SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the Commission
|_| Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NETRIX CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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the form or schedule and the date of its filing.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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[LOGO]
NETRIX CORPORATION
13595 DULLES TECHNOLOGY DRIVE
HERNDON, VIRGINIA 20171
July 28, 1999
Dear Stockholder:
The 1999 annual meeting of stockholders was held July 27, 1999. At the
meeting, the proposals described in our June 11, 1999 Proxy Statement pertaining
to the election of Directors, approval of the 1999 Long-Term Incentive Plan and
ratification of the appointment of Arthur Andersen LLP as the our independent
auditors for 1999 were voted upon and approved. On each of these matters, over
90% of all the shares were voted. However, at the meeting, only approximately
53% of the shares were represented by person or by proxy to vote on the proposal
to increase our capital stock. The proxies we received favored this proposal by
about a two-to-one margin, but since the proposal required approval by a
majority of all the shares entitled to vote, this proposal could not be approved
at the meeting. As a result, we adjourned the annual meeting and deferred the
vote on this proposal in order to provide an opportunity for more stockholders
to vote, either in person or by proxy. We will reconvene the annual meeting at
10:00 a.m. on August 26, 1999 at The Yale Club in New York City, and we expect
the only item on the agenda will be to vote on the proposal to increase our
capital stock.
Based on conversations with stockholders, we are reducing the proposed
increase in our capital stock. It is this revised proposal that will be voted on
at the reconvened annual meeting. As revised, we will propose no increase in our
preferred stock and limit the increase in our common stock to 14 million shares
(so our authorized common stock will increase from 15 million to 29 million
shares). This revised proposal is described in the accompanying Proxy Statement
Supplement. Pursuant to the Supplement, we are soliciting your proxy for
use at the annual meeting of stockholders when it reconvenes
Enclosed with the Supplement is a revised proxy card that reflects the
amended proposal to be voted upon by stockholders. If you will be unable to
attend the reconvened annual meeting, I encourage you to complete and return the
enclosed proxy card and return it to Netrix Corporation in the enclosed return
envelope. The Supplement includes more detailed information on the revised
proposal as well as voting instructions and an explaination of the treatment of
any proxy that you may have returned previously for voting at the Annual
Meeting.
I would appreciate your immediate attention to the mailing of the
enclosed proxy. Should you later determine that you are able to attend the
reconvened meeting, you may revoke any previously given proxy.
Very truly yours,
/s/ Norman F. Welsch
Norman F. Welsch
Chief Financial Officer and Secretary
[LOGO]
NETRIX CORPORATION
13595 Dulles Technology Drive
Herndon, Virginia 20171
July 28, 1999
PROXY STATEMENT SUPPLEMENT
Supplemental Information to the June 11, 1999 Proxy Statement provided
to Stockholders in connection with the 1999 Annual Meeting of
Stockholders
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PURPOSE OF THIS SUPPLEMENT. This Supplement contains information that
supplements the information we provided in our June 11, 1999 Proxy Statement
related to our solicitation of proxies for use at our 1999 Annual Meeting of
Stockholders. The information contained in this Supplement relates to Item 2 of
the Proxy Statement, which proposes an increase in the number of our authorized
shares of our capital stock. We are changing the proposal, and the discussion in
this Supplement supercedes the discussion contained in the Proxy Statement. This
Supplement and the enclosed proxy card have been sent to you by order of the
Board of Directors of Netrix Corporation. Along with an enclosed, revised proxy
card, this Supplement was first mailed to stockholders on or about July 29,
1999.
REASON FOR THIS SUPPLEMENT. In our conversations with stockholders prior
to the annual meeting, concerns were expressed to us regarding the size of the
proposed increase in our capital stock. At the meeting itself, only 53% of the
shares were represented by proxies or in person for consideration of the
proposal. Due to the nature of the proposal, brokers did not have discretion to
vote shares held in their name absent voting instructions from the beneficial
owners. We are modifying the proposal to alleviate the concerns of stockholders
and to enable brokers to vote their shares in the absence of specific
instructions from beneficial owners. In order to present this proposal at the
reconvened meeting, we are seeking proxies from a higher number of our
stockholders.
VOTING ON THE AMENDED PROPOSAL. If you submitted a proxy on the original
proposal to increase the authorized shares of the capital stock of Netrix
Corporation and you now wish to change your vote, you may do so by signing and
returning the enclosed proxy card to Netrix in the enclosed envelope. You may
also vote on the revised proposal in person if you attend the adjournment of the
annual meeting by completing a ballot form provided upon request at the
adjournment. If you submitted a proxy on the original proposal to increase the
number of authorized shares of Netrix's capital stock and you do not wish to
change your vote in light of the amendments to that proposal described in this
Supplement, there is no need for you to vote again. Your prior proxy will remain
effective with respect to this proposal unless revoked by you as a result of
your submission of a later proxy or by your voting in person at the adjournment
of the annual meeting. In addition, if you did not provide a proxy or attend the
annual meeting to vote on the original proposal, we urge you to vote on the
revised proposal either by signing and returning the enclosed proxy card in the
envelope provided or by voting in person at the reconvened annual meeting.
REQUIRED VOTE. To be adopted, the amendment to our Certificate of
Incorporation to increase our authorized common stock must receive the
affirmative vote of the majority of the shares entitled to vote. Brokers do have
discretion to vote shares on this matter without instruction from the beneficial
owners. For purposes of this proposal, abstentions and broker non-votes have the
effect of negative votes.
RESTATEMENT OF THE PROPOSAL. The following replaces, in its entirety, the
discussion of Item Two in the Proxy Statement.
ITEM TWO: INCREASE OF AUTHORIZED CAPITAL STOCK
Stockholders are being asked to consider and approve an increase in the
number of authorized shares of the common stock of Netrix Corporation.
Specifically, the Board has approved and recommends that Stockholders adopt an
amendment to Article Fourth of the Certificate of Incorporation that increases
the number of authorized shares of common stock from 15,000,000 to 29,000,000.
The text of Article Fourth of the Certificate of Incorporation, as proposed to
be amended, is set forth in Exhibit A.
As of May 28, 1999, Netrix had 11,493,009 shares of common stock issued
and outstanding, as well as 2,950,000 common shares reserved for issuance under
the corporation's existing benefit plans. Of the 2,950,000 shares of common
stock reserved under existing benefit plans, options for 1,457,888 shares
currently are outstanding. As of May 28, an additional approximately 1,640,000
shares of common stock were issuable upon conversion of outstanding preferred
stock and exercise of outstanding warrants. With only 15,000,000 shares of
common stock currently authorized for issuance, Netrix has reached the point at
which it is not able to fully utilize its equity benefit plan, including the
recently adopted 1999 Long-Term Incentive Plan, unless the number of authorized
shares of common stock is increased.
The Board believes that, under these circumstances, an increase in the
number of authorized shares is desirable so that additional, unreserved common
shares will be available for issuance or reservation by Netrix without further
stockholder authorization, except as may be required by law or by the rules of
the Nasdaq Stock Market. Specifically, the Board believes that Netrix requires
the ability to issue additional equity incentive awards to employees and
potential employees in order to attract and retain a high caliber of employees.
Furthermore, in light of the corporation's current cash requirements and
financial position and prospects, a number of vendors have indicated their
willingness to receive common stock or warrants in lieu of payments in cash. The
Board believes that, under the right circumstances, paying vendors in stock
could be beneficial to the corporation. In addition, the Board believes that
having additional shares authorized and available for issuance will allow Netrix
greater flexibility in considering potential future actions involving the
issuance of stock, although currently there are no plans to effect such
potential actions. The Board does not believe that authorizing the issuance of
2
additional shares will affect materially any substantive rights, powers or
privileges of holders of Netrix common stock. Other than with respect to the
reservation of common stock in connection with (1) current employee benefit
plans, (2) the 1999 Long-Term Incentive Plan, and (3) the expectation that
Netrix will increase the emphasis on stock options in compensating employees and
Directors, there are no other plans or other existing or proposed agreements or
understandings to issue, or reserve for future issuance, any of the additional
common shares that would be authorized by the amendment to the Certificate of
Incorporation. Finally, the Board does not view the proposed amendment of the
Certificate of Incorporation as part of an "anti-takeover" strategy. The
amendment is not being advanced as a result of any known effort by any party to
accumulate common stock or to obtain control of Netrix.
Of our 15,249,599 authorized shares of preferred stock, the 14,249,599
shares referenced in our Certificate of Incorporation as the Class A Preferred
Stock, Class B Preferred Stock, Class C Preferred Stock and Class D Preferred
Stock, have previously been retired and cannot be reissued. The only shares of
preferred stock available for issuance are the 1,000,000 shares referred to in
clause (I)(ii)(E) of Article Fourth of our certificate of incorporation.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION.
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Exhibit A
PROPOSED AMENDMENT TO THE
ARTICLES OF INCORPORATION
We will amend the first sentence of Article Fourth to our certificate of
incorporation if the amendment is approved by stockholders at our reconvened
annual meeting of stockholders. Set forth below is the proposed amendment. The
proposed new text is in italics and the proposed deletions are indicated by
overstriking. [EDGAR DOCUMENT ONLY: New text is underscored, and the proposed
deletions are in brackets.]
ARTICLE FOURTH
[Authorized Shares]
FOURTH: I. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
44,249,599 [30,249,599] shares, consisting of (i) 29,000,000 [15,000,000]
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shares of Common Stock, $.05 par value (the "Common Stock") and (i)
15,249,599 shares of Preferred Stock, $.05 par value (the "Preferred
Stock") consisting of (A) 2,499,946 share that are designated Class
A Convertible Preferred Stock ("Class A Preferred Stock"); (B)
3,639,333 shares that are designated Class B Convertible Preferred
Stock ("Class B Preferred Stock"); (C) 4,686,026 shares that are
designated Class C Convertible Preferred Stock ("Class C Preferred
Stock"); (D) 3,424,294 shares that are designated Class D
Convertible Preferred Stock ("Class D Preferred Stock"); and (E)
1,000,000 shares that are initially undesignated.
Please note that the Class A, Class B, Class C and Class D Preferred Stock
referenced in Article Fourth has previouslty been retired, and these shares
CANNOT be reissued.
NETRIX CORPORATION
PROXY
FOR THE RECONVENED 1999 ANNUAL MEETING OF STOCKHOLDERS
AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL
BE VOTED AS DIRECTED BY THE STOCKHOLDER. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED "FOR" EACH PROPOSAL.
The undersigned hereby appoints Steven T. Francesco and Lynn C. Chapman as
Proxies, with the full power of substitution, and hereby authorizes them to
represent and vote, as designated herein, all shares of common stock of Netrix
Corporation held of record by the undersigned on May 28, 1999, at the
reconvening Annual Meeting of Stockholders on August 26, 1999 or any adjournment
or postponement thereof, upon all such matters as may properly come before the
meeting.
|X| Please mark your votes If you plan to attend in |_|
as in this example. person, place an X in this box.
MATTERS TO BE SUBMITTED TO A VOTE:
AN AMENDED PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE
COMMON STOCK OF NETRIX CORPORATION.
INDICATE YOUR VOTE ON THIS PROPOSAL HERE:
FOR AGAINST ABSTAIN
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IN THEIR DISCRETION THE NAMED PROXIES MAY VOTE UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE RECONVENED ANNUAL MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF.
SIGNATURE:---------------------------------- DATE:--------------------
SIGNATURE:---------------------------------- DATE:--------------------
(SECOND SIGNATURE IF HELD JOINTLY)
NOTE: Please sign exactly as your name or names appear on your stock
certificates. Joint owners should each sign. When signing as
attorney, executor, administrator or guardian, please indicate full
title as such.
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STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
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