[Ramp Network Logo]
December 15, 2000
To Our Stockholders:
I am pleased to inform you that on December 6, 2000, Ramp Networks, Inc.
entered into an Agreement and Plan of Merger with Nokia Corporation ("Nokia")
and Blackbird Acquisition, Inc., a wholly owned subsidiary of Nokia. Under the
Merger Agreement, Blackbird Acquisition, Inc. has today commenced a cash
tender offer to purchase all of the outstanding shares of Ramp Networks'
common stock for $5.80 per share (subject to applicable withholding taxes),
without interest. The tender offer will be followed by a merger in which any
remaining shares of Ramp Networks' common stock will be converted into the
right to receive $5.80 per share in cash (subject to applicable withholding
taxes), without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND
THE MERGER AGREEMENT AS DESCRIBED IN THE SCHEDULE 14D-9 ATTACHED HERETO AND
DETERMINED THAT THE OFFER, THE MERGER AND THE MERGER AGREEMENT ARE FAIR TO AND
IN THE BEST INTERESTS OF THE STOCKHOLDERS OF RAMP NETWORKS AND RECOMMENDS THAT
THE STOCKHOLDERS OF RAMP NETWORKS ACCEPT THE OFFER AND TENDER THEIR SHARES TO
PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors, which are described in the attached
Schedule 14D-9 that has been filed today with the Securities and Exchange
Commission. These factors include, among other things, the opinion of
Broadview International LLC, the company's financial advisor, that the
consideration to be received by the stockholders of Ramp Networks in the offer
and subsequent merger pursuant to the Merger Agreement is fair from a
financial point of view to the stockholders of Ramp Networks.
In addition to the attached Schedule 14D-9 relating to the tender offer,
also enclosed is the Offer to Purchase, dated December 15, 2000, of Blackbird
Acquisition, Inc., together with related materials to be used for tendering
your shares. These documents set forth the terms and conditions of the tender
offer and the subsequent merger and provide instructions as to how to tender
your shares. I urge you to read the enclosed materials carefully. As described
in the enclosed materials, the offer will expire at 12:00 midnight, New York
City time, on Tuesday, January 16, 2001, unless the offer is extended.
Sincerely,
/s/ MAHESH VEERINA
Mahesh Veerina
President and Chief Executive
Officer
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
---------------
RAMP NETWORKS, INC.
(Name of Subject Company)
---------------
RAMP NETWORKS, INC.
(Name of Person(s) Filing Statement)
---------------
Common Stock, Par Value $0.001 Per Share
(Title of Class of Securities)
751567-10-8
(CUSIP Number of Class of Securities)
---------------
Mahesh Veerina
President and Chief Executive Officer
Ramp Networks, Inc.
3100 De La Cruz Boulevard
Santa Clara, CA 95054
(408) 988-5353
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
---------------
With a copy to:
Steven J. Tonsfeldt, Esq.
David C. Lee, Esq.
Venture Law Group
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
(650) 854-4488
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Item 1. Subject Company Information
The name of the subject company is Ramp Networks, Inc., a Delaware
corporation ("Ramp Networks" or the "Company"). The address of the principal
executive offices of the Company is 3100 De La Cruz Boulevard, Santa Clara,
California 95054 and the telephone number is (408) 988-5353. The title of the
class of equity securities to which this Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") relates is the Company's Common
Stock, par value $0.001 per share ("Common Stock" or the "Shares"). As of
December 1, 2000, 21,760,920 Shares were outstanding.
Item 2. Identity and Background of Filing Person
The name, business address and business telephone number of the Company,
which is the person filing this Schedule 14D-9, are set forth in Item 1 above.
This Schedule 14D-9 relates to the tender offer by Blackbird Acquisition,
Inc. (the "Purchaser"), a Delaware corporation and a wholly owned subsidiary
of Nokia Corporation, a corporation organized and existing under the laws of
the Republic of Finland ("Parent" or "Nokia"), to purchase all of the Shares
held by the Company's stockholders at a price of $5.80 per Share (the "Offer
Price"), net to the seller in cash (subject to applicable withholding of
taxes), without interest, upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated December 15, 2000 and in the
related Letter of Transmittal (which together with the Offer to Purchase, each
as may be amended and supplemented from time to time, constitute the "Offer"),
copies of which are filed respectively as Exhibits 1 and 2 hereto and are
incorporated herein by reference. The Offer is disclosed in a Tender Offer
Statement on Schedule TO dated December 15, 2000 (the "Schedule TO") filed
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules promulgated by the Commission thereunder.
The Offer is being made by the Purchaser pursuant to the Agreement and Plan
of Merger, dated as of December 6, 2000 (the "Merger Agreement"), by and among
Parent, Purchaser and the Company. The Merger Agreement provides that, among
other things, as promptly as practicable after the purchase of Shares pursuant
to the Offer and the satisfaction or waiver of the other conditions set forth
in the Merger Agreement and in accordance with the applicable provisions of
the Delaware General Corporation Law (the "DGCL"), Purchaser will be merged
with and into the Company (the "Merger"), the separate corporate existence of
Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation") and become a wholly owned subsidiary
of Parent. At the effective time of the Merger (the "Effective Time"), each
remaining outstanding Share, (other than Shares owned by Parent, Purchaser or
any direct or indirect wholly owned subsidiary of the Company or Parent
immediately prior to the Effective Time (the "Ineligible Shares") and Shares
held by stockholders who properly perfect their dissenters' rights under the
DGCL (the "Dissenting Shares")), will be converted automatically into the
right to receive the Offer Price in cash (subject to applicable withholding of
taxes), without interest. A copy of the Merger Agreement is filed as Exhibit 3
hereto and is incorporated herein by reference.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer at
least the number of Shares that shall constitute 51% of the then outstanding
Shares on a fully diluted basis (defined as all outstanding Shares together
with Shares issuable upon the conversion of any Company convertible securities
or upon the exercise of any vested options, warrants or rights to purchase
shares) and (ii) any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, having expired or been
terminated prior to the expiration of the Offer. The Offer is also subject to
certain other conditions set forth in Annex A to the Merger Agreement.
Concurrently with entering into the Merger Agreement, Parent and Purchaser
entered into Stockholder's Agreements, dated as of December 6, 2000 (the
"Stockholder's Agreements"), with the following stockholders of the Company:
Mahesh Veerina, Venrock Associates, Venrock Associates II, L.P. InterWest
Partners V, L.P, InterWest Investors V, Anthony Sun, Philip Gianos, L. William
Krause, Perry Grace, Richard Bridges, Ragu Bathina, Sridhar Bathina and
Kothandapani Ranganathan (collectively, the "Principal Stockholders").
Pursuant to the Stockholder's Agreements, the Principal Stockholders have
agreed, among other things, (i) to validly
1
tender (and not withdraw) all of their Shares into the Offer, (ii) if
applicable, to vote their Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated thereby, including the
Merger, and (iii) to grant to Purchaser an irrevocable option to purchase all,
and not less than all, of their Shares at a price per Share equal to $5.80, or
any higher price per Share paid in the Offer. On December 6, 2000, the
Principal Stockholders owned 7,858,187 Shares, constituting approximately 36%
of the then outstanding Shares.
The Schedule TO states that the address of the principal executive offices
of Parent is Keilalahdentie 4, P.O. Box 226, FIN-00045 Nokia Group, Finland
and the facsimile number is 011-358-9-605-042, and the address of the
principal executive offices of the Purchaser is 6000 Connection Drive, Irving,
Texas 75039 and the facsimile number is (972) 894-5811. All information
contained in this Schedule 14D-9 or incorporated herein by reference
concerning the Purchaser or Parent, or actions or events with respect to
either of them, was provided by the Purchaser or Parent, respectively, and the
Company takes no responsibility for such information.
Item 3. Past Contacts, Transactions, Negotiations and Agreements
Certain contracts, agreements, arrangements and understandings between the
Company and its executive officers, directors and affiliates are described in
the Information Statement pursuant to Section 14(f) of the Exchange Act, and
Rule 14f-1 thereunder (the "Information Statement") that is attached as Annex
A to this Schedule 14D-9 and is incorporated herein by reference. Except as
described herein, or in Annex A hereto, to the knowledge of the Company, as of
the date hereof there are no material contracts, agreements, arrangements or
understandings, or any potential or actual material conflicts of interest
between the Company or its affiliates and either (1) the Company, its
executive officers, directors or affiliates or (2) Parent, Purchaser, or any
of their respective executive officers, directors or affiliates.
2
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
In considering the recommendations of the Board of Directors of the Company
(the "Company Board") with respect to the Offer, the Merger and the Merger
Agreement as set forth in Item 4 below, the Company's stockholders should be
aware that certain members of the Company Board and certain of the Company's
officers have interests in the Offer and the Merger which are described herein
and in Annex A hereto and which may present them with certain conflicts of
interest. Each of the members of the Company Board was aware of these
potential conflicts and considered them along with the other factors described
in Item 4 below.
Interests of Executive Officers, Directors and Affiliates with Respect to
Shares Currently Held and Options
In the Offer, the stockholders of the Company, including certain directors
(or entities affiliated with such directors) and employees of the Company,
will be entitled to receive $5.80 for each Share they hold that is tendered in
the Offer and accepted for payment in accordance with its terms. Pursuant to
the Merger Agreement, at the Effective Time, all options to purchase Company
Common Stock ("Options") granted under Company Stock Option Plans (as defined
below) will be cancelled and the Company Stock Option Plans will be
terminated. As of the Effective Time, each cancelled Option that has an
exercise price that is equal to or less than $5.80 per Share will be replaced
with an option to purchase Parent ADSs (as defined below).
Assuming all Shares beneficially owned by the Company's directors and
executive officers are tendered in the Offer and all Options they hold are
surrendered for cancellation prior to the Effective Time, then the directors
and executive officers will be entitled to receive in the Offer and the
Merger, based upon their holdings as of December 1, 2000, the cash payments
and replacement options set forth in the table below:
Share and Option Amounts with Respect to
the Company's Directors and Executive Officers
$ Value of Unvested $ Value of
Vested Options Vested Options Replacement
Shares $ Value of with an Options at with an Options at
Beneficially Shares at Exercise Price Offer Exercise Price Offer Price
Name Owned Offer Price Below $5.80 Price (1) Below $5.80 (1)(6)
---- ------------ -------------- -------------- ----------- -------------- -------------
Anthony Sun (2)......... 3,987,486 $23,127,418.80 0 $ 0.00 0 $ 0.00
Philip T. Gianos (3).... 1,185,416 6,875,412.80 0 0.00 0 0.00
L. William Krause....... 0 0.00 0 0.00 0 0.00
Mahesh Veerina.......... 1,185,095 6,873,551.00 74,999 309,970.97 70,000 289,310.00
Perry Grace............. 1,000 5,800.00 6,250 11,250.00 143,750 258,750.00
Sridhar Bathina......... 574,002 3,329,211.60 29,999 123,985.87 28,000 115,724.00
Raghu Bathina........... 593,520 3,442,416.00 22,500 92,992.50 21,000 86,793.00
Elie Habib.............. 42,000 243,600.00 32,187 106,217.10 92,813 306,282.90
Richard Bridges......... 27,861 161,593.80 0 0.00 0 0.00
Kothandapani
Ranganathan............ 327,002 1,896,611.60 22,500 92,992.50 21,000 86,793.00
Robert Herjavec (4)..... 0 0.00 125,000 471,087.50 875,000 3,297,612.50
Mike Raghavan (5)....... 0 0.00 62,500 249,218.75 187,500 747,656.25
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(1)Value is net of aggregate exercise price.
(2)Shares beneficially owned by Mr. Sun include 3,987,486 Shares owned by
Venrock Associates and Venrock Associates II, L.P.
(3)Shares beneficially owned by Mr. Gianos include 1,185,416 Shares owned by
Interwest Partners V, L.P. and Interwest Investors V.
(4)Vested options include 125,000 Shares which will become fully vested if the
Offer is consummated prior April 26, 2001.
(5)Vested options include 62,500 Shares which will become fully vested upon
the consummation of the Offer.
(6) Values are based upon the cancellation of unvested options with an
exercise price below $5.80 and the replacement thereof with options to
purchase Parent ADSs in accordance with the Merger Agreement.
3
Other than Messrs. Habib, Herjavec and Raghavan, all of the above-named
individuals and their affiliated entities have entered into an agreement with
Parent and Purchaser (the "Stockholder's Agreement") pursuant to which they
have agreed to tender any Shares beneficially owned by them in the Offer. A
copy of the Stockholder's Agreement is attached as Exhibit 5 to this Schedule
14D-9 and the information contained under the caption "The Stockholder's
Agreements" in the Offer to Purchase is incorporated herein by reference.
Employment and Non-Competition Agreements
The following is a summary of the Employment and Non-Competition Agreements
(the "Employment Agreements") that Mahesh Veerina, Raghu Bathina, Sridhar
Bathina, Elie Habib and Kothandapani Ranganathan (the "Key Employees") each
entered into with the Company, as of December 6, 2000, as an inducement for
Parent to enter into the Merger Agreement. This summary is qualified in its
entirety by reference to the Employment Agreements, which are collectively
filed as Exhibit 6 to this Schedule 14D-9 and are incorporated herein by
reference.
The Employment Agreements become effective upon the Effective Time and each
has a term of two years. The Key Employees were offered the following initial
positions with the Company at the following annual base salaries:
Annual Base
Name Initial Position Salary
---- ---------------- -----------
Mahesh Veerina VP of Small Office Systems for the IP Routing $200,000
Group
Raghu Bathina Director, Product Management, of Small Office
Systems for the IP Routing Group $140,000
Sridhar Bathina Director, Software Engineering, of Small
Office Systems for the IP Routing Group and
Managing Director for India $140,000
Elie Habib Senior Director, Engineering, of Small Office
Systems for the IP Routing Group $165,000
Ranganathan Director, Hardware Engineering and Senior
Kothandapani Hardware Architect of Small Office Systems
for the IP Routing Group $150,000
In addition, the Employment Agreements entitle each Key Employee to
participate in all standard employee compensation, incentive plans, benefit
plans and programs of the Company, and expense reimbursement in the ordinary
course. Upon completion of the acquisition, employees of the Company,
including the Key Employees, will become part of the Nokia group and as such,
will become eligible to participate in benefit plans and incentive programs
offered or implemented by Parent or its subsidiaries.
The Employment Agreements also require each Key Employee to refrain, for a
period of 18 months from the Effective Time or one year from termination of
employment, whichever is later (but in no event more than four years from the
Effective Time), from (a) having a financial interest in a competitor of the
Company, (b) providing services in any capacity to a competitor of the
Company, (c) soliciting, encouraging or taking away suppliers or customers of
the Company for the Key Employee's benefit or the benefit of a competitor of
the Company, and (d) soliciting, encouraging or taking away employees or
consultants of the Company for the Key Employee's benefit or the benefit of
another party.
In the event any of the Key Employees is terminated without Good Cause (as
defined below) or resigns for Good Reason (as defined below) during the term
of his respective Employment Agreement, the Company will pay the Key Employee
a lump sum cash amount equivalent to 12 months' base salary, accelerate 50% of
any unvested stock options granted under Nokia's acquisition retention plans,
and pay the Key Employee's COBRA premiums for 12 months if the Key Employee
elects health insurance continuation.
4
"Good Cause" means (a) willful and serious misconduct in the performance of
job duties; (b) conviction of any felony; (c) material dishonesty; (d)
committing a fraud against the Company; (e) engaging in conduct demonstrably
injurious to, and having a material detrimental effect on, the Company, its
business or reputation; (f) breach of fiduciary duty; (g) inability to perform
essential functions of the position which is not cured within 10 days
following written notice from the Company; (h) breach of the proprietary
information and confidentiality, non-compete and non-solicitation, and
invention assignment provisions of the Employment Agreement; and (i) any other
material breach of the Employment Agreement that is not cured within 10 days
following written notice from the Company.
"Good Reason" means (a) a substantial reduction in Key Employee's function
or responsibilities without the Key Employee's written consent (not including
a mere change in job titles); (b) relocating his principal place of employment
by more than 30 miles without the Key Employee's written consent; or (c) a
reduction in salary during the term of the Employment Agreement. No separation
pay will be due to any Key Employee if the reduction in function or
responsibilities results from substantial growth, consolidation or
reorganization of the Company or expansion of the Company's lines of business.
The Merger Agreement
A summary of certain material provisions of the Merger Agreement is
included under the caption "Background of the Offer; the Merger Agreement and
Related Agreements" in the Offer to Purchase attached as Exhibit 1 to this
Schedule 14D-9 and incorporated herein by reference. Such summary does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Merger Agreement attached as Exhibit 3 to this Schedule
14D-9. We urge you to read the Merger Agreement in its entirety for a more
complete description of the material summarized in the referenced section of
the Offer to Purchase.
Stockholder's Agreements
A summary of certain material provisions of the Stockholder's Agreements is
included under the caption "Background of the Offer; the Merger Agreement and
Related Agreements" in the Offer to Purchase attached as Exhibit 1 to this
Schedule 14D-9 and incorporated herein by reference. Such summary does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Stockholder's Agreement attached as Exhibit 5 to this
Schedule 14D-9. We urge you to read the Stockholder's Agreement in its
entirety for a more complete description of the material summarized in the
referenced section of the Offer to Purchase.
Indemnification Provisions
The Merger Agreement provides that the Certificate of Incorporation and the
By-laws of the Surviving Corporation will contain provisions no less favorable
with respect to indemnification than those set forth in the Certificate of
Incorporation and By-laws of the Company, which provisions may not be amended,
repealed or otherwise modified for a period of six years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification is
required by law.
The Merger Agreement further provides that the Company will use
commercially reasonable efforts to maintain in effect for six years from the
Effective Time (the "Tail Period") the directors' and officers' liability
insurance policies as in effect immediately prior to the Effective Time (the
"Existing D&O Policies") with respect to matters occurring prior to the
Effective Time. The Surviving Corporation may substitute the Existing D&O
Policies with policies having at least the same coverage and containing terms
and conditions that are not materially less favorable. The Surviving
Corporation will not be required to expend more than an amount equal to 175%
of the annual premium of the Existing D&O Policies for the entire Tail Period,
in the aggregate.
5
In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any other person, then, proper provision shall be
made so that the successors and assigns of the Company or the Surviving
Corporation, as the case may be, or, at Parent's option, Parent, will assume
the indemnification and insurance obligations discussed in this section.
In addition, the Merger Agreement provides that the Surviving Corporation
and Parent will honor and fulfill in all respects the obligations of the
Company pursuant to indemnification agreements with the Company's directors
and officers existing at or before the Effective Time.
Item 4. The Solicitation or Recommendation
(a) Recommendation of the Company Board.
At a meeting held on December 6, 2000 the Company Board, by unanimous vote
of all directors (a) determined that each of the Offer, the Merger and the
Merger Agreement is fair to and in the best interests of the stockholders of
the Company, (b) approved the Offer and the Merger, (c) approved and adopted
the Merger Agreement and the Employment Agreements, the execution of such
agreements and the transactions contemplated by such agreements and (d)
recommended that such stockholders accept the Offer and tender their Shares
pursuant thereto.
THEREFORE, THE COMPANY BOARD RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
A copy of a letter to all stockholders of the Company communicating the
recommendations of the Company Board is attached as Exhibit 4 to this Schedule
14D-9 and is incorporated herein by reference.
(b) Background; Reasons for the Recommendation of the Company Board;
Opinion of Broadview International LLC ("Broadview").
(1) BACKGROUND.
During the period from April to September 1998, the Company and a business
unit of Parent discussed entering into a potential original equipment
manufacturing ("OEM") relationship concerning the Company's asymmetric digital
subscriber line ("ADSL") technology. At that time, the Company's product was
still in development and the discussions did not result in any definitive OEM
relationship.
In 2000, the Company and a business unit of Parent entered into an
agreement pursuant to which a business unit of Parent granted to the Company,
on a royalty-free basis, a license to use, reproduce and distribute certain
technology in connection with customer premises equipment.
On September 22, 2000, at a regularly scheduled meeting of the Company
Board, the Company Board discussed, among other things, the Company's business
prospects and a variety of financing alternatives, including a private
placement of common stock of the Company. The Company Board directed
management to continue to pursue financing alternatives and also directed
management to secure the services of an investment bank to act as its
financial advisor in exploring the sale of the Company.
On October 3, Anthony Sun, Chairman of the Company Board, discussed the
Company's financing options with Robert S. Abbe, Principal at Broadview. As
part of those discussions, Mr. Abbe and to Mr. Sun discussed whether Parent
would make a strong candidate as a suitor to acquire the Company. Mr. Sun
authorized Mr. Abbe to contact Parent.
6
On October 4, 2000, Mr. Abbe contacted Per-Ake Stahl, Director of
Acquisitions of Parent, and presented the idea of potential strategic
cooperation between the Company and Parent.
On October 6, 2000, representatives from Parent, including Mika Vehvilainen
and other persons, met with Mahesh Veerina, President and Chief Executive
Officer of the Company, and Rahgu Bathina, Vice President Product Management
of the Company, together with Mr. Michael Bruns, Associate at Broadview and
Mr. Abbe. At this meeting, the representatives of the Company presented an
overview of the Company and the parties held preliminary discussions about
potential cooperation between the Company and Parent, including a potential
investment by Parent in the Company, a potential OEM relationship and a
potential acquisition of the Company by Parent.
On October 16, 2000, Nokia Internet Communications, Inc., a subsidiary of
Parent and the Company entered into the Confidentiality Agreement which is
attached to this Schedule 14D-9 as Exhibit 13.
On October 25, 2000, Mr. Vehvilainen and Mr. MacDonald met with Mr. Veerina
to further discuss potential cooperation between the Company and the Parent.
On November 6, 2000, the Group Executive Board of Parent authorized its
management to proceed with discussions and negotiations in connection with a
potential transaction with the Company.
On November 8, 2000, Mr. Vehvilainen and Mr. MacDonald met with Mr. Veerina
and presented Parent's interest in pursuing a potential acquisition
transaction and commencing detailed due diligence investigations of the
Company. During this meeting, the representatives of the Company and Parent
discussed the principal terms and conditions of a potential transaction,
including an approximate maximum aggregate price that Parent was prepared to
offer, subject to the satisfactory completion of its due diligence,
negotiation of definitive agreements and obtaining corporate approvals, for
all of the outstanding shares of the Company. After considering the terms and
conditions of a potential acquisition transaction that were discussed at this
meeting and consulting with its financial advisor, the Company's
representatives advised Parent that, although they were interested in
continuing discussions with Parent regarding a potential acquisition
transaction, the proposed terms were inadequate.
During the following week, the Company and its advisors provided additional
due diligence information to Parent and had several additional discussions
with Parent and its advisors regarding the terms of a potential acquisition
transaction, including pricing.
On November 13, 2000, Mr. Vehvilainen and Mr. MacDonald met with Mr.
Veerina and Mr. Sun to further discuss the proposed acquisition transaction
and indicated that, subject to satisfactory completion of its due diligence,
negotiation of definitive agreements and obtaining corporate approvals, Parent
was prepared to offer up to an aggregate of $125 million for all of the
outstanding shares of the Company."
On November 15, 2000, the Company held a special meeting of the Company
Board by telephone to discuss, among other things, the Company's business
prospects and a possible acquisition of the Company. Mr. Abbe and Mr. Bruns
presented to the Company Board Broadview's efforts to date, including Parent's
transaction proposal and a history of the discussions and price negotiations
between Parent and the Company, discussed alternative parties approached or to
be approached by Broadview and highlighted Parent as the best possible
business fit for the Company. Members of the Company Board asked questions and
held a lengthy discussion regarding a potential acquisition transaction with
Parent and whether to proceed with due diligence investigations with Parent,
considering, among other things, the alternatives available to the Company and
the risks to the Company in executing plans as a stand alone company. Based on
the foregoing, the Company Board unanimously approved, among other things, a
decision to proceed with due diligence efforts with Parent, while at the same
time continuing efforts to develop other acquisition opportunities with the
highest probability strategic acquirors. Later that day, Mr. Abbe contacted
Mr. Stahl and indicated that the Company was prepared to proceed with further
negotiations.
7
During the period from November 17 to December 6, 2000, representatives of
Parent and its advisors conducted extensive business, financial, accounting,
technical and legal due diligence on the Company's business and operations,
including site visits to the Company's facilities. On November 22, 2000,
counsel to Parent distributed to the Company and the Company's counsel initial
drafts of the Merger Agreement and the Stockholder's Agreement. During the
period between November 27 and December 6, representatives of Parent and its
legal advisors held several negotiations with representatives of the Company
and its financial and legal advisors regarding the proposed offer price and
terms and conditions of the Merger Agreement and the Stockholder's Agreements.
During the period from November 17 to December 6, 2000, representatives of
Parent also met with senior executives of the Company, and, as an inducement
to Parent to proceed with an acquisition, representatives of Parent and the
Company negotiated employment agreements between the Company and five senior
executives of the Company, namely Mahesh Veerina, Raghu Bathina, Sridhar
Bathina, Elie Habib and Kothandapani Ranganathan, which agreements shall
become effective upon completion of the acquisition. Representatives of the
Company also discussed with representatives of Parent the employment policies
and programs of Parent or its subsidiaries that would be made available to the
Company's employees upon completion of the acquisition. Parent contemplates
that, after completion of the acquisition, employees of the Company will
participate in benefit programs of Parent or its subsidiaries. Parent also
intends to offer or implement, after completion of the acquisition,
performance-based incentive programs and other retention plans for employees
of the Company and contemplates granting to employees of the Company, after
completion of the acquisition, new options to purchase American Depositary
Shares of Parent under Parent's plans, which options will be subject to
vesting schedules dependent upon continued future employment and other
customary terms.
On November 29, 2000, members of the Group Executive Board of Parent met
and reviewed, among other things, the status of the possible transaction with
the Company. After discussion, Parent's Group Executive Board authorized its
officers and senior management to continue discussion of the possible
transaction with the Company and to present the matter to Parent's board of
directors.
On December 4, 2000, the Company held a special meeting of the Company
Board to discuss, with the advice and assistance of the Company's management
and financial and legal advisors, among other things, the Company's business
prospects and the proposed terms of the acquisition by Parent. Mr. Abbe
summarized the principal terms of Parent's proposed tender offer for the
Company. Thereafter, the Company's financial advisors and legal counsel
discussed with members of the Company Board copies of documents distributed
prior to the meeting, including the terms of a draft form of the Merger
Agreement and the Stockholder's Agreements, the fiduciary obligations of the
Company Board with respect to the proposed acquisition and other business
conditions of the proposed acquisition. Representatives of Broadview reported
on the status of its discussions with other potential acquirors. Broadview
then discussed its valuation analysis with respect to the proposed transaction
with Parent. Thereafter, Broadview indicated that it was prepared, subject to
completion of final agreements, to render to the Company Board its opinion to
the effect that, as of the date of the meeting, and based upon and subject to
certain other matters, the $5.80 per Share offer price was fair, from a
financial point of view, to Company stockholders. Based on all of the
foregoing, the Company Board authorized management to proceed to finalize the
transaction on terms consistent with those presented at the meeting.
On December 5, 2000, following a review and discussion of the proposed
terms and conditions of the Merger Agreement and of other matters related
thereto, Parent's board of directors, by telephone meeting, approved the
Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, and authorized the execution and delivery of the Merger
Agreement.
On December 6, 2000, the Company Board held a special telephonic meeting in
which all of the members were present. Broadview made a presentation regarding
certain financial analyses it had performed in connection with its review of
the Offer and Merger, and rendered its written opinion that, subject to
certain assumptions and qualifications, the $5.80 per Share offer price was
fair, from a financial point of view, to Company stockholders.
8
Representatives of Venture Law Group also gave a presentation regarding the
various legal aspects of the transaction as well as a summary of the principal
terms of the Merger Agreement. At the conclusion of the meeting, and based on
all of the foregoing, the Company Board unanimously determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, are fair and reasonable to, and adequate and otherwise in the best
interests of, the Company's stockholders, approved the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger,
authorized the execution and delivery of the Merger Agreement, recommended
that the Company's stockholders accept the Offer and tender their Shares in
the Offer, and recommended that the Company's stockholders approve and adopt
the Merger Agreement.
On December 6, 2000, Parent, Purchaser and the Company agreed on the final
terms of the Merger Agreement and executed the Merger Agreement and Parent,
Purchaser and the Principal Stockholders executed the Stockholders'
Agreements. The Company and the Key Employees also executed the Employment
Agreements, copies of which have been filed as Exhibit 6 to this Schedule 14D-
9.
On the morning of December 7, 2000, Parent issued a press release
announcing the execution of the Merger Agreement. A copy of this press release
has been filed as an Exhibit to the Schedule TO filed by Purchaser and Parent
with the SEC in connection with the Offer and is incorporated herein by
reference.
(2) REASONS FOR THE RECOMMENDATION OF THE COMPANY BOARD.
In reaching its determination described above, the Company Board considered
a number of factors, including, without limitation, the following:
(i) the amount of consideration to be received by the Company's
stockholders in the Offer and the Merger pursuant to the Merger Agreement,
as well as the fact that the Company's stockholders would receive a cash
payment with no financing condition;
(ii) the Company's prospects if it were to remain independent, including
the risks inherent in remaining independent, and the prospects of the
Company going forward as an independent company;
(iii) the possible alternatives to the Offer and the Merger (including
the possibility of continuing to operate the Company as an independent
entity), the range of possible benefits to the Company's stockholders of
such alternatives and the timing and the likelihood of accomplishing the
goal of any of such alternatives;
(iv) the fact that in view of discussions held with various parties,
currently and over the past few months, management of the Company believed
that it was unlikely that any other party would propose an acquisition or
strategic business combination that, taken as a whole, would be more
favorable to the Company and its stockholders than the Offer and the
Merger;
(v) the current status of the data networking market and the competitive
advantage in the industry of large telecommunications companies, including
Parent, with significant distribution capacity, installed infrastructure,
compatible product and service offerings, and substantial financial
resources;
(vi) the expected growth in the small business sector and the near-
saturation of the medium and large business sectors suggest that the large
network equipment vendors will soon begin competing for the Company's small
business customers, either by entering the Company's market segment
directly themselves, or by acquiring the Company's current competitors. The
Company relies on many of these larger vendors as distribution channel
partners, and the Company does not believe it will be able to compete
effectively on its own once those large vendors begin to enter the small
business market segment;
(vii) the financial condition, historical results of operations and
business and strategic objectives of the Company, as well as the risks
involved in achieving those objectives;
9
(viii) other historical information concerning the Company's business,
prospects, financial performance and condition, operations, technology,
management and competitive position;
(ix) the extensive arms-length negotiations between the Company and
Parent leading to the belief of the Company Board that $5.80 per Share
represented the highest price per Share that could be negotiated with
Parent;
(x) the fact that $5.80 per Share to be paid in the Offer and the Merger
represents a premium of approximately 86.3% over the 30-day trailing
average of $3.11 per Share, a premium of approximately 41.5% over the 10-
day trailing average of $4.10 per Share, and a premium of approximately
16.7% over the $4.9688 closing sale price per Share on the Nasdaq National
Market on December 6, 2000, the last trading day prior to the public
announcement of the execution of the Merger Agreement;
(xi) the current financial market conditions and historical market
prices, volatility and trading information with respect to the Common Stock
of the Company;
(xii) the opinion of Broadview, dated December 6, 2000, that as of such
date, subject to certain qualifications and assumptions, the $5.80 per
Share offer price was fair, from a financial point of view, to Company
Stockholders. Such opinion a copy of which is attached to this Schedule
14D-9 as Annex B, should be read in its entirety for a description of the
procedures followed, assumptions and qualifications made, matters
considered and limitations of the review undertaken by Broadview;
(xiii) the high likelihood that the proposed acquisition would be
consummated, in light of the experience, reputation and financial
capabilities of Parent, and that the proposed acquisition would be
consummated more quickly than a stock-for-stock merger and, on the other
hand, the risks to the Company if the acquisition were not consummated or
were not consummated for a significant period of time, including a
potential negative effect on (a) the Company's sales and operating results,
(b) progress of certain development projects and (c) the Company's stock
price;
(xiv) the terms of the Merger Agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations; and
(xv) the fact that pursuant to the Merger Agreement, the Company is not
prohibited from responding to any unsolicited Superior Proposal (as defined
in the Merger Agreement) to acquire the Company in the manner provided in
the Merger Agreement, and the Company may terminate the Merger Agreement
and accept such Superior Proposal subject to the Company's compliance with
the terms of the Merger Agreement and the Company's obligation to pay the
termination fee in the amount and in the manner described in the Merger
Agreement.
The Company Board did not assign relative weights to the above factors or
determine that any factor was of particular importance. Rather, the Company
Board viewed its position and recommendations as being based on the totality
of the information presented to and considered by it. In addition, it is
possible that different members of the Board assigned different weights to the
various factors described above.
The Company Board recognized that, while the consummation of the Offer
gives the Company's stockholders the opportunity to realize a premium over the
price at which the Shares were traded during the period prior to the public
announcement of the Offer, tendering in the Offer would eliminate the
opportunity for such stockholders to participate in the future growth and
profits of the Company. The Company Board believes that the loss of this
opportunity was fully reflected in the Offer Price of $5.80 per Share. The
Company Board recognized that there can be no assurance as to the level of
growth or profits to be attained by the Company, if it remained independent,
or by the Surviving Corporation in the future.
It is expected that, if the Shares are not purchased by Parent in
accordance with the terms of the Offer or if the Merger is not consummated,
the Company's current management, under the general direction of the Company
Board, will continue to manage the Company as an ongoing business.
10
THE FULL TEXT OF THE WRITTEN OPINION OF BROADVIEW IS ATTACHED HERETO AS
ANNEX B. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ SUCH OPINION CAREFULLY
AND IN ITS ENTIRETY. SUCH OPINION IS DIRECTED TO THE COMPANY BOARD IN
CONNECTION WITH THEIR CONSIDERATION OF THE MERGER AGREEMENT AND ADDRESSES ONLY
THE FAIRNESS (FROM A FINANCIAL POINT OF VIEW) OF THE CONSIDERATION TO BE
RECEIVED BY HOLDERS OF SHARES IN THE OFFER AND THE MERGER PURSUANT TO THE
MERGER AGREEMENT. SUCH OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE OFFER
OR THE MERGER AND DOES NOT CONSTITUTE AN OPINION OR A RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER SHARES IN THE OFFER OR HOW TO VOTE WITH
RESPECT TO THE MERGER. IN LIGHT OF THE FACTORS SET FORTH ABOVE, THE COMPANY
BOARD RESOLVED UNANIMOUSLY TO APPROVE THE OFFER, THE MERGER, THE MERGER
AGREEMENT, AND THE EMPLOYMENT AGREEMENTS, AND DETERMINED THAT THE TERMS OF THE
OFFER, THE MERGER AND THE MERGER AGREEMENT, ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDED THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE
PURCHASER.
(c) Intent to Tender.
To the Company's knowledge after reasonable inquiry, all of the Company's
executive officers, directors and affiliates currently intend to tender all
Shares held of record or beneficially owned by them pursuant to the Offer. The
foregoing does not include any Shares over which, or with respect to which,
any such executive officer, director or affiliate acts in a fiduciary or
representative capacity or is subject to the instructions of a third party
with respect to such tender or vote.
Item 5. Person/Assets Retained, Employed, Compensated or Used
In connection with the Offer and other matters arising in connection
therewith, Broadview has been retained as the exclusive financial advisor to
the Company Board. The Company Board and the Company have a long standing
relationship with Broadview, which has been its advisor in connection with
potential corporate partners and acquirors.
Pursuant to an engagement letter, dated November 15, 2000 (the "Engagement
Letter"), Broadview agreed to render financial advice and assistance to the
Company in connection with a possible merger, sale or other strategic
combination involving the Company (a "Deal"), including advice and assistance
with respect to defining objectives, performing valuation analysis, and
structuring, planning and negotiating a Deal. In addition, upon the Company's
request, Broadview would render a financial opinion letter to the Company in
accordance with Broadview's customary practice with respect to the
consideration to be received in a Deal.
Pursuant to the Engagement Letter, the Company has agreed to pay Broadview
the following fees: (i) a one-time commitment fee of $50,000 paid upon
execution of the Engagement Letter; (ii) a fee of $500,000 for providing a
financial opinion letter; and (iii) upon consummation of a Deal, a fee of
$500,000 plus 1.5% of all consideration above $20 million received by the
Company and/or its stockholders in the Deal, with a minimum fee of $1 million
and the $500,000 paid for delivery of the financial opinion letter being
credited against this success fee.
Broadview is a nationally recognized investment banking firm and, as part
of its investment banking activities, is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
private placements and valuations for corporate and other purposes. The
Company selected Broadview as its financial advisor on the basis of its
experience and expertise in transactions similar to the Offer and the Merger,
its reputation in the information technology and investment communities, and
its knowledge of and familiarity with the Company.
Neither the Company nor any person acting on its behalf has employed,
retained or agreed to compensate any other person to make solicitations or
recommendations to the Company's stockholders on behalf of the Company
concerning the Offer and the Merger.
11
Item 6. Interest in Securities of the Subject Company
To the best knowledge of the Company, no transactions in Shares have been
effected during the past 60 days by the Company or any of its executive
officers, directors or affiliates, except that executive officers of the
Company have acquired beneficial ownership of Shares under the Company's
Employee Stock Purchase Plan, which acquisitions are not material.
Item 7. Purposes of the Transaction and Plans or Proposals
(a) Except as described in this Schedule 14D-9, to the knowledge of the
Company no negotiation is being undertaken or is underway by the Company in
response to the Offer which relates to or would result in (1) any
extraordinary transaction, such as a merger or reorganization, involving the
Company or any affiliate or subsidiary of the Company, (2) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of
the Company, (3) a tender offer for or other acquisition of securities by or
of the Company, or (4) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in this Schedule 14D-9, there are no transactions,
board resolutions, agreements in principle, or signed contracts in response to
the Offer which relate to or would result in one or more of the matters
referred to in clauses (1) through (4) of paragraph (a) of this Item 7.
Item 8. Additional Information
The Information Statement attached as Annex A hereto is being furnished in
connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Company Board other than
at a meeting of the Company's stockholders.
Reference is hereby made to the Offer to Purchase and the related Letter of
Transmittal, which are attached as Exhibits 1 and 2 hereto, respectively, and
are incorporated by reference herein in their entirety.
12
Item 9. Exhibits
Exhibit 1 Offer to Purchase, dated December 15, 2000 (incorporated by
reference to Exhibit (a)(1) to the Schedule TO filed by Parent and
Purchaser on December 15, 2000).
Exhibit 2 Form of Letter of Transmittal (incorporated by reference to Exhibit
(a)(2) to the Schedule TO filed by Parent and Purchaser on December
15, 2000).
Exhibit 3 Agreement and Plan of Merger, dated as of December 6, 2000, among
Ramp Networks, Inc., Blackbird Acquisition, Inc., and Nokia
Corporation (incorporated by reference to Exhibit (d)(1) to the
Schedule TO filed by Parent and Purchaser on December 15, 2000).
Exhibit 4 Letter to Stockholders of Ramp Networks, Inc. dated December 15,
2000.*
Exhibit 5 Stockholder's Agreement between Nokia Corporation, Blackbird
Acquisition, Inc., and each of the Principal Stockholders dated as
of December 6, 2000 (incorporated by reference to Exhibit (d)(3)(i)
to the Schedule TO filed by Parent and Purchaser on December 15,
2000).
Exhibit 6 Employment and Non-Competition Agreements between the Company and
each of Mahesh Veerina, Raghu Bathina, Sridhar Bathina, Elie Habib,
and Kothandapani Ranganathan dated as of December 6, 2000.
Exhibit 7 Press Release issued by Parent on December 7, 2000 (incorporated by
reference to Exhibit (a)(8) to the Schedule TO filed by Parent and
Purchaser on December 15, 2000).
Exhibit 8 Information Statement pursuant to Section 14f-1 of the Exchange Act
(included as Annex A to this Schedule 14D-9 and filed as an exhibit
herewith).
Exhibit 9 Opinion of Broadview International, LLC, dated December 6, 2000
(included as Annex B to this Schedule 14D-9 and filed as an exhibit
herewith).
Exhibit 10 1995 Stock Option Plan, as amended (incorporated by reference to
Exhibit 10.2 to the Form S-1 filed by the Company on April 16,
1999).
Exhibit 11 1999 Stock Incentive Plan (incorporated by reference to Exhibit
10.3 to the Form S-1/A filed by the Company on April 27, 1999).
Exhibit 12 2000 Non-Statutory Stock Option Plan (incorporated by reference to
Exhibit 10.1 to the Form 8-K filed by the Company on October 18,
2000).
Exhibit 13 Confidentiality Agreement dated October 16, 2000 between Nokia
Internet Communications, Inc. and the Company (incorporated by
reference to Exhibit (d)(4) to the Schedule TO filed by Parent and
Purchaser on December 15, 2000).
- --------
* Included with Schedule 14D-9 mailed to stockholders.
13
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
/s/ Mahesh Veerina
By: _________________________________
Mahesh Veerina
President and Chief Executive
Officer
Dated: December 15, 2000
14
EXHIBIT INDEX
Exhibit
Number Exhibit Name
------- ------------
Exhibit 1 Offer to Purchase, dated December 15, 2000 (incorporated by
reference to Exhibit (a)(1) to the Schedule TO filed by Parent and
Purchaser on December 15, 2000).
Exhibit 2 Form of Letter of Transmittal (incorporated by reference to Exhibit
(a)(2) to the Schedule TO filed by Parent and Purchaser on December
15, 2000).
Exhibit 3 Agreement and Plan of Merger, dated as of December 6, 2000, among
Ramp Networks, Inc., Blackbird Acquisition, Inc., and Nokia
Corporation (incorporated by reference to Exhibit (d)(1) to the
Schedule TO filed by Parent and Purchaser on December 15, 2000).
Exhibit 4 Letter to Stockholders of Ramp Networks, Inc. dated December 15,
2000.
Exhibit 5 Stockholder's Agreement between Nokia Corporation, Blackbird
Acquisition, Inc., and each of the Principal Stockholders dated as
of December 6, 2000 (incorporated by reference to Exhibit (d)(3)(i)
to the Schedule TO filed by Parent and Purchaser on December 15,
2000).
Exhibit 6 Employment and Non-Competition Agreements between the Company and
each of Mahesh Veerina, Raghu Bathina, Sridhar Bathina, Elie Habib,
and Kothandapani Ranganathan dated as of December 6, 2000.
Exhibit 7 Press Release issued by Parent on December 7, 2000 (incorporated by
reference to Exhibit (a)(8) to the Schedule TO filed by Parent and
Purchaser on December 15, 2000).
Exhibit 8 Information Statement pursuant to Section 14f-1 of the Exchange Act
(included as Annex A to this Schedule 14D-9 and filed as an exhibit
herewith).
Exhibit 9 Opinion of Broadview International, LLC, dated December 6, 2000
(included as Annex B to this Schedule 14D-9 and filed as an exhibit
herewith).
Exhibit 10 1995 Stock Option Plan, as amended (incorporated by reference to
Exhibit 10.2 to the Form S-1 filed by the Company on April 16,
1999).
Exhibit 11 1999 Stock Incentive Plan (incorporated by reference to Exhibit
10.3 to the Form S-1/A filed by the Company on April 27, 1999).
Exhibit 12 2000 Non-Statutory Stock Option Plan (incorporated by reference to
Exhibit 10.1 to the Form 8-K filed by the Company on October 18,
2000).
Exhibit 13 Confidentiality Agreement dated October 16, 2000 between Nokia
Internet Communications, Inc. and the Company (incorporated by
reference to Exhibit (d)(4) to the Schedule TO filed by Parent and
Purchaser on December 15, 2000).
- --------
15
ANNEX A
RAMP NETWORKS, INC.
3100 DE LA CRUZ BOULEVARD, SANTA CLARA, CA 95054
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
General
This Information Statement (the "Statement") is being mailed on or about
December 15, 2000 as part of the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") of Ramp Networks, Inc., a Delaware
corporation (the "Company"), with respect to the tender offer by Blackbird
Acquisition, Inc. ("Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Nokia Corporation, a company organized under the laws of the
Republic of Finland ("Parent" or "Nokia"), for shares of the Company's Common
Stock, par value $0.001 per share ("Shares"). Capitalized terms used and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-
9. This Statement is furnished in connection with the possible election of
persons designated by Parent to a majority of the seats on the Company's Board
of Directors (the "Company Board"). The Agreement and Plan of Merger by and
among the Company, Parent and Purchaser, dated as of December 6, 2000 (as the
same may be amended from time to time, the "Merger Agreement"), provides that
promptly upon the purchase by Purchaser of Shares pursuant to the Offer and
from time to time thereafter, Purchaser shall be entitled to designate up to
the number of directors on the Company Board determined by rounding up to the
nearest whole number the product of (A) the total number of directors on the
Company Board (giving effect to the directors elected pursuant to this
sentence) and (B) the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser bears to the
total number of Shares then outstanding, and the Company shall, at such time,
promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the
Company Board or securing the resignations of incumbent directors, or both. At
such times, the Company shall use its reasonable best efforts to cause persons
designated by Purchaser to constitute the same percentage representation on
(i) each committee of the Company Board, (ii) each board of directors of each
Subsidiary, and (iii) each committee of each such board, in each case only to
the extent permitted by applicable law. Notwithstanding the foregoing, until
the Effective Time, the Company shall use its reasonable best efforts to
ensure that at least one member of the Company Board and each committee of the
Company Board and the boards of directors and committees of its Subsidiaries
who is not an employee of the Company or any Subsidiary shall remain a member
of the Company Board and of such boards and committees.
This Statement is required by Section 14(f) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and Rule 14f-1 promulgated
thereunder. You are urged to read this Statement carefully. You are not,
however, required to take any action. The Offer commenced on December 15, 2000
and is scheduled to expire at 12:00 Midnight, New York City time, on Tuesday,
January 16, 2001, unless extended. The information contained in this Statement
concerning Parent and Purchaser has been furnished to the Company by Parent,
and the Company assumes no responsibility for the accuracy, completeness or
fairness of any such information. At the close of business on December 1,
2000, there were 21,760,920 Shares issued and outstanding, which is the only
class of securities outstanding having the right to vote for the election of
the Company's directors, each of which entitles its record holder to one vote.
Designees to the Company's Board of Directors
Purchaser has informed the Company that it currently intends to choose the
individuals it has the right to designate to serve on the Company Board
pursuant to the Merger Agreement from the officers and employees of Parent and
Purchaser listed below.
A-1
The Company Board currently consists of four members. The Company's
Certificate of Incorporation provides for the classification of the Company
Board into two classes serving staggered terms. After the election or
appointment of the initial Class I and Class II directors, Class I directors
will be elected and qualified in odd-numbered years (e.g., 2001) and Class II
directors will be elected and qualified in even-numbered years (e.g., 2000).
Each Class I and Class II director is elected for a two year term.
Present Principal Occupation or Employment;
Material Positions Held During the Past
Name Class Age Five Years
---- ----- --- -------------------------------------------
Kirsi Sormunen....... I or II 49 Senior Vice President, Finance, Control and
Planning, The Americas Region, Nokia Inc.,
since 1999.
Senior Vice President, Finance & Control,
Nokia Telecommunications 1996-1999. Vice
President, Finance, Corporate Treasurer,
Nokia, 1993-1995.
Olli Huuskonen....... I or II 39 Senior Legal Counsel, Nokia Corporation,
since 1999.
Senior Legal Counsel, Metso Corporation
1999. Senior Legal Counsel and Legal
Counsel, Rauma Corporation 1990-1999.
Mika Vehvilainen..... I or II 39 President, Blackbird Acquisition, Inc.
Senior Vice President and General Manager,
Nokia Internet Communications, since 1999.
Senior Vice President, IP Solutions Group,
Nokia Telecommunications 1998-1999. Senior
VP Sales & Marketing, Nokia
Telecommunications 1996-1998. Vice
President, Sales & Marketing, Nokia
Cellular Systems 1995-1996.
Timo Ruikka.......... I or II 44 Secretary, Blackbird Acquisition, Inc. Vice
President of External Affairs, Nokia
Internet Communications, since 1999.
Senior Vice President and Vice President,
Group Legal Counsel, Nokia
Telecommunications 1988-1999.
Scott Blaine......... I or II 37 Treasurer, Blackbird Acquisition, Inc.,
Vice President, Finance, Nokia Internet
Communications, since 1999.
Senior Director of Finance, DSC
Communications Denmark, 1996-1999. Director
Finance, DSC Communications, 1995-1996.
Jan-Erik Stenman..... I or II 47 Assistant Secretary, Blackbird Acquisition,
Inc., Treasurer, The Americas Region, Nokia
Inc., since 1997.
Treasurer, The Americas Region, Nokia
Mobile Phones, Inc. 1996-1997. Vice
President, Project & Trade Finance, Nokia
Telecommunications, Inc. 1995-1996.
Richard Hutchins..... I or II 47 Assistant Secretary, Blackbird Acquisition,
Inc., Tax Director, Nokia Inc. and Nokia
Holding Inc., since 1999.
Tax Director, Zurn Industries, Inc. 1998.
Director-Corporate Taxes, AAF-McQuay, Inc.
1990-1998.
Parent has advised the Company that each of the individuals listed above
has consented to act as a director, if so designated. Parent has also advised
the Company that, to the best knowledge of Parent or Purchaser, none of such
individuals (i) currently is a director of, or holds, any position with, the
Company, (ii) beneficially owns any equity securities, or rights to acquire
any equity securities, of the Company or (iii) has been involved in any
transactions with the Company or any of its directors, executive officers,
affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the Commission.
It is expected that the Parent Designees may assume office at any time
following the purchase by Parent or Purchaser, as applicable, of the specified
minimum number of shares of Common Stock pursuant to the Offer, which
purchases cannot be earlier than December 15, 2000.
A-2
Current Directors and Executive Officers of the Company
Name Age Class Positions(1)
---- --- ----- -----------
Anthony Sun........................... 48 II Chairman of the Company Board
Mahesh Veerina........................ 39 II President, Chief Executive Officer
and Director
Philip Gianos......................... 50 I Director
L. William Krause..................... 58 I Director
Perry Grace........................... 43 Vice President Finance
Elie Habib............................ 41 Vice President Engineering
Robert Herjavec....................... 38 Vice President World-Wide Sales
Mike Raghavan......................... 43 Vice President Marketing
- --------
(1) The Company Board is divided into two classes as nearly equal in number as
possible, and the members of each class are elected for a term of two
years. The officers of the Company are appointed by the Company Board and
serve at the discretion of the Company Board.
Anthony Sun has served as the Chairman of the Company Board since September
1995. Mr. Sun has been a General Partner of Venrock Associates, a venture
capital firm, since 1979. Prior to joining Venrock, Mr. Sun held a number of
positions with Hewlett-Packard Company, TRW Inc. and Caere Corporation. Mr.
Sun also serves on the boards of directors of Cognex Corporation, Komag, Inc.,
3Dfx Interactive, Inc., and Worldtalk Communications Corp. Mr. Sun holds an
S.B. in Electrical Engineering, an S.M. in Electrical Engineering, and an
Engineering degree from the Massachusetts Institute of Technology, as well as
an M.B.A. from the Harvard University Graduate School of Business.
Mahesh Veerina has served as the Company's President and Chief Executive
Officer and as a director since October 1993. Prior to founding Ramp Networks,
Mr. Veerina managed the development of high performance ATM multi-protocol
routers, at SynOptics Communications, Inc., a manufacturer of networking
routers and switches (now Bay Networks, Inc.). Prior to SynOptics, Mr. Veerina
led software protocols development projects at Amdahl Corporation, a provider
of computer systems, storage subsystems and related hardware services. Mr.
Veerina holds a B.S. in Physics from Nagarjuna University, a M.S. in Physics
and Electronics from Andhra University, and an M.S. in Electrical Engineering
and Computer Science from Purdue University.
Philip Gianos has served as a director of the Company since March 1996. Mr.
Gianos has been a General Partner at InterWest Partners, a venture capital
firm, since 1982. Prior to joining InterWest, Mr. Gianos was with IBM
Corporation for eight years, managing both chip design and systems integration
for several IBM office automation products. Mr. Gianos serves as a director of
Xilinx, Inc. and as a director of the Western Association of Venture
Capitalists. Mr. Gianos holds a B.S and an M.S. in Electrical Engineering from
Stanford University and an M.B.A. from the Harvard University Graduate School
of Business.
L. William Krause has served as a director of the Company since March 1999.
Since November 1998, Mr. Krause has been President of LWK Ventures, a private
investment company. From October 1991 to November 1998, Mr. Krause served as
President and Chief Executive Officer and as a director of Storm Technology,
Inc., a provider of computer peripherals and software for digital imaging.
Prior to that, Mr. Krause spent ten years at 3Com Corporation, a manufacturer
of networking systems, where he served as President and Chief Executive
Officer until he retired in September 1990. Mr. Krause continued as Chairman
of the Board of Directors for 3Com Corporation until 1993. Previously, Mr.
Krause served in various marketing and general management positions at
Hewlett-Packard Company. Mr. Krause currently serves as a director of Aureal
Semiconductor, Inc., Infoseek Corporation, and Sybase, Inc. Mr. Krause holds a
B.S.E.E. from The Citadel.
Perry Grace has served as the Company's Vice President of Finance since May
2000. From June 1999 to May 2000, Mr. Grace served as the Company's
controller. From July 1987 June 1999, Mr. Grace was employed
A-3
by National Semiconductor Corporation where he most recently served as
Director of Finance. His duties there included management of the financial
group as well as strategic financial planning to support business strategy.
Mr. Grace received a Business Degree in Commerce with majors in Accounting,
Commercial Law and Computer Software Programming from Deakin University and
completed the required studies for certification from the Institute of Charted
Accountants in Australia.
Elie Habib has served as the Company's Vice President of Engineering since
March 1999. From January 1996 to January 1999, Mr. Habib was Vice President of
Engineering with Bay Networks, Inc. From April 1989 to December 1995, Mr.
Habib was Senior Engineering Manager at Sun Microsystems, Inc., a manufacturer
of computer desktop and servers equipment. Prior to his position with Sun
Microsystems, Mr. Habib was a Software Engineer with Amdahl Corporation. Mr.
Habib holds a B.S. in Computer Science and Mathematics from Universite de
Rouen in Rouen, France, an M.S. in Computer Science from Universite Paul
Sabatier in Toulouse, France, and an M.S. in Computer Science from Case
Western Reserve University.
Robert Herjavec has served as the Company's Vice President of Worldwide
Sales since October 2000. From February 2000 to October 2000, Mr. Herjavec was
Vice President of Internet and E-commerce security for AT&T Canada Corp., a
provider of voice and data services. From 1990 to February 2000, Mr. Herjavec
was the Founder and Chief Executive Officer of BRAK Systems Inc., a security
integration specialist, which was acquired by AT&T Canada Corp. in 1999. Mr.
Herjavec holds a B.A. from the University of Toronto.
Mike Raghavan has served as the Company's Vice President of Marketing since
October 2000. From February 1996 to September 2000, he served as the Vice
President of Marketing at Tvia, Inc., a broadband streaming media processor
company. From January 1994 to February 1996, he was the Senior Marketing
Manager at Trident Microsystems, Inc., a multimedia ASIC company. Prior to
Trident, he served in several management and marketing positions at Western
Digital, Hitachi and National Semiconductor. Mr. Raghavan holds an M.S. in
Industrial and Computer Engineering from University of Iowa and B. Tech. in
Engineering from the Indian Institute of Technology in Madras, India.
Corporate Governance
During the fiscal year ended December 31, 1999 (the "last fiscal year"),
the Company Board met eleven times and, no director attended fewer than 75% of
the aggregate number of meetings of the Company Board and meetings of the
committees of the Company Board on which he serves. The Company Board has an
Audit Committee and a Compensation Committee. The Company Board does not have
a nominating committee or a committee performing the functions of a nominating
committee.
The Audit Committee consists of Messrs. Gianos and Krause, two of the
Company's non-employee directors, and held four meetings during the last
fiscal year. The Audit Committee recommends the engagement of the firm of
certified public accountants to audit the financial statements of the Company
and monitors the effectiveness of the audit effort, the Company's financial
and accounting organization and its system of internal accounting controls.
The Compensation Committee consists of Messrs. Gianos and Sun, and held four
meetings during the last fiscal year. The Compensation Committee establishes
and administers the Company's policies regarding annual executive salaries and
cash incentives and long-term equity incentives. The Compensation Committee
also administers the Company's 2000 Non-Statutory Stock Option Plan, 1999
Stock Incentive Plan, 1995 Stock Option Plan and 1999 Employee Stock Purchase
Plan.
Directors' Compensation
Directors currently receive no cash fees for services provided in that
capacity but are reimbursed for out-of-pocket expenses incurred in connection
with attendance at meetings of the Company Board. During 1999, Messrs. Gianos
and Sun were non-employee directors who each received an option to purchase
48,000 shares at an exercise price of $7.50 per share under the 1999 Stock
Incentive Plan. During 1999, Mr. Krause was a non-employee director who
received two options to purchase an aggregate of 60,000 shares, each at an
exercise price of $7.50 per share under the 1999 Stock Incentive Plan. In
March 2000, Mr. Krause received an additional option to purchase 12,000 shares
at an exercise price of $20.125 per share under the 1999 Stock Incentive Plan.
A-4
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the Company's
Common Stock as of December 1, 2000 as to (i) each person who is known by the
Company to beneficially own more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table of this Statement and (iv)
all directors and executive officers as a group.
Common Stock
Beneficially Owned
-----------------------
Name(1) Number(2)(7) Percent(3)
------- ------------ ----------
Anthony Sun(4)(6)..................................... 4,035,486 18.50%
2494 Sand Hill Road
Menlo Park, CA 94025
Mahesh Veerina(6)(11)................................. 1,297,094 5.93%
Philip T. Gianos(5)(6)................................ 1,226,008 5.62%
3000 Sand Hill Road, Building 3
Menlo Park, CA 94025
L. William Krause(6).................................. 72,000 *
Timothy J. McElwee.................................... 0 *
Elie Habib (6)........................................ 81,061 *
Terry Gibson.......................................... 1,922 *
185 Sunset Ridge Road
Los Gatos, CA 95035
Patricia R. Burke (6)................................. 55,301 *
10797 Miquelito
San Jose, CA 95127
Venrock Associates (8)(10)............................ 3,987,486 18.32%
2494 Sand Hill Road
Menlo Park, CA 94025
InterWest Partners (9)(10)............................ 1,185,416 5.45%
3000 Sand Hill Road, Building 3
Menlo Park, CA 94025
All directors and officers as a group (10
persons)(4)(5)....................................... 6,768,872 30.62%
- --------
* Less than 1%.
(1) The persons named in this table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws where applicable and except as
indicated in the other footnotes to this table. Except as otherwise
noted, the address of each person listed in the table is c/o Ramp
Networks, Inc. 3100 De La Cruz Boulevard, Santa Clara, CA 95054.
(2) 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 or warrants held by that person that are currently exercisable or
exercisable within 60 days after December 1, 2000 are deemed outstanding.
Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person.
(3) Percentage of shares beneficially owned is based on 21,760,920 shares of
Common Stock outstanding as of December 1, 2000.
(4) Mr. Sun is a general partner of Venrock Associates, L.P. which holds
2,632,354 shares, and Venrock Associates II, L.P. which holds 1,355,132
shares. Mr. Sun disclaims beneficial ownership of the shares held by
these entities except to the extent of his pecuniary interest therein.
See Note 8.
(5) Mr. Gianos is a general partner of InterWest Management Partners V,
L.P., which is the general partner of InterWest Partners V, L.P. which
holds 1,178,008 shares. Mr. Gianos disclaims beneficial ownership in the
shares held by this entity, except to the extent of his pecuniary
interest therein. Shares attributable to Mr. Gianos do not include any
shares owned by InterWest Investors V, L.P. See Note 9.
(6) Includes the following shares issuable upon the exercise of outstanding
options exercisable within 60 days of December 1, 2000: Mr. Sun, 48,000;
Mr. Veerina, 111,999; Mr. Gianos, 48,000; Mr. Krause, 72,000; Ms. Burke,
24,250; and Mr. Habib, 39,061.
A-5
(7) In computing the number of shares beneficially owned by a person, no
shares held in street name are included in the total.
(8) Includes 2,632,354 shares held by Venrock Associates, L.P. and 1,355,132
shares held by Venrock Associates II, L.P.
(9) Includes 1,178,008 shares owned by InterWest Partners V, L.P. and 7,408
shares held by Interwest Investors V, L.P.
(11) Includes 200 shares held by Mr. Veerina's father and 2,640 shares held by
Mr. Veerina's mother; 1,800 shares held by Mr. Veerina's spouse; 2,640
shares held by each of Mr. Veerina's three children; and 2,665 shares
held by each of the following trusts: The 1999 Shalini Bathina
Irrevocable Trust, The 1999 Sirish Bathina Irrevocable Trust and The
Sneha Bathina Irrevocable Trust, for which Mr. Veerina's spouse is
trustee.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company Board currently consists of
Messrs. Sun and Gianos. No member of the Compensation Committee or executive
officer of the Company has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity. Neither Mr. Sun nor Mr. Gianos has at any time been an officer or
employee of the Company.
Executive Compensation and Other Information
The following table shows the compensation earned by (a) the Company's
Chief Executive Officer; and (b) the four other most highly compensated
executive officers of the Company during the fiscal year ended December 31,
1999 (the "Named Executive Officers"), and the compensation received by each
such individual during the Company's preceding two fiscal years.
Summary Compensation Table
Long-Term Compensation
-------------------------------
Annual Compensation Awards Payouts
----------------------------- ----------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name & Principal Fiscal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
---------------- ------ -------- ------- ------------ ---------- ------------ ------- ------------
Mahesh Veerina.......... 1999 $140,000 $39,000 0 0 96,000 0 0
President and Chief
Executive Officer 1998 140,000 30,000 0 0 0 0 0
Timothy J. McElwee(1)... 1999 147,115 78,000 0 0 119,998 0 0
Vice President of
Worldwide Sales 1998 150,000 56,000 0 0 0 0 0
Patricia R. Burke (2)... 1999 160,000 18,000 0 0 0 0 0
Vice President of
Marketing 1998 149,500 25,000 0 0 12,000 0 0
Elie Habib.............. 1999 126,346 10,000 0 0 164,999 0 0
Vice President of
Engineering 1998 0 0 0 0 0 0 0
Terry Gibson (3)........ 1999 106,731 11,250 0 0 179,999 0 0
Vice President of
Finance, Chief
Financial Officer and
Secretary 1998 0 0 0 0 0 0 0
- --------
(1) As of March 31, 2000, Mr. McElwee is no longer an employee of the Company.
Mr. McElwee entered into an agreement with the Company dated February 1,
2000, which provides that in the event his employment with the Company is
terminated by the Company without cause, he will be entitled to receive
his monthly base salary and benefits for a period of six months following
such termination. Additionally, Mr. McElwee's agreement with the Company
provides that any unvested stock options or shares of restricted stock he
holds as of the date of his termination will become immediately vested and
exercisable as though he maintained his employment or consulting
relationship with the Company for a period of 12 months following the date
of such termination.
A-6
(2) As of May 12, 2000, Ms. Burke is no longer an employee of the Company.
Ms. Burke entered into an agreement with the Company, dated June 30,
2000, which provides for the continuation of her salary through December
31, 2000. In addition, Ms. Burke's stock options will continue to vest
through December 31, 2000.
(3) As of June 9, 2000, Mr. Gibson is no longer an employee of the Company.
Mr. Gibson entered into an agreement with the Company which provides that
his stock options will vest through June 9, 2000 and that he would be
paid through June 9, 2000. The agreement also provided that the Company
would forgive Mr. Gibson from repaying a loan to the Company in the
amount of $20,000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to stock
options granted to the Named Executive Officers in the last fiscal year. In
addition, as required by Securities and Exchange Commission rules, the table
sets forth the hypothetical gains that would exist for these options based on
assumed rates of annual compound stock price appreciation during the option
term.
Individual Grants(1) Potential
---------------------------------------------- Realizable Value at
Number of Percent of Assumed Annual
Securities Total Rates of Stock
Underlying Options/Granted Exercise Price Appreciation
Options to Employees in of Base For Option Term(2)
Granted Fiscal Year (%) Price Expiration -------------------
Name (#) (3) ($/sh) Date 5% ($) 10% ($)
---- ---------- --------------- -------- ---------- -------- ----------
Mahesh Veerina.......... 96,000 5.28% $7.50 4/13/09 $452,804 $1,147,495
Timothy J. McElwee...... 119,998 6.60 7.50 3/19/09 565,996 1,434,344
Patricia R. Burke....... 0 0 0 0 0 0
Elie Habib.............. 164,999 9.08 2.50 2/16/09 259,417 657,415
Terry Gibson............ 179,999 9.90 7.50 3/19/09 849,003 2,151,540
- --------
(1) No stock appreciation rights were granted to the Named Executive Officers
in the last fiscal year. Options become exercisable at a rate of the total
number of shares of common stock subject to the option on the first
anniversary of the date of grant, and 1/48 of the total number of shares
monthly thereafter, as long as the optionee remains an employee with,
consultant to, or director of the Company.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the Securities and Exchange Commission. There is no
assurance provided to any Named Executive Officer or any other holder of
the Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock
appreciates over the option term, no value will be realized from the
option grants made to the Named Executive Officers.
(3) The Company granted stock options representing 2,015,189 shares to
employees in the last fiscal year.
A-7
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to stock
options exercised by the Named Executive Officers during the fiscal year ended
December 31, 1999. In addition, the table sets forth the number of shares
covered by stock options as of the fiscal year ended December 31, 1999, and
the value of "in-the-money" stock options, which represents the positive
spread between the exercise price of a stock option and the market price of
the shares subject to such option at the end of the fiscal year ended December
31, 1999.
Number of Unexercised Value of Unexercised In-
Shares Options at the-Money Options at
Acquired on Fiscal Year End (#) Fiscal Year End ($)
Exercise Value Exercisable/Unexercisable Exercisable/Unexercisable
Name (#) Realized ($) (1) (2)
---- ----------- ------------ ------------------------- -------------------------
Mahesh Veerina.......... 0 0 28,000 / 212,999 $333,660 / $2,379,861
Timothy J. McElwee...... 0 0 92,499 / 177,499 1,258,561 / 1,833,974
Patricia R. Burke....... 48,000 $339,984(3) 98,750 / 77,249 1,459,446 / 1,096,148
Elie Habib.............. 0 0 0 / 164,999 0 / 2,103,737
Terry Gibson............ 0 0 0 / 179,999 0 / 1,394,992
- --------
(1) No stock appreciation rights (SARs) were outstanding during fiscal 1999.
(2) Based on the $15.25 per share closing price of the Company's Common Stock
on The Nasdaq Stock Market on December 31, 1999, the last day of fiscal
year 1999, less the exercise price of the options.
(3) Value realized is calculated based on the fair market value of the
Company's Common Stock as determined by the Company Board on the date of
exercise ($7.50 on May 13, 1999) minus the exercise price of the option
($0.417) and does not necessarily indicate that the optionee sold such
stock.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of
1934 that might incorporate future filings, including this Statement, in whole
or in part, the following report and the Stock Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filings.
A-8
Stock Performance Graph
The following graph compares the cumulative total stockholder return data
for the Company's stock since June 22, 1999 (the date on which the Company's
stock was first registered under Section 12 of the Securities Exchange Act of
1934, as amended) to the cumulative return over such period of (i) the Nasdaq
National Market Composite Index, (ii) the Hambrecht & Quist Technology Index
and (iii) the Standard & Poors 500 Index. The graph assumes that $100 was
invested on June 22, 1999, the date the Company completed its initial public
offering, in the Common Stock of the Company and in each of the comparative
indices. The graph further assumes that such amount was initially invested in
the Common Stock of the Company at a per share price of $11.00, the price to
which such stock was first offered to the public by the Company on the date of
its initial public offering, and reinvestment of any dividends. The stock
price performance on the following graph is not necessarily indicative of
future stock price performance.
COMPARISON OF TOTAL RETURN *
AMONG RAMP NETWORKS, INC.,
THE NASDAQ NATIONAL MARKET COMPOSITE INDEX,
HAMBRECHT & QUIST TECHNOLOGY INDEX AND
THE STANDARD & POORS 500 INDEX
[PERFORMANCE GRAPH APPEARS HERE]
- --------
* Assumes $100 invested on June 22, 1999 in stock or index, including
reinvestment of dividends. Fiscal year ending December 31, 1999.
6/22/99 12/31/99
------- --------
Ramp Networks, Inc.......................................... $100 $139
Nasdaq National Market Composite Index...................... $100 $173
Hambrecht & Quist Technology Index.......................... $100 $158
Standard & Poors 500 Index.................................. $100 $110
A-9
Certain Relationships and Related Transactions
The Company has entered into indemnification agreements with its directors
and officers containing provisions that are in some respects broader than the
specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements may require the Company:
. to indemnify directors and officers against liabilities that may arise by
reason of their status or service as directors or officers, other than
liabilities arising from willful misconduct of a culpable nature;
. to advance their expenses incurred as a result of any proceeding against
them as to which they could be indemnified; and
. to obtain directors' and officers' insurance if available on reasonable
terms.
The Company currently has a policy for directors' and officers' insurance.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of ours in which indemnification would be
required or permitted. The Company is not aware of any threatened litigation or
proceeding that might result in a claim for indemnification. The Company
believes that its charter provisions and indemnification agreements are
necessary to attract and retain qualified persons as directors and officers.
In September 2000, the company granted Perry Grace an option to purchase
150,000 shares of Company Common Stock at an exercise price of $4.00.
In October 2000, the Company granted Robert Herjavec an option to purchase
1,000,000 shares of Company Common Stock at an exercise price of $2.0313. The
vesting of 125,000 shares subject to this option shall accelerate in the event
the Company consummates a change of control transaction prior to April 26, 2001
and 250,000 of such shares shall accelerate if such change of control is
consummated between April 26, 2001 and October 25, 2001.
In October 2000, the Company granted Mike Raghavan an option to purchase
250,000 shares of Company Common Stock at an exercise price of 1.8125. The
vesting of Mr. Raghavan's option shall be accelerated in accordance with its
terms upon attaining key marketing goals. In the event of a change of control
the vesting of Mr. Raghavan's option shall automatically be accelerated as
though Mr. Raghavan had been employed by the Company for an additional 12
months from the date of the change of control.
In October 2000, the Company loaned $100,000 to Sri Bathina and entered into
a non-recourse promissory note, due and payable on October 16, 2001, bearing
interest at a rate of 6.00%. The note is secured by the Shares owned by Mr.
Bathina.
In connection with the Merger Agreement executed on December 6, 2000,
Messrs. Veerina, Sun, Gianos, Krause, Grace, Bridges, Raghu Bathina and Sri
Bathina entered into Stockholder's Agreements and Messrs. Veerina, Habib, Sri
Bathina and Raghu Bathina entered into Employment and Non-Competition
Agreements effective as of the Effective Time, as described in the Schedule
14D-9 to which this Annex A is attached.
Except as described above, to date, the Company has made no loans to
officers, directors, principal shareholders or other affiliates or other than
advances of reimbursable expenses. All future transactions, including loans (if
any), between the Company and its officers, directors and principal
shareholders and their affiliates will be approved by a majority of the Company
Board, including a majority of the independent and disinterested outside
directors of the Company Board, and will be on terms no less favorable to the
Company than could have been obtained from unaffiliated third parties.
A-10
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and changes in
ownership of the Company's Common Stock. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports
they file. To the Company's knowledge, based solely on its review of the
copies of such reports received or written representations from certain
Reporting Persons that no other reports were required, the Company believes
that during its fiscal year ended December 31, 1999 all Reporting Persons
complied with all applicable filing requirements.
A-11
ANNEX B
December 6, 2000
CONFIDENTIAL
Board of Directors
Ramp Networks, Inc.
3100 De La Cruz Boulevard, Suite 200
Santa Clara, CA 95054
Dear Members of the Board:
We understand that Ramp Networks, Inc. ("Ramp" or the "Company"), Nokia
Corporation ("Nokia" or the "Parent") and Blackbird Acquisition, Inc., a
wholly-owned subsidiary of Parent ("Purchaser"), propose to enter into an
Agreement and Plan of Merger (the "Agreement") pursuant to which Parent will
cause Purchaser to make a tender offer (the "Offer") to purchase all of the
issued and outstanding shares of common stock of Ramp ("Ramp Common Stock"), at
a price per share of $5.80 in cash (the "Offer Price"), and subsequently merge
with and into Ramp (the "Merger"). Pursuant to the Merger, each issued and
outstanding share of Ramp Common Stock not acquired in the Offer will be
converted into the right to receive the highest per share cash consideration
paid pursuant to the Offer. The terms and conditions of the above described
Offer and Merger (together, the "Transaction") are more fully detailed in the
Agreement.
You have requested our opinion as to whether the Offer Price is fair, from a
financial point of view, to Ramp stockholders.
Broadview International LLC ("Broadview") focuses on providing merger and
acquisition advisory services to information technology ("IT"), communications
and media companies. In this capacity, we are continually engaged in valuing
such businesses, and we maintain an extensive database of IT, communications
and media mergers and acquisitions for comparative purposes. We are currently
acting as financial advisor to Ramp's Board of Directors and will receive a fee
from Ramp upon the successful conclusion of the Transaction.
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the draft of the Agreement dated December 4, 2000,
furnished to us by counsel to Parent on December 4, 2000 (which for
purposes of this opinion, we have assumed with your permission, to be
identical in all material respects to the Agreement to be executed);
2.) reviewed Ramp's quarterly report on Form 10-Q for the period ended
September 30, 2000, including the unaudited financial statements included
therein, and Ramp's annual report on Form 10-K for the fiscal year ended
December 31, 1999, including the audited financial statements included
therein;
3.) reviewed certain internal financial and operating information relating to
Ramp, including projections through December 31, 2001, prepared and
furnished to us by Ramp management;
4.) participated in discussions with Ramp management concerning the
operations, business strategy, current financial performance and prospects
for Ramp;
5.) discussed with Ramp management its view of the strategic rationale for the
Transaction;
6.) reviewed the recent reported closing prices and trading activity for Ramp
Common Stock;
B-1
7.) compared certain aspects of the financial performance of Ramp with public
companies we deemed comparable;
8.) analyzed available information, both public and private, concerning other
mergers and acquisitions we believe to be comparable in whole or in part
to the Transaction;
9.) reviewed recent equity research analyst reports covering Ramp;
10.) participated in discussions related to the Transaction among Ramp, Nokia
and their respective advisors; and
11.) conducted other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Ramp. With
respect to the financial projections examined by us, we have assumed that they
were reasonably prepared and reflected the best available estimates and good
faith judgments of the management of Ramp as to the future performance of
Ramp. We have neither made nor obtained an independent appraisal or valuation
of any of Ramp's assets.
Based upon and subject to the foregoing, we are of the opinion that the
Offer Price is fair, from a financial point of view, to Ramp stockholders.
For purposes of this opinion, we have assumed that Ramp is not currently
involved in any material transaction other than the Transaction, other
publicly announced transactions, and those activities undertaken in the
ordinary course of conducting its business. Our opinion is necessarily based
upon market, economic, financial and other conditions as they exist and can be
evaluated as of the date of this opinion, and any change in such conditions
would require a reevaluation of this opinion.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Ramp in connection
with its consideration of the Transaction and does not constitute a
recommendation to any Ramp shareholder as to whether such shareholder should
tender its shares in the Offer or as to how such shareholder should vote on
the Merger. This opinion may not be published or referred to, in whole or
part, without our prior written permission, which shall not be unreasonably
withheld. Broadview hereby consents to references to and the inclusion of this
opinion in its entirety in the Solicitation/Recommendation Statement on
Schedule 14D-9 and, if required, the Proxy Statement, in each case to be
distributed to Ramp shareholders in connection with the Transaction.
Sincerely,
/s/ Broadview International LLC
Broadview International LLC
B-2