UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toss.240.14a-12
ZEBRA TECHNOLOGIES CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PRELIMINARY PROXY STATEMENT
[ZEBRA TECHNOLOGIES CORPORATION LOGO]
ZEBRA TECHNOLOGIES CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 2002
To the Stockholders of
Zebra Technologies Corporation:
The Annual Meeting of Stockholders of Zebra Technologies Corporation (the
"Company") will be held at 10:30 a.m., Chicago time, on Wednesday, May 15, 2002,
at The University of Chicago Gleacher Center, 450 North Cityfront Plaza Drive,
Chicago, Illinois, for the following purposes:
(1) To elect six directors;
(2) To approve a proposal to amend the Company's Certificate of
Incorporation to adopt a classified Board of Directors;
(3) To approve a proposal to adopt the Zebra Technologies Corporation
2002 Non-Employee Director Stock Option Plan;
(4) To ratify the selection by the Board of Directors of KPMG LLP as the
independent auditors of the Company's financial statements for the
year ending December 31, 2002; and
(5) To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 20, 2002,
as the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting.
By order of the Board of Directors,
Gerhard Cless
SECRETARY
Vernon Hills, Illinois
April ___, 2002
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY. WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE
FURNISHED FOR THAT PURPOSE OR VOTE OVER THE INTERNET OR BY TELEPHONE IN
ACCORDANCE WITH THE INSTRUCTIONS ON THE PROXY CARD.
-2-
ZEBRA TECHNOLOGIES CORPORATION
333 Corporate Woods Parkway
Vernon Hills, Illinois 60061
(847) 634-6700
----------------------
PROXY STATEMENT
----------------------
The accompanying Proxy is solicited by the Board of Directors of Zebra
Technologies Corporation, a Delaware corporation ("Zebra," or the "Company"),
for use at the Annual Meeting of Stockholders. The Annual Meeting will be held
at 10:30 a.m., Chicago time, on Wednesday, May 15, 2002, at The University of
Chicago Gleacher Center, 450 North Cityfront Plaza Drive, Chicago, Illinois, and
any adjournments thereof. The Company intends to release this Proxy Statement
and the accompanying form of proxy to stockholders on or about April 15, 2002.
VOTING SECURITIES; PROXIES; REQUIRED VOTE
VOTING SECURITIES -- The Board of Directors has fixed the close of business
on March 20, 2002, as the Record Date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting or any adjournments
thereof. As of the Record Date, the Company had outstanding _______ shares of
Class A Common Stock, par value $.01 per share and _______ shares of Class B
Common Stock, par value $.01 per share. The holders of the Class A Common Stock
and the Class B Common Stock vote together as a single class on all matters to
be submitted to the vote of stockholders at the Annual Meeting. Holders of Class
A Common Stock are entitled to one vote per share. Holders of Class B Common
Stock are entitled to ten votes per share.
PROXIES -- The Board of Directors of the Company has selected Edward L.
Kaplan and Gerhard Cless to serve as proxies for the Annual Meeting. Messrs.
Kaplan and Cless are directors and executive officers of the Company. Most
stockholders have a choice of voting over the Internet, by using a toll-free
telephone number or by completing a proxy card and mailing it in the
postage-paid envelope provided. Please check your proxy card or the information
forwarded by your bank, broker or other holder of record to see which options
are available to you. Please be aware that if you vote over the Internet, you
may incur costs such as telecommunication and Internet access charges for which
you will be responsible. The Internet and telephone voting facilities for
stockholders of record will close at 11:00 p.m. Central Time on May 14, 2002.
The Internet and telephone voting procedures have been designed to authenticate
stockholders by use of a control number and to allow you to vote your shares and
to confirm that your instructions have been properly recorded. Each executed and
returned proxy card will be voted in accordance with the directions indicated
thereon, or if no direction is indicated, such proxy will be voted in accordance
with the recommendations of the Board of Directors contained in this Proxy
Statement. Each stockholder giving a proxy (by executing the proxy card, over
the Internet or by telephone) has the power to revoke it at any time before the
shares it represents are voted. Revocation of a proxy is effective upon receipt
by the Secretary of the Company of either (1) an instrument revoking the proxy
or (2) a proxy bearing a later date (which can be done by mail, over the
Internet or by telephone). Additionally, a stockholder may change or revoke a
previous proxy by voting in person at the Annual Meeting.
REQUIRED VOTE -- At the Annual Meeting, (1) a plurality of the votes cast in
person or by proxy is required to elect directors; (2) the affirmative vote of
holders of a majority of the voting power of the Common Stock is required to
amend the Company's Certificate of Incorporation; and (3) the affirmative vote
of holders of a majority of the voting power of the Common Stock cast
affirmatively or negatively is required to approve the 2002 Non-Employee
Director Stock Option Plan and to ratify the appointment of KPMG LLP as the
independent auditors of the Company's financial statements for the year ending
December 31, 2002. Stockholders will not be allowed to cumulate their votes in
the election of directors.
The required quorum for the transaction of business at the Annual Meeting
will be a majority of the voting power of shares of Common Stock issued and
outstanding on the Record Date. Abstentions and broker non-votes will be
included in determining the presence of a quorum. With respect to the proposal
to amend the Company's Certificate of Incorporation, abstentions and broker
non-votes will have the same effect as votes against such proposal. Neither
abstentions nor broker non-votes will have any effect on the voting on the
proposals to elect directors, to approve the 2002 Non-Employee Director Stock
Plan, or to ratify the appointment of KPMG LLP.
-1-
Because of their beneficial ownership of Common Stock, Messrs. Kaplan and
Cless, together with their spouses, have voting power sufficient to (1) elect
the five nominees named to serve as directors; (2) amend the Certificate of
Incorporation; (3) approve the 2002 Non-Employee Director Stock Option Plan; and
(4) ratify the appointment of KPMG LLP. Messrs. Kaplan and Cless have advised
the Board of Directors that all shares beneficially owned by them and their
spouses will be voted in favor of such proposals. See "Security Ownership of
Certain Beneficial Owners and Management."
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has set the number of directors to be elected at the
Annual Meeting at six. Each nominee for election as director currently serves as
a director of the Company. The Board of Directors recommends that the
stockholders vote in favor of the election of the six nominees named in this
Proxy Statement to serve as directors of the Company.
If at the time of the Annual Meeting any of the nominees is unable or
declines to serve, the persons named in the proxy will, at the direction of the
Board of Directors, either vote for the substitute nominee or nominees the Board
of Directors recommends or vote to allow the vacancy created thereby to remain
open until filled by the Board. The Board of Directors has no reason to believe
that any nominee will be unable or will decline to serve as a director if
elected.
NOMINEES FOR ELECTION AS DIRECTORS -- The Board of Directors has
unanimously adopted a resolution proposing an amendment to the Company's
Certificate of Incorporation, as currently amended (the "Certificate of
Incorporation") that classifies the Board of Directors into three separate
classes, as nearly equal in number as possible, with one class being elected
each year to serve a staggered three year term. The Amendment to the Certificate
of Incorporation is conditioned on obtaining shareholder approval as discussed
herein under "Proposal 2 - Approval of a classified Board of Directors."
If the amendment is adopted, the terms of Office of the Class I, Class II
and Class III directors will expire in 2003, 2004 and 2005, respectively.
Subject to the approval of the amendment to the Certificate of Incorporation,
the following table sets forth information regarding the nominees for directors
and such persons, if elected at the Annual Meeting, will serve as directors in
the classes and for the terms specified below:
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE TERM TO EXPIRE
-------------------------------------------------------------------------------------
CLASS I DIRECTORS
John W. Paxton 65 Vice President and General April 2002(1) 2003
Manager Barcode Business
Unit, Director
David P. Riley 55 Director 1991 2003
CLASS II DIRECTORS
Gerhard Cless 62 Executive Vice President, 1969 2004
Secretary, Director
Michael A. Smith 47 Director 1991 2004
CLASS III DIRECTORS
Edward L. Kaplan 59 Chief Executive Officer, Director 1969 2005
Christopher G. Knowles 59 Director 1991 2005
----------------------
(1) The Board intends to elect Mr. Paxton to the Board at its next meeting
in April 2002.
-2-
If the amendment to the Certificate of Incorporation is not approved, each
nominee, if elected at the Annual Meeting, will serve as a director until the
earlier of the 2003 Annual Meeting of the Company's stockholders or until their
successors are duly elected and qualified.
GERHARD CLESS, co-founder of Zebra Technologies Corporation, has been
Executive Vice President of Zebra Technologies Corporation since June 1998.
Mr. Cless also has been Secretary of Zebra since 1969. Mr. Cless served as
Executive Vice President for Engineering and Technology of Zebra from
February 1995 to June 1998, after having served as Senior Vice President of
Engineering since 1969. Mr. Cless served as Treasurer of Zebra until October
1991. Since 1969, he has been active with Zebra where he has directed the
development of numerous label printers and maintained worldwide
technology/vendor relationships. Prior to founding Zebra, Mr. Cless was a
research and development engineer at Teletype Corporation's printer division.
Mr. Cless received an MSME degree from Esslingen, Germany, and has done
graduate work at the Illinois Institute of Technology. The Cless Technology
Center, Zebra's 57,000 square foot product development and research facility,
is named in honor of Mr. Cless.
EDWARD L. KAPLAN, co-founder of Zebra Technologies Corporation, has been
Chief Executive Officer and Chairman of Zebra since 1969. He served as President
of Zebra from its formation until February 1995, from April 1997 to April 1998
(on an interim basis) and again from September 2001 to February 2002. Mr. Kaplan
served as Chief Financial Officer of Zebra from its formation until September
1991. Mr. Kaplan began his career as a project engineer for Seeburg Corporation,
later joining Teletype Corporation as a mechanical engineer performing research
and development in the Printer Division. In 1969, he and Gerhard Cless founded
Zebra, then known as Data Specialties, Inc. Mr. Kaplan received a BS in
Mechanical Engineering from the Illinois Institute of Technology (graduating Tau
Beta Pi) and an MBA from the University of Chicago and is an NDEA Fellow of
Northwestern University.
CHRISTOPHER G. KNOWLES has served as a director of Zebra since July 1991.
He was also a member of the Board of Directors of Insurance Auto Auctions,
Inc. from June 1994 to February 2001. In 1966, Mr. Knowles joined North
American Van Lines, which was acquired by PepsiCo, Inc. two years later. He
continued his career with PepsiCo, Inc., working in human relations and
distribution with several of its subsidiary companies, including North
American Van Lines, PepsiCo Service Industries and Wilson Sporting Goods, as
well as holding positions on the corporate staff of PepsiCo, Inc. In 1976, he
became a vice president of Allied Van Lines and later became Division Vice
President in charge of Allied's Household Goods Division, the largest
division of that company. In January 1980, Mr. Knowles joined Underwriters
Salvage Company as its Chairman and Chief Executive Officer and subsequently
acquired that company with other members of its management. Insurance Auto
Auctions, Inc. acquired underwriters Salvage Company in January 1994. Mr.
Knowles became President and Chief Operating Officer of Insurance Auto
Auctions, Inc. in April 1994 and held such positions until March 1996.
Between December 1998 and November 2001, Mr. Knowles served as Chief
Executive Officer of Insurance Auto Auctions. Inc. Mr. Knowles received his
BA degree from Indiana University in 1966.
JOHN W. PAXTON joined Zebra Technologies on February 22, 2002, as
President of the Company's Bar Code Business Unit. Immediately prior to
joining Zebra, Mr. Paxton headed Paxton Associates. From March 1999 to
December 2000, Mr. Paxton was Chairman and Chief executive officer of Telxon
Corporation. In December 1998, Mr. Paxton became Chairman of Odyssey
Industrial Technologies, LLC, a joint venture partnership with Odyssey
Investment Partners, a private equity fund engaged in making investments
primarily in middle market companies in a variety of industries. Beginning in
October 1995, he was affiliated with Monarch Marking Systems and Paxar
Corporation, following Paxar's acquisition of Monarch in March 1997. In
October 1995, Mr. Paxton was named Monarch's President and Chief Executive
Officer and served on Monarch's board of directors. In October 1997, he
became Executive Vice President of Paxar Corporation and President of the
company's Printing Solutions Group. He also served as a member of Paxar's
board of directors from March 1997 through December 1998. Mr. Paxton joined
Litton Industries as a corporate vice president in 1991, when the company
acquired Intermec Corporation. Between 1986 and 1991, he led Intermec,
joining as President and Chief Operating Officer, and becoming Chairman,
President and Chief Executive Officer in 1988. Mr. Paxton has a Bachelor of
Science degree in engineering and Master of Science degree in business
administration from LaSalle University, and is a registered engineer. He
served on the board of the National Association of Manufacturers, and was
Chairman and Vice Chairman of Automatic Identification Manufacturers (AIM), a
leading industry association.
DAVID P. RILEY has served as a director of Zebra since July 1991. In December
2000, he retired from The Middleby Corporation, where he served as President and
Chief Executive Officer since 1984. The Middleby Corporation is a
-3-
public company, which manufactures commercial food equipment and provides
complete kitchens to various institutional customers, as well as to restaurants
such as Pizza Hut and Domino's Pizza. Mr. Riley continues to serve as a director
of The Middleby Corporation. He was previously employed in various management
positions with a subsidiary of The Middleby Corporation and, before that, with
Hobart Corporation, a food equipment manufacturer. Mr. Riley holds a BS in
Engineering from the Ohio State University.
MICHAEL A. SMITH has served as a director of Zebra since July 1991. He is
also Chairman, Chief Executive Officer and founder of FireVision L.L.C., which
he formed in December 1999 to develop visualization software and related
analytical technologies. Further, Mr. Smith currently serves as Vice President
and Treasurer of HA Properties, a limited partnership that invests in real
estate, and as a managing member of Barrier Capital Partners LLC. From September
1998 to December 1999, Mr. Smith was Senior Managing Director and head of the
Chicago and Los Angeles offices of the Mergers & Acquisitions Department of
NationsBanc Montgomery Securities and its successor entity, Banc of America
Securities, LLC. He was Senior Managing Director and co-head of the Mergers and
Acquisitions Department of BancAmerica Robertson Stephens from September 1997 to
August 1998. Previously, Mr. Smith was co-founder and head of the investment
banking group BA Partners and its predecessor entity Continental Partners Group
since 1989. His previous positions include Managing Director, Corporate Finance
Department, for Bear, Stearns & Co. (1982 to 1989) and Vice President and
Manager of the Eastern States and Chicago Group Investment Banking Division of
Continental Bank (1977 to 1982). He was a director of Graphic Technology from
1983 to 1989. Mr. Smith graduated Phi Beta Kappa from the University of
Wisconsin and received an MBA from the University of Chicago.
BOARD MEETINGS IN 2001 -- The Board of Directors met four times during
2001. Each director attended more than 75% of the total number of meetings of
the Board of Directors and the Board committees on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS -- The Board of Directors has
established and assigned certain responsibilities to an Audit Committee and an
Options Committee.
AUDIT COMMITTEE. The Board of Directors has established an Audit Committee
comprised of the independent directors, Messrs. Knowles, Riley and Smith. These
three directors are independent in accordance with the National Association of
Securities Dealers' listing standards. This committee met four times during
2001.
COMMITTEE FOR 1997 STOCK OPTION PLAN. The 1997 Stock Option Plan is
administered by a Committee comprised of the independent directors, Messrs.
Knowles, Riley and Smith. The Committee determines the timing, terms and
prices of options made pursuant to our stock option plan. The Committee met
once during 2001.
The Company does not have a standing nominating committee or compensation
committee of the Board of Directors.
COMPENSATION OF DIRECTORS -- The Company pays each of its outside
directors an annual retainer of $4,000 and attendance fees of $1,500 with
respect to each meeting of the Board of Directors and $1,000 with respect to
each meeting of the Audit Committee. During 2001, the Company's outside
directors received aggregate compensation as follows: Christopher Knowles
($26,000), Michael Smith ($26,000), David Riley ($26,000) and Donald Skinner
($19,000). The remaining directors were employed by the Company and not
separately compensated for their service as directors. The Company did not
grant any options to its directors during 2001. Proposal 3 described below
provides for the approval of the Zebra Technologies Corporation 2002
Non-Employee Director Stock Option Plan, under which the Board of Directors
or a committee thereof would be able to grant options to the Company's
non-employee directors. It is expected that such options would vest at a rate
of 20% on each annual anniversary of the date of grant.
-4-
EXECUTIVE OFFICERS
Set forth below is a table identifying the executive officers of the Company
other than Messrs. Cless, Kaplan, and Paxton who are identified in the section
"Election of Directors -- Nominees for Election as Directors."
NAME AGE POSITION
-------------------------------- ---------- -------------------------------------------------
John H. Kindsvater 60 Senior Vice President, Business Development
Charles R. Whitchurch 55 Chief Financial Officer and Treasurer
Todd Naughton 39 Vice President and Controller
Michael T. Edicola 44 Vice President, Human Resources
Veraje Anjargolian 57 Vice President and General Manager, Card Printer
Business Unit
JOHN H. KINDSVATER became Senior Vice President, Business Development in
December 2000. He joined Zebra in 1980 and held various sales and marketing
executive positions, in which he was responsible for developing and implementing
marketing and sales strategies. In February 1995, he was promoted to Vice
President of Corporate Development, which position he held until July 1997, and
in February 1996 was appointed to the additional position of President of Zebra
Technologies VTI, which he held until December 1997. From December 1998 to
December 2000, Mr. Kindsvater held the position of Vice President, Market
Development. Prior to joining Zebra, Mr. Kindsvater held management positions in
corporate development, international operations, marketing and sales with
various technology-based companies, including Quixote Corporation, A. B. Dick
Company, Marsh Instrument Company and Jeppesen & Co. Mr. Kindsvater attended
Purdue University and received his BS degree and MBA from the University of
Denver. He has served on the Board of Directors of Automatic Identification
Manufacturers (AIM), the industry's trade association.
CHARLES R. WHITCHURCH joined Zebra as Chief Financial Officer and
Treasurer in September 1991. From 1981 until he joined Zebra, he served as
Vice President, Finance of Corcom, Inc., a technology company specializing in
the control of radio frequency interference. Mr. Whitchurch previously held
positions as Chief Financial Officer of Resinoid Engineering Corporation and
as Corporate Services Officer with the Harris Bank in Chicago. Mr. Whitchurch
earned a BA in Economics (Phi Beta Kappa) from Beloit College and an MBA from
Stanford University in 1973.
TODD R. NAUGHTON has served as Vice President and Controller of Zebra
since April 2000. Previously, Mr. Naughton was Corporate Controller for Zebra
since joining the company in January 1999. From January 1998 to January
1999, Mr. Naughton was Vice President -Financial Shares Services for Moore
North America. Previously, Mr. Naughton was Vice President and Controller
for UARCO Incorporated from June 1996 to January 1998. His previous
positions include Director of Treasury, Manager of Financial Planning and
Assistant Controller for Handy Andy Home Improvement Centers, Inc. (1988 to
1996), Assistant Controller and Manager of Financial Reporting of Uptown
Federal Savings, FSB (1986 to 1988) and as a Staff Auditor with Ernst &
Whitney (1984 to 1986). Mr. Naughton received a BS in accounting from the
University of Illinois at Urbana-Champaign, and an MBA from the University of
Chicago. He is a certified public accountant.
MICHAEL T. EDICOLA joined Zebra Technologies Corporation as Vice President of
Human Resources on September 7, 1999. Mr. Edicola is responsible for developing
and implementing global human resource strategies for the company. From 1995 to
1999, Mr. Edicola was Vice President of Human Resources for the Rank Group PLC's
Film and Entertainment Services business. Prior to that, from 1981 to 1995, he
served in a number of senior Human Resource management positions of increasing
responsibility with the General Electric Company, progressing to Divisional
Human Resources Officer within both the Aircraft Engines and Power Generation
business groups. Mr. Edicola received a BS in Industrial Relations from LeMoyne
College and an MA in Human Resources from the University of Cincinnati.
VERAJE ANJARGOLIAN became Vice President and General Manager of the
Company's Card Printer Business Unit in April 2000. He joined Zebra in
October 1998, with the merger of Zebra and Eltron International, Inc., and
served as Vice President of Card Printer Operations until appointment to his
current position. Dr. Anjargolian joined Eltron in 1996 as general manager of
the RJS division. Prior to joining Eltron, Dr. Anjargolian was a founding
partner of Sara Electronics Corp., which developed PC communications and
storage products. He was also associated with Rexon/WangDAT, Inc., where he
managed the growth of new DAT tape drives and associated tape solution
products, and with Wangtek, Inc., where he was responsible for the
development and commercialization of several PC tape drives
-5-
and associated controller cards. Educated in the U.K., Dr. Anjargolian received
a bachelor of science degree from the University of Wales, a master's degree
from the University of Manchester, and a Ph.D. from the University of London. He
also completed coursework for an MBA from the London School of Management.
The Board of Directors elects officers to serve at the discretion of the
Board. There are no family relationships among any of the directors or officers
of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE -- Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires the Company's officers
and directors and persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and The Nasdaq Stock
Market. Based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms were required
for them, the Company believes that for the year ended December 31, 2001, all
Section 16(a) filing requirements applicable to its officers, directors and 10%
beneficial owners were complied with by such persons.
-6-
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
The following table provides information concerning the annual and long-term
compensation for services in all capacities to the Company for the year ended
December 31, 2001, and the two prior years for (1) the chief executive officer,
(2) the four other executive officers of the Company as of December 31, 2001 who
received the highest compensation (combined salary and bonus) in 2001, and (3)
an executive officer whose employment with the Company terminated prior to the
end of the year (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION (1)
---------------
ANNUAL COMPENSATION AWARDS
-------------------------------- --------------- ALL
SECURITIES OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($)
------------------------------------------ --------- ------------ ---------- --------------- -------------
Edward Kaplan 2001 $533,500 -- -- $ 20,255(2)
Chairman and 2000 529,397 -- -- 22,374
Chief Executive Officer 1999 423,534 423,415 -- 23,878
Charles E. Turnbull* 2001 $575,905 -- -- $ 2,803(3)
President 2000 319,200 -- -- 10,575
1999 290,769 214,588 -- 11,337
Charles R. Whitchurch 2001 $233,746 -- -- $ 9,806(4)
Chief Financial Officer 2000 224,672 $ 10,887 -- 13,295
and Treasurer 1999 197,200 90,279 -- 14,768
John H. Kindsvater 2001 $164,554 -- -- $ 9,801(5)
Senior Vice President 2000 160,000 $ 9,093 -- 11,994
Business Development 1999 159,871 66,619 -- 13,348
Michael T. Edicola 2001 $198,238 $ 8,866 -- $ 7,962(6)
Vice President 2000 180,000 4,138 -- 2,327
Human Resources 1999 51,231 19,404 -- 39
Veraje Anjargolian 2001 $206,365 $ 40,944 -- $ 10,948(7)
Vice President and 2000 169,536 32,616 -- 5,965
General Manager, Card Printer 1999 142,066 37,781 -- 1,409
Business Unit
(1) None of the Named Officers had any restricted stock holdings as of
December 31, 2001.
(2) Consisting of 401(k) contributions of $5,100, profit sharing plan
payments of $3,167, disability insurance of $6,766, automobile allowance
of $4,680, and life insurance of $542.
(3) Consisting of 401(k) contributions of $2,587, and life insurance of
$216.
(4) Consisting of 401(k) contributions of $5,100, profit sharing plan
payments of $3,167, disability insurance of $1,007, and life insurance
of $532.
(5) Consisting of 401(k) contributions of $4,964, profit sharing plan
payments of $3,100, disability insurance of $917, and life insurance of
$820.
(6) Consisting of 401(k) contributions of $4,666, profit sharing plan
payments of $3,167, and life insurance of $129.
(7) Consisting of 401(k) contributions of $2,199, profit sharing plan
payments of $3,167, automobile allowance of $5,040, and life insurance
of $542.
* Mr. Turnbull's employment with the Company ended in September 2001.
-7-
OPTIONS GRANTED IN YEAR ENDED DECEMBER 31, 2001. The following table provides
information on stock options granted in the year ended December 31, 2001, to the
Named Officers:
OPTIONS GRANTED IN YEAR 2001
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (1)
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
--------- ----------------- --------------- ------------ ------------ --------------------------
Edward L. Kaplan -- -- -- -- -- --
Charles E. Turnbull 5,000 1.74 40.88 02/14/11 128,530 325,721
Charles R. Whitchurch 5,000 1.74 40.88 02/14/11 128,530 325,721
John H. Kindsvater -- -- -- -- -- --
Michael T. Edicola 4,000 1.39 40.88 02/14/11 102,824 260,577
Veraje Anjargolian 5,000 1.74 40.88 02/14/11 128,530 325,721
(1) The dollar amounts under these columns are based on assumed 5% and 10%
appreciation rates in accordance with the rules of the Securities and
Exchange Commission. This table is not intended to predict future
movements of the Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES -- The following table provides information on the Named Officers'
unexercised options at December 31, 2001.
AGGREGATED OPTION EXERCISES IN YEAR 2001
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)(1)
-------------------------- -------------------------
SHARE VALUE
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
------------------------------ ------------------ -------------- -------------------------- -------------------------
Edward L. Kaplan -- -- --/-- --/--
Charles E. Turnbull 40,700 380,697 0/0 0/0
Charles R. Whitchurch -- -- --/-- --/--
John H. Kindsvater -- -- --/-- --/--
Michael T. Edicola -- -- --/-- --/--
Veraje Anjargolian 6,800 155,505 3,500/18,900 57,895/229,492
-8-
(1) The value per option is calculated by subtracting the exercise price
from the closing price of the Company's Common Stock on the Nasdaq Stock
Market on December 31, 2001, of $55.51.
-9-
REPORT ON EXECUTIVE COMPENSATION
Traditionally, compensation for the Company's executive officers, other than
the Chief Executive Officer, has been determined by the Company's Chief
Executive Officer, Edward L. Kaplan, because of the relatively small number of
executive officers and Mr. Kaplan's personal knowledge of the relative
performance and responsibilities of each executive officer. For the year ended
December 31, 2001, compensation for the Company's executive officers, other than
Mr. Kaplan himself, was established in this manner. The Board of Directors
established Mr. Kaplan's compensation. Mr. Kaplan submitted to the Board of
Directors for its consideration a proposal for his own compensation package,
which was reviewed and approved by the Board.
COMPENSATION ELEMENTS -- For 2001, the primary components of the Company's
executive officer compensation program were base salaries and cash bonuses based
on Company and departmental performance.
BASE SALARIES -- In determining the base salaries of other executive
officers, Mr. Kaplan reviewed various technology industry salary surveys, and he
targeted salaries at levels competitive to those provided to executives with
similar responsibilities in businesses that he viewed as comparable to the
Company. Mr. Kaplan also attempted to maintain a salary structure for the
executive group that, vis-a-vis each executive, gives credit for relative
seniority and scope of assigned responsibilities.
Mr. Kaplan's salary, as approved by the Board, was based upon its subjective
evaluation of Mr. Kaplan's contributions to the Company and his importance to
the Company's continued growth. The Board reviewed the American Electronics
Association Executive Compensation Survey (the "Survey") to confirm Mr. Kaplan's
salary level was within the ranges represented by the Survey, but did not target
Mr. Kaplan's salary at a particular point within the Survey's compensation
ranges.
BONUS -- Executive bonuses for 2001 were performance-related. Bonuses were
designed to reward management for achieving and exceeding goals for Company
performance, as well as performance goals for particular departments.
Mr. Kaplan and each of the other Named Officers participated in the Company's
2001 Executive Bonus Plan (the "Bonus Plan"). Mr. Kaplan established the Bonus
Plan after meetings with the other executive officers to discuss the Company's
targeted performance goals, and the Board approved Mr. Kaplan's participation in
the Bonus Plan. Under the Bonus Plan, cash bonuses paid to each of the Named
Officers for 2001 were directly related to the Company's overall financial
performance. Bonuses were determined by multiplying the particular officer's
base salary by (1) his designated bonus percentage and (2) a performance factor
based upon the Company's achievement of targeted levels of operating profit for
2001. Designated bonus percentages were based upon seniority and relative
positions within the Company's organizational structure. For 2001, Messrs.
Kaplan and Turnbull received no bonuses, because the Company's performance did
not achieve targeted levels and their bonuses were tied exclusively to the
performance of the entire company.
Mr. Kaplan awarded bonuses in addition to those provided in the Bonus Plan to
certain of the Company's Named Executive Officers based upon the performance of
the departments over which they exercise direct supervisory authority. For these
bonuses, the performance criteria varied depending upon the department and the
particular goals set for the department for 2001.
STOCK OPTIONS -- The Company awards stock options to executive officers to
provide competitive compensation packages and because the Company believes it is
important that all of the Company's key executive officers have a meaningful
equity stake in the Company so that they have an incentive to create shareholder
value over a long-term investment horizon. In 2001, the Company granted 5,000
stock options to Charles E. Turnbull, 5,000 stock options to Charles R.
Whitchurch, 4,000 stock options to Michael T. Edicola and 5,000 stock options to
Veraje Anjargolian. Stock options are administered by a Committee of the Board
of Directors consisting of the three independent directors, Messrs. Riley,
Knowles and Smith.
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COMPLIANCE WITH SECTION 162(m) -- The Board of Directors currently intends
for all compensation paid to the Named Officers to be tax deductible to the
Company pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). Section 162(m) provides that compensation paid to
the Named Officers in excess of $1,000,000 cannot be deducted by the Company for
Federal income tax purposes unless, in general, such compensation is performance
based, is established by an independent committee of directors, is objective and
the plan or agreement providing for such performance based compensation has been
approved in advance by stockholders. In the future, however, if, in the judgment
of the Board, the benefits to the Company of a compensation program that does
not satisfy the arbitrary and inflexible conditions of Section 162(m) outweigh
the costs to the Company of the failure to satisfy these conditions, the Board
may adopt such a program.
BOARD OF DIRECTORS
Gerhard Cless David P. Riley
Edward L. Kaplan Michael A. Smith
Christopher G. Knowles
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's Chief Executive Officer, Mr. Kaplan, determined the
compensation to be paid the Company's executive officers, other than himself,
for the year ended December 31, 2001. The Board of Directors approved the
compensation to be paid to Mr. Kaplan. Mr. Cless, the Company's Executive
Vice President and Secretary and Mr. Kaplan participated in the deliberations
of the Board concerning Mr. Kaplan's compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1989, the Company entered into a lease agreement for its facility and
certain machinery, equipment, furniture and fixtures with Unique Building
Corporation ("Unique"), a corporation owned by Messrs. Kaplan and Cless and
Stewart Shiman (a former executive officer of the Company). Since its inception,
the lease has been amended to cover expansions of the facility. The lease was
amended, effective July 1999, to include space that was added in 1999.
The facility portion of the lease is treated as an operating lease and has a
term ending on June 30, 2014. Base monthly rental payments were $173,731 in
2001. Base monthly rental payments will remain at $173,731 through March 31,
2003, and will increase to $185,946 from April 1, 2003 through June 30, 2004,
and to $194,702 from July 1, 2004 through March 31, 2008. Base monthly rental
payments will decline to $67,132 from April 1, 2008 through June 30, 2009, and
will then increase to $77,202 from July 1, 2009 through June 30, 2014.
The lease agreement includes a modification to the base monthly rental, which
goes into effect if the prescribed rent payment is less than the aggregate
principal and interest payments required to be made by Unique under certain
Industrial Revenue Bonds. The Industrial Revenue bonds are supported by a Letter
of Credit issued by American National Bank. The Company guaranteed $700,000 of
Unique's obligation to such bank under the agreement relating to the Letter of
Credit. Under the portion of the lease agreement with Unique, which is accounted
for as a capital lease, the Company leases machinery, equipment, furniture, and
fixtures at a monthly rental of $5,725 over the lease term.
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PROPOSAL 2
APPROVAL OF A CLASSIFIED BOARD OF DIRECTORS
The Board of Directors has unanimously adopted a resolution proposing
an amendment to the Company's Certificate of Incorporation adding a new
Article ELEVENTH that classifies the Board of Directors into three classes
with staggered terms of office. As of March 14, 2002, the Company's Board of
Directors consists of a single class of five directors. The Company expects
its Board of Directors to add a sixth director at its next meeting in April
2002. All of the Company's directors are elected at each Annual Meeting of
Stockholders. The classified board amendment would classify the Board of
Directors into three separate classes, as nearly equal in number as possible,
with one class being elected each year to serve a staggered three-year term.
As indicated earlier, members in each class would be elected at the Annual
Meeting. The directors initially elected in Class I (John Paxton and David
Riley) would serve until the next Annual Meeting of Stockholders in 2003 or
until their respective successors have been elected and have qualified, or until
their earlier death, resignation, retirement or removal. The directors initially
elected in Class II (Gerhard Cless and Michael Smith) would serve until the
Annual Meeting of Stockholders in 2004 or until their respective successors have
been elected and have qualified, or until their earlier death, resignation,
retirement or removal. The directors initially elected in Class III (Edward
Kaplan and Christopher Knowles) would serve until the Annual Meeting of
Stockholders in 2005 or until their respective successors have been elected and
have qualified, or until their earlier death, resignation, retirement or
removal. Beginning with the election of directors to be held at the year 2003
Annual Meeting of Stockholders, the class of directors to be elected in such
year (Class I) would be elected for a three-year term, and at each successive
annual meeting, the class of directors to be elected in such year would be
elected for a three-year term so that the term of office of one class of
directors shall expire in each year.
APPROVAL OF A CLASSIFIED BOARD OF DIRECTORS
To preserve the classified board structure, the classified board amendment
also provides that a director elected by the Board of Directors to fill a
vacancy holds office until the next election of the class for which such
director has been chosen, and until that director's successor has been elected
and qualified or until his or her earlier death, resignation, retirement or
removal.
Delaware law provides that, if a corporation has a classified board,
unless the corporation's Certificate of Incorporation specifically provides
otherwise, the directors may only be removed by the stockholders for cause. The
Certificate of Incorporation, as amended by the proposed classified board
amendment, would not provide for removal of directors other than for cause.
Therefore, if Proposal 2 is adopted, stockholders can remove directors of the
Company for cause, but not in other circumstances. Presently, all of the
directors of the Company are elected annually and all of the directors may be
removed, with or without cause, by a majority of the voting power of the
Company.
Unless a director is removed or resigns, three annual elections are needed
to replace all of the directors on the classified Board of Directors. The
classified board amendment may, therefore, discourage an individual or entity
from acquiring a significant position in the Company's stock with the intention
of obtaining immediate control of the Board of Directors. If this proposal is
adopted, these provisions will be applicable to each annual election of
directors, including the elections following any change of control of the
Company.
The Company is not aware of any present third-party plans to gain control
of the Company, and the classified board amendment is not being recommended in
response to any such plan. Rather, the Board of Directors is recommending the
classified board amendment as part of its periodic review of the Company's
corporate governance mechanism and to assist in assuring fair and equitable
treatment for all of the Company's stockholders in hostile takeover situations.
The Board of Directors has no present intention of soliciting a stockholder vote
on any other proposals relating to a possible takeover of the Company.
ADVANTAGES OF THE CLASSIFIED BOARD AMENDMENT
The classified board amendment is designed to assure continuity and
stability in the Board of Directors' leadership and policies by ensuring that at
any given time a majority of the directors will have prior experience with the
Company and, therefore, will be familiar with its business and operations. The
Company has not experienced continuity problems in the past and the Board of
Directors wishes to ensure that this experience will continue. The
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Board has noted that since the Company's initial public offering, the holders
of the Class B Common Stock have held a majority of the voting power of the
Company's Common Stock, so that a potential acquiror would have been limited
in its ability to coerce the Board of Directors or the Company's
stockholders. Each share of Class B Common Stock automatically converts into
a share of Class A Common Stock upon the transfer thereof to someone other
than a Permitted Transferee (as defined in the Company's Certificate of
Incorporation to generally include family members, trusts and other
organizations controlled by family members of Messrs. Kaplan, Cless and other
original stockholders of the Company). If at any time the number of issued
and outstanding shares of Class B Common Stock falls below 10% of the
aggregate number of issued and outstanding shares of the Company's Common
Stock, each share of Class B Common Stock (whether or not issued and
outstanding) will automatically convert into one share of Class A Common
Stock and the Company will lose the features of the Class B Common Stock. The
Class B Common Stock was issued to the Company's private stockholders prior
to its initial public offering in August, 1991 and to the shareholders of
Eltron International, Inc. in connection with the Company's merger with
Eltron in October, 1998. As of March ____, 2002, there were ____ shares of
Class B Common Stock outstanding, which constituted ____% of the aggregate
number of issued and outstanding shares of the Company's Common Stock.
Messrs. Kaplan and Cless, the founders of the Company, along with their
families and related trusts, own ___ shares of Class B Common Stock.
Stockholders unrelated to Messrs. Kaplan or Cless own ____ shares of Class B
Common Stock. Accordingly, if _____ shares of Class B Common Stock are
transferred other than to Permitted Transferees, or absent such transfer,
____ shares of Class A Common Stock are issued through the exercise of stock
options or otherwise, the Class B Common Stock would automatically convert to
Class A Common Stock.
The Board of Directors believes that the stability in the Board of
Directors' leadership and policies in the past has helped to promote the
creation of long-term stockholder value. The Board of Directors also believes
that the classified board amendment will assist the Board of Directors in
protecting the interests of the Company's stockholders (whether or not shares of
Class B Common Stock remain outstanding) in the event of an unsolicited offer
for the Company by encouraging any potential acquirer to negotiate directly with
the Board of Directors.
DISADVANTAGES OF THE CLASSIFIED BOARD AMENDMENT
The classified board amendment may increase the amount of time required
for a takeover bidder to obtain control of the Company without the cooperation
of the Board of Directors, even if the takeover bidder were to acquire a
majority of the voting power of the Company's outstanding Common Stock. Without
the ability to obtain immediate control of the Board of Directors, a takeover
bidder will not be able to take action to remove other impediments to its
acquisition of the Company. Thus, the classified board amendment could
discourage certain takeover attempts, perhaps including some takeovers that
stockholders may feel would be in their best interests. By potentially
discouraging accumulations of large blocks of the Company's stock and
fluctuations in the market price of the Company's stock caused by accumulations,
the classified board amendment could cause stockholders to lose opportunities to
sell their shares at temporarily higher prices. Further, the classified board
amendment will make it more difficult for stockholders to change the majority
composition of the Board of Directors, even if the stockholders believe such a
change would be desirable. Because of the additional time required to change the
control of the Board of Directors, the classified board amendment could be
viewed as tending to perpetuate present management.
The complete text of the proposed amendment to the Company's Certificate
of Incorporation providing for the classified Board of Directors is attached as
Exhibit A. Please read Exhibit A in its entirety.
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RELATIONSHIP OF THE PROPOSED CLASSIFIED BOARD AMENDMENT
TO CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION
AND BY-LAWS WITH ANTI TAKEOVER EFFECTS,
THE NASDAQ MARKETPLACE RULES AND
THE COMPANY'S RIGHTS AGREEMENT
CERTIFICATE OF INCORPORATION
AUTHORIZED SHARES AVAILABLE FOR FUTURE ISSUANCES. The Certificate of
Incorporation contains provisions which could be viewed as having an
antitakeover effect. The Certificate of Incorporation currently authorizes the
issuance of 50,000,000 shares of Class A Common Stock, 28,358,189 shares of
Class B Common Stock and 10,000,000 shares of Preferred Stock. The authorized
and available Class A Common Stock and Preferred Stock could (within the limits
imposed by applicable law and The Nasdaq Marketplace Rules) be issued by the
Company, generally without further stockholder approval, and additional shares
of Class B Common Stock could be issued upon the approval of the holders of a
majority of the outstanding Class B Common Stock. The Board of Directors has
discretion to establish, without stockholder approval, the terms, rights and
preferences of any future issuances of preferred stock. Any issuance of
additional shares could be used to discourage a change in control of the
Company. For example, the Company could privately place shares with purchasers
who might side with the Board of Directors in opposing a hostile takeover bid.
All of these provisions have been in place since the Company's initial public
offering, except that the Company's authorized Class A Common Stock was
increased to 50,000,000 shares in June 1997. In addition, shares of Common Stock
and Preferred Stock may be issued in the event that Rights issued in connection
with the Company's Rights Agreement described below are exercised.
CLASS B COMMON STOCK. The Class B Common Stock authorized by the
Certificate of Incorporation has powers, preferences, rights, qualifications,
limitations and restrictions, which are essentially identical to the Class A
Common Stock, except for certain voting and transfer features. For each matter
submitted to stockholders for a vote, each holder of Class A Common Stock is
entitled to one vote for each share of Class A Common Stock held by such holder
and each holder of Class B Common Stock is entitled to ten votes for each share
of Class B Common Stock held by such holder. Class B Common Stock has been
issued and outstanding since the Company's initial public offering. As of March
20, 2002, there were _____ shares of Class A Common Stock outstanding, which
represented ___% of the aggregate number of issued and outstanding shares of the
Company's Common Stock. As of such date, there were ____ shares of Class B
Common Stock outstanding, which represented ___% of the aggregate number of
issued and outstanding shares of the Company's Common Stock and ___% of the vote
on matters submitted to stockholders. Although Section 214 of the Delaware
General Corporation Law provides that a corporation may provide for cumulative
voting in its Certificate of Incorporation, the Company's Certificate of
Incorporation does not provide cumulative voting with respect to the election of
directors or any other matter.
SPECIAL MEETINGS, CONSENT ACTION AND OTHER AMENDMENTS. Article FIFTH of
the Certificate of Incorporation provides that a special meeting of stockholders
may be called (i) by the Board of Directors pursuant to a resolution approved by
a majority of the Board of Directors or (ii) by stockholders representing at
least 66-2/3% of the Company's voting power. Under Article FIFTH, stockholder
action by written consent also requires a 66-2/3% supermajority vote. Under
Article SIXTH, the By-laws may be amended by the Board of Directors or by a
66-2/3% supermajority vote of the holders of the Company's outstanding Common
Stock. The affirmative vote of the holders of shares representing 66-2/3% of the
voting power of the Company's Common Stock is also required to amend these
provisions of the Certificate of Incorporation. Thus, proposals for stockholder
action, such as a proposed amendment to the By-laws of the Company or a proposal
for the removal of directors or election of new directors, are more likely to be
entertained at an annual meeting of the Company's stockholders than at a special
meeting. Further, a proxy contest initiated by a potential acquiror is more
likely to occur in connection with an annual meeting of stockholders than a
special meeting. Further, stockholder action by written consent is more
difficult because of the supermajority voting requirement. All these provisions
have been in place since the Company's initial public offering.
BY-LAWS
Effective March 7, 2002, the Board of Directors unanimously approved an
amendment to the By-laws for the Company that makes the provisions of the
By-laws regarding the composition and election of the Board of Directors
consistent with the proposed classified board amendment to the Certificate of
Incorporation. The
-14-
amendment to the By-laws will only be effective if the proposed classified board
amendment is approved by the Company's stockholders at the Annual Meeting.
The Board of Directors also unanimously approved and adopted amendments to
the By-laws to update certain corporate governance mechanisms. The provisions in
the By-laws regarding notice for stockholder proposals and board nominations had
not been revised since 1991. Prior to the recent amendment, the By-laws required
prior notice to the Company of stockholder proposals and director nominations.
The By-laws, as amended, update these notice provisions to conform with timing
requirements under current applicable Securities and Exchange Commission
regulations, and to clarify in further detail the information that must be
provided to the Company in a stockholder's notice for a proposal or board
nomination. The By-laws may be considered to contain anti-takeover provisions,
as they (i) impose advance notice requirements for stockholder nominations to
the Board of Directors and stockholder proposals, (ii) allow the Board of
Directors to designate the annual meeting date without restriction and (iii)
allow the Board of Directors to dictate the conduct of stockholder meetings.
These By-law provisions could enable the Company to delay undesirable
stockholder actions to give the Company necessary time and information to
adequately respond.
THE NASDAQ MARKETPLACE RULES
The Nasdaq Marketplace Rules do not contain any limitation on the adoption
of proposals with respect to classified boards.
STOCKHOLDERS RIGHTS AGREEMENT
The Board of Directors adopted a stockholder rights agreement (the "Rights
Agreement") pursuant to which the Company declared a dividend of one Class A
Right (a "Class A Right") for each outstanding share of Class A Common Stock and
one Class B Right (a "Class B Right," and together with the Class A Rights, the
"Rights") for each outstanding share of Class B Common Stock of the Company. The
dividend was payable on March 15, 2002 (the "Record Date") to the stockholders
of record on that date. Each Class A Right entitles the registered holder to
purchase from the Company after the Distribution Date (as defined below) one
ten-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Series A Preferred Shares"), of the Company and each
Class B Right entitles the registered holder to purchase from the Company one
ten-thousandth of a share of Series B Junior Participating Preferred Stock, par
value $.01 per share (the "Series B Preferred Shares," and together with the
Series A Preferred Shares, the "Preferred Shares"), of the Company, at a price
of $300.00 per one ten-thousandth of a Class A Preferred Share or Class B
Preferred Share, as the case may be (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in the Rights
Agreement dated March 14, 2002, between the Company and Mellon Investor Services
LLC, as Rights Agent (the "Rights Agent"), a copy of which has been filed with
the Securities and Exchange Commission as an exhibit to a registration statement
on Form 8-A and current report on Form 8-K.
Until the earlier of (1) the close of business on the tenth day after the
first public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of Class A Common Stock equal to or
greater than 15% or more of the then-outstanding Common Stock of the Company (an
"Acquiring Person"), or (2) the close of business on the tenth day (or such
later date as may be determined by action of the Company's Board of Directors
prior to such time as any person becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership of such person or group of Class A Common Stock equal to or greater
than 15% of such outstanding Common Stock of the Company (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced by the
Common Stock certificates, will be transferable only by the transfer of the
Common Stock associated with such Rights and any transfer of the Common Stock
(including a transfer to the Company) will constitute a transfer of the Rights.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
new Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, will contain a legend incorporating the Rights
Agreement by reference. Notwithstanding the foregoing, none of Gerhard Cless,
Edward L. Kaplan or certain of their relatives or related entities shall be
deemed an Acquiring Person. As described below, after a person or group becomes
an Acquiring Person, the Rights may not be redeemed or amended.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution
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Date and such separate Rights Certificates alone will evidence the Rights. Each
Class A Right is exercisable for one ten-thousandth of a Series A Preferred
Share, and each Class B Right is exercisable for one ten-thousandth of a Series
B Preferred Share, in each case at the then-current Purchase Price at any time
after the Distribution Date. The Rights will expire on March __, 2012 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are redeemed earlier by the Company, in each case, as described
below.
If a person or group of affiliated or associated persons becomes an
Acquiring Person, each holder of a Class A Right and each holder of a Class B
Right (other than those described in the next sentence) will thereafter have the
right to receive, upon exercise and instead of Preferred Shares, Class A Common
Stock or Class B Common Stock, as the case may be (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the Purchase Price of the Right. All Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be void.
At any time after a person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Stock, the Board of Directors of the Company may exchange the Class A
Rights and Class B Rights (other than Rights owned by such person or group that
have become void), in whole or in part, without any additional payment, for
Class A Common Stock or Class B Common Stock, as the case may be, at an exchange
ratio of one share of Common Stock (or of a share of a class or series of the
Company's preferred shares having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
At any time after the first date of public announcement by the Company or
an Acquiring Person that an Acquiring Person has become such, if (i) the Company
is the surviving corporation in a merger with any other company or entity, (ii)
the Company is acquired in a merger or other business combination transaction,
(iii) 50% or more of the Company's consolidated assets or earning power are
sold, or (iv) an Acquiring Person engages in certain "self-dealing" transactions
with the Company, each holder of a Right (other than those whose Rights have
become void) will thereafter have the right to receive, upon the exercise
thereof at the then-current Purchase Price of the Right, that number of shares
of common stock of the surviving or acquiring company which at the time of such
transaction will have a market value of two times the Purchase Price of such
Right.
At any time prior to a person or group becoming an Acquiring Person, the
Board of Directors of the Company may redeem all, but not less than all, of the
Rights at a price of $.001 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
A committee of the Board comprised of the independent directors will
review the Rights Plan at least every three years, and if a majority of the
members of that committee deems it appropriate, the committee may recommend to
the Board a modification or termination of Rights Plan.
Any of the provisions of the Rights may be amended by the Board of
Directors of the Company in order to cure any ambiguity or to make any other
changes which the Board deems necessary or desirable. However, after a person or
group becomes an Acquiring Person, any such amendment must not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PROPOSAL 2.
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PROPOSAL 3
APPROVAL OF THE ZEBRA TECHNOLOGIES CORPORATION
2002 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
GENERAL -- The Company's original non-employee director stock option plan
was adopted by the Board of Directors and approved by the stockholders in 1997.
A total of 77,000 shares of Class A Common Stock of the Company were initially
reserved for issuance under the plan, of which 52,500 shares have been issued.
The Board of Directors believes that it is in the best interests of the
Company to continue to provide incentives to non-employee directors of the
Company by issuing such directors options to purchase shares of Class A Common
Stock. On March 7, 2002, the Board of Directors approved the Zebra Technologies
Corporation 2002 Non-Employee Director Stock Option Plan (the "Directors'
Plan"). A total of 160,000 shares of Class A Common Stock, or approximately ___%
of the outstanding Class A Common Stock on the record date, are reserved for
issuance under the Directors' Plan. Stockholder approval of the Directors' Plan
is being sought as required therein and under The Nasdaq Marketplace Rules. If
approved by stockholders, the Directors' Plan will be effective as of March 7,
2002.
SUMMARY OF THE DIRECTORS' PLAN -- The following is a brief summary of the
provisions of the Directors' Plan.
PURPOSE -- The purpose of the Directors' Plan is to reward non-employee
directors of the Company for their efforts toward the continued growth,
profitability and success of the Company and its subsidiaries by providing
options to purchase shares of Class A Common Stock to such directors.
ADMINISTRATION -- The Directors' Plan is administered by the Board of
Directors or a committee of Directors designated by the Board. (Either shall be
referred to herein as the "Committee").
ELIGIBILITY AND PARTICIPATION -- Any non-employee director is eligible to
become a participant in the Directors' Plan. The Committee may select
participants from time to time from the non-employee directors. As of March 7,
2002, there were three non-employee directors eligible to participate in the
Directors' Plan.
TERMS OF OPTIONS -- Generally, options granted under the Directors' Plan
expire on the earliest to occur of (i) ten years from the grant date, (ii) one
year from the end of the participant's term of service as a director or (iii)
the day the participant is removed by the stockholders or resigns as a director
for conduct that involves theft or fraud with respect to the Company or as cause
is otherwise determined in accordance with the Delaware General Corporation Law.
The exercise price and vesting of the options will be established by the
Committee in its discretion. The Committee currently plans that the Option
exercise price for all options granted under the Director's Plan will be the
fair market value at the date of grant, and that Options will vest at a rate of
20% on each annual anniversary of the date of grant. Options are not exercisable
at any time with respect to unvested shares, and no further shares vest upon a
participant ceasing to be a director.
EXERCISE OF OPTIONS -- An option is exercised by giving written notice of
exercise to the Company, specifying the number of whole shares of Class A Common
Stock to be purchased, and tendering payment to the Company of the exercise
price. The payment must be made (i) in United States dollars by certified or
bank check, (ii) by tendering to the Company other shares of Class A Common
Stock owned for at least six months by the person exercising the option based on
the fair market value on the date the option is exercised, (iii) by certifying
to the satisfaction of the Committee ownership of shares of Class A Common Stock
owned for at least six months by the person exercising the option for later
delivery to the Company, (iv) by irrevocably authorizing a third party to sell
shares of Class A Common Stock acquired upon exercise of the option and remit to
the Company a sufficient portion of the sale proceeds to pay the exercise price
and any tax withholding resulting from such exercise or (v) by any combination
of such methods of payment.
The Committee may permit a participant to exercise an option prior to
vesting and/or prior to the lapse of restrictions on the exercisability of the
option, provided that (i) the Class A Common Stock issued upon such exercise
will remain subject to such vesting requirements and/or restrictions and will be
forfeited if the stock does
-17-
not vest or the restrictions do not lapse and (ii) such early exercise will only
be permitted (a) at the time of grant of the option or if the Company will not
otherwise be required to recognize a compensation expense for financial
reporting purposes as a result of such early exercise and (b) the participant
commits to make an election under Section 83(b) of the Internal Revenue Code of
1986, as amended (the "Code"), within 30 days of exercise of the option.
TRANSFERABILITY OF OPTIONS -- Except as provided in a specific option
agreement, options may only be transferred (i) to certain family members of the
participant, including trusts for the benefit of the participant and such family
members, foundations in which the participant and such family members control
the management of the assets, legal entities in which the participant and such
family members are the direct and beneficial owners of all the equity interests
and any personal representative of the participant upon the participant's death
or incompetency, provided that such transfer is by gift with no consideration
and no subsequent transfer is permitted other than by will or the laws of
descent and distribution, or (ii) by will or the laws of descent and
distribution or a qualified domestic relations order as defined by the Code.
DEATH OF OPTIONEE -- If an optionee director dies during the term of the
option, the option may be exercised, at any time prior to the time such option
becomes unexercisable, by such individual, trust or estate who or which by
designation of the director or operation of law succeeds to the rights of the
director under the Directors' Plan.
CAPITALIZATION CHANGES -- In the event of any stock dividend, stock split,
combination or exchange of shares, recapitalization or other change in the
capital structure of the Company, corporate separation or division of the
Company, sale by the Company of all or a substantial portion of its assets,
reorganization, rights offering, partial or complete liquidation, or any other
corporate transaction, Company share offering or other event involving the
Company and having an effect similar to the foregoing, the Committee may make
such substitutions or adjustments in the (i) number and kind of shares that may
be delivered under the Directors' Plan, (ii) number and kind of shares subject
to outstanding options, (iii) exercise price of outstanding options and (iv)
other characteristics or terms of the options as it may determine appropriate in
its sole discretion to equitably reflect such corporate transaction, share
offering or other event.
CHANGES IN CONTROL -- In the event of a Change in Control (as defined in
the Directors' Plan), any options outstanding as of the date such Change in
Control is determined to have occurred will become fully vested and exercisable
immediately prior to such Change in Control. Furthermore, the Committee will, in
its sole discretion, provide for one of the following: (i) the continuation of
the outstanding options by the Company, if the Company is a surviving
corporation, (ii) the assumption of the outstanding options by the surviving
corporation or its parent or subsidiary, (iii) the substitution by the surviving
corporation or its parent or subsidiary of equivalent awards for the outstanding
options or (iv) settlement of each share of Class A Common Stock subject to an
outstanding option for the Change in Control Price (as defined in the Directors'
Plan), less, to the extent applicable, the per share exercise price, or, if the
per share exercise price equals or exceeds the Change in Control Price, the
outstanding option shall terminate and be canceled.
AMENDMENT AND TERMINATION -- The Board of Directors may at any time amend,
alter or discontinue the Directors' Plan, but no amendment, alteration or
discontinuation that would adversely affect the rights of an optionee may be
made without such optionee's consent, except an amendment to permit the Company
a deduction under the Code. Further, no amendment may be made without
stockholder approval, to the extent such approval is required by law, agreement
or the rules of any stock exchange or market on which the Class A Common Stock
is listed.
FEDERAL INCOME TAX CONSEQUENCES -- Options granted under the Directors'
Plan are nonstatutory stock options. A director optionee will not recognize any
taxable income at the time he is granted a nonstatutory option. However, upon
its exercise, the optionee will generally recognize taxable income, measured by
the excess of the then fair market value of the shares of common stock purchased
over the exercise price. Upon resale of such shares by the optionee, any
difference between the sale price and the optionee's purchase price, to the
extent not recognized as taxable income as provided above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
-18-
The Company will generally be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonstatutory option.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PROPOSAL 3.
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Company's Board of Directors is comprised of three
independent directors. The Committee operates under a written charter adopted by
the Board of Directors. The Audit Committee Charter was included as Exhibit A to
the proxy statement relating to the Company's 2001 Annual Meeting of
Stockholders as filed with the Securities and Exchange Commission on April 10,
2001. The members of the Committee are: Michael Smith, Chairman, Christopher
Knowles and David P. Riley.
The Committee recommends to the Board of Directors, subject to stockholder
approval, the selection of the Company's independent accountants. The Committee
also provides assistance to the members of the Board of Directors in fulfilling
their oversight functions over the financial statements of the Company. It is
not the duty of the Committee, however, to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with accounting principles generally accepted in the United
States. The responsibility to plan and conduct audits is that of the Company's
independent accountants. The Company's management has the responsibility to
determine that the Company's financial statements are complete and accurate and
in accordance with accounting principles generally accepted in the United
States.
The Committee reviewed and discussed the audited financial statements with
management and received reports and met and held discussions with management and
the independent accountants. The Committee also discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61, and the Company's independent accountants also provided to the Committee
the written disclosure required by Independent Standards Board Standard No. 1.
The Committee discussed with the independent accountants that firm's
independence.
The Committee recommended that the Board of Directors include the audited
financial statements of the Company in the Company's Annual Report on Form
10-K for the year ended December 31, 2001, as filed with the Securities and
Exchange Commission. This recommendation was based on the Committee's
discussion with management and its independent accountants as well as the
Committee's reliance on the representation of management that the Company's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States.
Michael Smith, Chairman
Christopher Knowles
David P. Riley
AUDIT FEES -- The Company was billed approximately $401,340 by KPMG LLP, the
Company's independent auditors. These fees covered professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2001, and the reviews of interim financial
statements included in the Company's Forms 10-Q reports filed during the last
fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES -- The Company
was not billed by KPMG LLP for professional services rendered in connection with
financial information systems design and implementation services during the last
fiscal year.
ALL OTHER FEES -- The Company was billed approximately $238,402 for all other
services rendered by KPMG LLP during the last fiscal year that are not set forth
above, approximately $174,843 of which was tax related and $63,559 of which was
related to the Company's proposed acquisition of Fargo Electronics, Inc.
The Committee considered whether the provision by KPMG LLC of the services
covered under "Financial Information Systems Design and Implementation Fees" and
"All Other Fees" is compatible with maintaining KPMG LLP's independence, and
determined that the provision of such services for 2001 is compatible.
-20-
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return on
the Class A Common Stock of the Company for the last five years with the
cumulative total return on the Nasdaq Market Index and the MG Industry Group 171
-- Electronic Equipment Manufacturers Index -- over the same period.
FIVE-YEAR COMPARISON OF CUMULATIVE RETURNS
[GRAPHIC]
DECEMBER 31,
------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
---------- ---------- ---------- ---------- ---------- ----------
Zebra Technologies Corporation $ 100.00 $ 127.27 $ 122.99 $ 250.27 $ 174.53 $ 237.48
MG Group Index 100.00 118.47 147.92 295.42 235.79 204.80
Nasdaq Market Index 100.00 122.32 172.52 304.29 191.25 152.46
Assumes $100 invested on December 31, 1996 in the Company's Class A Common
Stock, the Nasdaq Market Index and the MG Industry Group 171, with reinvestment
of dividends.
-21-
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table presents, as of March 20, 2002, certain information with
respect to the beneficial ownership of the Company's Common Stock by (1) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of any class of Common Stock, (2) each director of the Company, (3) each
of the Named Officers and (4) all directors and executive officers of the
Company as a group.
CLASS A COMMON STOCK CLASS B COMMON STOCK % OF TOTAL
-------------------------------- -------------------------------- VOTING
NAME AND ADDRESS NUMBER % OF CLASS NUMBER % OF CLASS POWER(1)
-------------------- -------------- ------------- --------------- ----------- -------------
Edward L. Kaplan (2) -- -- 1,082,311 (3) % %
Carol K. Kaplan (2) -- -- 268,388 (4) % %
Gerhard Cless (2) 100,000 (5) * 2,193,312 (6) % %
Ruth I. Cless (2) -- (7) -- 772,736 (8) % %
Christopher G. Knowles 15,000 (9) * -- -- *
John W. Paxton -- -- -- -- --
David P. Riley 23,000 (10) * -- -- *
Michael A. Smith 18,000 (11) * -- -- *
Charles E. Turnbull 41,657 * -- -- *
John H. Kindsvater 34,595 (12) * -- -- *
Charles R. Whitchurch 46,353 (13) * -- -- *
Michael T. Edicola 7,547 (14) * -- -- *
Veraje Anjargolian 8,707 (15) * -- -- *
William Blair & Company, L.L.C. 1,158,563 (16) % -- -- %
Neuberger Berman, Inc. 2,077,218 (17) % -- -- %
Fidelity Management
& Research Company 1,223,000 (18) % 500,000 (18) % %
All Executive Officers and
Directors as a group
(10 persons) 158,351 (19) % 3,275,623 % %
--------------------
* Less than one percent.
(1) Each share of the Class A Common Stock has one vote and each share of the
Class B Common Stock has ten votes. This column shows the combined voting
power of all Class A Common Stock and Class B Common Stock beneficially
owned by each of the listed persons. The percentages are based on the
outstanding number of Class A Common Stock and Class B Common Stock as of
March 20, 2002.
(2) The address of this stockholder is c/o Zebra Technologies Corporation, 333
Corporate Woods Parkway, Vernon Hills, Illinois 60061.
(3) Excludes 268,388 shares that may be deemed held of record or beneficially
by Mr. Kaplan's wife, Carol, which may be deemed to be beneficially owned
by Mr. Kaplan.
(4) Excludes 1,082,311 shares held of record or beneficially by Mr. Kaplan,
which may be deemed to be beneficially owned by Mrs. Kaplan.
(5) Includes 100,000 shares held by a foundation of which Mr. Cless is
director.
(6) Excludes 772,736 shares held of record or beneficially by Mr. Cless' wife,
Ruth, which may be deemed to be beneficially owned by Mr. Cless.
-22-
(7) Excludes 100,000 shares held of record or beneficially by Mr. Cless, which
may be deemed to be beneficially owned by Mrs. Cless.
(8) Excludes 2,193,312 shares held of record or beneficially by Mr. Cless,
which may be deemed to be beneficially owned by Mrs. Cless.
(9) Includes 15,000 shares of Class A Common Stock issuable within 60 days
upon exercise of options.
(10) Includes 19,000 shares of Class A Common Stock issuable within 60 days
upon exercise of options.
(11) Includes 3,000 shares of Class A Common Stock issuable within 60 days upon
exercise of options.
(12) Includes 31,625 shares of Class A Common Stock issuable within 60 days
upon exercise of options.
(13) Includes 39,794 shares of Class A Common Stock issuable within 60 days
upon exercise of options. Excludes 622 shares held of record or
beneficially by Mr. Whitchurch's daughter, which may be deemed to be
beneficially owned by Mr. Whitchurch.
(14) Includes 7,100 shares of Class A Common Stock, issuable within 60 days
upon exercise of options.
(15) Includes 7,600 shares of Class A Common Stock issuable within 60 days upon
exercise of options.
(16) As reported on a Schedule 13G filed by William Blair & Co., L.L.C. on
February 15, 2002. According to such 13G, William Blair & Co., L.L.C. has
sole voting power with respect to all of these shares. The address of this
stockholder is 222 West Adams Street, Chicago, IL 60606.
(17) As reported on a Schedule 13G filed by Neuberger Berman, Inc. on February
12, 2002. According to such 13G, Neuberger Berman, Inc. has sole voting
power with respect to 596,408 of these shares, shared voting power with
respect to 1,471,210 of these shares and shared dispositive power with
respect to all 2,077,218 of these shares. The address of this stockholder
is 605 Third Avenue, New York, New York 10158.
(18) As reported by FMR Corporation and certain affiliates by letter on March
20, 2001. According to such letter, affiliates of FMR Corporation have
sole dispositive power with respect to all 500,000 of these shares and
sole voting power with respect to zero shares. The address of this
stockholder is 82 Devonshire Street, Boston, Massachusetts 02109.
(19) Includes 130,831 shares of Class A Common Stock issuable within 60 days
upon exercise of options.
-23-
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's Board of Directors has appointed KPMG LLP, independent
certified public accountants, as auditors of the Company's financial statements
for the year ending December 31, 2002. KPMG LLP has acted as auditors for the
Company since July 1991.
The Board has determined to afford stockholders the opportunity to express
their opinions on the matter of auditors for the Company, and, accordingly, is
submitting to the stockholders at the Annual Meeting a proposal to ratify the
Board's appointment of KPMG LLP. If this proposal does not receive the
affirmative vote of a majority of the votes cast affirmatively or negatively at
the Annual Meeting, in person or by proxy, the Board of Directors will interpret
this as an instruction to seek other auditors. The Board of Directors recommends
that the stockholders vote to ratify the appointment of KPMG LLP as auditors for
the year ending December 31, 2002.
The Company expects that representatives of KPMG LLP will be present at the
Annual Meeting and available to respond to questions. These representatives will
be given an opportunity to make a statement if they desire to do so.
OTHER MATTERS
SOLICITATION -- The cost of this proxy solicitation will be borne by the
Company. The Company will also request banks, brokers, fiduciaries, custodians,
nominees and certain other record holders to send proxies, proxy statements and
other materials to their principals at the Company's expense. The Company will
reimburse such banks, brokers, fiduciaries, custodians, nominees and other
record holders for their reasonable out-of-pocket expenses of solicitation. The
Company does not anticipate that costs and expenses incurred in connection with
this proxy solicitation will exceed those normally expended for a proxy
solicitation for an election of directors in the absence of a contest.
PROPOSALS OF STOCKHOLDERS -- Stockholder proposals for the annual meeting of
stockholders to be held in 2003 will not be included in the Proxy Statement for
that meeting unless the proposal is proper for inclusion in the Proxy Statement
and for consideration at the next annual meeting of stockholders and is received
by Charles R. Whitchurch at the Company's executive offices located at 333
Corporate Woods Parkway, Vernon Hills, Illinois 60061, no later
than________________. Stockholders must also follow the procedures prescribed in
SEC Rule 14a-8 under the Exchange Act.
To be considered at the 2003 Annual Meeting, stockholder proposals must be
received by the Secretary of the Company not less than 45 days nor more than 75
days prior to ______________.
OTHER BUSINESS -- The Board of Directors is not aware of any matters to be
presented at the Annual Meeting other than those enumerated in the Company's
Notice of Annual Meeting of Stockholders enclosed herewith. If any other matters
are properly brought before the meeting, however, it is intended that the
persons named in the proxy will vote as directed by the Board of Directors.
ANNUAL REPORT TO STOCKHOLDERS -- The Company's Annual Report to Stockholders
for the year ended December 31, 2001, containing financial and other information
pertaining to the Company, is being furnished to stockholders simultaneously
with this Proxy Statement.
ANNUAL REPORT ON FORM 10-K -- The Company will furnish without charge to any
stockholder as of the record date a copy of the Company's Annual Report on Form
10-K for the year ended December 31, 2001, as filed with the Securities and
Exchange Commission. Requests for such materials should be made in writing and
directed to Zebra Technologies Corporation, 333 Corporate Woods Parkway, Vernon
Hills, Illinois 60061, Attention: Charles R. Whitchurch.
By Order of the Board of Directors
Gerhard Cless
SECRETARY
-24-
EXHIBIT A
FORM OF CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ZEBRA TECHNOLOGIES CORPORATION
ZEBRA TECHNOLOGIES CORPORATION (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Act"), DOES HEREBY CERTIFY THAT:
1. In accordance with the provisions of Section 242 of the Act, and the
Certificate of Incorporation of the Corporation, as amended (the "Certificate of
Incorporation"), an amendment to the Certificate of Incorporation has been duly
adopted by the Board of Directors acting at a duly convened meeting and approved
by the requisite votes of the stockholders of the Corporation entitled to vote
thereon voting at a duly convened meeting.
2. Said amendment amends the Certificate of Incorporation by adding
the following new Article ELEVENTH:
"ELEVENTH: The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors consisting of
not less than two (2) nor more than seven (7) directors. The exact number
shall be determined from time to time by resolution adopted by the
affirmative vote of a majority of the directors in office at the time of
adoption of such resolution.
The directors shall be divided into three classes, Class I, Class II
and Class III, with each class having as equal a number of members as
reasonably possible. The initial term of office of the Class I, Class II
and Class III directors shall expire at the annual meeting of stockholders
of the Corporation in 2003, 2004 and 2005, respectively. Beginning in
2003, at each annual meeting of stockholders of the Corporation,
successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors
is changed, any increase or decrease shall be apportioned among the
classes by the Board of Directors so as to maintain the number of
directors in each class as nearly equal as is reasonably possible, and any
additional director of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that shall coincide
with the remaining term of that class. In no case will a decrease in the
number of directors shorten the term of any incumbent director, even
though such decrease may result in an inequality of the classes until the
expiration of such term. A director shall hold office until the annual
meeting of stockholders of the Corporation in the year in which his or her
term expires and
-1-
until his or her successor shall be elected and qualified, subject,
however, to prior death, resignation, retirement or removal from office.
Except as otherwise provided by law, directors may only be removed for
cause and only upon the vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the voting power of the shares entitled to
vote generally in the election of directors. Except as required by law or
the provisions of this Certificate of Incorporation, all vacancies on the
Board of Directors and newly-created directorships shall be filled by the
Board of Directors. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same remaining
term as that of his or her predecessor.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships
shall be governed by the terms of this Certificate of Incorporation and
any resolutions of the Board of Directors applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this
Article ELEVENTH. Notwithstanding anything to the contrary contained in
this Certificate of Incorporation, the affirmative vote of the holders of
at least sixty-six and two-thirds percent (66 2/3%) of the voting power of
the shares entitled to vote generally in the election of directors shall
be required to amend, alter or repeal, or to adopt any provision
inconsistent with, this Article ELEVENTH."
-2-
IN WITNESS WHEREOF, ZEBRA TECHNOLOGIES CORPORATION has caused this
Certificate of Amendment to be executed this 15th day of May, 2002.
ZEBRA TECHNOLOGIES CORPORATION
By:
------------------------------------
Edward L. Kaplan
Chairman and Chief Executive Officer
-3-
ZEBRA TECHNOLOGIES CORPORATION
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ZEBRA
TECHNOLOGIES CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON MAY 15, 2002 AND AT ANY ADJOURNMENT THEREOF.
The undersigned stockholder of Zebra Technologies Corporation, a Delaware
corporation (the "Company") hereby appoints Edward L. Kaplan and Gerhard Cless
as proxies for the undersigned, and each of them, with full power of
substitution in each of them, to attend the annual meeting of stockholders to be
held at The University of Chicago Gleacher Center, 450 North Cityfront Plaza
Drive, Chicago, Illinois on Wednesday, May 15, 2002, at 10:30 a.m., local time,
or any adjournment or postponement thereof to cast on behalf of the undersigned
all votes that the undersigned is entitled to cast at such meeting and otherwise
to represent the undersigned at the meeting with all powers possessed by the
undersigned if personally present at the meeting.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
WITHHOLD AUTHORITY
FOR ALL FOR ALL FOR ALL EXCEPT
1. ELECTION OF DIRECTORS: [ ] [ ] [ ]
01 - GERHARD CLESS
02 - EDWARD L. KAPLAN
03 - CHRISTOPHER G. KNOWLES
04 - JOHN W. PAXTON
05 - DAVID P. RILEY
06 - MICHAEL A. SMITH
-------------------------------------
(Except nominee(s) written above)
(INSTRUCTIONS: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the line
above)
FOR AGAINST ABSTAIN
2. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO CLASSIFY BOARD OF DIRECTORS: [ ] [ ] [ ]
3. PROPOSAL TO ADOPT THE 2002 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN: [ ] [ ] [ ]
4. PROPOSAL TO RATIFY KPMG LLP AS
INDEPENDENT AUDITORS: [ ] [ ] [ ]
TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF IN
THE DISCRETION OF THE PROXY HOLDER.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS
GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" EACH
OF THE NOMINEES FOR DIRECTOR AND "FOR" EACH OF THE OTHER PROPOSALS AND IN THE
DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
This proxy is revocable and the undersigned may revoke it at any time prior to
the Annual Meeting by giving written notice of such revocation to the Secretary
of the Company prior to the meeting or by filing with the Secretary of the
Company prior to the meeting a later-dated proxy. Should the undersigned be
present and want to vote in person at the Annual Meeting, or at any adjournment
thereof, the undersigned may revoke this proxy by giving written notice of such
revocation to the Secretary of the Company on a form provided at the meeting.
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Stockholders of the Company called for May 15, 2002 and the Proxy Statement for
the Annual Meeting prior to the signing of this proxy.
Signature of Stockholder ________________________________ Dated: ______
Signature, if held jointly ________________________________ Dated: ______
Signature, if held jointly ________________________________ Dated: ______
Please sign exactly as your name or names appear above. For joint accounts, each
owner should sign. When signing as executor, administrator, attorney, trustee,
guardian or in another representative capacity, please give your full title. If
a corporation or partnership, please sign in the name of the corporation or
partnership by an authorized officer or person.
Please sign, date and return this proxy card promptly using the enclosed
envelope.