SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</Table>
Verilink Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[VERILINK(R) LOGO]
950 EXPLORER BOULEVARD
HUNTSVILLE, ALABAMA 35806-2808
October 17, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of
Stockholders of Verilink Corporation (the "Company") to be held at the Company's
facility located at 950 Explorer Boulevard in Huntsville, Alabama on Wednesday,
November 14, 2001, at 9:00 a.m. local time. I sincerely hope that you will be
able to attend the meeting and I look forward to seeing you.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. We also will report on the
operations of the Company during the past year as well as on our plans for the
future.
We are including with this Proxy Statement a copy of the Company's
Annual Report on Form 10-K. It contains information on the Company's operations,
markets, products and services as well as the Company's audited financial
statements.
Please take this opportunity to become involved in the affairs of the
Company. Each of the issues covered by the Proxy Statement is important to
position the Company for growth. We hope that you will take time to carefully
consider each matter.
Whether or not you expect to be present at the meeting, please
complete, date, sign, and mail the enclosed proxy in the envelope provided.
Returning the proxy does NOT deprive you of your right to attend the meeting and
vote your shares in person. If you attend the meeting, you may withdraw your
proxy and vote your own shares.
Sincerely,
/s/ Howard Oringer
Howard Oringer
Chairman of the Board
VERILINK CORPORATION
950 EXPLORER BOULEVARD
HUNTSVILLE, ALABAMA 35806-2808
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 14, 2001
------------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of Verilink
Corporation (the "Company"), will be held at the Company's facility located at
950 Explorer Boulevard in Huntsville, Alabama on Wednesday, November 14, 2001,
at 9:00 a.m. local time, for the following purposes:
1. To elect two (2) Class II directors to hold office
until the 2004 Annual Meeting of Stockholders or
until their respective successors have been duly
elected or appointed;
2. To ratify the appointment of PricewaterhouseCoopers
LLP as the Company's independent accountants for the
fiscal year ending June 28, 2002; and
3. To transact such other business as may properly come
before the Annual Meeting and any adjournment or
postponement thereof. The Board of Directors is not
aware of any other business to be presented to a vote
of the stockholders at the Annual Meeting.
The foregoing matters are described in more detail in the enclosed
Proxy Statement, which is attached and made a part hereof.
The Board of Directors has fixed the close of business on October 1,
2001 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any postponement or adjournment thereof.
By Order of the Board of Directors,
/s/ Graham G. Pattison
Graham G. Pattison
President, Chief Executive Officer
and Director
Huntsville, Alabama
October 17, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE
URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD AT YOUR EARLIEST
CONVENIENCE TO ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU
SEND IN YOUR PROXY AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR
SHARES IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE
WITH THE PROCEDURES SET FORTH IN THE PROXY STATEMENT.
MAILED TO STOCKHOLDERS ON OR ABOUT OCTOBER 17, 2001
VERILINK CORPORATION
950 EXPLORER BOULEVARD
HUNTSVILLE, ALABAMA 35806-2808
------------------------
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Verilink Corporation, a Delaware corporation (the
"Company"), of proxies in the accompanying form for use in voting at the Annual
Meeting of Stockholders to be held on Wednesday, November 14, 2001, at 9:00 a.m.
local time, at the Company's facility located at 950 Explorer Boulevard,
Huntsville, Alabama and any adjournment or postponement thereof (the "Annual
Meeting"). The shares represented by the proxies received, properly dated and
executed, and not revoked will be voted at the Annual Meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is exercised by delivering to the Company
a written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail and the Company
will bear all associated costs. These costs will include the expense of
preparing and mailing proxy materials for the Annual Meeting and reimbursements
paid to brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. The Company may conduct further solicitation personally,
telephonically or by facsimile through its officers, directors and regular
employees, none of whom will receive additional compensation for assisting with
the solicitation.
The close of business on October 1, 2001 has been fixed as the record
date (the "Record Date") for determining the holders of shares of Common Stock
of the Company entitled to notice of and to vote at the Annual Meeting. As of
the close of business on the Record Date, the Company had 15,744,834 shares of
Common Stock outstanding and entitled to vote at the Annual Meeting. The
presence at the Annual Meeting of a majority, or 7,872,418, of these shares of
Common Stock of the Company, either in person or by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting. Each outstanding
share of Common Stock on the Record Date is entitled to one (1) vote on all
matters, except that stockholders have cumulative voting rights with respect to
the election of directors.
An automated system administered by the Company's transfer agent will
tabulate votes cast by proxy at the Annual Meeting, and an employee of the
Company will tabulate votes cast in person at the Annual Meeting. Abstentions
and broker non-votes are each included in the determination of the number of
shares present and voting, and each is tabulated separately. However, broker
non-votes are not counted for purposes of determining the number of votes cast
with respect to a particular proposal. In determining whether a proposal has
been approved, abstentions are counted as votes against the proposal and broker
non-votes are not counted as votes for or against the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of October
1, 2001 by (a) each stockholder known by the Company to be the beneficial owner
of more than five percent of the Company's Common Stock, (b) each director and
1
nominee for director of the Company, (c) each Named Executive Officer in the
Summary Compensation Table below (see "Executive Compensation") and (d) all
directors and current executive officers who beneficially own shares, as a
group.
VESTED
OPTIONS PERCENTAGES
NUMBER OF EXERCISABLE TOTAL OF SHARES
SHARES WITHIN 60 BENEFICIAL BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED DAYS(1) OWNERSHIP OWNED(2)
------------------------ --------- ----------- ---------- ------------
Leigh S. Belden(3) .................................... 2,691,575 72,905 2,764,480 17.48%
Steven C. Taylor(4) ................................... 1,908,164 72,905 1,981,069 12.52%
Beltech, Inc.(5) ...................................... 1,000,000 -- 1,000,000 6.35%
Beacon Telco, L.P(6) .................................. 999,900 -- 999,900 6.25%
Dimensional Fund Advisors Inc.(7) ..................... 893,600 -- 893,600 5.68%
Oliver Corporation(8) ................................. 800,000 -- 800,000 5.08%
Graham G. Pattison(9) ................................. 29,200 460,628 489,828 3.02%
Howard Oringer ........................................ 248,500 150,000 398,500 2.51%
Michael L. Reiff(10) .................................. -- 155,000 155,000 *
Ronald G. Sibold(11) .................................. 5,000 120,833 125,833 *
John A. McGuire ....................................... 30,000 84,167 114,167 *
John E. Major ......................................... 10,000 80,334 90,334 *
S. Todd Westbrook(12) ................................. -- 50,000 50,000 *
James B. Garner(13) ................................... 5,269 40,000 45,269 *
Steven E. Turner ...................................... 11,472 -- 11,472 *
Edward A. Etzel ....................................... 2,000 -- 2,000 *
Directors and current executive officers as a group
(12 persons)(14) ................................... 4,942,176 1,342,922 6,285,098 36.78%
--------------
* Less than 1%
(1) In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of Common Stock subject
to options held by that person that are vested and exercisable or
vested and exercisable within 60 days of October 1, 2001 are deemed
outstanding. Employee stock options are generally exercisable; however
the shares of Common Stock issuable upon exercise typically vest over
time provided the optionee remains continuously employed by the
Company. Upon cessation of employment, the Company has the option to
repurchase all of any unvested shares issued upon exercise of employee
options. Such shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person. To
the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person
named in the table has sole voting and investment power with respect to
the shares set forth opposite such person's name. Except as otherwise
indicated, the address of each of the persons in this table is as
follows: c/o Verilink Corporation, 950 Explorer Boulevard, Huntsville,
Alabama 35806-2808.
(2) Percentage beneficially owned is based on 15,744,834 shares of Common
Stock outstanding as of October 1, 2001.
(3) Includes (a) 1,130,869 shares owned by Leigh S. Belden, individually,
and by Leigh S. Belden & Deborah Tinker Belden, or their successors,
Trustees U/A Dated 12/09/88; (b) 1,050 shares owned by Baytech
Associates, a California general partnership in which Mr. Belden has a
50% general partner interest; (c) 559,656 shares owned by trusts for
minor children of Mr. Belden; and (d) 1,000,000 shares owned by
Beltech, Inc., a Nevada corporation of which Mr. Belden is a Director
and President and the Leigh S. Belden and Deborah Tinker Belden Trust
U/A Dated 12/09/88 is the sole shareholder. Mr. Belden disclaims
beneficial ownership as to 559,656 of these shares. As of October 1,
2001, Mr. Belden has pledged 891,280 shares to the Company to secure
the notes described under "Certain Relationships and Related
Transactions".
(4) Includes (a) 1,107,114 shares owned by Steven C. Taylor, individually,
and by Steven C. Taylor and Suzanne E. Taylor, Trustees of Steven and
Suzanne Taylor Living Trust Agreement Dated June 2, 1988; (b) 1,050
2
shares owned by Baytech Associates, a California general partnership
interest in which Mr. Taylor has a 50% general partner interest; and
(c) 800,000 shares owned by the Oliver Corporation, a Nevada
corporation of which Mr. Taylor is a Director and President and the
Steven and Suzanne Taylor Living Trust Agreement Dated June 2, 1988 is
the sole shareholder.
(5) Beltech, Inc., 940 Southwood Blvd., Suite 201, Incline Village, NV
89452.
(6) As reported in a Schedule 13D filed by Beacon Telco, L.P. as of April
1, 2001, includes 749,900 outstanding shares as to which Beacon Telco,
L.P. has sole voting and investment power, and includes vested rights
to acquire 250,000 shares pursuant to the Warrant and Stockholder's
Agreement between the Company and Beacon Telco, L.P. dated October 13,
2000. Beacon Telco, L.P., 8 St. Mary's Street, Boston, MA 02215.
(7) As reported in a Schedule 13G filed by Dimensional Fund Advisors Inc.
as of December 31, 2000, includes 893,600 shares as to which
Dimensional Fund Advisors Inc. has sole voting and investment power.
Dimensional Fund Advisors Inc., 1299 Ocean Avenue, 11th Floor, Santa
Monica, CA 90401.
(8) Oliver Corporation, 940 Southwood Blvd., Suite 201, Incline Village, NV
89452.
(9) Excludes options to purchase 339,372 shares that are not vested, but
exercisable within 60 days of October 1, 2001.
(10) Excludes options to purchase 264,500 shares that are not vested, but
exercisable within 60 days of October 1, 2001.
(11) Excludes options to purchase 279,167 shares that are not vested, but
exercisable within 60 days of October 1, 2001.
(12) Excludes options to purchase 150,000 shares that are not vested, but
exercisable within 60 days of October 1, 2001.
(13) Excludes options to purchase 85,000 shares that are not vested, but
exercisable within 60 days of October 1, 2001.
(14) Excludes options to purchase 1,204,289 shares that are not vested, but
exercisable within 60 days of October 1, 2001.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than ten
percent of the Company's Common Stock (collectively, "Reporting Persons") to
file reports of ownership and changes in ownership with the SEC and the Nasdaq
National Market. Reporting Persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such reports received or
written representations from certain Reporting Persons, the Company believes
that during fiscal 2001, all Reporting Persons complied with all applicable
filing requirements except as follows. Steven C. Taylor failed to report sales
of 84,000 shares in March 2000 and a gift of 1,500 shares in April 2000 on Form
4's for March 2000 and April 2000, respectively. This failure was inadvertent,
and the transactions were subsequently reported on a Form 5 filed on August 15,
2001 for the fiscal year ended June 29, 2001. The November 2000 Form 4 for
Edward A. Etzel was inadvertently filed 23 days late, on January 3, 2001, rather
than December 11, 2000. The June 2000 Form 5 for James B. Garner was
inadvertently filed 1 day late, on August 15, 2001, rather than August 14, 2000.
S. Todd Westbrook failed to timely report a stock option granted in February
2000 on Form 5. This failure was inadvertent, and the option grant was
subsequently reported on Form 5 for the fiscal year ended June 30, 2000 that was
filed late on April 10, 2001.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The number of directors on the Board is fixed at seven (7). The
Company's Certificate of Incorporation divides the Company's Board of Directors
into three classes designated Class I, Class II, and Class III. The members of
each class of directors serve staggered three-year terms. The Board is currently
composed of two (2) Class I directors (Graham G. Pattison and John E. Major),
two (2) Class II directors (Howard Oringer and John A. McGuire), and two (2)
Class III directors (Leigh S. Belden and Steven C. Taylor), whose terms will
expire upon the election and qualification of directors at the Annual Meeting of
Stockholders to be held in 2003, 2001 and 2002, respectively. There is currently
one vacancy on the Board.
At the Annual Meeting, the stockholders will elect two (2) Class II
directors to serve a three (3) year term until the 2004 Annual Meeting of
Stockholders or until their respective successors are elected or appointed and
qualified or until the directors' earlier resignation or removal. In the event
either of the nominees is unable or unwilling to serve as a nominee, the proxies
may be voted for any substitute nominee designated by the present Board of
Directors or the proxy holders to fill such vacancy. The Board of Directors has
no reason to believe that the persons named will be unable or unwilling to serve
as a nominee or as a director if elected.
In voting for directors for each class, each stockholder is entitled to
cast that number of votes equal to the number of shares of Common Stock held by
such stockholder multiplied by the number of directors to be elected to that
certain class of directors, and each stockholder may cumulate and cast all such
votes for a single director nominated to such class, or may distribute such
votes among the number of directors to be elected to such class as such
stockholder sees fit. Votes may be cumulated only for directors to be elected
within each class. The candidates for each class of directors receiving the
highest number of affirmative votes will be elected to such class, up to the
number of directors to be elected to that class. The persons authorized to vote
shares represented by executed proxies in the enclosed form (if authority to
vote for the election of directors is not withheld) will have full discretion
and authority to vote for any or all of the nominees for that certain class of
directors as they may determine or, if authority to vote for a specified
candidate or candidates has been withheld, among those candidates for such class
for whom authority to vote has not been withheld.
Unless marked otherwise, proxies received will be voted FOR the
election of each of the nominees named below. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner as will ensure the election
of as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders.
Certain information about Howard Oringer and John A. McGuire, the Class
II director nominees, is furnished below.
Mr. Oringer has been a Director of the Company since August 1987 and
Chairman of the Board of Directors since January 1996. In addition, he has been
the Managing Director of Communications Capital Group, a management consulting
firm, since November 1993. From February 1986 to November 1993, Mr. Oringer was
the President, Chief Executive Officer and Chairman of the Board of Directors of
Telesciences, a manufacturer of telecommunications equipment. Mr. Oringer
received a B.E. in Engineering from the Stevens Institute of Technology, an M.S.
in Electrical Engineering from the California Institute of Technology and an
M.B.A. from Santa Clara University. Mr. Oringer is a member of the Board of
Directors of Tekelec, Inc. and Ixia, Inc.
Mr. McGuire became a Director of the Company in July 1998. Mr. McGuire
retired in 2000 as the Chairman and Chief Executive Officer of Ellipsys
Technology, Inc., a telecommunications company. From 1994 to 1996, Mr. McGuire
was the Managing Partner of J. McGuire and Associates, a management consulting
firm. From 1991 to 1994, Mr. McGuire was the President of Telescience
International, a telecommunications manufacturing company. Mr. McGuire received
a B.S. in Mathematics from the California State University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES NAMED
ABOVE.
4
THE BOARD OF DIRECTORS AND COMMITTEES
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
----------------------- --- ------------------------------------------------- -------
Graham G. Pattison(3) 51 President, Chief Executive Officer, and Director 1999
Howard Oringer(1)(2)(3) 59 Managing Director of Communications Capital Group 1987
Leigh S. Belden(3) 52 Director 1982
Steven C. Taylor(2) 53 Vice Chairman of the Board 1982
John A. McGuire(1)(2)(3) 66 Director 1998
John E. Major(1) 55 President, Novatel Wireless, Inc. 1999
---------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of the Strategy Committee. Mr. McGuire was appointed to the
Strategy Committee in February 2001.
Mr. Belden co-founded the Company and served as its President, Chief
Executive Officer, and Director since its inception in December 1982. In April
1999, Mr. Belden resigned as the Company's President and Chief Executive
Officer. From 1980 to 1982, Mr. Belden was Vice President of Marketing for
Cushman Electronics, a manufacturer of telephone central office and two-way
radio test equipment. Previously, he held various international and domestic
sales and marketing management positions for California Microwave. Mr. Belden
received a B.S. in Electrical Engineering from the University of California at
Berkeley and an M.B.A. from Santa Clara University.
Mr. Major is CEO of Novatel Wireless, Inc. Prior to joining Novatel
Wireless in July 2000, Mr. Major served as president and CEO of Wireless
Knowledge, Inc., a joint venture between Microsoft Corporation and QUALCOMM Inc.
Mr. Major also served as Corporate Executive Vice president of QUALCOMM Inc. and
President of its Wireless Infrastructure Division. Prior to that, Mr. Major held
several executive leadership positions at Motorola from 1977 until joining
QUALCOMM in 1997. Mr. Major received a B.S. in Mechanical and Aerospace
Engineering from the University of Rochester, and a M.S. in Mechanical
Engineering from the University of Illinois. He also holds a M.B.A. with
distinction from Northwestern University and a J.D. from Loyola University. Mr.
Major received an honorary doctorate from Westminster College in 1995. Mr. Major
currently serves on the board of directors of Novatel Wireless, Inc., Littlefuse
Inc., Indentix, Inc., Advanced Remote Communications Solutions, and Lennox
International Inc.
Mr. Pattison joined the Company as its President, Chief Executive
Officer, and Director in April 1999. Prior to joining the Company, Mr. Pattison
held various executive positions at Motorola Corporation from 1991 through April
1999 including, Corporate Vice President and General Manager of new business
ventures at Motorola's new Internet and Networking Group and Vice President and
General Manager of Motorola's Network System Division. Mr. Pattison received a
B.S. in Electrical Engineering and a M.S. in Engineering Technology from Royal
Melbourne Institute of Technology, Australia.
Mr. Taylor co-founded the Company and has served as its Chief Technical
Officer since its inception in December 1982 until his retirement in April 1999.
In addition, Mr. Taylor served as Chairman of the Board of Directors from the
Company's inception until January 1996, at which time he became the Vice
Chairman of the Board of Directors. Previously, Mr. Taylor served as Chief
Engineer of Digital Products for Culbertson Industries and California Microwave.
In 1980, Mr. Taylor formed Telecommunications Consultants, Inc., a consulting
firm engaged in the design and support of digital and analog communications
equipment.
There are no family relationships among any of the directors or
executive officers of the Company.
5
BOARD MEETING AND COMMITTEES
The Company's Board of Directors met six (6) times during fiscal 2001.
None of the directors attended fewer than 75% of all the meetings of the Board
and those committees of the Board on which he served. The Chairman of the Board
receives a retainer of $6,500 per quarter. The Vice Chairman of the Board
receives a retainer of $6,000 per quarter. All other Non-employee Directors
receive a retainer fee of $4,000 per quarter. In addition, all Non-employee
Directors receive a fee of $2,000 for each Board meeting attended, or $1,000 for
telephonic participation.
The Audit Committee, which held seven (7) meetings during fiscal 2001,
currently consists of Messrs. Major, McGuire, and Oringer. The Audit Committee
Chairman, Mr. Major, receives a retainer fee of $1,750 per quarter. All other
Non-employee Audit Committee Members receive a retainer fee of $1,000 per
quarter. In addition, each Non-employee Audit Committee Member receives a fee of
$500 for each meeting attended. The Audit Committee recommends to the Board the
engagement of the firm of certified public accountants to audit the financial
statements of the Company for the fiscal year for which they are appointed, and
monitors the effectiveness of the audit effort and the Company's financial and
accounting organization and financial reporting.
The Compensation Committee, which held eight (8) meetings during fiscal
2001, currently consists of Messrs. McGuire, Oringer, and Taylor. The
Compensation Committee Chairman, Mr. McGuire, receives a retainer fee of $1,750
per quarter. All other Non-employee Compensation Committee Members receive a
retainer fee of $1,000 per quarter. In addition, each Non-employee Compensation
Committee Member receives a fee of $500 for each meeting attended. The
Compensation Committee establishes and reviews the compensation policies
applicable to the Company's executive officers and administers the 1993 Amended
and Restated Stock Option Plan (the "Option Plan") and the Verilink Corporation
1996 Employee Stock Purchase Plan (the "Stock Purchase Plan"). Stock Option
grants intended to qualify as performance based compensation exempt from the
deduction limit under Section 162(m) of the Internal Revenue Code will be
granted by a sub-committee consisting solely of Messrs. Oringer and McGuire.
The Strategy Committee, which held eight (8) meetings during fiscal
2001, currently consists of Messrs. Belden, McGuire, Oringer, and Pattison. Mr.
McGuire was appointed to the Strategy Committee in February 2001. The Strategy
Committee Chairman, Mr. Belden, receives a retainer fee of $4,000 per quarter.
All other Non-employee Strategy Committee Members receive a retainer fee of
$2,500 per quarter. In addition, each Non-employee Strategy Committee Member
receives a fee of $2,000 for each meeting attended, or $1,000 for telephonic
participation. The Strategy Committee establishes and reviews the strategic
direction of the Company.
The Company also pays any Non-employee Director who consults with the
Company in the amount of $1,000 for each half-day, or $2,000 for each full day.
This fee is paid only for days in which the Non-employee Director is not
receiving fees for attendance at Board Meetings or Committee Meetings. During
fiscal 2001, the Company paid Mr. Belden $23,000, Mr. Major $9,000, Mr. McGuire
$23,000, Mr. Oringer $13,000, and Mr. Taylor $9,000 for these per diem fees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Taylor joined the Compensation Committee after his retirement from
Verilink in April 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 2001, the Company advanced $115,092 and $300,653 for
housing assistance loans to Graham G. Pattison and Michael L. Reiff,
respectively, in connection with the offers of employment to these executive
officers of the Company. At June 29, 2001, the total amount outstanding under
these loans was $242,712 and $409,734 for Mr. Pattison and Mr. Reiff,
respectively. These loans bear no interest and will be repaid based upon the
earlier of termination of employment for cause, ninety days after voluntary
termination of employment, one year after any other termination of employment,
or seven years from the date of the loans. In the event the underlying property
covered by these loans is sold by the executives for less than the purchase
price of the property, the loan amount will be reduced accordingly and the
Company will reimburse the executives for any tax liability that arises as a
result of this loan forgiveness. Additional advances totaling approximately
$250,000 are expected to be made
6
in fiscal 2002 to Mr. Pattison as part of the housing assistance loan. The
Company also advanced $35,518 in fiscal 2001 to Edward A. Etzel for a housing
assistance loan. As part of Mr. Etzel's termination agreement, Mr. Etzel
transferred his ownership interest in the house under construction to the
Company in exchange for the amount owed under the housing assistance loan that
totaled $226,483 on his termination date.
During fiscal 2000, the Company provided other loans in the amount of
$300,000 each to Mr. Pattison and Mr. Reiff. These loans bear no interest and
should be repaid based upon the earlier of termination of employment for any
reason or within one year after the value of exercisable stock options exceeds
$2,000,000 (defined as the fair market value of stock subject to exercisable
options less the total exercise price of such options). If the executive's
employment terminates before the exercisable stock options exceeds $2,000,000, a
portion of the loan amount will be forgiven for each full year the executive
remained employed by the Company. The portion forgiven is fifty percent for each
full year of service for Mr. Reiff and twenty-five percent for each full year of
service for Mr. Pattison.
In September 1993, the Company and Leigh S. Belden, a Director of the
Company, entered into a Common Stock Purchase Agreement providing for the
purchase by Mr. Belden of 1,600,000 shares of the Company's Common Stock in
exchange for a non-recourse promissory note issued by Mr. Belden in favor of the
Company in the amount of $800,000 with the issued shares of Common Stock
initially collateralizing the note. From time to time thereafter, the Company
released excess collateral based upon then current market prices. Through
subsequent note modifications in February 1998 and September 1999, repayments on
this note, which bears interest at 5% per annum, would commence in September
2000 and continue through maturity in March 2002. During fiscal 2001, quarterly
payments of $115,000 were made in September and December 2000. The March 2001
and June 2001 payments and the remaining quarterly payments were rescheduled to
March 2002. As of June 29, 2001, $942,782 of principal and interest was
outstanding under this promissory note. A total of 794,240 shares of Common
stock of the Company was held by the Company at June 29, 2001 as collateral for
this note and the loan facility discussed below.
In February 1999, the Company approved a loan facility of up to
$3,000.000 to Mr. Belden in return for a note that bears interest at 6% per
annum and that had an original maturity date of March 1, 2000. All or a portion
of this loan facility may be made available through guarantees by the Company of
third party loans. The September 1999 note modification agreement provided for
the repayment of this note to commence in September 2000 and to continue through
maturity in March 2002. During fiscal 2001, quarterly payments of $360,000 were
made in September and December 2000. The March 2001 and June 2001 quarterly
payments and the remaining quarterly payments were rescheduled to March 2002. As
of June 29, 2001, $2,116,786 of principal and interest was outstanding under
this loan facility. A total of 794,240 shares of Common stock of the Company was
held by the Company at June 29, 2001 as collateral for this loan facility and
the non-recourse promissory note discussed above.
EXECUTIVE COMPENSATION
COMPENSATION TABLES
The following tables set forth certain information concerning
compensation of and stock options held by the Company's Chief Executive Officer
and each of the four other most highly compensated executive officers of the
Company.
SUMMARY COMPENSATION TABLE
The following table, together with the footnotes thereto, summarizes
the total compensation for fiscal 2001 of (i) the Company's Chief Executive
Officer, (ii) the four other most highly compensated executive officers of the
Company who were serving as such at 2001 fiscal year end, and (iii) two
additional persons who would have been included in the table if they had been
serving as executive officers of the Company at 2001 fiscal year end
(collectively, the "Named Executive Officers"), as well as the total
compensation paid to each Named Executive Officer for the Company's two previous
fiscal years, if applicable.
7
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------ UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) (#)(3) ($)(4)
------------------------------------------ ---- ------- ------- ---------- ------------
Graham G. Pattison........................ 2001 300,000 -- -- 74,535(5)(6)
President, Chief Executive 2000 305,769 489,876 500,000 39,020(5)
Officer, and Director 1999 51,923 -- 300,000 11,376(5)
Michael L. Reiff.......................... 2001 250,000 -- 89,500 88,401(7)(8)
Executive Vice President and 2000 147,115 158,230 350,000 124,873(7)
Chief Operating Officer 1999 -- -- -- --
Ronald G. Sibold.......................... 2001 200,000 50,000 200,000 27,708
Vice President and Chief 2000 11,538 94,555 200,000 32
Financial Officer 1999 -- -- -- --
S. Todd Westbrook......................... 2001 160,000 -- 100,000 17,977
Vice President, Operations 2000 55,026 50,000 100,000 4,249
1999 -- -- -- --
James B. Garner........................... 2001 150,000 -- 30,000 19,813
Vice President, Marketing 2000 131,538 70,607 75,000 5,862
1999 -- -- -- --
Edward A. Etzel(9)........................ 2001 236,842(10) 104,724 -- 106,376(11)
former Sr. Vice President , 2000 47,597 -- 250,000 3,819
Worldwide Sales 1999 -- -- -- --
Steven E. Turner(12)...................... 2001 215,465(13) -- -- 11,191
former Vice President and 2000 200,461 86,859 100,000 14,576
Chief Technical Officer 1999 76,270 39,655 100,000 8,891
-------------
(1) The amounts disclosed in this column include amounts deferred by the
Named Executive Officers pursuant to the Company's 401(k)
Investment/Retirement Plan (the "401(k) Plan"). The fiscal 2000 salary
for each Named Executive Officer employed during the entire year is
shown for 53 weeks to match the number of weeks included in the
Company's fiscal year ended June 30, 2000 as compared to 52 weeks for
the 2001 and 1999 fiscal years.
(2) The amounts disclosed in this column represent bonus amounts in the
year earned and commissions earned on sales.
(3) The stock options listed in the table include options granted to
purchase Common Stock of the Company.
(4) The amounts shown in this column include the fringe benefits offered to
executive officers that consists of auto allowances and operating
expenses, 401(k) Plan matching contributions, certain membership fees,
reimbursement of medical, tax, and legal expenses, and life insurance
premiums paid by the Company.
(5) Includes payments by the Company for temporary housing and relocation
expenses of $24,485, $22,734, and $8,681 in fiscal 2001, 2000, and
1999, respectively.
(6) Additionally, includes imputed interest on interest-free loans of
$23,203.
(7) Includes payments by the Company for temporary housing and relocation
expenses of $32,569 and $116,248 in fiscal 2001 and 2000, respectively.
(8) Additionally, includes imputed interest on interest-free loans of
$22,579.
(9) Mr. Etzel resigned as the Company's Senior Vice President, Worldwide
Sales in March 2001.
8
(10) This amount represents $168,476 in salary earned during fiscal year
2001 and $68,366 in severance compensation paid during fiscal 2001.
(11) Includes payments by the Company for relocation expenses of $84,818.
(12) Mr. Turner resigned as the Company's Vice President and Chief Technical
Officer in March 2001.
(13) This amount represents $161,619 in salary earned during fiscal year
2001 and $53,846 in severance compensation paid during fiscal 2001.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to the
grant of stock options under the Company's Amended and Restated 1993 Stock
Option Plan to each of the Named Executive Officers during the fiscal year ended
June 29, 2001.
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL PATE OF
SECURITIES OPTIONS EXERCISE STOCK APPRECIATION FOR
UNDERLYING GRANTED TO SHARE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
---------------------------- ---------- ------------ --------- ---------- ------- -------
Graham G. Pattison.......... -- -- -- -- -- --
Michael L. Reiff............ 89,500 9.49 $3.188 11/24/10 179,440 454,736
Ronald G. Sibold............ 200,000 21.20 $2.375 12/07/10 298,724 757,028
S. Todd Westbrook........... 100,000 10.60 $2.375 12/07/10 149,362 378,514
James B. Garner............. 30,000 3.18 $1.969 03/15/11 37,145 94,133
Edward A. Etzel............. -- -- -- -- -- --
Steven E. Turner............ -- -- -- -- -- --
---------------
(1) The potential realizable value portion of the foregoing table
illustrates value that might be realized upon exercise of the options
immediately prior to the expiration of their terms, assuming the
specified compounded rates of appreciation on the Company's Common
Stock over the term of the options. Actual gains, if any, on stock
option exercise are dependent upon a number of factors, including the
future performance of the Common Stock, overall stock market
conditions, and the timing of option exercises, if any. There can be no
assurance that amounts reflected in this table will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides the specified information concerning
exercises of options to purchase the Company's Common Stock in fiscal year 2001,
and unexercised options held as of June 29, 2001, by the Named Executive
Officers.
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END(#) FISCAL YEAR END($)(2)
ACQUIRED ON VALUE -------------------------------- -------------------------------
NAME EXERCISE(#) REALIZED(1)($) EXERCISABLE UNEXERCISABLE(3) EXERCISABLE UNEXERCISABLE(3)
------------------------ ------------ ----------- ----------- ---------------- ------------ ----------------
Graham G. Pattison ..... -- $ -- 377,932 422,068 $274,762 $363,938
Michael L. Reiff ....... -- -- 118,541 300,959 84,401 169,533
Ronald G. Sibold ....... -- -- 100,000 300,000 51,250 153,750
S. Todd Westbrook ...... -- -- 50,000 150,000 25,625 76,875
James B. Garner ........ -- -- 26,250 98,750 6,406 62,155
Edward A. Etzel ........ -- -- -- -- -- --
Steven E. Turner(4) .... 75,000 77,493 -- -- -- --
--------------
(1) The value realized upon the exercise of stock options represents the
positive spread between the exercise price of stock options and the
fair market value on the exercise date.
9
(2) The value of "in-the-money" stock options represents the positive
spread between the exercise price of options and $3.40, the price per
share of the underlying shares of Common Stock, as reported on the
Nasdaq National Market on June 29, 2001 (the last trading day of fiscal
year 2001).
(3) The options are immediately exercisable; however, the shares of Common
Stock issued upon exercise of such options typically vest over four
years at the annual rate of 25% of the total shares granted on the
anniversary of the grant date, provided the optionee remains
continuously employed by the Company. Upon cessation of employment for
any reason, the Company has the option to repurchase all, but not some,
of any unvested shares of Common Stock issued upon exercise of an
option, within 60 days following the date of cessation of employment at
a repurchase price equal to the exercise price of such shares.
Accordingly, options are identified above as unvested to the extent
that the underlying Common Stock is unvested as of fiscal year end.
(4) Includes shares acquired on exercise after employment was terminated.
CHANGE OF CONTROL SEVERANCE BENEFITS AGREEMENTS AND EMPLOYMENT CONTRACTS
The Company has entered into a Change of Control Severance Benefits
Agreement (the "Agreement") with each of its executive officers. All capitalized
terms in the description below have the same meaning as in the Agreement. Under
the terms of the Agreement if the executive's employment terminates due to an
Involuntary Termination or a Voluntary Termination for Good Reason within 24
months following a Change of Control, the termination will be a Covered
Termination and the Company shall (i) pay the Executive a lump sum payment equal
to 100% of the sum of Annual Base Pay and Annual Bonus, subject to any
applicable withholding of federal, state or local taxes, (ii) fully vest all
stock options held by the executive and the period of time to exercise such
stock options following a Covered Termination may be extended, and (iii)
continue Welfare Benefit coverage for the executive and his covered dependents
under any Welfare Benefit plan or program maintained by the Company on the same
terms and conditions (including cost to the executive) as in effect immediately
prior to the Covered Termination, for one (1) year following the Covered
termination. Upon the occurrence of a Covered Termination, and prior to the
receipt of any benefits under the Agreement, the executive shall execute an
Employee Agreement and Release (the "Release"). Such Release shall specifically
relate to all of the executive's rights and claims in existence at the time of
such execution and shall confirm the executive's obligations under the Company's
standard form of proprietary information agreement.
Mr. Michael L. Reiff, Executive Vice President and Chief Operating
Officer is a party to an Employment Agreement with the Company. Pursuant to that
Agreement, Mr. Reiff is entitled to an annual base salary of $250,000, subject
to annual increases; is eligible for annual bonuses, subject to meeting
performance goals, with a target payout of fifty percent (50%) of annual base
salary; and is eligible for benefits generally available to other executive
officers of the Company. He also received temporary housing and relocation
assistance and was granted a loan facility of $400,000, as amended, to acquire a
residence in Alabama and another loan facility of $300,000. Under the Agreement,
Mr. Reiff is also entitled to receive an option to purchase 89,500 shares of
Company common stock on each anniversary of his employment with the Company. In
addition, if Mr. Reiff's employment with the Company terminates under specified
circumstances, such as an involuntary termination by the Company without cause,
he will be entitled to severance benefits equal to one (1) year's annual base
salary and to the continuation of other employee benefits for a period of one
(1) year following any such termination.
Mr. Graham G. Pattison, the Company's President and Chief Executive
Officer is a party to an Employment Agreement with the Company. Pursuant to that
Agreement, Mr. Pattison is entitled to an annual base salary of $300,000,
subject to annual increases; is eligible for annual bonuses, subject to meeting
performance goals, with a target payout of fifty percent (50%) of annual base
salary; and is eligible for benefits generally available to other executive
officers of the Company. He also received temporary housing and relocation
assistance and was granted a loan facility of $400,000, as amended, to acquire a
residence in Alabama and another loan facility of $300,000. In addition, if Mr.
Pattison's employment is terminated by the Company without cause, he will be
entitled to severance benefits equal to one (1) year's annual base salary and to
the continuation of other employee benefits for a period of one (1) year
following any such termination.
Mr. Edward A. Etzel, the Company's former Senior Vice President,
Worldwide Sales, is a party to a Settlement Agreement and Full and Final Release
of Claims entered into in connection with his termination of employment with the
Company. Pursuant to that Agreement, Mr. Etzel received salary continuation for
six months
10
from the effective date of the Agreement and continuation of coverage under the
Company's medical, dental, and vision plans during that six-month salary
continuation period. Additionally, Mr. Etzel transferred his ownership interest
in the house under construction to the Company in exchange for the amount owed
under the housing assistance loan that totaled $226,483 on his termination date.
Mr. Steven E. Turner, the Company's former Vice President and Chief
Technical Officer, is a party to a Settlement Agreement and Full and Final
Release of Claims entered into in connection with his termination of employment
with the Company. Pursuant to that Agreement, Mr. Turner received salary
continuation for six months from the effective date of the Agreement and
continuation of coverage under the Company's medical, dental, and vision plans
during that six-month salary continuation period.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
reports of the Compensation Committee and the Audit Committee and the
Performance Graph which follows shall not be deemed to be incorporated by
reference into such filings.
In determining the officers' compensation levels, the Compensation
Committee generally considers factors such as competitive compensation levels
for officers of other high technology companies of similar revenues,
profitability and growth rates among other factors. The Compensation Committee
is currently composed of Messrs. McGuire, Oringer, and Taylor. Mr. Taylor is a
former officer and employee of the Company. In addition to administering the
1993 Amended and Restated Stock Option Plan and the 1996 Employee Stock Purchase
Plan, the Compensation Committee is authorized by the Board, among other things,
to establish and review annually the general compensation policies applicable to
the Company's executive officers, including the relationship of Company
financial performance to executive compensation and the basis for the Chief
Executive Officer's compensation during each fiscal year.
The Chief Executive Officer's compensation for fiscal year 2001 was
based on the terms of the employment agreement between Graham Pattison and the
Company dated March 22, 1999. Based on the Company's performance for fiscal
2001, no bonus was paid.
Compensation Policy Regarding Deductibility. The Company is required to
disclose its policy regarding qualifying executive compensation for
deductibility under Section 162(m) of the Code which provides that, for purposes
of the regular income tax and the alternative minimum tax, the otherwise
allowable deduction for compensation paid or accrued with respect to a covered
employee of a publicly-held corporation is limited to no more than $1 million
per year. For the fiscal year ended June 29, 2001, no executive officer of the
Company received $1 million in total compensation, nor does the Company
anticipate that compensation payable to any executive officer will exceed $1
million for fiscal 2002.
THE COMPENSATION COMMITTEE
JOHN A. MCGUIRE
HOWARD ORINGER
STEVEN C. TAYLOR
11
REPORT OF AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in its oversight of
the Company's accounting, reporting practices and financial reports. The Audit
Committee's responsibilities are more fully described in its charter, a copy of
which was filed as Exhibit A to the proxy statement for the 2000 annual meeting.
Management has the primary responsibility for the preparation and
integrity of the Company's financial statements, accounting and financial
reporting principles and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
company's independent auditors, PricewaterhouseCoopers LLP, are responsible for
performing an independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial statements with
generally accepted accounted principles.
In fulfilling its oversight responsibilities, the Audit Committee:
- reviewed and discussed the audited consolidated
financial statements for fiscal 2001 with the
Company's management,
- discussed with PricewaterhouseCoopers LLP the matters
that are required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit
Committees,
- received from PricewaterhouseCoopers LLP the written
disclosures and the letter required by the
Independence Standards Board Statement No. 1,
Independence Discussions with Audit Committees, and
- has discussed with PricewaterhouseCoopers LLP their
independence.
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 29, 2001, for filing with the Securities and Exchange
Commission.
THE AUDIT COMMITTEE
JOHN E. MAJOR
JOHN A. MCGUIRE
HOWARD ORINGER
12
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on
the Company's Common Stock during the last five fiscal years with the cumulative
total return on The NASDAQ Stock Market U.S. Index and the JP Morgan H&Q
Technology Index during the same period. The graph shows the value, at the end
of each of the last five fiscal years, of $100 invested in the Company's Common
Stock and in each of the foregoing indices on June 30, 1996 and assumes
reinvestment of dividends, if any. The graph depicts the change in the value of
Common Stock relative to the indices as of the end of each fiscal year and not
for any interim period. The stock price performance shown on the graph below is
not necessarily indicative of future price performance.
[PERFORMANCE GRAPH]
Cumulative Total Return
--------------------------------------------------------------------------------------
End of Fiscal Year
--------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
Verilink Corporation ......... 100.00 41.18 32.35 11.52 37.99 13.33
NASDAQ Stock Market (U.S.) ... 100.00 121.60 160.06 230.22 340.37 184.51
JP Morgan H & Q Technology ... 100.00 130.60 165.43 267.75 469.74 233.62
13
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as the Company's independent
accountants since the Company's inception and has been recommended to the Board
of Directors as the Company's independent accountants for fiscal year 2002. In
the event that ratification of this selection of accountants is not approved by
a majority of the shares of Common Stock voting at the Annual Meeting in person
or by proxy, management will review its future selection of accountants. Unless
marked to the contrary, proxies received will be voted FOR ratification of the
appointment of PricewaterhouseCoopers LLP as the independent accountants for the
2002 fiscal year.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting with the opportunity to make a statement, if they
desire to do so, and they are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR FISCAL YEAR 2002.
FEES BILLED TO US BY PRICEWATERHOUSECOOPERS LLP DURING FISCAL 2001
Audit Fees:
Fees for the 2001 fiscal year audit by PricewaterhouseCoopers LLP of
our annual financial statements and their review of the financial statements
included in our quarterly reports on Form 10-Q totaled $120,500.
Financial Information Systems Design and Implementation Fees:
Fees billed to us during our 2001 fiscal year by PricewaterhouseCoopers
LLP to provide services related to the conversion of the Company's MAXCIM
computer system to the Oracle ERP system totaled $37,700.
All Other Fees:
Fees billed to us by PricewaterhouseCoopers LLP during our 2001 fiscal
year for other services not described above, including tax related services,
totaled $65,727.
The Audit Committee has determined that the non-audit services provided
to us during our fiscal year 2001 by PricewaterhouseCoopers are compatible with
the maintenance of their independence.
STOCKHOLDER PROPOSALS/STOCKHOLDER NOMINATIONS FOR DIRECTOR
Stockholder proposals submitted pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, and intended to be presented at the
Company's 2001 Annual Meeting of Stockholders must be received by the Company
not later than June 14, 2001 in order to be considered for inclusion in the
Company's proxy materials for that meeting.
The Board of Directors does not have a nominating committee or a
committee performing the functions of a nominating committee. Stockholders
wishing to directly nominate candidates for election to the Board of Directors
("Director Nominations") and for the conduct of other business to be brought
before an annual meeting ("Other Business"), must do so in accordance with the
Company's Certificate of Incorporation and Bylaws.
To be timely, notice of Director Nominations to be brought before an
annual meeting or special meeting must be received by the Secretary of the
Company, at the address set forth below, not earlier than ninety nor later than
sixty days prior to the first anniversary of the preceding year's annual meeting
or, if the date of the annual meeting is advanced by more than thirty days or
delayed by more than sixty days from such anniversary, such notice
14
must be received not earlier than ninety days prior to such annual meeting and
not later than the later of (1) the sixtieth day prior to the annual meeting or
(2) the tenth day following the date on which notice of the date of the annual
meeting was mailed or public disclosure thereof was made, whichever occurs
first. The Certificate of Incorporation also provides that notice of Director
Nominations of any candidate for director shall include certain information with
respect to a proposed nominee, including (without limitation) information as to
such nominee's business background, relationships with stockholders and certain
other parties, and share ownership in the Company.
To be timely, notice of Other Business to be brought before an annual
meeting or special meeting must be received by the Secretary of the Company, at
the address set forth below, not later than ninety days prior to the meeting
date or, if less than one hundred days notice or prior public disclosure of the
date of the meeting is given to or made to stockholders, notice of Other
Business must be received no later than the close of business on the tenth day
following the day on which such notice of the date of the annual meeting or
special meeting was mailed or made public. The Company has not yet publicly
announced the date of the 2002 Annual Meeting of Stockholders.
Stockholder proposals for Other Business or Director Nominations should
be mailed to C.W. Smith, Vice President and Corporate Controller, Verilink
Corporation, 950 Explorer Boulevard, Huntsville, Alabama 35806-2808.
OTHER MATTERS
The Board of Directors knows of no other business at this time which
will be presented to the Annual Meeting. If any other business is properly
brought before the Annual Meeting, it is intended that proxies in the enclosed
form will be voted in respect thereof in accordance with the judgments of the
persons voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented.
Stockholders are urged to fill in, sign and promptly return the
accompanying form in the enclosed envelope.
By Order of the Board of Directors
/s/ Graham G. Pattison
Graham G. Pattison
President, Chief Executive Officer
and Director
October 17, 2001
Madison, Alabama
15
[VERILINK(R) LOGO]
VLKCM-PS-01
[FORM OF FRONT OF PROXY CARD]
PROXY
VERILINK CORPORATION
950 Explorer Boulevard
Huntsville, Alabama 35806-2808
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON NOVEMBER 14, 2001
The undersigned hereby appoints GRAHAM G. PATTISON as Proxy, with full
power of substitution, and hereby authorizes him to vote, as designated below,
all shares (unless a lesser number is specified on the other side) of Common
Stock of Verilink Corporation (the "Company") that the undersigned would be
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
on November 14, 2001 at the Company's facility located at 950 Explorer
Boulevard, Huntsville, Alabama, at 9:00 a.m. local time, and any adjournment or
postponement thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR
EACH OF PROPOSALS 1 AND 2 AND IN THE DISCRETION OF THE PROXY HOLDER(S) WITH
RESPECT TO OTHER MATTERS PROPERLY BROUGHT BEFORE THE MEETING, INCLUDING ANY
ADJOURNMENTS THEREOF.
(Continued and to be SIGNED on the Next Page)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF PROPOSALS 1 AND 2.
Please mark and date the proxy and sign your name as it
appears hereon. If executed by a corporation, a duly
authorized officer must sign by name and title.
Executors, administrators, and trustees must so
indicate when signing. If shares are held jointly,
EACH holder must sign.
Dated , 2001
-------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Signature(s) of Stockholder(s)
No. 1 Proposal to elect Howard Oringer and John A. McGuire as directors of
the Company.
For Withheld
[ ] [ ] (INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
in the space provided below.)
--------------------------------------------------
No. 2 Proposal to ratify and approve the appointment of PricewaterhouseCoopers
LLP as the Company's independent accountants for the fiscal year ending
June 28, 2002.
For Against Abstain
[ ] [ ] [ ]