
$1 million for compensation paid to certain executives of public companies.
Having considered the requirements of Section 162(m), the Compensation Committee
believes that grants made pursuant to the Company's Amended and Restated 1991
Stock Incentive Plan meet the requirement that such grants be "performance
based" and are, therefore, exempt from the limitations on deductibility.
Historically, the combined salary and bonus of each executive officer has been
well below the $1 million limit. The Compensation Committee's present intention
is to comply with Section 162(m) unless the Compensation Committee feels that
required changes would not be in the best interest of the Company or its
shareholders.
Respectfully Submitted by the Compensation Committee,
William E. Foster
John A. McMullen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed on February 1, 1995. No current
or former member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries.
COMPENSATION OF DIRECTORS
In April 1995, the Board of Directors and shareholders approved the
Amended and Restated 1994 Non-Employee Director Stock Option Plan (the "Director
Plan"). The Director Plan provides that each non-employee director of the
Company be granted an option to acquire 15,000 shares of common stock on the
date that person becomes a director, and annually be granted, beginning with the
January 1 falling at least 12 months after a Director's initial grant, an option
to purchase an additional 3,000 shares. Options are granted at a price equal to
the fair market value on the date of grant. The option becomes exercisable over
a four-year period, and the term of the option is ten years from the date of
grant.
In March 1999, the Board of Directors approved an amendment to the
Director Plan, authorizing and granting to each non-employee member of the Board
of Directors a one-time, 7,000 share stock option, at an exercise price equal to
the fair market value of the stock on the date of the grant. Additionally, the
Board of Directors approved an amendment to the Director Plan, effective as of
May 2000, pursuant to which Messrs. Keane, Perry and McMullen were each granted
an option to acquire 28,800 shares and Mr. Foster was granted an option to
acquire 57,600 shares at an exercise price equal to the fair market value on the
date of grant. Other than shares reserved for outstanding options, there are
currently no additional shares available for issuance under the Director Plan.
The Company pays each Director a fee of $2,000 per official meeting of
the Board of Directors attended by such Director. In addition, the Company pays
each Director a fee of $500 per official Committee meeting attended by such
Director.
SECTION 16(a) - BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers, directors, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities to file
reports of ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission and the Company. Based on the Company's review of copies of such
forms, each officer, director and 10% holder complied with his/her obligations
in a timely fashion with respect to transactions in securities of the Company
during the year ended December 31, 2000.
STOCK PERFORMANCE GRAPH
The following graph compares the change in the shareholder return on
the Company's Common Stock against the return for the Nasdaq Stock Market Index
and the Nasdaq Electronic Components Stock Index (SIC Code 367), as calculated
by the Center for Research in Security Prices by the University of Chicago
Graduate School of Business, for the period beginning December 29, 1995 and
ending December 31, 2000.
[TABULAR REPRESENTATION OF STOCK PERFORMANCE GRAPH]
Ezenia! Inc. NASDAQ Stock Market Index SIC Code 367
12/29/1995 $100 $100 $100
12/31/1996 $135 $123 $173
12/31/1997 $50 $151 $181
12/31/1998 $58 $212 $280
12/31/1999 $25 $384 $550
12/31/2000 $4 $238 $428
This graph assumes the investment of $100 in the Company's Common
Stock, the Nasdaq Index and the Nasdaq Electronic Components Stock Index as of
December 29, 1995 and assumes dividends were reinvested. Additional measurement
points are at the remaining month ends for the years ended December 31, 1996,
December 31, 1997, December 31, 1998, December 31, 1999 and December 31, 2000.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Each class serves
a three-year term. The term of the current Class III Directors will expire at
the Meeting. All directors will hold office until their successors have been
duly elected and qualified.
The Board of Directors has nominated Khoa D. Nguyen and John F. Keane,
Jr. for reelection as Class III Directors, each to hold office until the Annual
Meeting of Shareholders to be held in 2004 and until such person's respective
successor is duly elected and qualified. Shares represented by all proxies
received by the Board of Directors and not marked so as to withhold authority to
vote for Mr. Nguyen or Mr. Keane will be voted FOR the election of the nominees.
The nominees have indicated their willingness to serve, if elected; however, if
either Mr. Nguyen or Mr. Keane should be unable or unwilling to serve, the
proxies may be voted for the election of a substitute nominee designated by the
Board of Directors or for fixing the number of directors at a lesser number.
The following table sets forth for each nominee to be elected at the
Meeting and for each director whose term of office will extend beyond the
Meeting, his age, the position(s) currently held by each nominee or director
with the Company, the year such nominee or director was first elected a
director, the year each nominee's or director's term will expire and the class
of director of each nominee or director.
NOMINEE OR DIRECTOR'S NAME AGE POSITION(S) HELD DIRECTOR SINCE YEAR TERM CLASS OF
- -------------------------- --- ---------------- -------------- WILL EXPIRE DIRECTOR
----------- --------
John A. McMullen 59 Director 2000 2002 I
Roy G. Perry 44 Director 2000 2002 I
William E. Foster 56 Director 1994 2003 II
Khoa D. Nguyen 47 Chairman, President and Chief 1997 2001 III
Executive Officer
John F. Keane, Jr. 41 Director 2000 2001 III
WILLIAM E. FOSTER has been a Director of the Company since November
1994. Mr. Foster is a founder and was Chairman of the Board of Stratus Computer,
Inc., a manufacturer of continuously available computer platforms, from 1980 to
1998. He was Chief Executive Officer and President of Stratus Computer, Inc.
from 1980 to 1997. Mr. Foster currently serves as a director of Natural
Microsystems.
JOHN F. KEANE, JR. became a Director of the Company in February 2000.
Mr. Keane is a founder and, since July 2000, has been the Chief Executive
Officer of ArcStream Solutions, a wireless consulting and systems integration
firm. Previously, Mr. Keane had been employed by Keane, Inc., a provider of
e-business, information technology, and consulting services and served as
President from November 1999 to July 2000, as Co-President from September 1997
to November 1999 and as a Senior Vice President and Area Manager from January
1995 to September 1997. Mr. Keane has been a director of Keane, Inc. since May
1998.
JOHN A. MCMULLEN joined the Board of Directors of the Company in
February 2000. Since 1984, Mr. McMullen has been the Managing Principal of
Cambridge Meridian Group Inc., a management consulting and business advisory
company. Mr. McMullen also serves as a Director of Cambridge Meridian Group Inc.
KHOA D. NGUYEN has been a Director of the Company since December 1997.
Mr. Nguyen was named President and Chief Executive Officer of the Company
effective April 9, 1998. Previously, he had been Executive Vice President and
Chief Operating Officer of the Company since September 1997. Prior to joining
the Company Mr. Nguyen had been employed at PictureTel Corporation, a
videoconferencing company, where he served as Vice President of Engineering from
January 1993 to February 1994, and as Chief Technology Officer and General
Manager of the Group Systems and Networking Products divisions from February
1994 to August 1996. From August 1991 to December 1992, he was Vice President of
Engineering at VTEL Corporation, a videoconferencing company. Previously, Mr.
Nguyen held various research and development positions at IBM Corporation.
ROY G. PERRY has been a Director of the Company since February 2000.
Mr. Perry is employed by Dell Computer Corporation and since February 2001 he
has served as Vice President, Worldwide Manufacturing. Mr. Perry previously
served Dell Computer Corporation as Vice President, HSB Operations and Nashville
Fulfillment Campus from August 1999 to February 2001 and as Vice President,
Dimensions and Portables Manufacturing from May 1997 to August 1999. From 1993
to May 1997, Mr. Perry had been employed at Allied Signal Corporation where he
served as Vice President of CAS Operations.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held a total of 7 meetings during the year ended
December 31, 2000. During that period the Audit Committee of the Board of
Directors held 3 meetings and the Compensation Committee of the Board of
Directors held 1 meeting. Each of the current directors attended at least
seventy-five percent (75%) of the meetings of the Board of Directors and
committees of the Board of Directors on which the director served during the
year.
The Compensation Committee consists of Messrs. Foster and McMullen. The
Compensation Committee determines the compensation of the Company's senior
management and administers the Company's stock option plans.
The Audit Committee consists of Messrs. Keane, McMullen and Perry. The
Audit Committee recommends engagement of the Company's independent auditors,
consults with the Company's auditors concerning the scope of the audit, reviews
the results of their examination, reviews and approves any material accounting
policy changes affecting the Company's operating results, and reviews the
Company's financial controls. The Audit Committee is governed by a written
charter, included as APPENDIX A hereto, which was adopted by the Board of
Directors on April 27, 2000. Each member of the Audit Committee is an
"independent director" as defined in the National Association of Securities
Dealers' listing standards.
The Board of Directors has no standing nominating committee.
AUDIT COMMITTEE REPORT
During the fiscal year ended December 31, 2000, the Audit Committee of
the Board of Directors consisted of Messrs. Keane, McMullen and Perry. The Audit
Committee reviewed and discussed the Company's audited financial statements with
management of the Company and the Company's independent auditors, Ernst & Young
LLP. The Audit Committee discussed with Ernst & Young LLP the matters required
to be discussed by the Statement of Auditing Standards No. 61. These discussions
included the scope of the independent auditor's responsibilities, significant
accounting adjustments, any disagreements with management and discussions of the
quality, not just the acceptability, of accounting principles, reasonableness of
significant judgments and the clarity of disclosures in the financial
statements.
In addition, the Audit Committee reviewed the written disclosures and
the letter from Ernst & Young LLP relating to the independence of such firm as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with Ernst & Young LLP that
firm's independence. The Audit Committee satisfied itself as to Ernst & Young
LLP's independence.
Based on the above referenced reviews and discussions, the Audit
Committee recommended that the Board of Directors include the audited financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000 for filing with the Securities Exchange Commission.
Respectfully Submitted by the Audit Committee,
John F. Keane, Jr.
John A. McMullen
Roy G. Perry
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS MADE BY THE COMPANY
UNDER THOSE STATUTES, IN WHOLE OR IN PART, THIS REPORT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS, NOR WILL THIS REPORT BE
INCORPORATED BY REFERENCE INTO ANY FUTURE FILINGS MADE BY THE COMPANY UNDER
THOSE STATUTES.
CERTAIN TRANSACTIONS
No transactions occurring between January 1, 2000 and the date hereof
are to be reported in this section, other than compensatory arrangements
discussed elsewhere in this Proxy Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S
1995 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved, subject to shareholder
ratification, an amendment to the Company's 1995 Employee Stock Purchase Plan
(the "ESPP") increasing the number of shares available for purchase thereunder
from 600,000 to 900,000 shares. The Board of Directors recommends approval of
the amendment because it believes that the availability of an employee stock
purchase plan is an important factor in the Company's ability to attract and
retain employees and provide an incentive to such employees to exert their best
efforts for the Company. Approval of the stockholders is sought to meet the
stockholder approval requirements of the ESPP and Rule 16(b)-3 of the Securities
and Exchange Act of 1934.
As of March 31, 2001, of the 600,000 shares authorized under the ESPP,
only 44,919 shares remained available for issuance under further offerings.
PURPOSE OF PLAN; ELIGIBILITY. The purpose of the ESPP is to provide
employees of the Company (of which there were 169 as of December 31, 2000) an
opportunity to participate in the growth and development of the Company through
the purchase of common stock.
ADMINISTRATION. The ESPP is administered by the Compensation Committee
of the Board of Directors. The plan is implemented by one or more offerings from
time to time and for such offering period(s) as determined by the Board of
Directors. The price at which common stock is purchased under the plan is the
lower of 85% of its fair market value at the commencement of an offering period
or 85% of its fair market value on the last day of the offering period.
Employees make purchases under the ESPP by authorizing the Company to withhold
from their pay an amount between 2% and 10% of the employee's annual rate of
compensation at the time the option is granted, not to exceed $25,000 in any one
year.
TRANSFERABILITY. Options granted under the ESPP may not be transferred
otherwise than by will or pursuant to applicable laws of descent and
distribution.
AMENDMENTS TO OPTIONS AND THE ESPP. The Board of Directors may amend or
modify the ESPP at any time subject to the rights of holders of outstanding
options on the date of amendment or modification, except stockholder approval is
required for any such amendment that would increase the maximum number of shares
purchasable thereunder or change the eligibility requirements of the ESPP.
TERMINATION. The ESPP will terminate on January 31, 2005.
SUMMARY OF TAX CONSEQUENCES. The ESPP is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Internal
Revenue Code. As such, no income is taxable to a participant until shares which
have been purchased are sold, and the federal tax treatment upon sale depends
upon whether the shares have been held for two years following the beginning of
the applicable offering period and one year from the date of purchase. If shares
are held for those periods, there is no compensation deduction for the Company.
SHARES PURCHASED UNDER THE ESPP. The following table sets forth the
number of shares purchased under the ESPP during the fiscal year ended December
31, 2000 by
o our chief executive officer and the Named Executive Officers
o all of our current executive officers as a group
o all employees of the Company, excluding executive officers, as a
group
1995 EMPLOYEE STOCK PURCHASE PLAN
NUMBER OF
NAME AND POSITION SHARES
----------------- ------
Khoa D. Nguyen 3,936
President and Chief Executive Officer
Stephen G. Bassett 0
Chief Financial Officer, Treasurer and Secretary
Steven M. Chomicz 0
Vice President of Worldwide Sales
Arthur J. Souza 0
Vice President of Marketing and Business Development
Edward C. Wade 3,833
Vice President of Manufacturing
Current Executive Officers as a Group (4 PERSONS) 7,769
All Employees of the Company, excluding Executive
Officers, as a Group 156,037
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO THE COMPANY'S 1995 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP,
certified public accountants, to serve as independent auditors for the fiscal
year ending December 31, 2001. Ernst & Young LLP has served as the Company's
independent auditors since 1993. It is expected that a member of the firm of
Ernst & Young LLP will be present at the Meeting and will be available to make a
statement and to respond to appropriate questions. If the shareholders do not
ratify the selection of Ernst & Young LLP, the Board of Directors may consider
selection of other independent certified public accountants to serve as
independent auditors, but no assurances can be made that the Board of Directors
will do so or that any other independent certified public accountants would be
willing to serve.
AUDIT FEES
The aggregate fees billed for professional services rendered by Ernst &
Young LLP for the audit of the Company's annual financial statement for the
fiscal year ended December 31, 2000 and the reviews of the financial statements
included in the Company's Forms 10-Q for such fiscal year totaled $153,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Ernst & Young LLP to provide financial
systems design and implementation during the fiscal year ended December 31,
2000.
ALL OTHER FEES
The aggregate fees billed for all other services rendered by Ernst &
Young for the fiscal year ended December 31, 2000 totaled $86,490.
AUDITOR INDEPENDENCE
The Audit Committee considered whether the provision of services covered
under "All Other Fees" is compatible with maintaining Ernst & Young LLP's
independence in determining whether to appoint Ernst & Young LLP as the
Company's independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF THE COMPANY'S AUDITORS.
VOTING PROCEDURES
The affirmative vote of a plurality of the shares of the Company's
Common Stock present or represented at the Meeting and entitled to vote is
required for the election of the Class III Directors, and the affirmative vote
of a majority of such shares is required for the approval of the amendment to
the Company's 1995 Employee Stock Purchase Plan, for the approval and adoption
of the 2001 Equity Incentive Plan and for the ratification of the appointment of
the Company's auditors. For purposes of determining whether a proposal has
received a majority vote, abstentions will be included in the vote totals, with
the result being that an abstention will have the same effect as a negative
vote. In instances where brokers are prohibited from exercising discretionary
authority for beneficial holders who have not returned a proxy (so-called
"broker non-votes"), those shares will not be included in the vote totals and,
therefore, will have no effect on the outcome of the vote. Shares that abstain
or for which the authority to vote is withheld on certain matters will, however,
be treated as present for quorum purposes on all matters.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that stated above. If other business
should come before the Meeting, the persons named in the proxies solicited
hereby, each of whom is an employee of the Company, may vote all shares subject
to such proxies with respect to any such business in the best judgment of such
persons.
SHAREHOLDER PROPOSALS
It is currently contemplated that the 2002 Annual Meeting of Shareholders
will be held on or about May 29, 2002. Proposals of shareholders intended for
inclusion in the proxy statement to be furnished to all shareholders entitled to
vote at the next annual meeting of the Company and/or for inclusion in the
agenda for that meeting must be received at the Company's principal executive
offices not later than December 19, 2001. It is suggested that proponents submit
their proposals by certified mail, return receipt requested.
Dated: April 18, 2001
APPENDIX A
AUDIT COMMITTEE CHARTER
EZENIA! INC.
ORGANIZATION
This charter governs the operations of the audit committee. At least annually,
the committee shall review and reassess the charter and obtain the board of
directors' approval thereof. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All committee
members shall be financially literate, and at least one member shall have
accounting or related financial management expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the annual independent audit of the
Company's financial statements, and the legal compliance and ethics programs as
established by management and the board. In doing so, it is the responsibility
of the committee to maintain free and open communication between the committee,
independent auditors, and management of the Company. In discharging its
oversight role, the committee is empowered to investigate any matter brought to
its attention with full access to all books, records, facilities, and personnel
of the Company and the power to retain outside counsel, or other experts for
this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of its
activities to the board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
o The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of the
Company's shareholders. The committee shall have the ultimate authority and
responsibility to evaluate and, where appropriate, to recommend that the
Board of Directors replace the independent auditors. The committee shall
discuss with the auditors their independence from management and the
Company and the matters included in the written disclosures required by the
Independence Standards Board. Annually, the committee shall review and
recommend to the board the selection of the Company's independent auditors.
o The committee shall discuss with the independent auditors the overall scope
and plans for the annual audit. Also, the committee shall discuss with
management and the independent auditors the adequacy and effectiveness of
the accounting and financial controls, including the Company's system to
monitor and manage business risk, and legal and ethical compliance
programs. Further, the committee shall meet separately with the independent
auditors, with and without management present, to discuss the results of
their examinations.
o The committee shall review the interim financial statements with management
and the independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q. Also, the committee shall discuss the results of the
quarterly review and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards. The chair of the committee may represent the entire committee
for the purposes of this review.
o The committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the committee shall discuss the results of the annual audit and any
other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards. The
committee shall also prepare annually a report to the Company's
stockholders.
ANNEX
EZENIA! INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
(as amended on May 30, 2001)
1. DEFINITIONS. As used in this 1995 Employee Stock Purchase Plan of
Ezenia! Inc., the following terms have the respective meanings ascribed to them
below:
(a) BASE COMPENSATION means annual or annualized base compensation,
exclusive of overtime, bonuses, contributions to employee benefit plans, and
other fringe benefits.
(b) BENEFICIARY means, with respect to any Participating Employee, the
person designated as beneficiary on such Participating Employee's Membership
Agreement or other form provided by the Company for such purpose, or if no such
beneficiary is named, the person to whom the Option is transferred by will or
under the applicable laws of descent and distribution.
(c) BOARD means the board of directors of the Company, except that if
and for so long as the board of directors of the Company has delegated its
authority with respect to the Plan to the Committee pursuant to Section 4, then
all references in this Plan to the Board will be deemed to refer to the
Committee acting in such capacity.
(d) CODE means the Internal Revenue Code of 1986, as amended.
(e) COMPANY means Ezenia! Inc., a Delaware corporation.
(f) COMMITTEE means the Compensation Committee of the Board.
(g) EFFECTIVE DATE means the effective date of the Company's
registration statement on Form S-1, File No. 33-91132, under the Securities Act
of 1933, as amended.
(h) ELIGIBLE EMPLOYEE means a person who is eligible under the
provisions of Section 7 to receive an Option as of a particular Offering
Commencement Date.
(i) EMPLOYER means, as to any particular Offering Period, the Company
and any Related Corporation that is designated by the Board as a corporation
whose Eligible Employees are to receive Options as of that Period's Offering
Commencement Date.
(j) MARKET VALUE means, as of the Offering Commencement Date of the
first Offering Period under this Plan, the initial public offering price at
which shares of Stock are offered to the public, as specified in the Company's
registration statement on Form S-1 referred to above, and as of any other
particular date, (i) if the Stock is listed on a national securities exchange,
the closing price of the Stock on such exchange on such date, (ii) if the Stock
is not listed on a national securities exchange but is quoted through the
National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ")
National Market System or any successor thereto, the last sale price of the
Stock so quoted on such date, and (iii) if the Stock is not listed on a national
securities exchange or quoted through the NASDAQ National Market System or any
successor thereto, but is quoted through NASDAQ other than through the National
Market System, or is otherwise publicly traded, the average of the closing bid
and asked prices of the Stock so quoted or otherwise reported on such date.
(k) MEMBERSHIP AGREEMENT means an agreement whereby a Participating
Employee authorizes an Employer to withhold payroll deductions from his or her
Base Compensation.
(l) OFFERING COMMENCEMENT DATE means the first business day of an
Offering Period on which Options are granted to Eligible Employees.
(m) OFFERING PERIOD means (i) in the case of the initial Offering
Period hereunder, the period running from the Effective Date to January 31,
1996, (ii) in the case of each subsequent Offering Period through January 31,
2001 a semi-annual period running from February 1 to the next following July 31
or from August 1 to the next following January 31 and (iii) in the case of each
Offering Period subsequent to January 31, 2001, a semi-annual period running
from June 1 to the next following November 30 or from December 1 to the next
following May 31; during which options will be offered under the Plan pursuant
to a determination by the Board.
(n) OFFERING TERMINATION DATE means the last business day of an
Offering Period, on which Options must, if ever, be exercised.
(o) OPTION means an option to purchase shares of Stock granted under
the Plan.
(p) OPTION SHARES means shares of Stock purchasable under an Option.
(q) PARTICIPATING EMPLOYEE means an Eligible Employee to whom an Option
is granted.
(r) PLAN means this 1995 Employee Stock Purchase Plan of the Company,
as amended from time to time.
(s) RELATED CORPORATION means any corporation that is or during the
term of the Plan becomes a parent corporation of the Company, as defined in
Section 424(e) of the Code, or a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.
(t) STOCK means the common stock, $0.01 par value per share, of the
Company, to be authorized upon stockholder approval of certain amendments to the
Company's Amended and Restated Certificate of Incorporation, authorized by the
Board on April 12, 1995, authorizing a one-for-two reverse stock split and
setting the par value of the Company's Common Stock at $0.01, and the filing
with the Delaware Secretary of State of an appropriate certificate of amendment
to such Amended and Restated Certificate of Incorporation effecting such
changes.
2. PURPOSE OF THE PLAN. The Plan is intended to encourage ownership of
Stock by employees of the Company and any Related Corporations and to provide an
additional incentive for the employees to promote the success of the business of
the Company and any Related Corporations. It is intended that the Plan qualify
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
3. TERM OF THE PLAN. The Plan will become effective on the Effective
Date. No Option may be granted under the Plan after January 31, 2005.
4. ADMINISTRATION OF THE PLAN. The Plan will be administered by the
Board. The Board will determine which semi-periods will be Offering Periods in
accordance with Section 8, and which (if any) Related Corporations will be
Employers as to each Offering Period. The Board will have authority to interpret
the Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, to determine the terms of Options granted under the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
All determinations of the Board under the Plan will be final and binding as to
all persons having or claiming any interest in or arising out of the Plan. The
Board may delegate all or any portion of its authority with respect to the Plan
to the Committee, and thereafter until such delegation is revoked by the Board
all powers under the Plan delegated to the Committee will be exercised by the
Committee.
5. TERMINATION AND AMENDMENT OF PLAN. The Board may terminate or amend
the Plan at any time; PROVIDED, HOWEVER, that the Board may not, without
approval by the holders of a majority of the outstanding shares of Stock,
increase the maximum number of shares of Stock purchasable under the Plan or
change the description of employees or classes of employees eligible to receive
Options. Without limiting the generality of the foregoing, but subject to the
foregoing proviso, the Board may amend the Plan from time to time to increase or
decrease the length of any future Offering Periods and to make all required
conforming changes to the Plan. No termination or amendment of the Plan may
adversely affect the rights of a Participating Employee with respect to any
Option held by the Participating Employee prior to such termination or
amendment.
6. SHARES OF STOCK SUBJECT TO THE PLAN. No more than an aggregate of
900,000 shares of Stock may be issued or delivered pursuant to the exercise of
Options granted under the Plan (such maximum number of shares taking into
account the effects of the one-for-two reverse stock split referred to above,
and subject to automatic proportionate adjustment in the event of any other
stock dividend, stock split, stock combination, recapitalization, or other
similar event affecting the Common Stock and to adjustments made in accordance
with Section 9.7). Shares to be delivered upon exercise of Options may be either
shares of Stock that are authorized but unissued or shares of Stock held by the
Company in its treasury. If an Option expires or terminates for any reason
without having been exercised in full, the unpurchased shares subject to the
Option will become available for other Options granted under the Plan. At all
times during which Options are outstanding, the Company will reserve and keep
available sufficient shares of Stock to cover the exercise in full of such
Options, and will pay all fees and expenses incurred by the Company in
connection therewith.
7. PERSONS ELIGIBLE TO RECEIVE OPTIONS. Each employee of an Employer
will be granted an Option on each Offering Commencement Date on which such
employee meets all of the following requirements:
(a) The employee is customarily employed by an Employer for more than
twenty hours per week and for more than five months per calendar year.
(b) The employee will not, after grant of the Option, own Stock
possessing five percent or more of the total combined voting power or value of
all classes of stock of the Company or of any Related Corporation. For purposes
of this paragraph (b), the rules of Section 424(d) of the Code will apply in
determining the Stock ownership of the employee, and Stock that the employee may
purchase under outstanding options will be treated as Stock owned by the
employee.
(c) Upon grant of the Option, the employee's rights to purchase Stock
under all employee stock purchase plans (as defined in Section 423(b) of the
Code) of the Company and its Related Corporations will not accrue at a rate
exceeding $25,000 of Market Value of Stock (determined as of the grant date) for
each calendar year in which such Option is outstanding at any time. The accrual
of rights to purchase Stock will be determined in accordance with Section
423(b)(8) of the Code.
8. OFFERING COMMENCEMENT DATES. Options will be granted on the first
business day of the period running from the Effective Date to January 31, 1996
and, thereafter, options will be granted on the first business day of each
semi-annual period running, (i) in the case of periods beginning prior to
January 31, 2001, from February 1 to the next following July 31 or from August 1
to the next following January 31 and, (ii) in the case of periods beginning
after January 31, 2001, from June 1 to the next following November 30 or from
December 1 to the next following May 31, that is designated by the Board of
Directors as an Offering Period. Following the initial Offering Period under the
Plan (I.E., the period running from the Effective Date to January 31, 1996), all
succeeding semi-annual periods described above will be deemed Offering Periods
without the need of further Board action unless and until contrary action will
have been taken by the Board prior to the beginning of what would otherwise be
an Offering Period.
9. TERMS AND CONDITIONS OF OPTIONS.
9.1 GENERAL. All Options granted on a particular Offering Commencement
Date will comply with the terms and conditions set forth in Sections 9.2 through
9.11. Subject to Sections 7(c) and 9.9, each Option granted on a particular
Offering Commencement Date will entitle the Participating Employee to purchase
that number of shares of Stock equal to the result of $12,500 (or such lesser
amount as is selected by the Board, prior to the applicable Offering
Commencement Date, and applied uniformly during the Offering Period then
beginning) divided by the Market Value of one such share on the Offering
Commencement Date and then rounded down, if necessary, to the nearest whole
number.
9.2 PURCHASE PRICE. The purchase price of each Option Share will be 85%
of the lesser of (a) the Market Value of a share of Stock as of the Offering
Commencement Date or (b) the Market Value of a share of Stock as of the Offering
Termination Date.
9.3 RESTRICTIONS ON TRANSFER.
(a) Options may not be transferred otherwise than by will or pursuant
to applicable laws of descent and distribution. During the lifetime of a
Participating Employee, such Participating Employee's Options may not be
exercised by anyone other than such Participating Employee.
(b) The Optionee will agree in the Membership Agreement to notify the
Company of any transfer of Option Shares within two years of the Offering
Commencement Date for such Option Shares. The Company will have the right to
place a legend on all stock certificates representing Option Shares instructing
the transfer agent to notify the Company of any transfer of such Option Shares.
The Company will also have the right to place a legend on all stock certificates
representing Option Shares setting forth or referring to the restriction on
transferability of such Option Shares.
9.4 EXPIRATION. Each Option will expire at the close of business on the
Offering Termination Date or on such earlier date as may result from the
operation of Sections 9.5 or 9.6.
9.5 TERMINATION OF EMPLOYMENT OF OPTIONEE. If a Participating Employee
ceases for any reason (other than death) to be continuously employed by an
Employer, whether due to voluntary severance, involuntary severance, transfer,
or disaffiliation of a Related Corporation with the Company, his or her Option
will immediately expire, and the Participating Employee's accumulated payroll
deductions will be returned by the Company. For purposes of this Section 9.5, a
Participating Employee will be deemed to be employed throughout any leave of
absence for military service, illness, or other bona fide purpose that does not
exceed the longer of ninety days or the period during which the Participating
Employee's reemployment rights are guaranteed by statute (including without
limitation the Veterans Reemployment Rights Act or similar statute relating to
military service) or by contract. If the Participating Employee does not return
to active employment prior to the termination of such period, his or her
employment will be deemed to have ended on the ninety-first day of such leave of
absence (or such longer period guaranteed by statute or by contract as provided
above).
9.6 DEATH OF OPTIONEE. If a Participating Employee dies, his or her
Beneficiary will be entitled to withdraw the Participating Employee's
accumulated payroll deductions, or to purchase shares on the Offering
Termination Date to the extent that the Participating Employee would be so
entitled had he or she continued to be employed by an Employer. The number of
shares purchasable will be limited by the amount of the Participating Employee's
accumulated payroll deductions as of the date of his or her death. Accumulated
payroll deductions will be applied by the Company toward the purchase of shares
only if the Participating Employee's Beneficiary submits to the Employer not
later than the Offering Termination Date a written request
that the deductions be so applied. Accumulated payroll deductions not withdrawn
or applied to the purchase of shares will be delivered by the Company to the
Beneficiary within a reasonable time after the Offering Termination Date.
9.7 CAPITAL CHANGES AFFECTING THE STOCK. In the event that, between the
Offering Commencement Date and the Offering Termination Date with respect to an
Option, a stock dividend is paid or becomes payable in respect of the Stock, or
there occurs a split-up or contraction in the number of shares of Stock, the
number of shares of Stock for which the Option may thereafter be exercised and
the price to be paid for each such share will both be proportionately adjusted.
In the event that, after the Offering Commencement Date, there occurs a
reclassification or change of outstanding shares of Stock or a consolidation or
merger of the Company with or into another corporation or a sale or conveyance,
substantially as a whole, of the property of the Company, the Participating
Employee will be entitled on the Offering Termination Date to receive shares of
Stock or other securities equivalent in kind and value to the shares of Stock he
or she would have held if he or she had exercised the Option in full immediately
prior to such reclassification, change, consolidation, merger, sale, or
conveyance and had continued to hold such shares (together with all other shares
and securities thereafter issued in respect thereof) until the Offering
Termination Date. In the event that there is to occur a recapitalization
involving an increase in the par value of the Stock that would result in a par
value exceeding the exercise price under an outstanding Option, the Company will
notify the affected Participating Employee of such proposed recapitalization
immediately upon its being recommended by the Board to the Company's
shareholders, after which the Participating Employee will have the right to
exercise his or her Option prior to such recapitalization; if the Participating
Employee fails to exercise the Option prior to recapitalization, the exercise
price under the Option will be appropriately adjusted. In the event that, after
the Offering Commencement Date, there occurs a dissolution or liquidation of the
Company, except pursuant to a transaction to which Section 424(a) of the Code
applies, each Option will terminate, but the Participating Employee will have
the right to exercise his or her Option prior to such dissolution or
liquidation.
9.8 PAYROLL DEDUCTIONS. A Participating Employee may purchase shares
under his or her Option during any particular Offering Period by completing and
returning to the Company at least 15 days prior to the beginning of such
Offering Period a Membership Agreement indicating a percentage (which will be a
full integer between two and ten, inclusive) of his or her Base Compensation
that is to be withheld each pay period (not to exceed an aggregate of $12,500 in
any Offering Period). No Participating Employee will be permitted to change the
percentage of Base Compensation withheld during an Offering Period. However, not
more than once per Offering Period the Participating Employee may cancel his or
her Agreement, and withdraw all (but not less than all) of his
or her accumulated payroll deductions, by submitting a written request therefor
to the Company not later than the close of business on the Offering Termination
Date. The percentage of Base Compensation withheld may be changed from one
Offering Period to another.
9.9 EXERCISE OF OPTIONS. On the Offering Termination Date the
Participating Employee may purchase the number of shares purchasable by his or
her accumulated payroll deductions, or if less, the maximum number of shares
subject to the Option as provided in Section 9.1, provided that:
(a) If the total number of shares that all Optionees elect to purchase,
together with any shares already purchased under the Plan, exceeds the total
number of shares that may be purchased under the Plan pursuant to Section 6, the
number of shares that each Optionee is permitted to purchase will be decreased
PRO rata based on the Participating Employee's accumulated payroll deductions in
relation to all accumulated payroll deductions currently being withheld under
the Plan.
(b) If the number of shares purchasable includes a fraction, such
number will be adjusted to the next smaller whole number and the purchase price
will be adjusted accordingly.
Accumulated payroll deductions not withdrawn prior to the Offering Termination
Date will be automatically applied by the Company toward the purchase of Option
Shares, or to the extent in excess of the aggregate purchase price of the shares
then purchasable by the Participating Employee, refunded to the Participating
Employee, except that where such excess is less than the purchase price for a
single share of Stock on the Offering Termination Date, such excess will not be
refunded but instead will be carried over and applied to the purchase of shares
in the first following Offering Period (subject to the possibility of withdrawal
by the Participating Employee during such Offering Period in accordance with the
terms of the Plan).
9.10 DELIVERY OF STOCK. Except as provided below, within a reasonable
time after the Offering Termination Date, the Company will deliver or cause to
be delivered to the Participating Employee a certificate or certificates for the
number of shares purchased by the Participating Employee. A stock certificate
representing the number of Shares purchased will be issued in the participant's
name only, or if his or her Membership Agreement so specifies, in the name of
the employee and another person of legal age as joint tenants with rights of
survivorship. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises will require that
the Company or the Participating Employee take any action in connection with the
shares being purchased under the Option, delivery of the certificate or
certificates for such shares will be postponed until the necessary action will
have been completed, which action will be taken by the Company at its own
expense, without unreasonable delay. The Optionee will have no rights as a
shareholder in respect of shares for which he or she has not received a
certificate.
9.11 RETURN OF ACCUMULATED PAYROLL DEDUCTIONS. In the event that the
Participating Employee or the Beneficiary is entitled to the return of
accumulated payroll deductions, whether by reason of voluntary withdrawal,
termination of employment, or death, or in the event that accumulated payroll
deductions exceed the price of shares purchased, such amount will be returned by
the Company to the Participating Employee or the Beneficiary, as the case may
be, not later than within a reasonable time following the Offering Termination
Date applicable to the Option Period in which such deductions were taken.
Accumulated payroll deductions held by the Company will not bear interest nor
will the Company be obligated to segregate the same from any of its other
assets.
ANNEX
FORM OF PROXY CARD
[SIDE ONE]
PROXY
EZENIA! INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ITS ANNUAL MEETING
MAY 30, 2001
The undersigned hereby appoints Khoa D. Nguyen and Stephen G. Bassett
as proxies, each with full power of substitution, and hereby authorizes them or
either of them to represent and to vote as designated below all shares of Common
Stock of Ezenia! Inc. held of record by the undersigned on April 4, 2001 at the
Annual Meeting of Stockholders to be held at the Offices of the Company, 63
Third Avenue, Burlington, Massachusetts on May 30, 2001 and at any adjournments
or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNERS
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" THE OTHER
PROPOSALS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SIDE TWO]
- ------------------------- ------------------------
VOTE BY TELEPHONE VOTE BY INTERNET
- ------------------------- ------------------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
- ----------------------------------------------------------- ------------------------------------------------------------
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy 1. Read the accompanying Proxy Statement and Proxy
Card. Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/ezen
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the Instructions provided.
- ------------------------------------------------------------ ------------------------------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
CALL 1-877-PRX-VOTE ANYTIME! GO TO http://www.eproxyvote.com/ezen ANYTIME!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. To elect two Class III Directors to hold office for a three-year term
and until their respective successors have been duly elected and
qualified.
Nominees: (01) Khoa D. Nguyen
(02) John F. Keane, Jr.
[ ] FOR [ ] WITHHELD
[ ] ----------------
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided above.)
2. To approve an amendment to the Company's 1995 Employee Stock Purchase
Plan, increasing the number of shares issuable thereunder from 600,000
shares to 900,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of the firm of Ernst & Young LLP, as
independent auditors of the Company for the fiscal year ending December
31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to transact such other
business as may properly come before the meeting or any adjournment
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE.
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If shares are held of record by a corporation, please
sign in full corporate name by president or other authorized officer.
Partnerships should sign in partnership name by an authorized signatory.
Signature: Date: Signature: Date:
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