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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
AAVID THERMAL TECHNOLOGIES, 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 Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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AAVID THERMAL TECHNOLOGIES, INC.
ONE EAGLE SQUARE
CONCORD, NEW HAMPSHIRE 03301
(603) 224-1117
April 30, 1998
Dear Stockholder:
You are cordially invited to attend the Company's 1998 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 A.M. on Friday, June 19,
1998 at the Holiday Inn, 172 North Main Street, Concord, New Hampshire 03301.
At the Annual Meeting, you will be asked to (i) elect six directors of the
Company, (ii) approve an amendment to the Company's 1994 Stock Option Plan which
would increase the number of shares available for grant thereunder and (iii)
approve an amendment to the Company's 1995 Non-Employee Director Stock Option
Plan which would increase the number of shares available for grant thereunder.
In addition, we will be pleased to report on the affairs of the Company and a
discussion period will be provided for questions and comments of general
interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the Annual Meeting; however, whether or not you plan to be with us
at the Annual Meeting, it is important that your shares be represented.
Accordingly, you are requested to sign and date the enclosed proxy and mail it
in the envelope provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
RONALD F. BORELLI
Chairman of the Board of Directors
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AAVID THERMAL TECHNOLOGIES, INC.
ONE EAGLE SQUARE
CONCORD, NEW HAMPSHIRE 03301
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NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
------------------------
Concord, New Hampshire
April 30, 1998
To the Stockholders of
Aavid Thermal Technologies, Inc.
Notice is hereby given that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of Aavid Thermal Technologies, Inc. (the "Company") will be
held on Friday, June 19, 1998 at 10:00 A.M. at the Holiday Inn, 172 North Main
Street, Concord, New Hampshire 03301 for the following purposes:
(1) To elect six directors to serve for the ensuing year;
(2) To consider and vote upon a proposal to amend the Company's 1994
Stock Option Plan to increase the number of shares available for
grant thereunder;
(3) To consider and vote upon a proposal to amend the Company's 1995
Non-Employee Director Stock Option Plan to increase the number of
shares available for grant thereunder; and
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record at the close of business on May 15, 1998 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
A copy of the Company's Annual Report for the fiscal year ended December
31, 1997 is enclosed.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete, sign and date the enclosed form of proxy and return it
promptly in the envelope provided. No postage is required if mailed in the
United States. Stockholders who attend the Annual Meeting may revoke their proxy
and vote their shares in person.
By Order of the Board of Directors
JOHN W. MITCHELL
Secretary
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AAVID THERMAL TECHNOLOGIES, INC.
ONE EAGLE SQUARE
CONCORD, NEW HAMPSHIRE 03301
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PROXY STATEMENT
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GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement and the accompanying proxy are being furnished to the
holders of common stock, par value $.01 per share (the "Common Stock"), of Aavid
Thermal Technologies, Inc. (the "Company" or "Aavid") in connection with the
solicitation by the Board of Directors of the Company of proxies for use at the
1998 Annual Meeting of Stockholders (the "Annual Meeting") to be held on Friday,
June 19, 1998, or at any adjournment thereof, pursuant to the accompanying
Notice of 1998 Annual Meeting of Stockholders. The purposes of the Annual
Meeting and the matters to be acted upon are set forth in the accompanying
Notice of 1998 Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the Annual Meeting.
This Proxy Statement and the accompanying proxy, together with a copy of the
Annual Report of the Company for the fiscal year ended December 31, 1997,
including financial statements, are first being mailed or delivered to
stockholders of the Company on or about May 16, 1998.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company and will be solicited chiefly by mail. The Company will
make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
Common Stock and will reimburse them for their expenses in so doing. Should it
appear desirable to do so in order to ensure adequate representation of the
Common Stock at the Annual Meeting, officers, agents and employees of the
Company may communicate with stockholders, banks, brokerage houses and others by
telephone, facsimile or in person to request that proxies be furnished. All
expenses incurred in connection with this solicitation will be borne by the
Company. The Company has no present plans to hire special employees or paid
solicitors to assist in obtaining proxies, but reserves the option of doing so
if it should appear that a quorum otherwise might not be obtained.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. If the enclosed proxy is properly executed, duly returned to
the Company in time for the Annual Meeting and not revoked, your shares will be
voted in accordance with the instructions contained thereon. Where a signed
proxy is returned, but no specific instructions are indicated, your shares will
be voted FOR all nominees for director in accordance with Proposal No. 1, to
approve Proposals No. 2 and No. 3 and in accordance with the proxies' best
judgment on any other matters which may properly come before the Annual Meeting.
Any stockholder who executes and returns a proxy may revoke it in writing at any
time before it is voted at the Annual Meeting by (i) filing with the Secretary
of the Company, at the above address, written notice of such revocation bearing
a later date than the proxy or a subsequent proxy relating to the same shares or
(ii) attending the Annual Meeting and voting in person (although attendance at
the Annual Meeting will not in and of itself constitute revocation of a proxy).
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VOTING RIGHTS AND VOTING SECURITIES
VOTING AT THE ANNUAL MEETING
The Board of Directors has fixed the close of business on May 15, 1998 (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting or at any and all adjournments thereof. On May
15, 1998 there were 8,371,005 shares of common stock outstanding; each such
share is entitled to one vote on each of the matters to be presented at the
Annual Meeting. The Common Stock is the only class of outstanding voting
securities of the Company. The holders of a majority of the outstanding shares
of Common Stock, present in person or by proxy and entitled to vote, will
constitute a quorum at the Annual Meeting. The affirmative vote of the holders
of a plurality of the Common Stock, represented in person or by proxy, at the
Annual Meeting is required to approve Proposal No. 1. The affirmative vote of
the holders of a majority of the shares of Common Stock issued, outstanding and
entitled to vote, represented in person or by proxy, is required to approve
Proposals No. 2 and No. 3.
Abstentions and "broker non-votes" will be counted for purposes of
determining the presence or absence of a quorum. "Broker non-votes" are shares
held by brokers or nominees which are present in person or represented by proxy,
but which are not voted on a particular matter because instructions have not
been received from the beneficial owner. Under applicable Delaware law, the
effect of "broker non-votes" on a particular matter depends on whether the
matter is one as to which the broker or nominee has discretionary voting
authority under the applicable rule of The New York Stock Exchange. The effect
of "broker non-votes" on the specific items to be brought before the Annual
Meeting is discussed under each item.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth the number and percentage of shares of
Common Stock beneficially owned, as of March 1, 1998 (except as otherwise noted
in the footnotes), by (i) all persons known by the Company to own beneficially
more than five percent of the outstanding Common Stock; (ii) each director and
nominee for director of the Company; (iii) each executive officer named in the
Summary Compensation Table (see "Executive Compensation"); and (iv) all
directors, nominees for director and executive officers of the Company as a
group. Except as otherwise specified, the named beneficial owner has the sole
voting and investment power over the shares listed.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK(1) COMMON STOCK
- ------------------------ ----------------------- ------------
Alan F. Beane(2)........................................... 1,218,000 13.5%
Rice Mezzanine Lenders, L.P.(3)............................ 614,956 7.4%
Ronald F. Borelli(4)....................................... 426,250 5.2%
Charles A. Dickinson(5).................................... 10,000 *
Edward F. Glassmeyer(6).................................... 89,421 1.1%
M. William Macey, Jr.(7)................................... 71,092 *
Douglas L. Newhouse(7)..................................... 62,086 *
Frank J. Pipp(8)........................................... -- *
David R.A. Steadman(9)..................................... 41,000 *
Hasan Ferit Boysan(10)..................................... 60,835 *
George P. Dannecker(11).................................... 79,079 *
John W. Mitchell(12)....................................... 48,643 *
Bharatan R. Patel(13)...................................... 306,391 3.9%
All directors, director nominees and executive officers as
a group (14 persons)(14)................................. 1,283,864 15.0%
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* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, which attribute beneficial ownership of
securities to persons who possess sole or shared voting power and/or
investment power with respect to those securities.
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(2) Consists of shares of Common Stock issuable upon exercise of options and
3,000 shares of Common Stock held by Mr. Beane's children. Mr. Beane's
address is c/o Materials Innovation Inc., 8 Commerce Way, Lebanon, New
Hampshire 03784.
(3) Includes 495,000 shares of Common Stock issuable upon exercise of a
warrant, 5,500 shares held by Jeffrey A. Toole and 700 shares held by
Jeffrey Sangalis, each a partner of the partnership. The partnership's
address is c/o Rice Sangalis Toole & Wilson, 5847 San Felipe, Suite 4350,
Houston, Texas 77057.
(4) Includes 426,250 shares of Common Stock issuable upon the exercise of
options, including 140,625 shares issuable upon the exercise of options
which are not exercisable within 60 days of March 1, 1998.
(5) Includes 10,000 shares of Common Stock issuable upon the exercise of
options.
(6) Consists of 85,436 shares of Common Stock owned by Oak Investment Partners
V, Limited Partnership ("Oak V"), 1,485 shares of Common Stock owned by Oak
V Affiliates Fund, Limited Partnership ("Oak V Affiliates") and 2,500
shares of Common Stock issuable upon the exercise of options. Mr.
Glassmeyer is a general partner of the general partners of Oak V and Oak V
Affiliates and possesses investment and voting power with respect to all
such shares. Mr. Glassmeyer disclaims beneficial ownership of the shares of
Common Stock owned by Oak V and Oak V Affiliates other than the shares
attributable to his general and limited partnership interests therein. Mr.
Glassmeyer is not standing for re-election as a director.
(7) Includes 15,000 shares of Common Stock issuable upon the exercise of
options. Mr. Newhouse is not standing for re-election as a director.
(8) Nominee for director. Upon election as a director, Mr. Pipp will receive an
option to purchase 10,000 shares of Common Stock pursuant to the Company's
1995 Non-Employee Director Stock Option Plan. See "Compensation of
Directors."
(9) Includes 10,000 shares of Common Stock issuable upon the exercise of
options.
(10) Includes 10,835 shares of Common Stock issuable upon the exercise of
options, including 6,667 shares issuable upon the exercise of options which
are not exercisable within 60 days of March 1, 1998.
(11) Includes 600 shares of Common Stock held by Mr. Dannecker's children and
76,673 shares of Common Stock issuable upon the exercise of options,
including 31,317 shares issuable upon the exercise of options which are not
exercisable within 60 days of March 1, 1998.
(12) Includes 44,143 shares of Common Stock issuable upon the exercise of
options, including 20,873 shares issuable upon the exercise of options
which are not exercisable within 60 days of March 1, 1998.
(13) Includes 70,000 shares of Common Stock issuable upon the exercise of
options, including 42,500 shares issuable upon the exercise of options
which are not exercisable within 60 days of March 1, 1998.
(14) Includes 85,436 shares of Common Stock owned by Oak V, 1,485 shares of
Common Stock owned by Oak V Affiliates and 777,596 shares of Common Stock
issuable upon the exercise of options, including 305,550 shares issuable
upon the exercise of options which are not exercisable within 60 days of
March 1, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities and Exchange Commission (the "Commission") has comprehensive
rules relating to the reporting of securities transactions by directors,
executive officers and stockholders who beneficially own more than 10% of the
Company's Common Stock (collectively, the "Reporting Persons"). These rules are
complex and difficult to interpret. Based solely on a review of Section 16
reports received by the Company from Reporting Persons and written
representations from the Company's executive officers and directors, the Company
believes that no Reporting Person has failed to file a Section 16 report on a
timely basis during the most recent fiscal year.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected to serve for a term
of one year and until their respective successors are elected and qualified. The
persons named in the enclosed proxy intend to vote for the election of the
Company's nominees for director, who are listed below, unless the proxy is
marked to indicate that such authorization is expressly withheld. Each of the
nominees listed below, other than Mr. Frank J. Pipp, is currently a director of
the Company. Should any of the listed persons be unable to accept nomination or
election (which the Board of Directors does not anticipate), it is the intention
of the persons named in the enclosed proxy to vote for the election of such
persons as the Board of Directors may recommend. Proxies cannot be voted for a
greater number of persons than the number of nominees named. APPROVAL OF
PROPOSAL NO. 1 TO ELECT SIX DIRECTORS REQUIRES THE AFFIRMATIVE VOTE OF A
PLURALITY OF THE COMMON STOCK, REPRESENTED IN PERSON OR BY PROXY, AT THE ANNUAL
MEETING.
The following table sets forth the names of each of the Company's nominees
for director, their ages, the year in which each first became a director of the
Company and their principal occupations during the past five years:
YEAR
FIRST
BECAME PRINCIPAL OCCUPATIONS
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- ----------------------------------------------------
Ronald F. Borelli......... 61 1993 Ronald F. Borelli has served as Chairman of the
Board and Chief Executive Officer of the Company
since October 15, 1996 and as President of the
Company from October 1996 to October 1997;
president, chief executive officer and a director of
Spectra, Inc., a hot melt ink jet company focusing
on color printers, from March 1989 to October 1996;
from 1982 to March 1989 a senior vice president of
SCI Systems; prior thereto he spent 20 years at
Honeywell.
Charles A. Dickinson...... 74 1997 Mr. Dickinson has twice served as chairman of the
board of Solectron Corporation, from 1986 to 1990
and from 1993 to 1996, where he has been a director
since 1984; from 1991 until February 1996, he was
responsible for establishing Solectron Europe. Mr.
Dickinson has held various management positions in
manufacturing and technology companies. From 1986
until 1990 he served as chief executive officer and
chairman of Vermont Microsystems; prior thereto he
was chief executive officer and president of
Dataproducts Corporation, having been promoted from
vice president of operations, a position he had held
since 1978.
M. William Macey, Jr. .... 44 1993 Mr. Macey is a partner and co-founder of Sterling
Ventures Limited ("Sterling"), a company formed in
1991 to sponsor private equity investments; managing
director of Asian Oceanic Group, an international
merchant bank headquartered in Hong Kong, from 1990
to 1991; previously a managing director in the
mergers and acquisitions group of Smith Barney,
Harris Upham & Co.
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YEAR
FIRST
BECAME PRINCIPAL OCCUPATIONS
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- ----------------------------------------------------
Bharatan R. Patel......... 49 1996 Mr. Patel has been the President and Chief Operating
Officer of the Company since October 1997 and the
President and Chief Executive Officer of Fluent,
Inc., a subsidiary of the Company ("Fluent"), since
1988, when Fluent was formed as a subsidiary of
Creare Inc. ("Creare"), an engineering consulting
firm; various capacities at Creare since 1976,
including principal engineer and vice president, and
established the Fluent division upon its formation
in 1983; senior engineer from 1971 to 1976 in the
Power Systems Group of Westinghouse Electric
Corporation.
Frank J. Pipp............. 73 -- Mr. Pipp is a consultant to Xerox Corporation
("Xerox") and Chairman of the Board of FastCast
Corporation. He was a Corporate Officer, Group
Vice-President of Xerox Corporation ("Xerox"),
holding several senior worldwide management
positions at Xerox, including manufacturing,
engineering, product planning and service. He joined
Xerox in 1971 after spending 21 years with Ford
Motor Company, where he served in many senior
management manufacturing positions. He has served as
Chairman of the Board of Directors for Delphax
Printing System, AMTX Corporation and Xylogics
Corporation. He has also chaired the Malcolm
Baldridge National Quality Award panel.
David R.A. Steadman....... 60 1994 Mr. Steadman served as Chairman of the Board from
February 1995 until October 1996; Chairman of
Brookwood Companies Incorporated, a textile
converter, dyer and finisher, since March 1989;
chairman of Technology Service Group, Inc., a
manufacturer of coin-operated telephones, from
November 1994 to December 1997; president of
Atlantic Management Associates, Inc., a management
services and investment group, since November 1988;
chairman and chief executive officer of Integra-A
Hotel and Restaurant Company from July 1990 to March
1994; chairman and chief executive officer of GCA
Corporation from 1987 to July 1990; various
positions within the Raytheon Company from 1975 to
1978 and 1980 to 1987; and Mr. Steadman served as
chairman of a group of subsidiaries of EMI Ltd. in
the United Kingdom, Australia and the United States
from 1978 to 1980.
All directors of the Company are elected by the stockholders for a one-year
term and hold office until the next annual meeting of stockholders of the
Company and until their successors are elected and qualified. There are no
family relationships among the directors and executive officers of the Company.
OTHER DIRECTORSHIPS
Mr. Steadman currently serves as a director of Tech/Ops Sevcon, Wahlco
Environmental Systems, Inc. and Elcotel, Inc. Mr. Dickinson currently serves as
a director of Solectron Corporation and Trident Microsystems, Inc. Mr. Newhouse,
who is not standing for re-election, currently serves as a director of American
Buildings Company, a manufacturer of metal building systems.
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BOARD COMMITTEES
The Company's Board of Directors has a Compensation and Stock Plans
Committee and an Audit Committee but does not have a nominating committee. The
members of each committee are appointed by the Board of Directors.
Compensation and Stock Plans Committee. The Compensation and Stock Plans
Committee reviews and approves overall policy with respect to compensation
matters, including such matters as compensation plans for employees and
employment agreements and compensation for executive officers. The Compensation
and Stock Plans Committee also administers the Company's Stock Plans. The
Compensation and Stock Plans Committee currently consists of Messrs. Steadman,
Glassmeyer, Macey and Newhouse. The Compensation and Stock Plans Committee met
three times during 1997.
Audit Committee. The Audit Committee recommends to the Board of Directors
the auditing firm to be selected each year as independent auditors of the
Company's financial statements and to perform services related to the completion
of such audit. The Audit Committee also has responsibility for: (i) reviewing
the scope and results of the audit; (ii) reviewing the Company's financial
condition and results of operations with management; (iii) considering the
adequacy of the internal accounting and control procedures of the Company; and
(iv) reviewing any non-audit services and special engagements to be performed by
the independent auditors and considering the effect of such performance on the
auditors' independence. Messrs. Glassmeyer and Macey currently serve as members
of the Audit Committee. The Audit Committee met once during 1997.
MEETINGS OF THE BOARD OF DIRECTORS
The business affairs of the Company are managed under the direction of the
Board of Directors. Members of the Board are kept informed through various
reports and documents sent to them, through operating and financial reports
routinely presented at Board and committee meetings by the Chairman and other
officers, and through other means. In addition, directors of the Company
discharge their duties throughout the year not only by attending Board meetings,
but also through personal meetings and other communications, including
considerable telephone contact, with the Chairman of the Board and others
regarding matters of interest and concern to the Company.
During the fiscal year ended December 31, 1997, the Company's Board of
Directors held five formal meetings. Each director attended at least 75% of the
meetings of the Board of Directors held during 1997 when he was a director and
of all committees of the Board of Directors on which he served during 1997.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company (other than Messrs. Glassmeyer,
Macey and Newhouse) receives an annual fee of $10,000 and $500 for each Board of
Directors and committee meeting attended. All directors are reimbursed for all
reasonable expenses incurred by them in acting as a director or as a member of
any committee of the Board of Directors. In addition, directors who are not
employees of the Company are compensated through stock options under the
Directors' Plan. Messrs. Macey and Newhouse are officers, directors and,
together with William L. Selden, a director of the Company until November 1997,
the sole stockholders of Sterling, which received an annual management fee from
the Company through April 1998. See "Certain Relationships and Related
Transactions."
The Company has adopted the 1995 Non-Employee Director Stock Option Plan
(the "Directors' Plan") to promote the Company's interests by attracting and
retaining highly skilled, experienced and knowledgeable non-employee directors.
An aggregate of 100,000 shares of Common Stock have been reserved for issuance
under the Directors' Plan. Options granted under the Directors' Plan do not
qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Directors' Plan
provides for an automatic grant of an option to purchase 10,000 shares of Common
Stock effective upon initial election or appointment to the Board of Directors
of a non-employee director and an automatic grant of an option to purchase an
additional 2,500 shares of Common Stock on each anniversary of
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the date of his or her election or appointment to the Board of Directors. In
addition, the Directors' Plan provided for the automatic grant to each of
Messrs. Borelli, Glassmeyer, Macey, Newhouse and Selden of: (i) an option to
purchase 10,000 shares of Common Stock in February 1996 (the "Initial Options")
following the consummation of the Company's initial public offering (the
"Initial Public Offering") at an exercise price of $9.50 per share, the initial
public offering price of the Common Stock; and (ii) on April 21st of each year,
commencing April 21, 1996, an automatic grant of an option to purchase an
additional 2,500 shares of Common Stock, provided such individual received
Initial Options and is serving as a non-employee director at the close of
business on April 21st of such year. The options have an exercise price of 100%
of the fair market value of the Common Stock on the date of grant and have a
ten-year term. Initial Options became exercisable in their entirety from and
after the date six months after the date of the grant. All other options granted
under the Directors' Plan become fully exercisable from and after the first
anniversary of the grant date. Each outstanding option is subject to
acceleration in the event of a change of control of the Company (as defined in
the Directors' Plan). The options may be exercised by payment in cash, check or
shares of Common Stock. On April 10, 1997, Mr. Dickinson was granted an option
to purchase 10,000 shares of Common Stock at an exercise price of $11.375. On
April 15, 1997, Mr. Steadman was granted an option to purchase 10,000 shares of
Common Stock at an exercise price of $11.25 upon his becoming a non-employee
director. On April 21, 1997, each of Messrs. Glassmeyer, Macey, Newhouse and
Selden was granted an option to purchase an additional 2,500 shares of Common
Stock at an exercise price of $11.25 and on April 21, 1998, each of Messrs.
Glassmeyer, Macey and Newhouse was granted an option to purchase an additional
2,500 shares at an exercise price of $32.375. On April 10, 1998, Mr. Dickinson
was granted an option to purchase an additional 2,500 shares of Common Stock at
an exercise price of $30.125 and on April 15, 1998 Mr. Steadman was granted an
option to purchase an additional 2,500 shares of Common Stock at an exercise
price of $32.25. See "Proposal No. 3 -- Amendment to 1995 Non-Employee Director
Stock Option Plan" for information concerning a proposed amendment to the
Directors' Plan to increase the number of shares available for grant thereunder.
VOTE REQUIRED
The six nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as directors. Only votes cast for a nominee will
be counted, except that the accompanying proxy will be voted for all nominees in
the absence of instruction to the contrary. Abstentions, "broker non-votes" and
instructions on the accompanying proxy card to withhold authority to vote for
one or more nominees will result in the respective nominees receiving fewer
votes. However, the number of votes otherwise received by the nominee will not
be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1 -- ELECTION OF DIRECTORS" TO
BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A
VOTE "FOR" EACH NOMINEE.
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EXECUTIVE COMPENSATION
The following table summarizes all compensation earned by or paid to the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company whose annual salary and bonus
exceeded $100,000 (collectively, the "Named Executive Officers") for services
rendered in all capacities to the Company during the fiscal years indicated.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
FISCAL ---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ------ -------- -------- ------------ ------------
Ronald F. Borelli(1)............... 1997 $250,000 $150,000 -- $ --
Chairman of the Board 1996 48,077(2) 37,500 300,000 --
and Chief Executive Officer
George P. Dannecker(3)............. 1997 $175,804 $ 59,100 17,320 $ --
President and Chief Operating 1996 138,846 28,423 -- --
Officer of Aavid Thermal Products 1995 135,000 68,760 -- --
Bharatan R. Patel(4)............... 1997 $200,000 $ 83,744 -- $ --
President and Chief Operating 1996 200,000 142,922 70,000 --
Officer 1995 66,667 -- -- 943,006(5)
John W. Mitchell(6)................ 1997 $173,000 $ 34,650 2,393 $ --
Vice President, General 1996 163,873 30,000 -- --
Counsel and Secretary 1995 9,889 -- 68,750 --
Hasan Ferit Boysan(7).............. 1997 $144,672 $ 75,099 -- $ --
Chief Operating Officer of 1996 142,560 109,203 5,835 --
Fluent 1995 37,122 -- -- 101,396(8)
- ---------------
(1) Effective October 15, 1996, Mr. Borelli, a director of the Company,
succeeded Alan F. Beane as Aavid's President and Chief Executive Officer.
Mr. Borelli ceased to serve as President of the Company in October 1997. See
"Employment Agreements" for a discussion of Mr. Borelli's compensation. In
1995, the Company paid Mr. Borelli a fee of $100,000 as compensation for his
efforts in coordinating and negotiating the Company's acquisition of Fluent.
(2) Represents a base salary of $250,000 on an annualized basis.
(3) Mr. Dannecker became President and Chief Operating Officer of Aavid Thermal
Products in October 1997.
(4) Mr. Patel became President and Chief Operating Officer of the Company in
October 1997. Mr. Patel joined the Company in August 1995 in connection with
the Company's acquisition of Fluent.
(5) Represents a payment of $555,766 for income taxes due upon the exercise of
Fluent options and a bonus of $387,240 under Fluent's previous bonus plan.
(6) Mr. Mitchell joined the Company in December 1995.
(7) Mr. Boysan became Chief Operating Officer of Fluent in August 1997. Mr.
Boysan joined the Company in August 1995 in connection with the Company's
acquisition of Fluent.
(8) Represents a bonus payment of $101,396 under Fluent's previous bonus plan.
STOCK OPTIONS
The following table sets forth certain information regarding individual
options granted in fiscal 1997 to each of the Named Executive Officers pursuant
to the Company's stock option plans. The options underlying each grant become
exercisable in four equal installments commencing on the date of grant and then
on the next three successive anniversaries of the date of grant. In accordance
with the rules of the Commission, the table sets forth the hypothetical gains or
"option spreads" that would exist for the options at the end of their respective
terms. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the option was granted to the end of
the option's term.
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OPTION GRANTS IN FISCAL 1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(2)
OPTIONS EMPLOYEES IN PER EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR(1) SHARE DATE 5% 10%
---- ----------- -------------- -------- ---------- --------- ---------
Ronald F. Borelli........... -- -- -- -- -- --
George P. Dannecker......... 15,000 5% $16.50 6/19/07 $ 155,700 $ 394,500
Bharatan R. Patel........... -- -- -- -- -- --
John W. Mitchell............ 2,393 1% $12.75 1/30/07 $ 19,192 $ 48,626
Hasan Ferit Boysan.......... -- -- -- -- -- --
- ---------------
(1) Based upon options to purchase 289,982 shares granted to all employees in
1997. On January 1, 1998 Messrs. Borelli, Dannecker, Mitchell, Patel and
Boysan were granted options to purchase 100,000 shares, 24,900 shares, 3,000
shares, 10,000 shares and 5,000 shares, respectively, of Common Stock at an
exercise price of $24.00 per share, except options to purchase 50,000 shares
granted to Mr. Borelli have an exercise price equal to the greater of $27.50
or fair market value on July 1, 1998. All the options, other than those
granted to Mr. Borelli, were immediately exercisable as to 25% and become
exercisable as to an additional 25% on each of January 1, 1999, 2000 and
2001. Mr. Borelli's options become exercisable as to 25,000 shares on each
of January 1, 1999, July 1, 1999, January 1, 2000 and July 1, 2000. The
options granted to Messrs. Borelli, Dannecker, Mitchell, Patel and Boysan in
1998 were granted subject to stockholder approval of an amendment to the
Company's 1994 Stock Option Plan. See "Proposal No. 2 -- Amendment to 1994
Stock Option Plan."
(2) The 5% and 10% assumed annual compound rates of stock price appreciation are
mandated by the Commission and do not represent the Company's estimate or
projection of the future Common Stock prices. Actual gains, if any, on stock
option exercises will depend on the future price of the Common Stock and
overall stock market conditions. The 5% and 10% rates of appreciation over
the 10 year option term of the $12.75 stock price on the date of grant would
result in a stock price of $20.77 and $33.07, respectively. The 5% and 10%
rates of appreciation over the 10 year option term of the $16.50 stock price
on the date of grant would result in a stock price of $26.88 and $42.80,
respectively. There is no representation that the rates of appreciation
reflected in this table will be achieved.
The following table sets forth information with respect to (i) stock
options exercised in 1997 by the Named Executive Officers and (ii) unexercised
stock options held by such individuals at December 31, 1997.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND 1997 FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- --------- ------------------------- -------------------------
Ronald F. Borelli............ -- -- 207,500/118,750 $3,136,299/$1,721,406
George P. Dannecker.......... 2,400 $ 328,069 53,667/ 13,106 $1,111,539/$ 105,225
Bharatan R. Patel............ -- -- 35,000/ 35,000 $ 507,500/$ 507,500
John W. Mitchell............. -- -- 52,042/ 19,101 $ 778,834/$ 279,338
Hasan Ferit Boysan........... -- -- 2,917/ 2,918 $ 42,311/$ 42,297
- ---------------
(1) Calculated on the basis of $24.00 per share, the closing sale price of the
Common Stock as reported on the Nasdaq National Market on December 31, 1997,
minus the exercise price.
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EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Mr. Borelli for an
initial term through December 31, 1999, and with Mr. Mitchell for an initial
term of three years expiring December 1, 1998. Aavid Thermal Products has
entered into an employment agreement with Mr. Dannecker for an initial term of
two-and-a-half-years expiring on July 1, 1996, which agreement was automatically
renewed through June 30, 1999, and Fluent and Fluent Europe Limited have entered
into employment agreements with Messrs. Patel and Boysan, respectively, for
initial terms of three years expiring on August 24, 1998. Each of the foregoing
employment agreements (collectively, the "Employment Agreements") provides for
automatic renewal for successive one year terms (two years in the case of
Messrs. Patel and Boysan) unless either party gives written notice to the other
to the contrary at least 90 days prior to its expiration; however, each of
Messrs. Borelli, Mitchell, Dannecker, Patel and Boysan are entitled to terminate
his employment at any time by giving 90 days' notice to the Company. The
Employment Agreements require each employee to devote his full business time and
best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company. The Employment
Agreements currently provide for the payment of a base salary to Messrs.
Borelli, Patel, Mitchell, Dannecker and Boysan equal to $300,000, $200,000,
$165,000, $160,000 and $135,000, respectively, subject to increase for Mr.
Borelli to $350,000 in 1999 and at the discretion of the board of directors of
their respective employers for the others. Each Employment Agreement provides
that the employee will continue to receive his base salary, bonuses, benefits
and other compensation for a specified period in the event their respective
employers terminate their employment other than for "cause" or under certain
other circumstances. In addition, in the event there is a material change to the
makeup of the Board of Directors, without Mr. Borelli's consent, as a result of
a merger, acquisition or financing, and either Mr. Borelli is terminated as a
result of such change or he elects to voluntarily terminate his employment as a
result of such material change, then he will be entitled to continue to receive
his base salary for the longer of 12 months or the end of the term of his
Employment Agreement. As consideration for Mr. Borelli becoming Chairman,
President and Chief Executive Officer, in October 1996 the Company granted Mr.
Borelli options to purchase an aggregate of 300,000 shares of Common Stock at an
exercise price of $9.50 per share. 37,500 of these options became exercisable
upon grant, with the remainder becoming exercisable in equal quarterly
installments over a period of two years as long as Mr. Borelli remains employed
by the Company. In connection with Mr. Borelli agreeing to extend his employment
agreement through December 1999, in January 1998 the Company granted Mr. Borelli
options to purchase 50,000 shares of Common Stock at an exercise price of $24.00
per share and 50,000 shares of Common Stock at the higher of fair market value
on July 1, 1998 or $27.50; all of such options were granted subject to
stockholder approval of an amendment to the Company's 1994 Stock Option Plan.
See "Proposal No. 2 -- Amendment to 1994 Stock Option Plan."
Each of Messrs. Borelli, Dannecker, Mitchell and Patel is entitled to
annual bonuses based on the Company's performance. Mr. Borelli is entitled to an
annual bonus of up to $150,000 based upon his performance and the performance of
the Company in 1997 and between $105,000 and $300,000 based upon the Company's
achievement of various percentages of the Company's Plan Return on Capital (as
defined below) in 1998 and 1999. Mr. Dannecker is entitled to receive an annual
bonus ranging from $5,600 to $56,000, based on Aavid Thermal Products' actual
performance measured against budgeted performance. Mr. Mitchell is entitled to
receive an annual bonus of up to $60,000 based on his management of the
Company's legal expenses. Mr. Patel is entitled to annual bonuses, commencing
with the year ended December 31, 1996, based on Fluent's revenue and EBIT
(defined below) growth, which is payable in cash, and Fluent's Return on Capital
(defined below), which is payable in shares of Common Stock. The Common Stock
will be subject to vesting, based upon continued employment. The Employment
Agreements (other than those of Messrs. Borelli, Patel and Boysan) provide that
if the bonus payments would cause a payment default under the terms of the
Company's agreement with LaSalle Business Credit, Inc., the payment will be
deferred until such time as the payments would not cause a default. Such
deferred payments would accrue interest at the rate of 10.25% per annum. The
Company may renegotiate its obligation to make the payments under those
employment agreements in connection with certain public offering or acquisition
transactions involving the Company.
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"EBIT" means consolidated net income before taxes and interest expense.
"Return on Capital", which means aftertax operating profit less the total annual
cost of capital. "Plan Return on Capital" means the Return on Capital goals, as
determined in the good faith judgment of the Board of Directors, that the
Company is budgeted to attain in the fiscal year.
The Employment Agreements contain non-competition covenants, waivable by
the Company, which survive the termination of each employee's employment with
the Company until two years from the date the employee's employment terminates
(the "Non-Competition Period"). In addition to other compensation payable to
each of Messrs. Borelli, Dannecker, Mitchell, Patel and Boysan under their
agreements, during the Non-Competition Period the Company is required to pay
each employee one-half (75% of base salary in the case of Messrs. Patel and
Boysan) of his highest prior base salary per annum.
Mr. Henderson's employment as President and Chief Operating Officer of
Aavid Thermal Products terminated in April 1997. On June 4, 1997, the Company
entered into a Settlement Agreement and General Release of All Claims (the
"Settlement Agreement") with Mr. Henderson. The Settlement Agreement provided
that Mr. Henderson would continue to be paid the sum of $250,000 in accordance
with the Company's practices until March 31, 1998 and would be entitled to
exercise a total of 110,291 options to purchase the Company's Common Stock prior
to July 1, 1997. Upon execution of the Settlement Agreement, the Company paid
Mr. Henderson bonuses of $75,000 and $40,000, plus interest, for 1995 and 1996,
respectively. Under the Settlement Agreement and in accordance with Mr.
Henderson's employment agreement, Mr. Henderson also received a payment of
$8,333.33 per month for four months beginning June 1, 1997 for his covenant not
to compete and was released from such covenant after receiving such payments.
In addition, the Company entered into an employment agreement with Mr.
Steadman for an initial term expiring on December 31, 1997. The agreement
provided that Mr. Steadman would be employed on a part time basis as Chairman of
the Company's Board of Directors. Under the agreement, Mr. Steadman was required
to commit no less than 52 days per year of dedicated, and if required on-site,
time to the Company. The agreement provided Mr. Steadman with a salary of
$100,000 per year in lieu of other fees paid to directors for services to the
Company. In addition, Mr. Steadman was granted, effective March 13, 1995, an
option to acquire 28,655 shares of Common Stock at an exercise price of $2.20
per share (the "March Option") and, effective December 1, 1995, an option to
purchase 14,327 shares of Common Stock at an exercise price of $9.00 per share
(the "December Option"). As of April 15, 1998, all shares of Common Stock
subject to the March Option and the December Option had vested. On October 14,
1996, Mr. Steadman resigned as the Company's Chairman of the Board, although he
remains a director. Effective October 15, 1996, Mr. Steadman's employment
agreement was amended and pursuant to the terms thereof, Mr. Steadman was paid
his salary only through April 15, 1997.
COMPENSATION AND STOCK PLANS COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation and Stock Plans Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933,
as amended (the "Securities Act"), or under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The Compensation and Stock Plans Committee is currently comprised of three
directors. As members of the Compensation and Stock Plans Committee, it is our
responsibility to determine the most effective total executive compensation
strategy based on the Company's business and consistent with stockholders'
interests. Our specific duties entail reviewing overall policy with respect to
compensation matters, including such matters as compensation plans for employees
and employment agreements and compensation for executive officers.
COMPENSATION PHILOSOPHY
The Company believes that executive compensation should be closely related
to increased stockholder value. One of the Company's strengths contributing to
its successes is a strong management team, many of whom have been with the
Company for a large number of years. The Committee believes that low executive
turnover has been instrumental to the Company's success, and that the Company's
compensation program has
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played a major role in limiting executive turnover. The compensation program is
designed to enable the Company to attract, retain and reward capable employees
who can contribute to the continued success of the Company, principally by
linking compensation with the attainment of key business objectives. Equity
participation and a strong alignment to stockholders' interests are key elements
of the Company's compensation philosophy. Accordingly, the Company's executive
compensation program is designed to provide competitive compensation, support
the Company's strategic business goals and reflect the Company's performance.
The compensation program reflects the following principles:
- Compensation should encourage increased stockholder value.
- Compensation programs should support the short- and long-term strategic
business goals and objectives of the Company.
- Compensation programs should reflect and promote the Company's values and
reward individuals for outstanding contributions toward business goals.
- Compensation programs should enable the Company to attract and retain
highly qualified professionals.
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components, base
salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance and resources of the
Company and general economic conditions, as well as a number of factors relating
to the particular individual, including the performance of the individual
executive, and level of experience, ability and knowledge of the job.
INCENTIVES
Incentives consist of cash awards and stock options. Most of the Company's
executive officers are entitled to bonuses, established in their employment
agreements, based on the Company's performance. In 1997, bonuses were paid to
each of Messrs. Borelli, Patel, Dannecker and Mitchell pursuant to their
employment agreements. Stock options are granted from time to time to reward key
employees' contributions to the Company's performance.
The Compensation Committee strongly believes that the pay program should
provide employees with an opportunity to increase their ownership and
potentially gain financially from increases in the Company's stock price. By
this approach, the best interests of stockholders, executives and employees will
be closely aligned. Therefore, executives and other employees are eligible to
receive stock options, giving them the right to purchase shares of Common Stock
of the Company at a specified price in the future. The grant of options is based
primarily on a key employee's potential contribution to the Company's growth and
profitability, based on the Compensation Committee's discretionary evaluation.
Options are granted at the prevailing market value of the Company's Common Stock
and will only have value if the Company's stock price increases. Generally,
grants of options vest over a period of time and executives must be employed by
the Company for such options to vest.
In furtherance of its overall compensation philosophy, the Company has
adopted the 1995 Employee Stock Purchase Plan (the "Purchase Plan"). Under the
Purchase Plan, all full-time employees of the Company and its subsidiaries are
entitled to purchase shares of the Common Stock through payroll deductions, lump
sum cash payments, or both, as determined by the Board of Directors, or any
committee of the board to whom it delegates its authority. 250,000 shares are
reserved for purchase under the Purchase
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Plan. Under the Purchase Plan, the Company will grant rights to purchase shares
of Common Stock to eligible employees pursuant to one or more offerings (each,
an "Offering") on a date or series of dates designated by the Board of Directors
(the "Offering Date"). The rights granted on any Offering Date are exercisable
upon the expiration of a period whose length shall be determined by the Board of
Directors, but which may not exceed 27 months. The price per share with respect
to each grant of rights under the Purchase Plan is the lesser of: (i) 85% of the
fair market value of a share of Common Stock on the Offering Date on which such
right was granted, or (ii) 85% of the fair market value of a share of Common
Stock on the date such right is exercised. The Purchase Plan is intended to
qualify as an "employee stock purchase plan" within the meaning of Section 423
of the Code.
CHIEF EXECUTIVE OFFICER 1997 COMPENSATION
Ronald F. Borelli, who has served as the Company's Chairman of the Board
and Chief Executive Officer since October 15, 1996 and President from October
15, 1996 to October 15, 1997, received $250,000 in base salary for the Company's
last fiscal year. In 1997, Mr. Borelli also received a cash bonus of $150,000
for services rendered in 1997, based on the Company's achieving Plan Return on
Capital for 1997, pursuant to the terms of his employment agreement with the
Company. Mr. Borelli's base salary and bonus were established in connection with
his employment as the Company's Chairman of the Board, President and Chief
Executive Officer during fiscal year ended December 31, 1997. Mr. Borelli was
not granted options in 1997; however, in connection with Mr. Borelli agreeing to
extend his employment agreement through December 1999, Mr. Borelli was granted
options on January 1, 1998 to purchase 50,000 shares of Common Stock at an
exercise price of $24.00, the fair market value on the date of grant, and 50,000
shares of Common Stock at the higher of fair market value on July 1, 1998 or
$27.50, subject to stockholder approval of an amendment to the Company's 1994
Stock Option Plan increasing the number of shares available for grant
thereunder. See "-- Employment Agreements."
TAX EFFECTS
Changes made in 1993 to the Code impose certain limitations on the
deductibility of executive compensation paid by public companies. In general,
under the limitations, the Company will not be able to deduct annual
compensation paid to certain executive officers in excess of $1,000,000 except
to the extent that such compensation qualifies as "performance-based
compensation" (or meets other exceptions not relevant here). Non-deductibility
would result in an additional tax cost to the Company. It is possible that at
least some of the cash and equity-based compensation paid or payable to the
Company's executive officers will not qualify for the "performance-based
compensation" exclusion under the deduction limitation provisions of the Code.
Nevertheless, the Compensation Committee anticipates that in making compensation
decisions it will give consideration to the net cost to the Company (including,
for this purpose, the potential limitation on deductibility of executive
compensation).
CONCLUSION
The Compensation and Stock Plans Committee believes that linking executive
compensation to corporate performance results in a better alignment of
compensation with corporate business goals and stockholder value. The
Compensation and Stock Plans Committee believes its compensation practices are
directly tied to stockholder returns and linked to the achievement of annual and
longer-term financial and operational results of the Company on behalf of the
Company's stockholders. In view of the Company's performance and achievement of
goals and competitive conditions, the Compensation and Stock Plans Committee
believes that compensation levels during 1997 adequately reflect the Company's
compensation goals and policies.
COMPENSATION AND STOCK PLANS COMMITTEE
David R.A. Steadman
Edward F. Glassmeyer
Douglas L. Newhouse
M. William Macey, Jr.
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COMPENSATION AND STOCK PLANS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors established the Compensation Committee in
November 1993 and combined it with the Stock Plans Committee in 1997 to form the
Compensation and Stock Plans Committee. Each of Messrs. Steadman, Glassmeyer,
Macey and Newhouse served as members of the Compensation and Stock Plans
Committee during fiscal 1997. In 1997, each of Messrs. Macey, Glassmeyer and
Newhouse received options to purchase 2,500 shares of Common Stock and Mr.
Steadman received options to purchase 10,000 shares of Common Stock pursuant to
the Directors' Plan. See "Compensation of Directors."
See "Certain Relationships and Related Transactions" for a description of
the principal terms of the Company's management agreement with Sterling.
See "-- Employment Agreements" for a description of the prior employment
agreement between the Company and Mr. Steadman.
COMPARATIVE PERFORMANCE OF THE COMPANY
The Stock Price Performance Graph set forth below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPARE CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
AAVID
MEASUREMENT PERIOD THERMAL PEER GROUP NASDAQ
(FISCAL YEAR COVERED) TECHNOLOGIES INDEX MARKET INDEX
1/30/96 100.00 100.00 100.00
3/29/96 88.31 109.88 103.98
6/28/96 75.32 109.63 111.68
9/30/96 85.71 115.29 114.76
12/31/96 111.69 121.30 120.16
3/31/97 122.08 107.99 114.05
6/30/97 214.29 128.37 134.93
9/30/97 312.99 158.47 157.31
12/31/97 249.35 137.05 147.40
The above Graph compares the change in the Company's cumulative total
stockholder return on its Common Stock (as measured by dividing: (i) the sum of
(a) the cumulative amount of dividends for the period indicated, assuming
dividend reinvestment, and (b) the difference between the Company's share price
at the end of the period and January 30, 1996, the date the Company's Common
Stock commenced trading on The Nasdaq National Market, by (ii) the share price
at January 30, 1996) with the cumulative total return of The Nasdaq Stock Market
Index and the cumulative total return of the Company's peer group (assuming the
investment of $100 in the Company's Common Stock, the Nasdaq Stock Market Index
and the Company's peer group on January 30, 1996, and reinvestment of all
dividends). During 1996 and 1997, the Company paid no dividends. The companies
included in the Company's peer group are: Alpha Technologies Group Inc., AMP
Inc., Autodesk Inc., Cadence Design Systems Inc., Computervision Corp., Jabil
Circuit Inc., Kent Electronics Corp., Molex Inc., Parametric Technology Corp.,
Sigma Circuits Inc., Solectron Corp., Synopsys Inc., and Vishay Intertechnology
Inc. The Company's 1997 peer group index does not include Cooper and Chyan
Technology, Inc. ("Cooper"), which was included in the Company's 1996 peer group
index, because Cooper was not in existence at December 31, 1997.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1993, the Company entered into a management agreement with
Sterling pursuant to which Sterling agreed to provide financial and management
consulting services to the Company for a fee of $200,000 per annum, plus 2% of
the Company's consolidated net income before interest expense, taxes,
depreciation, amortization and certain other expenses ("EBITDA") in excess of
$7,000,000 (the "Sterling EBITDA Fee"), plus reimbursement of direct
out-of-pocket costs and expenses. In September 1995, the Company and Sterling
amended the management agreement to eliminate the Sterling EBITDA Fee effective
January 1, 1996. In consideration of elimination of the Sterling EBITDA Fee, the
Company agreed to pay Sterling $275,000, which amount was paid in February 1996
from the net proceeds of the Company's initial public offering, and to increase
the management fee to $250,000 per annum for the period commencing January 1,
1996. Pursuant to the management agreement, the management fee would not be paid
on a current basis, but would accrue, during any period when the Company was in
default of the payment of principal or interest under its term loan and
revolving credit facility. Pursuant to the management agreement, Sterling
assisted the Company's management in, among other things, developing and
implementing corporate strategy, including acquisition and divestiture
strategies, budgeting future corporate investment and debt and equity offerings.
The management agreement was to terminate on the later of: (i) December 31,
2000; (ii) the date no officer or employee of Sterling was a member of the Board
of Directors of the Company; or (iii) the date Oak V, Oak V Affiliates and the
directors and officers of Sterling beneficially owned in the aggregate less than
15% of the Company's Common Stock, although Sterling could terminate the
agreement at any time upon 30 days' notice. In the event of a change in control
of the Company in which no Sterling director remained a director of the Company,
the present value of the management fee for the remaining term of the agreement
(using a discount rate of 9%) would have become immediately due and payable. In
April 1998, the Company and Sterling entered into an agreement to terminate the
management agreement effective upon the Company's payment to Sterling of
$619,348. Messrs. Macey and Newhouse, current directors of the Company, and Mr.
Selden, a director of the Company until November, 1997, are officers, directors
and the sole stockholders of Sterling. Messrs. Macey and Newhouse do not, and
Mr. Selden did not, receive cash compensation other than the management fee for
serving as directors of the Company. See "-- Compensation of Directors."
In October 1993, the Company entered into an agreement with Materials
Innovation Inc. ("MII") pursuant to which MII, Mr. Alan Beane, who beneficially
owns 13.5% of the Common Stock and was formerly both a director and the
Company's chief executive officer, and Mr. Glenn Beane, Alan Beane's brother,
granted to the Company exclusive worldwide rights and licenses under certain
patents and technology owned by them to develop, make, have made, use and sell
certain products used to attach certain heat dissipation products ("Clamp
Products") and heat sinks manufactured by a vacuum die cast process ("Heat Sink
Products"). Under the agreement, the Company is required to pay MII an annual
royalty for the Clamp Products sold by the Company equal to the greater of (i)
$0.05 per Clamp Product or (ii) 15% of the net selling price for such Clamp
Products, with a minimum royalty of $40,000 per annum. In addition, under the
agreement the Company must pay MII an annual royalty for the Heat Sink Products
sold by the Company equal to the greater of (i) 10% of the net selling price and
(ii) 25% of the net selling price minus servicing cost. During the term of the
agreement, the Company is required to reimburse MII for its direct costs
incurred in sourcing and testing clamps required and requested by the Company.
The agreement provides that prior to October 14, 2003, MII, Alan Beane and Glenn
Beane may not directly or indirectly, in any capacity whatsoever: (i) sell any
heat dissipation product of the type produced by the Company (other than
products whose principal purpose is not heat dissipation and products for one
specified customer); (ii) license, sell, transfer, provide or make available to
any business which is competitive with the Company any products, technology or
other intellectual property which may be useful in the manufacture or sale of
the Company's heat dissipation products, except that MII is permitted to sell
raw materials to entities which are not direct competitors of the Company; or
(iii) provide any kind of services to any business which is competitive with the
Company with respect to its heat dissipation products. In addition, the Company
may not prior to October 14, 2003, in any capacity whatsoever, engage in the
manufacture, distribution, sale or licensing of particle level heterogeneous
materials and other materials created from powders and particles, except
adhesives and compliant interface materials, or pursuant to a license from MII.
The Company must give MII primary consideration as a supplier of such materials
created from powders and particles if MII can supply
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such materials on terms which are competitive with those otherwise available in
the market. The agreement grants the Company a right of first refusal in the
event of a transfer of MII's interest in the technology covered by the
agreement. In addition, the agreement provides that MII may not, and may not
permit Glenn Beane or any affiliate to, transfer all or any part of its interest
in the patents or technology covering the Clamp Products or Heat Sink Products,
unless, prior to the transfer, the transferee has executed an agreement
acknowledging that it takes such interest subject to the provisions of the
agreement between MII and Aavid. The agreement terminates upon the last to
expire of the licensed patents covering the Clamp Products and the Heat Sink
Products, although the Company may terminate the agreement at any time effective
immediately upon written notice to MII. In 1997, royalty payments and expense
reimbursement by the Company to MII were not material and there were no sales of
MII products and development services to the Company. Mr. Alan Beane is the
chairman and an owner of 41.5% of MII.
On March 4, 1998, MII and Messrs. Alan and Glenn Beane (collectively, the
"Petitioners") filed a petition for declaratory judgment against the Company
seeking to have the agreement between the Company and MII declared invalid. The
Petitioners claim that the Company had failed to pay royalties associated with
the vacuum die cast patent. The action does not seek monetary damages. The
Company believes it has meritorious defenses and intends to vigorously defend
the action. Although the Company believes that the termination of the agreement
with MII will not have a material adverse effect on its business, results of
operations or financial condition, there can be no assurance it will not have
such a material adverse effect in the future.
Under the terms of Mr. Beane's former employment agreement with the
Company, Mr. Beane was permitted to pursue scientific research, patent
inventions and business ventures with MII so long as such activities did not
interfere with Mr. Beane's obligations to Aavid. The Company has no rights to
any intellectual property resulting from such permitted activities. The
relationship of MII to the Company is regulated by the terms of an agreement
between MII, its principals and Aavid, which prohibits MII from competing with
the Company in the markets for heat sinks and other products whose principal
purpose is to dissipate heat from electronic devices. MII is pursuing the
development of certain products and advanced materials which, if successfully
developed, would have application to the Company's business. However, MII is not
obligated to license such technology to Aavid, and there can be no assurance
that Aavid will benefit from the relationship with MII or will be able to
license any intellectual property from MII, if desirable, on acceptable terms or
at all. There can be no assurance that a conflict of interest will not develop
between Aavid and MII.
Mr. Beane's Employment Agreement originally provided for the payment of an
annual bonus during the five year period ended December 31, 1998, regardless of
whether Mr. Beane was then employed by the Company, equal to 8% of the Company's
EBITDA in excess of $5.0 million for the applicable year. In September 1995, Mr.
Beane's employment agreement was amended to provide for (i) the payment of
annual bonuses in 1996, 1997 and 1998 in an amount equal to 8% of the Company's
EBIT in excess of $10.75 million for 1996, $12.75 million for 1997 and $14.44
million for 1998 (which amounts were to be adjusted for any future acquisitions)
and (ii) the payment to Mr. Beane of $2,374,000, representing the present value
of the portion of the expected future bonus payments required under the
employment agreement. Mr. Beane received a bonus of $246,000 in 1995,
representing 8% of 1995 EBITDA in excess of $5.0 million. In December 1995, the
Company paid Mr. Beane $250,000 as an advance against Mr. Beane's 1995 bonus.
All amounts (other than the $2.4 million payment referred to above) required to
be paid under Mr. Beane's employment agreement in any year in excess of $750,000
shall be deferred until the first year in which such payments can be made
without exceeding such $750,000 annual limit. Mr. Beane was paid the $2,374,000
in February 1996 from the proceeds of the Company's initial public offering.
Under the terms of the agreement, Mr. Beane was entitled to a bonus of $109,824
in 1997, which amount has not to date been paid. Mr. Beane's employment
agreement with the Company expired in October 1996.
INDEBTEDNESS OF MANAGEMENT
In connection with the acquisition of Fluent in 1995, the Company loaned
Mr. Patel $113,505. The loan was secured by a lien on 9,048 shares of Common
Stock held by Mr. Patel, bore interest at the applicable
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federal rate and matured on August 24, 1997. Mr. Patel repaid the loan in full
on the maturity date. The largest amount of indebtedness of Mr. Patel
outstanding in 1997 was $113,505.
PROPOSAL NO. 2 -- AMENDMENT TO 1994 STOCK OPTION PLAN
On March 10, 1998, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to the Company's 1994 Stock Option Plan (the
"1994 Option Plan") which would increase the aggregate number of shares of
Common Stock which may be issued thereunder from 900,000 to 1,400,000 shares,
all of which would be available for the grant of either "incentive stock
options," as defined in Section 422 of the Code, or options which do not qualify
as incentive stock options (non-qualified stock options). The primary features
of the 1994 Option Plan are summarized below. The full text of the 1994 Option
Plan and the proposed amendment thereto is set forth in Appendix A to this Proxy
Statement and the following discussion is qualified in its entirety by reference
thereto.
The Company adopted the 1994 Option Plan to secure for the Company and its
stockholders the benefits arising from capital stock ownership by officers,
employees, consultants and advisors of the Company who are expected to
contribute significantly to the Company's future growth and success. The 1994
Option Plan provides for the issuance of incentive stock options to employees of
the Company and non-qualified stock options to employees, officers, consultants
and advisors of the Company. The Board of Directors believes that approval of
the amendment to the 1994 Option Plan will serve the best interests of the
Company and its stockholders by permitting the Company to continue to utilize
stock options as a means to attract and retain key employees and consultants who
are in a position to contribute materially to the successful conduct of the
Company's business and affairs and, in addition, to stimulate in such
individuals an increased desire to render greater service to the Company and its
subsidiaries. In addition, the availability of shares for grant under the 1994
Option Plan is important in that it provides the Company an alternative or
additional means of compensating key employees and consultants, thereby
providing such individuals with an equity participation in the Company. As of
March 1, 1998, there were 4,080 shares available for future grants under the
1994 Option Plan. All employees are eligible to participate in the 1994 Option
Plan and as of March 1, 1998, approximately 274 employees were participating in
the 1994 Option Plan.
The 1994 Option Plan is administered by the Compensation and Stock Plans
Committee of the Board of Directors (the "Committee"), which has the authority
to select optionees, designate the number of shares to be covered by each option
and, subject to certain restrictions, specify other terms of the options. Each
option is evidenced by an executed option agreement in a form approved by the
Committee. No options granted under the 1994 Option Plan are transferable by the
optionee other than by will or by the laws of descent and distribution, or
pursuant to a qualified domestic relations order, and each option is
exercisable, during the lifetime of the optionee, only by the optionee.
Under the 1994 Option Plan, the Committee will determine the purchase price
per share of Common Stock deliverable upon the exercise of an option, provided
that the exercise price of an incentive stock option must be at least equal to
100% of the fair market value of the Common Stock as of the close of business on
the business day immediately preceding the date of the grant (110% of the fair
market value in the case of options granted to employees who hold more than ten
percent of the voting power of the Company's capital stock on the date of
grant). Each option and all rights thereunder expire on the date established by
the Committee at the time of the grant, provided that the term of an incentive
stock option is not to exceed ten years (five years in the case of an incentive
stock option granted to a ten percent holder). The Committee has the discretion
to determine the vesting schedule and the period required for full
exercisability of stock options. The 1994 Option Plan provides for the immediate
exercisability of all options upon a change in control of the Company (as
defined in the 1994 Option Plan). Upon exercise of any option granted under the
1994 Option Plan, the exercise price may be paid in cash and/or such other form
of payment as may be permitted under the applicable option agreement, including,
without limitation, previously owned shares of Common Stock.
The Board of Directors has retained the right to amend or terminate the
1994 Option Plan as it deems advisable. However, no amendment shall be made to
the 1994 Option Plan without submitting such amendments to the Company's
stockholders for approval if so required under Section 422 of the Code or
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Rule 16b-3 under the Exchange Act. In addition, no amendments to, or termination
of, the 1994 Option Plan can impair the rights of any individual pursuant to
options previously granted to such individual without that individual's consent.
The 1994 Option Plan shall terminate in 2004. Any option outstanding under the
1994 Option Plan at the time of the 1994 Option Plan's termination shall remain
outstanding until the option expires by its terms.
As of March 1, 1998, options to purchase an aggregate of 1,043,820 shares
have been granted under the 1994 Option Plan, including 147,900 shares granted
subject to stockholder approval of an amendment to the 1994 Option Plan
increasing the number of shares available for grant thereunder. Messrs. Borelli,
Dannecker, Patel, Mitchell and Boysan have been granted options to purchase an
aggregate of 100,000, 115,673, 117,540, 80,000, 74,143 and 10,835 shares of
Common Stock, respectively, under the 1994 Option Plan, including options to
purchase 100,000, 24,900, 10,000, 3,000 and 5,000 shares granted to Messrs.
Borelli, Dannecker, Patel, Mitchell and Boysan, respectively, subject to
stockholder approval of an amendment to the 1994 Option Plan increasing the
number of shares available for grant thereunder.
See "Certain Federal Income Tax Considerations" for a brief description of
the tax consequences of the grant of options under the 1994 Option Plan.
NEW PLAN BENEFITS
The following table sets forth information regarding the currently known
benefits which will be received pursuant to the amendment to the 1994 Stock
Option Plan by: (i) each executive officer named in the Summary Compensation
Table (see "Executive Compensation"); (ii) all current executive officers as a
group; (iii) all current directors who are not executive officers as a group;
and (iv) all employees, including all current officers who are not executive
officers, as a group.
1994 STOCK OPTION PLAN
DOLLAR NUMBER OF
NAME AND PRINCIPAL POSITION VALUE UNITS
--------------------------- ------ ---------
Ronald F. Borelli........................................... $(1) 100,000
Chairman of the Board and Chief Executive Officer
George P. Dannecker......................................... $(1) 24,900
Vice President -- Marketing and Sales of Aavid Thermal
Products
Bharatan R. Patel........................................... $(1) 10,000
President and Chief Executive Officer of Fluent
John W. Mitchell............................................ $(1) 3,000
Vice President, General Counsel and Secretary
Hasan Ferit Boysan.......................................... $(1) 5,000
Chief Operating Officer of Fluent
All current executive officers as a group................... $(1) 147,900
All current directors who are not executive officers as a $ 0 0
group.....................................................
All employees, including current officers who are not $ 0 0
executive officers, as a group............................
- ---------------
(1) The dollar value is not readily determinable. Based upon the 5% and 10%
assumed annual compound rates of stock price appreciation, based on the
option exercise price, mandated by the Commission, the potential realizable
value at the assumed 5% and 10% annual rates of stock price appreciation for
the option term would be $1,789,500 and $4,104,000, respectively, for Mr.
Borelli, $375,741 and $952,425, respectively, for Mr. Dannecker, $150,900
and $382,500, respectively, for Mr. Patel, $45,270 and $114,750,
respectively, for Mr. Mitchell, $75,450 and $191,250, respectively, for Mr.
Boysan, and $2,512,311 and $5,936,175, respectively, for all current
executive officers as a group. Actual gains, if any, on stock option
exercises will depend on the future price of the Common Stock and overall
stock market conditions. The 5% and 10% rates of appreciation over the
10 year option term of the $24.00 stock price on the date of grant would
result in a stock price of $39.09 and $62.25, respectively. The 5% and 10%
rates of appreciation over the 10 year option term of the $27.50 stock price
on the date of grant would result in a stock price of $44.79 and $71.33,
respectively. The $27.50 exercise price may be higher if the fair market
value of the Common Stock on July 1, 1998 is higher. There is no
representation that the rates of appreciation reflected in this table will
be achieved. See "Executive Compensation -- Stock Options."
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VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
issued, outstanding and entitled to vote, present or represented at the Annual
Meeting, a quorum being present, is required for the adoption of this proposal.
Broker "non-votes" with respect to this matter will be treated as neither a vote
"for" nor a vote "against" the matter, although they will be counted in
determining if a quorum is present. However, abstentions will be considered in
determining the number of votes required to attain a majority of the shares
present or represented at the Annual Meeting and entitled to vote. Accordingly,
an abstention from voting by a stockholder present in person or by proxy at the
Annual Meeting has the same legal effect as a vote "against" the matter because
it represents a share present or represented at the Annual Meeting and entitled
to vote, thereby increasing the number of affirmative votes required to approve
this proposal.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 2 -- AMENDMENT TO 1994 STOCK
OPTION PLAN" TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL NO. 3 -- AMENDMENT TO
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On March 10, 1998, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to the Company's 1995 Stock Option Plan for
Non-Employee Directors (the "Directors' Plan") which would increase the
aggregate number of shares of Common Stock which may be issued thereunder from
100,000 shares to 200,000 shares. Options granted under the Directors' Plan are
intended to be treated as options which do not qualify as incentive stock
options within the meaning of Section 422 of the Code. In assessing the
recommendation of the Board, stockholders should consider that all current
directors other than Messrs. Borelli and Patel, who are not eligible to
participate in the Directors' Plan, will benefit from the adoption of the
amendment to the Directors' Plan and thus may be viewed to have a conflict of
interest. The primary features of the Directors' Plan are summarized below. The
full text of the Directors' Plan and the proposed amendment thereto is set forth
in Appendix B to this Proxy Statement and the following discussion is qualified
by reference thereto.
The Board of Directors believes that the continued growth and success of
the Company will depend, in large part, upon the ability of the Company to
retain on its Board of Directors knowledgeable persons who, through their
efforts and expertise, can make a significant contribution to the success of the
Company's business and to provide incentive for such directors to work for the
best interests of the Company and its stockholders through ownership of its
Common Stock.
Pursuant to the Directors' Plan as currently in effect, each person who is
elected a non-employee director will automatically receive an option to purchase
10,000 shares of the Company's Common Stock on the date of his or her initial
election or appointment to the Board of Directors (the "Initial Grant Date"). In
addition, each non-employee director will automatically receive an additional
option to purchase 2,500 shares of the Company's Common Stock on the anniversary
of the Initial Grant Date (the "Additional Grant Date"). The option exercise
price per share of Common Stock will be equal to the fair market value (as
defined in the Director's Plan) of the Common Stock on the date that the option
is granted. The term of the option will be for a period of ten years from the
date the option is granted. A total of 100,000 shares of Common Stock has
currently been reserved for issuance under the Directors' Plan. The number of
shares which may be issued under the Directors' Plan is subject to adjustment to
reflect any increase or decrease in the number of shares resulting from a stock
split, stock dividend, consolidation or other similar capital adjustment.
Except as set forth below, options become exercisable on the first
anniversary of the date of grant. In the event a director ceases to be a
director of the Company for any reason other than death or permanent disability,
then any unexercised portion of options granted to such optionee shall, to the
extent not then exercisable, immediately terminate and become void or, to the
extent such option is exercisable, may be exercised within 180 days after the
date he or she ceases to be a director of the Company. The Directors' Plan
provides that the options will become immediately exercisable upon a change in
control of the Company. For purposes thereof, a change in control of the Company
is deemed to occur if (1) there occurs (A) any consolidation or merger in which
the Company is not the continuing or surviving entity or pursuant to which
shares of the Common Stock would be converted into cash, securities or other
property, other than a merger of
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the Company in which the holders of the Common Stock immediately prior to the
merger have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all the Company's assets; (2) the Company's stockholders
approve any plan or proposal for the liquidation or dissolution of the Company;
(3) any person (as such term is used in Sections 13(d) and 14(d)(2)of the
Exchange Act) shall become the beneficial owner (within the meaning of Rule
13d-3 under said Act) of 40% or more of the Common Stock other than pursuant to
a plan or arrangement entered into by such person and the Company; or (4) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors shall cease for any reason to
constitute a majority of the Board unless the election or nomination for
election by the Company's stockholders of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
The Directors' Plan is administered by the Compensation and Stock Plans
Committee of the Board of Directors of the Company. However, the Directors' Plan
prescribes the individuals who would be awarded options, the numbers of shares
subject to the options, and the terms and conditions of each award. The Board of
Directors may at any time terminate the Directors' Plan and may from time to
time alter or amend the Directors' Plan or any part thereof, provided that the
Board of Directors may not, without approval by the affirmative vote of the
holders of a majority of shares of Common Stock present in person or by proxy
and entitled to vote at the meeting (1) increase the maximum number of shares
for which options may be granted; (2) materially modify the requirements as to
eligibility to participate; (3) materially increase benefits accruing to option
holders; or (4) amend the Directors' Plan in any manner that would cause Rule
16b-3 of the Exchange Act to be inapplicable. In any event, no stock options may
be granted under the Directors' Plan after April 26, 2005.
See "Certain Federal Income Tax Considerations" for a brief description of
the tax consequences of the grant of options under the Directors' Plan.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
issued, outstanding and entitled to vote, present or represented at the Annual
Meeting, a quorum being present, is required for the adoption of this proposal.
Broker "non-votes" with respect to this matter will be treated as neither a vote
"for" nor a vote "against" the matter, although they will be counted in
determining if a quorum is present. However, abstentions will be considered in
determining the number of votes required to attain a majority of the shares
present or represented at the Annual Meeting and entitled to vote. Accordingly,
an abstention from voting by a stockholder present in person or by proxy at the
Annual Meeting has the same legal effect as a vote "against" the matter because
it represents a share present or represented at the Annual Meeting and entitled
to vote, thereby increasing the number of affirmative votes required to approve
this proposal.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 3 -- AMENDMENT TO 1995 NON-
EMPLOYEE DIRECTOR STOCK OPTION PLAN" TO BE IN THE BEST INTERESTS OF THE COMPANY
AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the salient Federal income tax consequences
associated with options granted under the 1994 Option Plan and the Directors'
Plan.
The grant of a stock option (whether non-qualified or incentive) is not a
taxable event. In general, the holder of a non-qualified stock option will
recognize ordinary income when the option is exercised equal to the excess of
the value of the stock over the exercise price (i.e., the option spread), and
the Company receives a corresponding deduction (subject to the applicability of
the $1 million executive compensation deductibility limitation). If a
non-qualified stock option is exercised within six months after the date of
grant and if the optionee is subject to the six-month restrictions on sale of
Common Stock under Section 16(b) of the Exchange Act, the optionee generally
recognizes ordinary income on the date the restrictions lapse, unless an early
income recognition election is made. Upon a later sale of the stock, the
optionee will realize capital gain or loss equal to the difference between the
selling price and the value of the stock at the time the option was exercised
(or, if later, the time ordinary income was recognized with respect to the
exercise).
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The holder of an incentive stock option does not realize taxable income
upon exercise of the option, although the option spread is included in income
for purposes of the alternative minimum tax. If stock acquired upon exercise of
the incentive stock option is sold or otherwise disposed of within two years
from the date the option is granted or within one year from the date the option
is exercised, then, in general, gain realized on the sale is treated as ordinary
income to the extent of the option spread at the exercise date, and the Company
receives a corresponding deduction (subject to the applicability of the $1
million executive compensation deductibility limitation). Any remaining gain is
treated as capital gain. If the stock is held for at least two years from the
grant date and one year from the exercise date, then gain or loss realized upon
the sale will be long-term capital gain or loss and the Company will not be
entitled to a deduction. A special basis adjustment applies to reduce the gain
for alternative minimum tax purposes.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP have been the independent public accountants for the
Company since August 29, 1996, and will serve in that capacity for the 1998
fiscal year.
Representatives of Arthur Andersen LLP, independent accountants of the
Company, are expected to be present at the Annual Meeting and available to
respond to appropriate questions. Such representatives also will have the
opportunity, should they so desire, to make any statements to the stockholders
which they deem appropriate.
1999 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1999 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's 1999 proxy statement,
they must be received by the Company at its principal executive offices, One
Eagle Square, Concord, New Hampshire 03301 (Attn: General Counsel), prior to
January 15, 1999. The Board of Directors will review any stockholder proposals
that are filed as required and will determine whether such proposals meet
applicable criteria for inclusion in the Company's proxy statement for the 1999
Annual Meeting of Stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for consideration at the Annual Meeting. Should any other matters
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy on behalf of the stockholders
they represent in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
JOHN W. MITCHELL
Secretary
Dated: April 30, 1998
THE COMPANY SHALL PROVIDE, WITHOUT CHARGE, TO ANY STOCKHOLDER, UPON THE
WRITTEN REQUEST THEREFOR, COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997. ANY SUCH REQUEST SHALL BE DIRECTED TO
AAVID THERMAL TECHNOLOGIES, INC., ATTENTION: JOHN W. MITCHELL, ESQ., SECRETARY,
AT THE FOLLOWING ADDRESS: ONE EAGLE SQUARE, CONCORD, NEW HAMPSHIRE 03301.
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APPENDIX A
Below is the text of the Company's 1994 Stock Option Plan as proposed to be
amended pursuant to Proposal No. 2. Proposed language to the 1994 Stock Option
Plan is set forth in bold print and the language to be deleted is set forth in
brackets.
AAVID THERMAL TECHNOLOGIES, INC.
1994 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of this plan (the "Plan") is to secure for
Aavid Thermal Technologies, Inc. (the "Company") and its stockholders the
benefits arising from capital stock ownership by employees, officers,
consultants and advisors of the Company and its parent and subsidiary
corporations who are expected to contribute to the Company's future growth and
success. Except where the context otherwise requires, the term "Company" shall
include the parent and all present and future subsidiaries of the Company as
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the "Code"). Those provisions of the Plan
that make express reference to Section 422 of the Code shall apply only to
incentive stock options (as defined in the Plan).
2. TYPES OF OPTIONS AND ADMINISTRATION OF THE PLAN.
2.1 Types of Options. Options granted pursuant to the Plan may be either
incentive stock options meeting the requirements of Section 422 of the Code
("Incentive Stock Options"), or non-statutory stock options that are not
intended to meet the requirements of Section 422 of the Code ("Non-Statutory
Options").
2.2 Administration of the Plan.
2.2.1 To the fullest extent permitted by applicable laws, rules or
regulations, the Plan shall be administered by the Stock Plans Committee
(the "Committee") of the Board of Directors of the Company (the "Board"),
which committee shall consist of at least two directors, each of whom shall
be a "disinterested person" as defined in Rule 16b-3 of the Securities
Exchange Act of 1934 (the "Exchange Act") as such term is interpreted from
time to time.
2.2.2 Prior to the first registration of a sale of the Company's
Common Stock $0.01 par value per share ("Common Stock") under the
Securities Act of 1933, the Committee may in its sole discretion grant
options hereunder to purchase shares of the Company's Series A Convertible
Preferred Stock ("Series A Stock").
2.2.3 Simultaneously with and after the first registration of a sale
of the Company's Common Stock under the Securities Act of 1933, the
Committee may in its sole discretion grant options hereunder to purchase
shares of Common Stock.
2.2.4 The Committee shall have authority, subject to the express
provisions of the Plan, to construe the respective option agreements and
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the terms and provisions of the respective option
agreements, which need not be identical, and to make all other
determinations which are, in the judgment of the Committee necessary or
desirable for the administration of the Plan. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or
in any option agreement in the manner and to the extent it shall deem
expedient to implement the Plan and it shall be the sole and final judge of
such expediency. No director or person acting pursuant to authority
delegated by the Board shall be liable for any action or determination
under the Plan made in good faith.
2.2.5 The Committee may select one of its members as its chairman and
shall hold meetings at such times and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. All references in the Plan to the Committee shall mean the Board
if there is no Committee
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so appointed. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
2.2.6 Applicability of Rule 16b-3. Those provisions of the Plan that
make express reference to Rule 16b-3 promulgated under the Exchange Act or
any successor rule ("Rule 16b-3"), or that are required in order for
certain option transactions to qualify for exemption under Rule 16b-3,
shall apply only to such persons as are required to file reports under
Section 16(a) of the Exchange Act (a "Reporting Person").
3. ELIGIBILITY. Options may be granted to persons who are, at the time of
grant, employees, officers, consultants or advisors of the Company; provided,
that the class of persons to whom Incentive Stock Options may be granted shall
be limited to employees of the Company. A person who has been granted an option
may, if he or she is otherwise eligible, be granted additional options if the
Committee shall so determine. Subject to adjustment as provided in Section 17,
below, the maximum number of shares of Series A and Common Stock with respect to
which options may be granted during the ten-year term of the Plan to any one
employee under the Plan shall not exceed one-half of the number of shares of
such stock originally authorized for issuance hereunder (subject to adjustments
as provided in Section 17, below). For the purpose of calculating such maximum
number, (a) an option shall continue to be treated as outstanding
notwithstanding its repricing, cancellation or expiration, and (b) the repricing
of an outstanding option or the issuance of a new option in substitution for a
canceled option shall be deemed to constitute the grant of a new additional
option separate from the option that is repriced or canceled.
4. STOCK SUBJECT TO PLAN. Subject to adjustment as provided in Section 17,
below --
4.1 The aggregate maximum number of shares of Common Stock that may be
issued and sold under the Plan is 1,400,000 [900,000] shares.
4.2 If an option granted under the Plan shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan. If shares issued upon exercise of an option under the Plan are tendered to
the Company in payment of the exercise price of an option granted under the
Plan, such tendered shares shall again be available for subsequent option grants
under the Plan; provided that in no event shall such shares be made available
for issuance to a Reporting Person or pursuant to the exercise of an Incentive
Stock Option.
5. FORM OF OPTION AGREEMENTS. As a condition to the grant of an option under
the Plan, each recipient of an option shall execute an option agreement in such
form not inconsistent with the Plan as may be approved by the Board. Such option
agreements need not be the same for all option recipients.
6. PURCHASE PRICE.
6.1 General. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Committee provided, that in the
case of an Incentive Stock Option, the exercise price shall not be less than
100% of the fair market value of such stock, as determined by the Committee at
the time of grant, or less than 110% of such fair market value in the case of
options described in Section 12.2, below. Fair market value shall be determined
as of the close of business on the business day immediately preceding the grant
date of an option.
6.2 Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the purchase price by delivery of cash or a check to the
order of the Company in an amount equal to such purchase price or, to the extent
provided in the applicable option agreement, (a) by delivery to the Company of
shares of stock of the Company already owned by the optionee having a fair
market value equal to the exercise price of the shares of stock being purchased,
or (b) by any other means (including, but without limitation thereto, by
delivery of a promissory note of the optionee payable on such terms as the
Committee
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may direct) that the Committee determines are consistent with the purpose of the
Plan and with applicable laws, rules and regulations (including, but without
limitation thereto, the provisions of Regulation T promulgated by the Federal
Reserve Board). The fair market value of any shares of the Company stock or
other non-cash consideration which may be delivered upon exercise of an option
shall be determined by the Committee.
7. FAIR MARKET VALUE.
7.1 If the Common Stock is publicly traded at the time an option is
granted under the Plan, "fair market value" on a given date shall mean --
7.1.1 the closing price (on that date) of the Common Stock on the
principal national securities exchange on which the Common Stock is traded,
if such stock is then traded on a national securities exchange;
7.1.2 the last reported sale price (on that date) of the Common Stock
on the Nasdaq National Market or SmallCap Market, if the Common Stock is
then traded in one of such markets; or
7.1.3 the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on a national securities
exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
7.2 The "fair market value" of the Series A Stock and, if the Common Stock
is not publicly traded at the time an option is granted under the Plan, the
Common Stock, shall be deemed to be the fair value of such stock subject to the
option as determined by the Committee after taking into consideration all
factors that it deems appropriate, including, but without limitation thereto,
recent sale and offer prices of such stock in private transactions negotiated at
arm's length.
8. OPTION PERIOD. Each option and all rights thereunder shall expire on the
date established by the Committee at the time of grant, except that in the case
of an Incentive Stock Option, the expiration date shall not be later than ten
years after the date on which the option is granted, and all options shall be
subject to earlier termination as provided in the Plan.
9. EXERCISE OF OPTIONS. Each option granted under the Plan shall be
exercisable either in full or in installments at such time or times and during
such period or periods as shall be determined by the Committee at the time of
grant, subject, however, to the provisions of the Plan.
10. TRANSFERABILITY OF OPTIONS.
10.1 No options shall be assignable or transferable by the person to whom
it was granted, either voluntarily or by operation of law, except by such
person's will or by the laws of descent and distribution, and during the life of
the optionee, an option shall be exercisable only by the optionee; except that
Non-Statutory Options may be transferred pursuant to a qualified domestic
relations order (as defined in Rule 16b-3).
10.2 With respect to option exercises by Reporting Persons (as defined in
Section 2.2.6, above), if and to the extent that Rule 16b-3(a)(2) is amended so
as to permit transfers of options to members of an optionee's family or to
trusts established for the benefit of such family members, Incentive Stock
Options and Non-Statutory Options may be transferable to the extent and on the
terms provided by Rule 16b-3(a)(2), as so amended; provided that a transfer of
an Incentive Stock Option pursuant to this provision will only be permissible if
and to the extent that Section 422 of the Code is amended to provide that such
transfer will not cause such Incentive Stock Option to be treated as a
non-statutory stock option which does not meet the requirements of Section 422
of the Code.
11. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. Except as
provided in Section 12.4, below, with respect to Incentive Stock Options, and
subject to the provisions of the Plan, the Committee shall determine the period
of time during which an optionee may exercise an option following (a) the
termination
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of the optionee's employment or other relationship with the Company or (b) the
death or disability of the optionee. Such periods shall be set forth in the
agreement evidencing such option.
12. INCENTIVE STOCK OPTIONS. Options granted under the Plan that are intended
to be Incentive Stock Options shall be subject to the following additional terms
and conditions:
12.1 Express Designation. Each Incentive Stock Option granted under the
Plan shall, at the time of grant, be specifically designated as such and in the
option agreement covering such option.
12.2 Ten Percent Stockholders. If any employee to whom an Incentive Stock
Option is to be granted under the Plan is at the time of the grant of such
option the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then the
following special provisions shall be applicable to the Incentive Stock Option
granted to such individual:
12.2.1 the purchase price per share of any stock subject to such
Incentive Stock Option shall not be less than 110% of the fair market value
of one share of such stock at the time of grant; and
12.2.2 such Incentive Stock Option shall expire not later than five
years after the date on which the option was granted.
12.3 Dollar Limitations. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other option plans of
the Company) that are intended to constitute Incentive Stock Options shall not
constitute Incentive Stock Options to the extent that such options, in the
aggregate, become exercisable for the first time in any one calendar year for
shares of stock with an aggregate fair market value (determined as of the
respective date or dates of grant) of more than $100,000.
12.4 Termination of Employment. No Incentive Stock Option may be
exercised as such unless at the time of exercise, the optionee has been
continuously employed by the Company since the date of grant, except that --
12.4.1 An Incentive Stock Option may be exercised within such period
and to such extent as may be specified in the applicable option agreement
or in any applicable employment agreement, provided, that if such exercise
is subsequent to the period of three months after such cessation of
employment, it shall be treated as the exercise of a Non-Statutory Option
under the Plan.
12.4.2 If the optionee dies while in the employ of the Company, or
within three months after he or she ceases to be an employee, the Incentive
Stock Option may be exercised to the extent that the option was exercisable
at the date of death by the person to whom it is transferred by will or by
the laws of descent and distribution within the period of one year after
the date of death (or within such lesser period as may be specified in the
applicable option agreement).
12.4.3 If the optionee becomes disabled (within the meaning of
Section 422(e)(3) of the Code or any successor provision thereto) while in
the employ of the Company, the Incentive Stock Option may be exercised to
the extent that the option was exercisable at the date of cessation of
employment within the period of one year after the date the optionee ceases
to be such an employee because of such disability (or within such lesser
period as may be specified in the applicable option agreement).
12.4.4 A leave of absence with the written approval of the Committee
shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company to
continue the employment of the employee after the approved period of
absence. Employment shall also be considered as continuing uninterrupted
during any other bona fide leave of absence (such as those attributable to
illness, military obligations or governmental service), provided that the
period of such leave does not exceed 90 days or, if longer, does not exceed
any period during which such optionee's right to re-employment is
guaranteed by statute.
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12.4.5 An Incentive Stock Option shall not be affected by any change
of employment within or among the Company and any parent or subsidiary
corporation, so long as the optionee continues to be an employee of either
the Company or such parent or subsidiary corporation.
12.4.6 For all purposes of the Plan and any option granted hereunder,
employment shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations (or any successor regulations).
Notwithstanding the foregoing provisions, no Incentive Stock Option may be
exercised after its expiration date.
13. ADDITIONAL OPTION PROVISIONS, ACCELERATION AND EXTENSION. The Committee
may, in its sole discretion, include additional provisions in option agreements
covering options granted under the Plan, and after the grant date may take other
actions with respect to options granted under the Plan.
Such provisions and actions may include, but shall not be limited to the
following:
13.1 restrictions on transfer, repurchase rights, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other property to
optionees upon exercise of options, provided that such additional provisions or
actions shall not be inconsistent with any other express term or condition of
the Plan and such additional provisions shall not cause any Incentive Stock
Option granted under the Plan to fail to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code; and
13.2 to accelerate the date or dates on which all or any particular option
or options granted under the Plan may be exercised and to extend the period
during which all, or any particular, option or options granted under the Plan
may be exercised.
14. CHANGE IN CONTROL.
14.1 Acceleration of Options. Anything in any option agreement to the
contrary notwithstanding, each outstanding option granted under the Plan shall
become immediately exercisable in full in the event a Change in Control of the
Company occurs.
14.2 Definition of Change in Control. For purposes of the Plan, a "Change
in Control" shall be deemed to have occurred if --
14.2.1 there shall be consummated --
14.2.1.1 any consolidation or merger of the Company in which the
Company is not the surviving or continuing corporation or pursuant to
which shares of Common Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders
of the Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or
14.2.1.2 any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company, or
14.2.2 the stockholders of the Company shall approve a plan or
proposal for liquidation or dissolution of the Company, or
14.2.3 any person (as such term is used in Section 13(d) and Section
14(d)(2) of the Exchange Act) shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the Common
Stock other than pursuant to a plan or arrangement entered into by such
person and the Company, or
14.2.4 during any period of two consecutive years, individuals who at
the beginning of such period constitute the entire Board shall cease for
any reason to constitute a majority thereof, unless the election or the
nomination for election by the Company's stockholders of each new director
was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period.
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15. SECURITIES LAWS.
15.1 Assurances etc. The Company may require any optionee as a condition
of exercising his or her option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the
stock subject to the option for his or her own account for investment and not
with any present intention of selling or otherwise distributing the same, and to
such other effects as the Company deems necessary, appropriate or advisable in
order to comply with federal and applicable state securities laws, or with
covenants or representations made by the Company in connection with any public
offering of its securities.
15.2 Compliance With Securities Laws. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of stock
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Committee. Nothing herein shall be deemed to require the Company to apply
for or to obtain such listing, registration or qualification, or to satisfy such
condition.
16. RIGHTS AS A STOCKHOLDER. An optionee shall have no rights as a
stockholder with respect to any shares covered by the option (including, without
limitation, any rights to receive dividends or non-cash distributions with
respect to such shares) until the date of issuance of a stock certificate to him
or her for such shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.
17. ADJUSTMENT PROVISIONS FOR RECAPITALIZATION AND RELATED TRANSACTIONS.
17.1 General. If through or as a result of any merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (a) any outstanding shares of stock of the
Company covered by an option are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company, or (b)
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of stock or
other securities covered by an option, an appropriate and proportionate
adjustment shall be made in (i) the maximum number and kind of shares reserved
for issuance under the Plan, (ii) the number and kind of shares or other
securities subject to any then outstanding options under the Plan, and (c) the
price for each share subject to any then outstanding options under the Plan,
without changing the aggregate purchase price as to which such options remain
exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant
to this Section 17 if such adjustment would cause the Plan to fail to comply
with Section 422 of the Code.
17.2 Committee Authority to Make Adjustments. Any adjustments under this
Section 17 will be made by the Committee whose determinations as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued under the Plan on account of
any such adjustments.
18. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION ETC.
18.1 General. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of
stock of the Company are exchanged for securities, cash or other property of any
other corporation or business entity or in the event of a liquidation of the
Company, the Board or the board of directors of any corporation assuming the
obligations of the Company, may, in its discretion,
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take any one or more of the following actions as to outstanding options,
subject, however, to the provisions of Section 14, above (relating to a Change
in Control), which in the event of a conflict, shall take precedence:
18.1.1 provide that such options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), provided that any such options substituted for
Incentive Stock Options shall meet the requirements of Section 424(a) of
the Code;
18.1.2 upon written notice to the optionees, provide that all
unexercised options will terminate immediately prior to the consummation of
such transaction unless exercised by the optionee within a specified period
following the date of such notice;
18.1.3 in the event of a merger under the terms of which holders of
the stock of the Company will receive upon consummation thereof a cash
payment for each share surrendered in the merger (the "Merger Price"), make
or provide for a cash payment to the optionees equal to the difference
between (a) the Merger Price times the number of shares of stock subject to
such outstanding options (to the extent then exercisable at prices not in
excess of the Merger Price) and (b) the aggregate exercise price of all
such outstanding options in exchange for the termination of such options;
and
18.1.4 provide that all or any outstanding options shall become
exercisable in full immediately prior to such event.
18.2 Substitute Options. The Committee may grant options under the Plan
in substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Committee may direct that substitute options be granted on such terms and
conditions as it considers appropriate in the circumstances.
19. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or in any
option shall (a) confer upon any optionee any right with respect to the
continuation of his or her employment by the Company, (b) interfere in any way
with the right of the Company at any time to terminate such employment or to
increase or decrease the compensation of the optionee, or (c) restrict the right
of an optionee to resign his or her employment.
20. OTHER EMPLOYEE BENEFITS. The amount of any compensation deemed to be
received by an employee as a result of the exercise of an option or the sale of
shares received upon such exercise shall not constitute compensation with
respect to which any other employee benefits of such employee are determined,
including, but without limitation thereto, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan, except as to benefit
plans that by their terms include such amounts as compensation and except as
otherwise specifically determined by the Committee.
21. TERMINATION AND AMENDMENT OF THE PLAN AND OPTION AGREEMENTS.
21.1 The Board may at any time terminate the Plan and may from time to
time modify or amend the Plan in any respect, except that if at any time the
approval of the stockholders of the Company is required under Section 422 of the
Code or any successor provision with respect to Incentive Stock Options, or in
order to satisfy the requirements of Rule 16b-3, the Board may not effect such
modification or amendment without such approval.
21.2 The termination or any modification or amendment of the Plan shall
not, without the consent of an optionee, affect his or her rights under an
option previously granted. With the consent of the optionee, the Committee may
amend any outstanding option agreement in a manner not inconsistent with the
Plan.
21.3 The Board shall have the right to amend or modify (a) the terms and
provisions of the Plan and of any outstanding Incentive Stock Options granted
under the Plan to the extent necessary to qualify any or all such options for
such favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded Incentive Stock Options under Section 422 of the
Code and (b) the terms and provisions of the Plan and of any outstanding option
to the extent necessary to ensure the qualifications of the Plan under Rule
16b-3.
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22. WITHHOLDING.
22.1 The Company shall have the right to deduct from payments of any kind
otherwise due to an optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Committee, which
may be withheld by the Committee in its sole discretion, the optionee may elect
to satisfy such obligations, in whole or in part, (a) by causing the Company to
withhold shares of stock otherwise issuable pursuant to the exercise of an
option, or (b) by delivering to the Company shares of stock of the Company
already owned by the optionee. The shares so delivered or withheld shall have
fair market value equal to such withholding obligation. The fair market value of
the shares used to satisfy such withholding obligation shall be determined in
the manner provided in Section 7, above, as of the date that the amount of tax
to be withheld is to be determined. An optionee who has made an election
pursuant to this Section 22.1 may only satisfy his or her withholding obligation
with shares of stock that are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
22.2 Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use shares for the payment of withholding taxes shall be effective
unless made in compliance with any applicable requirements of Rule 16b-3 (unless
it is intended that the transaction not qualify for exemption under Rule 16b-3).
23. CANCELLATION AND GRANT OF OPTIONS ETC. The Committee shall have the
authority to effect at any time and from time to time, with the consent of the
affected optionees (a) the cancellation of any or all of their outstanding
options under the Plan and the grant in substitution therefor of new options
under the Plan covering the same or different numbers of shares and having an
option exercise price per share, which may be lower or higher than the exercise
price per share of the canceled options, or (b) the amendment of the terms of
any and all outstanding options under the Plan to provide an option exercise
price per share that is higher or lower than the then current exercise price per
share of such outstanding options.
24. EFFECTIVE DATE AND DURATION OF THE PLAN.
24.1 The Plan shall become effective upon its adoption by the Board, but
no option granted under the Plan shall become exercisable unless and until the
Plan shall have been approved by the Company's stockholders. If such stockholder
approval is not obtained within twelve months after the date of the Board's
adoption of the Plan, options previously granted under the Plan shall not vest
and shall terminate and no options shall be granted thereafter.
24.2 Amendments to the Plan not requiring stockholder approval shall
become effective when adopted by the Board; amendments requiring stockholder
approval (as provided in Section 21, above) shall become effective upon their
adoption by the Board, but no option granted after the date of such amendment
shall become exercisable (to the extent that such amendment to the Plan was
required to enable the Company to grant such option to a particular person)
unless and until such amendment shall have been approved by the Company's
stockholders. If such stockholder approval is not obtained within twelve months
of the Board's adoption of such amendment, any options granted on or after the
date of such amendment shall terminate to the extent that such amendment was
required to enable the Company to grant such option to a particular optionee.
Subject to this limitation, options may be granted under the Plan at any time
after the effective date and before the date fixed for termination of the Plan.
24.3 Unless sooner terminated as provided in the Plan, the Plan shall
terminate at the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board. Options outstanding on
such date shall, nevertheless, continue in full force and effect in accordance
with the provisions of the instruments evidencing such options.
25. PROVISION FOR FOREIGN PARTICIPANTS. The Committee may, without amending
the Plan, modify awards or options granted to participants who are foreign
nationals or employed outside the United States to recognize differences in
laws, rules, regulations or customs of such foreign jurisdictions with respect
to tax, securities, currency, employee benefit or other manners.
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APPENDIX B
Below is the text of the Company's 1995 Non-Employee Director Stock Option
Plan as proposed to be amended pursuant to Proposal No. 3. Proposed language to
the 1995 Non-Employee Director Stock Option Plan is set forth in bold print and
the language to be deleted is set forth in brackets.
AAVID THERMAL TECHNOLOGIES, INC.
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE. This Non-Qualified Stock Option Plan, to be known as the 1995
Non-Employee Director Stock Option Plan (the "Plan"), is intended to promote the
interests of Aavid Thermal Technologies, Inc., a Delaware corporation
(hereinafter, the "Company") by providing an inducement to obtain and retain the
services of qualified persons who are not employees or officers of the Company
to serve as members of its Board of Directors (the "Board").
2. AVAILABLE SHARES.
(a) The total number of shares of Common Stock, par value $.01 per share,
of the Company (the "Common Stock"), for which options may be granted under the
Plan shall not exceed 200,000 [100,000] shares* subject to adjustment in
accordance with Paragraph 11 of the Plan.
(b) The number of shares of Common Stock set forth in Paragraph 2(a) and
Paragraph 4 reflect and give effect to any stock split carried out in connection
with the initial public offering of the Company's Common Stock.
(c) Shares subject to the Plan are authorized but unissued shares or shares
that were once issued and subsequently reacquired by the Company. If any options
granted under the Plan are surrendered before exercise or lapse without
exercise, in whole or in part, the shares reserved therefor shall continue to be
available under the Plan.
3. ADMINISTRATION. The Plan shall be administered by the Stock Plans Committee
of the Board (the "Committee"). In the event the Committee ceases to exist for
whatever reason, the Board shall have all power and authority to administer the
Plan. In such event, the word "Committee" wherever used herein shall be deemed
to mean the Board. The Committee shall, subject to the provisions of the Plan,
have the power to construe the Plan, to determine all questions hereunder, and
to adopt and amend such rules and regulations for the administration of the Plan
as it may deem desirable.
4. GRANTING OF OPTIONS.
(a) Initial Grant. On the consummation of the initial public offering of
the Company's Common Stock (the "Public Offering Date"), each person who is then
a member of the Board, and who is not a current or former employee or officer of
the Company (a "non-employee director"), shall be automatically granted an
initial option (the "Initial Option") to purchase 10,000* shares of the Common
Stock at the offering price per share to the public in such offering.
(b) Subsequent Grants. Each non-employee director who received an Initial
Option and who is serving as a non-employee director at the close of business on
April 21 in any year commencing with April 21, 1996 shall be automatically
granted on such date an option to purchase an additional 2,500* shares of Common
Stock.
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* After giving effect to the 5.5-for-1 stock split of the Common Stock approved
by the Board of Directors on November 7, 1995.
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(c) Newly Elected or Appointed Non-Employee Directors. Each person who
becomes a non-employee director after the Public Offering Date shall be
automatically granted an option to purchase 10,000* shares of Common Stock
effective upon his or her election or appointment to the Board and shall be
automatically granted an option to purchase an additional 2,500* shares of
Common Stock on each anniversary of the date of his or her election or
appointment to the Board, providing that on such anniversary he or she is a non-
employee director.
(d) Except for the specific options referred to above, no other options
shall be granted under the Plan.
5. OPTION PRICE.
(a) The option (purchase) price of the stock covered by an option granted
pursuant to the Plan shall be equal to the fair market value of such shares on
the day the option is granted. The option price will be subject to adjustment in
accordance with the provisions of Paragraph 11 of the Plan.
(b) If the Company's Common Stock is publicly traded, "fair market value"
shall be determined as of the date an option is granted and shall mean --
(i) the closing price (on that date) of the Common Stock on the
principal national securities exchange on which the Common Stock is traded,
if such stock is then traded on a national securities exchange; or
(ii) the last reported sale price (on that date) of the Common Stock
on the Nasdaq National Market or SmallCap Market, if the Common Stock is
then traded in either of such markets; or
(iii) the closing bid price (or average of bid prices) last quoted (on
that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on a national securities
exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
(c) If the Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall be deemed to be the fair value
of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, but without
limitation thereto, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
6. PERIOD OF OPTION. Unless sooner terminated in accordance with the
provisions of Paragraph 9 of the Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.
7. VESTING OF SHARES AND LEGEND.
(a) Vesting. All Initial Options shall be fully exercisable from and after
the date six months after the date of grant. All other options granted hereunder
shall be fully exercisable from and after the first anniversary of the grant
date.
(b) Acceleration Upon Change in Control. Anything in the Plan to the
contrary notwithstanding, each outstanding option granted under the Plan shall
become immediately exercisable in full in the event a Change in Control (as
defined in Paragraph 12) of the Company occurs.
(c) Legend on Certificates. The certificates representing shares purchased
under the Plan shall carry such appropriate legend and such written instructions
shall be given to the Company's transfer agent as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements of
the Securities Act of 1933 or any state securities laws.
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* After giving effect to the 5.5-for-1 stock split of the Common Stock approved
by the Board of Directors on November 7, 1995.
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8. NON-TRANSFERABILITY OF OPTIONS. Any option granted pursuant to the Plan
shall not be assignable or transferable other than by will or the laws of
descent and distribution or pursuant to a domestic relations order and shall be
exercisable during the optionee's lifetime only by him or her. If and to the
extent that Rule 16b-3(a)(2) under the Securities Exchange Act of 1934 (the
"Exchange Act") is amended so as to permit transfers of options to members of an
optionee's family or to trusts established for the benefit of such family
members, options granted hereunder may be transferable to the extent and on the
terms provided by Rule 16b-3(a)(2), as so amended.
9. TERMINATION OF OPTION RIGHTS.
(a) In the event an optionee ceases to be a member of the Board for any
reason other than death or permanent disability, any then unexercised portion of
options granted to such optionee shall, to the extent not then vested,
immediately terminate and become void; any portion of an option which is then
vested, but has not been exercised at the time the optionee so ceases to be a
member of the Board may be exercised, to the extent it is then vested, by the
optionee within 180 days of the date the optionee ceased to be a member of the
Board; and all such optionee's options shall terminate after such 180 days have
expired.
(b) In the event that an optionee ceases to be a member of the Board by
reason of his or her death or permanent disability, any option granted to such
optionee shall be immediately and automatically accelerated and become fully
vested and all unexercised options shall be exercisable by the optionee (or by
the optionee's personal representative, heir or legatee, in the event of death)
until the scheduled expiration date of the option.
10. EXERCISE OF OPTION.
(a) Subject to the terms and conditions of the Plan and the relevant option
agreement, an option granted hereunder shall, to the extent then exercisable, be
exercisable in whole or in part by giving written notice to the Company by mail
or in person stating the number of shares with respect to which the option is
being exercised, accompanied by payment in full for such shares. Payment may
be --
(i) in United States dollars in cash or by check;
(ii) in whole or in part in shares of Common Stock of the Company
already owned by the person exercising the option or shares subject to the
option being exercised (subject to such restrictions and guidelines as the
Committee may adopt from time to time), valued at fair market value
determined in accordance with the provisions of Paragraph 5; or
(iii) consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the
sale of the Common Stock acquired upon exercise of the option and an
authorization to the broker or selling agent to pay that amount to the
Company, which sale shall be at the participant's direction at the time of
exercise.
(b) The Company's transfer agent shall, on behalf of the Company, prepare a
certificate or certificates representing shares acquired pursuant to the
exercise of an option, shall register the optionee as the owner of such shares
on the books of the Company and shall cause the fully executed certificate(s)
representing such shares to be delivered to the optionee as soon as practicable
after payment of the option price in full.
(c) The holder of an option shall not have any rights of a stockholder with
respect to the shares covered by the option, except to the extent that one or
more certificates for such shares shall be delivered to him or her upon the due
exercise of the option.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION AND OTHER MATTERS. Subject to
the provisions of Paragraph 7(b), upon the occurrence of any of the following
events, an optionee's rights with respect to options granted to him or her
hereunder shall be adjusted as hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
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the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Merger; Consolidation; Liquidation; Sale of Assets. In the event the
Company is merged into or consolidated with another corporation under
circumstances where the Company is not the surviving corporation, or if the
Company is liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation while unexercised options remain
outstanding under the Plan --
(i) subject to the provisions of clauses (iii), (iv) and (v) below,
after the effective date of such merger, consolidation or sale, as the case
may be, each holder of an outstanding option shall be entitled, upon
exercise of such option, to receive in lieu of shares of Common Stock,
shares of such stock or other securities as the holders of shares of Common
Stock received pursuant to the terms of the merger, consolidation or sale;
or
(ii) the Committee may waive any discretionary limitations imposed
with respect to the exercise of the option so that all options from and
after a date prior to the effective date of such merger, consolidation,
liquidation or sale, as the case may be, specified by the Committee, shall
be exercisable in full; or
(iii) all outstanding options may be canceled by the Committee as of
the effective date of any such merger, consolidation, liquidation or sale,
provided that notice of such cancellation shall be given to each holder of
an option, and each such holder thereof shall have the right to exercise
such option in full (without regard to any discretionary limitations
imposed with respect to the option) during a 30-day period preceding the
effective date of such merger, consolidation, liquidation or sale; or
(iv) all outstanding options may be canceled by the Committee as of
the date of any such merger, consolidation, liquidation or sale, provided
that notice of such cancellation shall be given to each holder of an option
and each such holder thereof shall have the right to exercise such option,
but only to the extent exercisable in accordance with any discretionary
limitations imposed with respect to the option prior to the effective date
of such merger, consolidation, liquidation or sale; or
(v) the Committee may provide for the cancellation of all outstanding
options and for the payment to the holders thereof of some part or all of
the amount by which the value thereof exceeds the payment, if any, which
the holder would have been required to make to exercise such option.
(c) Issuance of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing events, the
class and aggregate number of shares set forth in Paragraphs 2 and 4 of the Plan
that are subject to options which previously have been or subsequently may be
granted under the Plan shall also be appropriately adjusted to reflect such
events. The Committee shall determine the specific adjustments to be made under
this Paragraph 11 and its determination (subject to Paragraph 7(b)) shall be
conclusive.
12. CHANGE OF CONTROL. For purposes of the Plan, a "Change in Control" shall
be deemed to have occurred if --
(a) there shall be consummated --
(i) any consolidation or merger of the Company in which the Company is
not the surviving or continuing corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
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(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the
assets of the Company, or
(b) the stockholders of the Company shall approve a plan or proposal for
liquidation or dissolution of the Company, or
(c) any person (as such term is used in Section 13(d) and Section 14(d)(2)
of the Exchange Act) shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 40% or more of the Common Stock other than
pursuant to a plan or arrangement entered into by such person and the Company,
or
(d) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board shall cease for any reason
to constitute a majority thereof, unless the election or the nomination for
election by the Company's stockholders of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
13. RESTRICTIONS ON ISSUANCE OF SHARES. Notwithstanding the provisions of
Paragraph 7 and Paragraph 10 of the Plan, the Company shall have no obligation
to deliver any certificate or certificates upon exercise of an option until one
of the following conditions shall be satisfied:
(a) The shares with respect to which the option has been exercised are at
the time of the issue of such shares effectively registered under applicable
federal and state securities laws as now in force or hereafter amended; or
(b) Counsel for the Company shall have given an opinion that such shares
are exempt from registration under federal and state securities laws as now in
force or hereafter amended; and the Company has complied with all applicable
laws and regulations with respect thereto, including without limitation all
regulations required by any stock exchange upon which the Company's outstanding
Common Stock is then listed.
14. INVESTMENT REPRESENTATIONS OF OPTIONEE. If requested by the Company, the
optionee shall deliver to the Company written representations and warranties
upon exercise of an option that are necessary to show compliance with federal
and state securities laws, including representations and warranties to the
effect that a purchase of shares under the option is made for investment and not
with a view to their distribution (as that term is used in the Securities Act of
1933).
15. OPTION AGREEMENT. Each option granted under the provisions of the Plan
shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Committee.
16. TERMINATION AND AMENDMENT OF PLAN. Options may no longer be granted under
the Plan after the close of business on the tenth anniversary of the date of its
adoption, and the Plan shall terminate when all options granted or to be granted
hereunder are no longer outstanding. The Board may at any time terminate the
Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that the Board may not, without approval by the affirmative
vote of the holders of a majority of the shares of Common Stock present in
person or by proxy and entitled to vote at the meeting --
(a) increase the maximum number of shares for which options may be granted
under the Plan (except by adjustment pursuant to Paragraph 11);
(b) materially modify the requirements as to eligibility to participate in
the Plan;
(c) materially increase benefits accruing to option holders under the Plan;
or
(d) amend the Plan in any manner that would cause Rule 16b-3 under the
Exchange Act ("Rule 16b-3") to become inapplicable to the Plan;
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and provided further that the provisions of the Plan specified in Rule
16b-3(c)(2)(ii)(A) (or any successor or amended provision thereof) under the
Exchange Act (including without limitation, provisions as to eligibility,
amount, price and timing of awards) may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder. Termination or
any modification or amendment of the Plan shall not, without consent of a
participant, affect his or her rights under an option previously granted to him
or her.
17. WITHHOLDING OF INCOME TAXES. Upon the exercise of an option, the Company,
in accordance with Section 3402(a) of the Internal Revenue Code, may require the
optionee to pay withholding taxes in respect of amounts considered to be
compensation includible in the optionee's gross income.
18. COMPLIANCE WITH REGULATIONS. It is the Company's intent that transactions
under the Plan comply with all applicable conditions of Rule 16b-3 and any
applicable Securities and Exchange Commission interpretations thereof. To the
extent that any provision of the Plan or action by the Board or the Committee
fails to so comply, it shall be deemed null and void to the extent permitted by
law and deemed advisable by either of them.
19. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflicts of law thereof.
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AAVID THERMAL TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Ronald F. Borelli, John W. Mitchell and David
R.A. Steadman, and each of them, with full power of substitution, as proxies to
vote on behalf of the undersigned all shares which the undersigned may be
entitled to vote at the 1998 Annual Meeting of Stockholders (the "Annual
Meeting") of Aavid Thermal Technologies, Inc. (the "Company") to be held at the
Holiday Inn, 172 North Main Street, Concord, New Hamshire 03301 at 10:00 A.M. on
Friday, June 19, 1998, and at any adjournments thereof, with all powers the
undersigned would possess if personally present, upon the matters set forth in
the Notice of Annual Meeting and Proxy Statement, as directed on reverse side
hereof.
The shares of common stock represented by this Proxy will be voted in
accordance with the following instructions. In the absence of any
instructions, such shares will be voted FOR the election of all nominees listed
in Item 1, FOR the proposal of Item 2 and FOR the proposal in Item 3.
The undersigned hereby acknowledges receipt of the Company's Notice of Annual
Meeting and Proxy Statement, each dated April 30, 1998, and the Company's
Annual Report for the fiscal year ended December 31, 1997, each of which has
been enclosed herewith.
(To be Completed, Signed and Dated on Reverse Side)
---------------
| SEE REVERSE |
| SIDE |
---------------
40
- ------- ----
| | Please mark your |
| X | votes as in this
| | example
- -------
WITHHOLD AUTHORITY FOR all nominees listed
to vote for all nominees below (except as indicated
listed below in the contrary below)
------- -------
1. Election of | | | |
Directors | | | |
------- -------
Nominees: Ronald F. Borelli M. William Macey, Jr. Frank J. Pipp
Charles A. Dickinson Bharatan R. Patel David R.A. Steadman
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line set forth below.
_________________________________
FOR AGAINST ABSTAIN
------- ------- -------
| | | | | |
2. Proposal to approve | | | | | |
an amendment to the ------- ------- -------
Company's 1994 Stock Option Plan (the "1994 Plan") to increase the
number of shares of the Company's common stock for which options may
be granted under the 1994 Plan as described more fully in the Proxy
Statement accompanying this Proxy.
------- ------- -------
| | | | | |
2. Proposal to approve | | | | | |
an amendment to the ------- ------- -------
Company's 1995 Non-Employee Director Stock Option Plan (the "Director's
Plan") to increase the number of shares of the Company's common stock
for which options may be granted under the Director's Plan as described
more fully in the Proxy Statement accompanying this Proxy.
4. In their discretion, such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.
THE UNDERSIGNED HEREBY REVOKES ANY PROXY TO VOTE SHARES OF COMMON STOCK
OF THE COMPANY HERETOFORE GIVEN BY THE UNDERSIGNED.
SIGNATURES(S) _________________________________________________________
TITLE (if applicable)_____________________________ DATE _______________
NOTE: Please date, sign exactly as your name appears on this Proxy and promptly
return in the enclosed envelope. In the case of joint ownership, each
joint owner must sign. When signing as guardian, executor, administrator,
attorney, trustee, custodian, or in any other similar capacity, please
give full title. If a corporation, sign in full corporate name by
president or other authorized officer, giving title, and affix corporate
seal. If a partnership, sign in partnership name by authorized person.