-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F5v/4qnXnpQ5SxiPQMOEvMR9HVFG6sOCbCtkWO5vnBKsGNnIarLSdGyDWxRRXlfW +7IGFPVmexGhVclSxzEYFA== 0001125282-02-001765.txt : 20020520 0001125282-02-001765.hdr.sgml : 20020520 20020520171956 ACCESSION NUMBER: 0001125282-02-001765 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020520 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ANADIGICS INC CENTRAL INDEX KEY: 0000940332 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 222582106 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-49024 FILM NUMBER: 02658173 BUSINESS ADDRESS: STREET 1: 35 TECHNOLOGY DR CITY: WARREN STATE: NJ ZIP: 07059 BUSINESS PHONE: 9086685000 MAIL ADDRESS: STREET 1: 35 TECHNOLOGY DRIVE CITY: WARREN STATE: NJ ZIP: 07059 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ANADIGICS INC CENTRAL INDEX KEY: 0000940332 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 222582106 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 35 TECHNOLOGY DR CITY: WARREN STATE: NJ ZIP: 07059 BUSINESS PHONE: 9086685000 MAIL ADDRESS: STREET 1: 35 TECHNOLOGY DRIVE CITY: WARREN STATE: NJ ZIP: 07059 SC TO-I 1 b318576_scto.txt SCHEDULE TO-I UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE TO (Rule 13e-4) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ANADIGICS, INC. (Name of Subject Company (Issuer)) ANADIGICS, INC. (Name of Filing Person (Offeror)) OPTIONS TO PURCHASE COMMON STOCK, PAR VALUE $.01 PER SHARE, HELD BY CERTAIN OPTION HOLDERS UNDER THE ANADIGICS, INC. 1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN FOR EMPLOYEES (Title of Class of Securities) 032515108 (CUSIP Number of Class of Securities) (Underlying Common Stock) THOMAS C. SHIELDS Copies to: Senior Vice President and Chief Financial Officer PETER H. EHRENBERG, ESQ. ANADIGICS, Inc. Lowenstein Sandler PC 141 Mt. Bethel Road 65 Livingston Avenue Warren, NJ 07059 Roseland, NJ 07068 (908) 668-5000 (973) 597-2500 (Name, address and telephone number of person authorized to receive notices and communications on behalf of filing person) Calculation of Filing Fee Transaction Valuation* Amount of Filing Fee $11,186,488 $1,029 =========== ====== *Calculated solely for purposes of determining the filing fee. This amount assumes that options to purchase 966,018 shares of common stock of ANADIGICS, Inc., having an aggregate value of $11,186,488 as of May 16, 2002, will be exchanged pursuant to this offer. The aggregate value of such options was calculated based on the current market price of the shares of common stock subject to such options. The amount of the filing fee, calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals ...000092 of the value of the transaction. [_] Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Form or Registration No.: Not applicable. Filing party: Not applicable. Date filed: Not applicable. [_] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [_] third party tender offer subject to Rule 14d-1. [X] issuer tender offer subject to Rule 13e-4. [_] going-private transaction subject to Rule 13e-3. [_] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer. [_] INTRODUCTORY STATEMENT This Tender Offer Statement on Schedule TO (this "Schedule TO") relates to our offer to exchange certain options to purchase shares of our common stock held by our optionees for new options to purchase shares of our common stock at a per share exercise price equal to the closing price of one share of our common stock on the date of grant upon the terms and subject to the conditions in the Offer to Exchange dated May 20, 2002 attached hereto as Exhibit (a)(1) (the "Offer to Exchange") and the related Letter of Transmittal attached hereto as Exhibit (a)(2) (the "Letter of Transmittal"). The information in the Offer to Exchange and the Letter of Transmittal is incorporated herein by reference in answer to all applicable items in this Schedule TO, except as otherwise set forth below. Item 1. Summary Term Sheet. The information set forth under "Summary Term Sheet" in the Offer to Exchange is incorporated herein by reference. Item 2. Subject Company Information. (a) The name of the issuer is ANADIGICS, Inc., a Delaware corporation (the "Company"), the address of its principal executive offices is 141 Mt. Bethel Road, Warren, NJ 07059 and the telephone number of its principal executive offices is (908) 668-5000. The information set forth in the Offer to Exchange under Section 9 ("Information About ANADIGICS, Inc.") is incorporated herein by reference. (b) This Schedule TO relates to an offer by the Company to exchange certain options (the "Options") outstanding under the ANADIGICS, Inc. 1997 Long Term Incentive and Share Award Plan for Employees, as amended (hereinafter, the "Plan") to purchase shares of the Company's common stock, par value $.01 per share (the "Common Stock"), for new options (the "New Options") to purchase shares of the Common Stock to be granted under the Plan, upon the terms and subject to the conditions described in the Offer to Exchange and the related Letter of Transmittal (the Letter of Transmittal together with the Offer to Exchange, as they may be amended from time to time, as well as the cover letter accompanying the Offer to Exchange, are referred to herein as the "Offer"). The number of shares of Common Stock subject to the New Options will be equal to the number of shares of Common Stock subject to the Options that are accepted for exchange and canceled, as adjusted for any stock splits, stock dividends and similar events. The Company estimates that Options covering 966,018 shares of Common Stock are eligible for exchange pursuant to the Offer. The information set forth in the Offer to Exchange under "Summary Term Sheet," Section 1 ("Number of Options; Expiration Date"), Section 5 ("Acceptance of Options for Exchange and Cancellation and Issuance of New Options") and Section 8 ("Source and Amount of Consideration; Terms of New Options") is incorporated herein by reference. (c) The information set forth in the Offer to Exchange under Section 7 ("Price Range of Common Stock") is incorporated herein by reference. Item 3. Identity and Background of Filing Person. (a) The information set forth under Item 2(a) above and the information set forth in Schedule A to the Offer to Exchange is incorporated herein by reference. Item 4. Terms of the Transaction. -1- (a) The information set forth in the Offer to Exchange preceding the "Summary Term Sheet" and under "Summary Term Sheet," Section 1 ("Number of Options; Expiration Date"), Section 3 ("Procedures"), Section 4 ("Change in Election"), Section 5 ("Acceptance of Options for Exchange and Cancellation and Issuance of New Options"), Section 6 ("Conditions of the Offer"), Section 8 ("Source and Amount of Consideration; Terms of New Options"), Section 11 ("Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer"), Section 12 ("Legal Matters; Regulatory Approvals"), Section 13 ("Material Federal Income Tax Consequences") and Section 14 ("Extension of Offer; Termination; Amendment") is incorporated herein by reference. (b) The information set forth in the Offer to Exchange under Section 10 ("Interests of Directors and Officers; Transactions and Arrangements About the Options") is incorporated herein by reference. Item 5. Past Contracts, Transactions, Negotiations and Arrangements. (e) The information set forth in the Offer to Exchange under Section 8 ("Source and Amount of Consideration; Terms of New Options"), and Section 10 ("Interests of Directors and Officers; Transactions and Arrangements About the Options") are incorporated herein by reference. Item 6. Purposes of the Transaction and Plans or Proposals. (a) The information set forth in the Offer to Exchange under Section 2 ("Purpose of the Offer") is incorporated herein by reference. (b) The information set forth in the Offer to Exchange under Section 5 ("Acceptance of Options for Exchange and Cancellation and Issuance of New Options") and Section 11 ("Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer") is incorporated herein by reference. (c) The information set forth in the Offer to Exchange under Section 2 ("Purpose of the Offer") is incorporated herein by reference. Item 7. Source and Amount of Funds or Other Consideration. (a) The information set forth in the Offer to Exchange under Section 8 ("Source and Amount of Consideration; Terms of New Options") and Section 15 ("Fees and Expenses") is incorporated herein by reference. (b) The information set forth in the Offer to Exchange under Section 6 ("Conditions of the Offer") is incorporated herein by reference. (d) Not applicable. Item 8. Interest in Securities of the Subject Company. (a) The information set forth in the Offer to Exchange under Section 10 ("Interests of Directors and Officers; Transactions and Arrangements About the Options") and Schedule A to the Offer to Exchange is incorporated herein by reference. (b) The information set forth in the Offer to Exchange under Section 10 ("Interests of Directors and Officers; Transactions and Arrangements About the Options") is incorporated herein by reference. Item 9. Person/Assets, Retained, Employed, Compensated or Used. -2- (a) Not applicable. Item 10. Financial Statements. (a) The Company incorporates by reference the Company's consolidated financial statements set forth under Item 8 in the Company's Annual Report on Form 10-K for the year ended December 31, 2001 filed by the Company with the SEC on March 29, 2002 and the Company's condensed consolidated financial statements set forth under Item 1 of Part I in the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2002 filed by the Company with the SEC on April 26, 2002. The Company also incorporates by reference the information set forth in the Offer to Exchange under Section 9 ("Information About ANADIGICS, Inc.") and Section 16 ("Additional Information"). (b) Not applicable. Item 11. Additional Information. (a) The information set forth in the Offer to Exchange under Section 10 ("Interests of Directors and Officers; Transactions and Arrangements About the Options") and Section 12 ("Legal Matters; Regulatory Approvals") is incorporated herein by reference. (b) Not applicable. Item 12. Exhibits. (a) (1) Offer to Exchange, dated May 20, 2002. (2) Form of Letter of Transmittal. (3) Form of Letter to Eligible Option Holders. (4) Form of Letter to Tendering Option Holders. (5) Form of E-mail Letter to ANADIGICS, Inc. Employees. (b) Not applicable. (d) ANADIGICS, Inc. 1997 Long Term Incentive and Share Award Plan for Employees, as amended. (g) Not applicable. (h) Not applicable. Item 13. Information Required by Schedule 13E-3. (a) Not applicable. -3- SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule TO is true, complete and correct. ANADIGICS, INC. By: /s/ Thomas C. Shields ----------------- Thomas C. Shields, Senior Vice President, Chief Financial Officer and Secretary Date: May 20, 2002 -4- INDEX TO EXHIBITS ----------------- Exhibit Number Description (a)(1) Offer to Exchange, dated May 20, 2002. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Letter to Eligible Option Holders. (a)(4) Form of Letter to Tendering Option Holders. (a)(5) Form of E-mail Letter to ANADIGICS, Inc. Employees. (d)(1) ANADIGICS, Inc. 1997 Long Term Incentive and Share Award Plan for Employees, as amended. -5- EX-99.(A)(1) 3 b318576_exa1.txt OFFER TO EXCHANGE, DATED MAY 20, 2002 Exhibit (a)(1) ANADIGICS, INC. OFFER TO EXCHANGE OUTSTANDING OPTIONS HAVING AN EXERCISE PRICE OF AT LEAST $21.00 FOR NEW OPTIONS THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 18, 2002, UNLESS THE OFFER IS EXTENDED. ANADIGICS, Inc. is offering optionees the opportunity to exchange outstanding stock options having an exercise price of at least $21.00 per share (the "eligible options") for new options that we will grant to purchase shares of our common stock (the "new options"). All eligible options which are returned by optionees and accepted by ANADIGICS for exchange will be canceled upon expiration of this offer. We will grant the new options on the later of December 20, 2002 or the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. The new options will not be granted until December 20, 2002 at the earliest. You will be at risk during the period between the expiration date of this offering and the date on which your new options will be granted (the "cancellation period"). If, for any reason, you cease to serve as an employee of ANADIGICS or its subsidiaries during the cancellation period, you will not be eligible to have a new option granted to you at the end of the cancellation period. Similarly, if ANADIGICS ceases to exist as an independent corporation during the cancellation period, either because it is acquired or for any other reason, or if you cease working for us because your business unit has been sold or for any other reason, you will not be eligible to receive a new option at the end of the cancellation period. THIS OFFER TO EXCHANGE HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC") OR ANY STATE SECURITIES COMMISSION. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS OFFER TO EXCHANGE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. We are making this offer upon the terms and subject to the conditions described in this "Offer to Exchange" and in the related Letter of Transmittal and cover letter (which together, as they may be amended from time to time, constitute the "offer"). This offer is not conditioned upon a minimum number of options being exchanged. This offer is subject to the conditions described in Section 6 of this Offer to Exchange. Which Options are Eligible Options? All options having an exercise price of at least $21.00 per share that are currently outstanding under our 1997 Long Term Incentive and Share Award Plan for Employees, as amended (hereinafter, the "Plan") are eligible options. None of the options granted under our 1994 Long Term Incentive and Share Award Plan had an exercise price of at least $21.00 per share; accordingly, none of the options granted under that plan are eligible options. Similarly, none of the options granted within the past six months under the Plan have been granted at a price of at least $21.00 per share; as a result, none of the options granted within the past six months under the Plan may be exchanged pursuant to this Offer to Exchange. In addition, none of the options granted under our 1995 Long Term Incentive and Share Award Plan, as amended, are eligible options because either they do not have an exercise price of at least $21.00 or they were granted to optionees not eligible to participate in the exchange. A-1 Who Can Participate in the Exchange? You can participate in this exchange if you are the owner of eligible options which have been granted under the Plan. However, you can not participate in the exchange if you are a director or an executive officer of the Company. How many new options will I receive? Each new option will be exercisable for the number of shares of our common stock covered by the related eligible options that you have agreed to cancel, as adjusted for any stock splits, stock dividends and similar events. The exact number of option shares that you now have is set forth as an attachment to the Letter of Transmittal that you will receive. That attachment does not distinguish between eligible options and options that cannot be canceled pursuant to this offer. What are the eligibility requirements that I must satisfy after the expiration date of the offer to receive the new options? To receive a grant of new options pursuant to the offer and under the terms of the Plan, you must be an employee of ANADIGICS or its subsidiaries from the date you return your options through the date we grant the new options. As more fully discussed herein, we will not grant the new options until the later of December 20, 2002 or the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. IF YOU AGREE TO EXCHANGE YOUR OPTIONS BUT ARE NOT AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES FROM THE DATE YOU RETURN ELIGIBLE OPTIONS THROUGH THE DATE WE GRANT THE NEW OPTIONS, YOU WILL FORFEIT YOUR ELIGIBLE OPTIONS AND NOT RECEIVE ANY NEW OPTIONS IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR EXCHANGE. ALSO, YOU WILL NOT RECEIVE ANY OTHER CONSIDERATION FOR THE OPTIONS TENDERED IF YOU CEASE SERVING AS AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES DURING THE CANCELLATION PERIOD. What is the exercise price of the new options? Each new option will have an exercise price equal to the closing sale price of one share of our common stock on the National Market System of the National Association of Securities Dealers, Inc. on the grant date or on the first day thereafter on which a selling price is made available to the public. What is the vesting period of the new options? The new options will vest fully one year after the grant date. If you cease to be an employee of ANADIGICS or its subsidiaries during that one year period, you will lose all of the new options. What is the term of the new options? Each new option will have a term that expires ten years after the grant date (in the absence of an earlier termination). What risks am I taking if I exchange my eligible options? When this offer expires (June 18, 2002, unless we extend the offering period), we will cancel the eligible options that we accept for exchange. We will accept for exchange all eligible options that are returned to us in accordance with the terms and conditions of the offer. We will not grant the new options until the later of December 20, 2002 or the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. You will have no right to receive new options unless you are an employee of ANADIGICS on the date that we grant the new options. Thus, you will not receive new options if you cease to work for us because: o you voluntarily decide to leave our employ during the cancellation period; o you are dismissed by us during the cancellation period with or without cause; o you must leave our employ during the cancellation period due to your death or disability; or o you retire during the cancellation period. A-2 We have every reason to believe that ANADIGICS will continue to exist as an independent public company as of the grant date. However, if we cease to exist as an independent company prior to the grant date, or if you cease working for us because your business unit has been sold, you will not receive your new options. Thus, you will not receive new options if: o ANADIGICS or your business unit is acquired during the cancellation period; or o ANADIGICS ceases doing business during the cancellation period. The exercise price of the new options will not be set until the end of the cancellation period. We are certainly hopeful that the market price of our common stock will increase during the cancellation period. It is possible that the exercise price of your new options will be higher than the exercise price of the options that you are returning to us. The vesting periods of your new options will be somewhat different than the eligible options that you may return to us. A portion or all of your new options may vest earlier or later than they would have vested had you not canceled your options. If you cease to be an employee of ANADIGICS or its subsidiaries during the one year vesting period for the new options, you will lose all of the new options. During the cancellation period you will be unable to exercise any of your canceled options previously accepted for exchange. Thus, if our stock price were to increase during the cancellation period, you may have less liquidity -- because you will have no opportunity to exercise any options -- during the cancellation period if you exchange your existing options than if you retain them. During the period between the date on which this offer expires and the date on which we will be granting the new options, we do not intend to grant any stock options to any person who has agreed to cancel options. Instead, we will defer the grant of any options that we were intending to make to such persons until the grant date. What does the Company recommend that I do? ALTHOUGH OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER, NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS FOR EXCHANGE. YOU MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR OPTIONS. The Board of Directors has approved this offer in order to give the holders of eligible options the opportunity to exchange their options for options that may have a lower exercise price. However, as we have indicated, there are risks associated with this exchange. If you anticipate that you will not be an employee of ANADIGICS or its subsidiaries when the new options are granted see the discussion in response to Question 5 below. We recognize that the decision to accept this exchange offer is an individual one that should be based on a variety of factors. Given the personal nature of this determination, we have not made any general recommendation. You should consult with your personal advisors if you have questions about your financial or tax situation. Shares of our common stock are quoted on the NASDAQ National Market under the symbol "ANAD". On May 16, 2002, the closing price of our common stock on the NASDAQ National Market was $11.58 per share. We recommend that you obtain current market quotations for our common stock before deciding whether to elect to exchange your options. A-3 You should direct questions about this offer or requests for assistance or for additional copies of the Offer to Exchange or the Letter of Transmittal to the Stock Option Exchange hotline at 908-791-6060 or stockoptionexchange@anadigics.com. IMPORTANT In order to accept this offer, you must complete and sign the Letter of Transmittal and return it to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attn: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. We will not make any exceptions with regard to this deadline; we will not process any acceptance received after this offer expires. You do not need to return your stock option grant agreements for your eligible options to effectively elect to accept this offer. Optionees who are not accepting this offer are requested to advise us that they are declining the offer by so indicating on their Letter of Transmittal and returning their Letter of Transmittal to the attention of the Stock Option Exchange at the address set forth in the immediately preceding paragraph. We are not making this offer to, and we will not accept any options from, holders in any jurisdiction in which we believe this offer would not comply with the laws of such jurisdiction. However, we may, at our discretion, take any actions necessary for us to make this offer to option holders in any such jurisdiction. WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS PURSUANT TO THIS OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE RELATED LETTER OF TRANSMITTAL AND COVER LETTER. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US. A-4 TABLE OF CONTENTS Page SUMMARY TERM SHEET THE OFFER. 1. Number of Options; Expiration Date. 2. Purpose of the Offer. 3. Procedures. 4. Change in Election. 5. Acceptance of Options for Exchange and Cancellation and Issuance of New Options. 6. Conditions of the Offer. 7. Price Range of Common Stock. 8. Source and Amount of Consideration; Terms of New Options. 9. Information About ANADIGICS, Inc. 10. Interests of Directors and Officers; Transactions and Arrangements About the Options. 11. Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer. 12. Legal Matters; Regulatory Approvals. 13. Material U.S. Federal Income Tax Consequences. 14. Extension of Offer; Termination; Amendment. 15. Fees and Expenses. 16. Additional Information. 17. Forward Looking Statements; Miscellaneous. SCHEDULE A--Information About the Directors and Executive Officers of ANADIGICS, Inc. A-5 SUMMARY TERM SHEET The following are answers to some of the questions that you may have about this offer. We urge you to carefully read the remainder of this Offer to Exchange and the accompanying Letter of Transmittal and cover letter because the information in this summary is not complete. We have included references to the relevant sections of this Offer to Exchange where you can find a more complete description of the topics in this summary. Q1. WHAT SECURITIES ARE WE OFFERING TO EXCHANGE? We are offering to exchange all outstanding stock options having an exercise price of at least $21.00 per share that are outstanding under our 1997 Long Term Incentive and Share Award Plan for Employees, as amended (hereinafter, the "Plan"). Q2. WHY ARE WE MAKING THE OFFER? As a company, we are philosophically committed to the concept of our optionees as owners, and in light of recent stock market conditions and the difficulties experienced generally in our industry, many of our outstanding options have exercise prices that are significantly higher than the current market price of our common stock. We believe that these options are unlikely to be exercised in the foreseeable future. We felt it appropriate to offer this exchange program, which, together with our regular annual grant process, will help us advance our philosophy. Q3. ARE THERE CONDITIONS TO THE OFFER? The offer is subject to the conditions described in Section 6. However, the offer is not conditioned on a minimum number of option holders accepting the offer or a minimum number of options being exchanged. Q4. ARE THERE ANY ELIGIBILITY REQUIREMENTS I MUST SATISFY IN ORDER TO RECEIVE THE NEW OPTIONS? You must be the owner of an eligible option that is outstanding as of the date on which our offer expires and, on the grant date, you must be an employee of ANADIGICS or its subsidiaries. The grant date will be the later of December 20, 2002 or the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. However, you can not participate in the exchange if you are a director or an executive officer of the Company. Q5. WHAT IF I AM NOT AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES WHEN THE NEW OPTIONS ARE GRANTED AND BEGIN TO VEST? If you believe that you will not be an employee of ANADIGICS or its subsidiaries when the new options are granted and begin to vest, we recommend that you not accept the offer. Your eligible options may currently be fully or partially vested. If you do not accept the offer, then when your relationship with ANADIGICS ends, you generally will be able to exercise your eligible options that have vested through the date of termination and to the extent, if any, that the stock price exceeds the exercise price of your eligible options. However, if you accept the offer, your eligible options will be canceled. If your relationship ends before the new options are granted, you will not be eligible to receive new options and you will not receive any other consideration. Q6. HOW MANY NEW OPTIONS WILL I RECEIVE IN EXCHANGE FOR THE OPTIONS I RETURN? A-6 You will receive one new option for each eligible option that you return, as adjusted for any stock splits, stock dividends and similar events. The exact number of option shares (including shares covered by options that are not eligible options) that you have now is set forth as an attachment to the enclosed Letter of Transmittal. If you elect to exchange any of your eligible options, it will be necessary for you to initial the option grants that you desire to cancel on the attachment and then return the signed Letter of Transmittal, with the initialed attachment, to us at the address that we have described in this offer. All new options will be granted under the same Plan that governed the related canceled options and will be subject to the terms and conditions of that Plan and a new option agreement between you and us. Q7. WHEN WILL I RECEIVE MY NEW OPTIONS? The new options will have a grant date that will be the later of December 20, 2002 or the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. We expect to distribute the new option agreements promptly after the close of business on the grant date. (Section 5) Q8. WHY WILL I HAVE TO WAIT TO RECEIVE MY NEW OPTIONS? If we were to grant the new options on any date which is earlier than six months and one day after the date we cancel the options accepted for exchange, we would be required for financial reporting purposes to record a compensation expense against our earnings. By deferring the grant of the new options for at least six months and one day, we believe we will not have to record such a compensation expense except with respect to certain options granted to optionees who elect to participate in the exchange and who were granted options within the period beginning six months prior to commencement of the exchange period and concluding at least six months and one day following the date we cancel the options accepted for exchange. Q9. WHAT WILL THE EXERCISE PRICE OF THE NEW OPTIONS BE? Each new option will have an exercise price equal to the closing sale price of one share of our common stock on the National Market System of the National Association of Securities Dealers, Inc. on the grant date or on the first day thereafter on which a selling price is made available to the public. We recommend that you obtain current market quotations for our common stock before deciding whether to elect to exchange your options. We will tell you what the exercise price for the new options is on or about December 20, 2002. We will post the exercise price on the ANADIGICS website. The exercise price of any option you tender must be at least $21.00 per share. HOWEVER, BECAUSE WE WILL NOT GRANT NEW OPTIONS UNTIL AT LEAST SIX MONTHS AND ONE DAY AFTER THE DATE WE CANCEL THE OPTIONS ACCEPTED FOR EXCHANGE, THE NEW OPTIONS MAY HAVE A HIGHER EXERCISE PRICE THAN SOME OR ALL OF YOUR CURRENT OPTIONS. WE RECOMMEND THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING WHETHER TO TENDER YOUR OPTIONS. Q10. WHEN WILL THE NEW OPTIONS VEST? The new options will vest one year after they are granted. Thus, if the new options are granted on December 20, 2002, they will vest on December 20, 2003. If you cease to be an employee of ANADIGICS or its subsidiaries during the one year vesting period for the new options, you will lose all of the new options. Q11. WHEN WILL THE NEW OPTIONS EXPIRE? The new options will expire ten years after the grant date (in the absence of an earlier termination). A-7 Q12. WILL I HAVE TO WAIT LONGER TO PURCHASE COMMON STOCK UNDER MY NEW OPTIONS THAN I WOULD UNDER THE OPTIONS I EXCHANGE? Yes; to the extent your eligible options would have vested before the one year anniversary of the grant date, you will lose the benefits of any vesting under options you tender in the offer. The new options you receive will not be vested, even if the options you exchange are fully or partially vested. Q13. IF I ELECT TO EXCHANGE ELIGIBLE OPTIONS, DO I HAVE TO EXCHANGE ALL OF MY ELIGIBLE OPTIONS OR CAN I JUST EXCHANGE SOME OF THEM? You are not required to exchange all of your eligible options. However, if you exchange any options granted on a particular date, you will be required to exchange all of the options granted to you on that date. Q14. WILL I HAVE TO PAY TAXES IF I EXCHANGE MY OPTIONS IN THE OFFER? If you accept the offer, you will not recognize income for U.S. federal income tax purposes at the time of the exchange or at the time we grant new options to you. We believe that the exchange will be treated as a non- taxable exchange and the grant of options is not recognized as taxable income. We recommend that you consult with your own tax advisor to determine the tax consequences of accepting this offer. If you are an optionee based outside of the United States, we recommend that you consult with your own tax and other advisors to determine the tax and other consequences of this transaction under the laws of the country in which you live and work. (Section 13) Q15. WILL MY NEW OPTIONS BE INCENTIVE STOCK OPTIONS? No. None of the eligible options are "incentive stock options" (as such term is defined under the Internal Revenue Code). Accordingly, all new options will be non-qualified stock options and not incentive stock options. (Section 8) Q16. WHAT ACCOUNTING IMPACT WILL THE OFFER HAVE ON ANADIGICS? Because of the 181 day gap between the date on which this offer expires and the date on which the new options are granted, we will not be required to recognize any compensation expense as a result of our exchange offer except with respect to certain options granted to optionees who elect to participate in the exchange and who were granted options within the period beginning six months prior to commencement of the exchange period and concluding at least six months and one day following the date we cancel the options accepted for exchange. Had we selected a shorter period or modified some of the other terms of our offer, the offer could have resulted in variable accounting treatment, potentially requiring ANADIGICS to recognize additional non-cash compensation expenses on our statement of operations. Such variable accounting treatment will be limited to certain options granted to optionees who elect to participate in the exchange and who were granted options within the period beginning six months prior to commencement of the exchange period and concluding at least six months and one day following the date we cancel the options accepted for exchange. Q17. WHEN DOES THE OFFER EXPIRE? CAN THE OFFER BE EXTENDED, AND IF SO, HOW WILL I KNOW IF IT IS EXTENDED? The offer expires on June 18, 2002, at 5:00 p.m., New York City Time, unless we extend it. If we extend the offer, it will be necessary for us to defer the grant dates and vesting dates of the new options by the length of the time that we extend the offering period. You should not expect that we will extend the offering period. Although we do not currently intend to do so, we may, in our discretion, extend the offer at any time. If we extend the offer, we will publicly announce the extension no later than 9:00 a.m., New York City Time, on the next business day after the last previously scheduled or announced expiration date. (Section 14) A-8 Q18. WHAT DO I NEED TO DO? If you decide to accept our offer, you need to make your election, sign the attached Letter of Transmittal, indicate on the attachment to the Letter of Transmittal which of your options you are exchanging (by initialing the options that you intend to cancel) and deliver your Letter of Transmittal, with the attachment, to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attention: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. If you have questions about delivery, you may contact the Stock Option Exchange hotline at (908) 791-6060 or stockoptionexchange@anadigics.com. You should review the Offer to Exchange and the accompanying Letter of Transmittal and cover letter and all of their attachments before making your election. We will only accept a paper copy of your Letter of Transmittal. Delivery by email will not be accepted. If you intend to reject the offer, we would appreciate your indicating your rejection on the Letter of Transmittal and delivering your Letter of Transmittal to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attention: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. If we extend the offer beyond June 18, 2002, then you must complete, sign and deliver the Letter of Transmittal before the extended expiration of the offer. We may reject any acceptance to the extent that we determine the Letter of Transmittal is not properly completed or to the extent that we determine it would be unlawful to accept the options. Although we may later extend, terminate or amend the offer, we currently expect to accept all properly exchanged options promptly after the offer expires. If you do not complete, sign and deliver the Letter of Transmittal before the offer expires, it will have the same effect as if you rejected the offer. Q19. DURING WHAT PERIOD OF TIME MAY I CHANGE MY PREVIOUS ELECTION? You may change your previous election at any time before 5:00 p.m. New York City Time, on June 18, 2002. If we extend the offer beyond that time, you may change your previous election at any time until the extended expiration of the offer. To change your election, you must deliver a letter of withdrawal to the attention of the Stock Option Exchange before the offer expires. You may change your election more than once before the expiration of the offer. (Section 4) Q20. WHAT HAPPENS TO MY OPTIONS IF I DO NOT ACCEPT THE OFFER OR IF MY ACCEPTANCE DOES NOT QUALIFY UNDER THE TERMS OF THE OFFER? Nothing. If you do not accept the offer, or if we do not accept the options you return because your exchange did not qualify under the terms of our offer, you will keep your current options, and you will not receive any new options pursuant to this offer. No changes will be made to your current options. Q21. WHAT DO WE AND OUR BOARD OF DIRECTORS THINK OF THE OFFER? Although our Board has approved this offer, neither we nor our Board of Directors are making any recommendation as to whether you should tender or refrain from tendering your eligible options. We recognize that the decision to accept is an individual one that should be based on a variety of factors. You should consult with your personal advisors if you have questions about your financial or tax situation. Under certain circumstances, you could fare worse financially by accepting the offer than if you decide not to accept the offer. A-9 Q22. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER? For additional information or assistance, you should contact the Stock Option Exchange hotline in accordance with the instructions that we have set forth above. A representative of the Company will do their best to promptly respond to any of your questions about this offer. A-10 THE OFFER 1. NUMBER OF OPTIONS; EXPIRATION DATE. We are offering to exchange new options to purchase common stock in return for all eligible options. Eligible options are all outstanding options that have an exercise price of at least $21.00 per share. We estimate that as of the date of this offer, options covering 966,018 shares of our common stock are eligible for exchange. You may only return options having an exercise price of at least $21.00 per share. If you exchange any options granted on a particular date, you will be required to exchange all of the options granted to you on that date. Our offer is subject to the terms and conditions described in this Offer to Exchange and the accompanying Letter of Transmittal and cover letter. We will only accept options that are properly returned and not validly withdrawn in accordance with Section 4 of this Offer to Exchange before the offer expires on the "expiration date" as defined below. Each new option will be exercisable for a number of shares equal to the number of shares covered by the existing option being replaced, as adjusted for any stock splits, stock dividends and similar events. The exact number of option shares that you have now is set forth in an attachment to the enclosed Letter of Transmittal. All new options will be issued under the same Plan that covered the canceled options and a new option agreement between you and us. IF YOU ARE NOT AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE GRANT THE NEW OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR EXCHANGE. YOU ALSO WILL NOT RECEIVE ANY OTHER CONSIDERATION FOR YOUR TENDERED OPTIONS IF YOU ARE NOT AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE GRANT THE NEW OPTIONS. The term "expiration date" means 5:00 p.m., New York City Time, on June 18, 2002, unless and until we, in our discretion, extend the period of time during which the offer will remain open. If we extend the period of time during which the offer remains open, the term "expiration date" will refer to the latest time and date on which the offer expires. See Section 14 for a description of our rights to extend, delay, terminate and amend the offer. If we decide to take any of the following actions, we will publish a notice: o we increase or decrease what we will give you in exchange for your options; or o we increase or decrease the number of options eligible to be exchanged in the offer. If the offer is scheduled to expire within ten business days from the date we notify you of such an increase or decrease, we will also extend the offer for a period of ten business days after the date the notice is published. A "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City Time. 2. PURPOSE OF THE OFFER. A-11 We issued the options under the Plan to strengthen ANADIGICS by providing incentives to our employees to encourage them to devote their abilities and industry to the success of ANADIGICS' business enterprise. Many of our outstanding options, whether or not they are currently exercisable, have exercise prices that are significantly higher than the current market price of our common stock. We believe that in light of recent market conditions, many of these options are unlikely to be exercised in the foreseeable future. By making this offer to exchange outstanding options for new options that will have an exercise price equal to the closing sales price of our common stock on the grant date, we intend to provide our optionees with the benefit of owning options that over time may have a greater potential to increase in value, create better performances incentives for our optionees and thereby maximize stockholder value. We will not penalize optionees in any respect if they decide not to accept the Offer. Thus, by way of example, employees who decline to participate will remain eligible to receive future option grants notwithstanding the fact that they opted not to participate in our Offer. We are reserving the right, in the event of a merger or similar transaction, or in the event of a sale of a business unit, to take any actions we deem necessary or appropriate to complete a transaction that our Board of Directors believes is in the best interests of the Company and its stockholders. This could include steps which would preclude current optionees from being eligible to receive new options on the grant date. If we were to take such steps in connection with such a transaction, optionees who have tendered options for cancellation pursuant to this offer would not receive options to purchase securities of the acquiror or any other consideration for their tendered options. Subject to the foregoing, except as otherwise described or referred to in this Offer to Exchange or in our filings with the SEC, we presently have no plans or proposals that relate to or would result in: o an extraordinary corporate transaction, such as a merger or reorganization, involving the sale of ANADIGICS or any of our material subsidiaries; o any sale of a material amount of our assets or any subsidiary's assets; o any material change in our present dividend policy, or our indebtedness or capitalization; o any change in our present board of directors or senior management, including a change in the number or term of directors or to fill any existing board vacancies or change any executive officer's material terms of employment; o any other material change in our corporate structure or business; o our common stock not being authorized for quotation in an automated quotation system operated by a national securities association; o our common stock becoming eligible for termination of registration pursuant to section 12(g)(4) of the Securities Exchange Act; o the suspension of our obligation to file reports pursuant to section 15(d) of the Securities Exchange Act; o the acquisition by any person of any of our securities, other than in connection with our employee benefit plans or upon the conversion of outstanding convertible securities; or o any material change in our certificate of incorporation or bylaws, or any actions which may make it more difficult for any person to acquire control of our company. A-12 From time to time, we receive inquiries regarding potential transactions which could ultimately result in our acquiring assets or businesses in exchange for our stock, cash or a combination of stock and cash. Neither we nor our Board of Directors are making any recommendation as to whether you should tender your options, nor have we authorized any person to make any such recommendation. We recognize that the decision to accept is an individual one that should be based on a variety of factors. You should consult with your personal advisors if you have questions about your financial or tax situation. Under certain circumstances, you could fare worse financially by accepting the offer than if you decide not to accept the offer. If you accept the offer, we will not grant any options to you prior to the grant date, even if you otherwise would have received grants in the interim. Instead, we will defer the grant of any such "interim" options until after the grant date. 3. PROCEDURES. Making Your Election. To make an election to accept this offer, you must complete the Letter of Transmittal by initialing on the attachment which options you are canceling, sign the Letter of Transmittal and deliver the Letter of Transmittal to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059; Attention: Stock Option Exchange, before 5:00 P.M. New York City Time on the expiration date. We will only accept a paper copy of your Letter of Transmittal. Delivery by email will not be accepted. You do not need to return your stock option letter agreements for your eligible options to effectively elect to accept the offer. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING LETTERS OF TRANSMITTAL, IS AT THE ELECTION AND RISK OF THE TENDERING OPTION HOLDER. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY. If you intend to reject this offer, we would appreciate your specifying such rejection in the Letter of Transmittal and returning the Letter of Transmittal to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059; Attention: Stock Option Exchange, before 5:00 P.M. New York City Time on the expiration date. Determination of Validity; Rejection of Options; Waiver of Defects; No Obligation to Give Notice of Defects. We will determine, in our discretion, all questions as to the number of shares subject to eligible options and as to the validity, form, eligibility (including time of receipt) and acceptance of Letters of Transmittal and letters of withdrawal. Our determination of these matters will be final and binding on all parties. We may reject any or all Letters of Transmittal and letters of withdrawal to the extent that we determine that they were not properly executed or delivered or to the extent that we determine that it is unlawful to accept the returned options. Otherwise, we will accept properly and timely returned options that are not validly withdrawn. We may waive any of the conditions of the offer or any defect or irregularity in any Letter of Transmittal or letter of withdrawal with respect to any particular options or any particular option holder. No options will be properly submitted until all defects or irregularities have been cured by the option holder returning the options or waived by us. Neither we nor any other person are obligated to give notice of any defects or irregularities involved in the submission of any options or letters of withdrawal, and no one will be liable for failing to give notice of any defects or irregularities. Our Acceptance Constitutes an Agreement. If you elect to exchange eligible options according to the procedures described above, you will accept the terms and conditions of the offer. Our acceptance of eligible options that are properly submitted will form a binding agreement between us and you on the terms and subject to the conditions of this offer. Subject to our rights to extend, terminate and amend the offer, we currently expect that we will accept promptly after the expiration of the offer all properly submitted options that have not been validly withdrawn. 4. CHANGE IN ELECTION. A-13 You may only withdraw or otherwise modify your election by following the procedures described in this Section 4. If you elect to accept the offer and exchange your options and you later want to withdraw or otherwise modify your election to reject the offer or to return different eligible options in a manner which complies with this offer, you must submit a change of election to the attention of the Stock Option Exchange in the form of a letter of withdrawal in which you advise us of the change. We will only accept a paper copy of your letter of withdrawal. Delivery by e-mail will not be accepted. The change will be effective only if it constitutes a complete rejection of the offer or if it describes an exchange that is permitted under the terms of this offer. If the letter of withdrawal describes an exchange that is not consistent with the terms of this offer, we have the right, in our discretion, to either treat it as a rejection of the offer or to disregard it and accept the election initially submitted by you. You may withdraw or otherwise modify your election at any time before 5:00 p.m., New York City Time, on June 18, 2002. If we extend the offer beyond that time, you may withdraw or otherwise modify your election at any time until the extended expiration of the offer. To withdraw or otherwise modify your election, you must deliver a letter of withdrawal to the attention of the Stock Option Exchange at our Warren, New Jersey headquarters before the offer expires. The letter of withdrawal must be signed by you, have your name on it, and must clearly indicate whether you elect to accept or reject the offer. Neither we nor any other person are obligated to give notice of any defects or irregularities in any letter of withdrawal, and no one will be liable for failing to give notice of any defects or irregularities. We will determine, in our discretion, all questions as to the form and validity, including time of receipt, of letters of withdrawal. Our determinations with respect to these matters will be final and binding. 5. ACCEPTANCE OF OPTIONS FOR EXCHANGE AND CANCELLATION AND ISSUANCE OF NEW OPTIONS. On the terms and subject to the conditions of this offer and as promptly as practicable following the expiration date, we will timely accept the eligible options for exchange, and cancel all options properly returned and not validly withdrawn before the expiration date. Promptly after the close of business on the grant date, you will receive your new option agreement. The new options will have a grant date of the later of December 20, 2002 or the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. Your new options will entitle you to purchase up to the number of shares of common stock covered by your eligible options, as adjusted for any stock splits, stock dividends and similar events. The attachment to your Letter of Transmittal shows all of the option shares that you now own. The options listed on that attachment may include options which are not eligible to be canceled. We will give you oral or written notice of our acceptance for exchange or cancellation of options validly returned and not properly withdrawn as of the expiration date. After we accept returned options for exchange, we will send each option holder who accepted the offer a letter confirming the new options that will be granted to the option holder if the option holder continues to be an employee of ANADIGICS or its subsidiaries on the new grant date. IF YOU ARE NOT AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE GRANT THE NEW OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR EXCHANGE. YOU ALSO WILL NOT RECEIVE ANY OTHER CONSIDERATION FOR YOUR TENDERED OPTIONS IF YOU ARE NOT AN EMPLOYEE OF ANADIGICS OR ITS SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE GRANT THE NEW OPTIONS. A-14 6. CONDITIONS OF THE OFFER. We will not be required to accept any options returned to us, and we may terminate or amend the offer, or postpone our acceptance and cancellation of any options returned to us, in each case, subject to Rule 13e-4(f)(5) under the Securities Exchange Act, if at any time on or after May 20, 2002 and before the expiration date, we determine that any of the following events has occurred, and, in our reasonable judgment, regardless of the circumstances giving rise thereto, including any action or omission to act by us, the occurrence of the event makes it inadvisable for us to proceed with the offer or to accept and cancel options returned to us: o any action or proceeding by any government agency, authority or tribunal or any other person, domestic or foreign, is threatened or pending before any court, authority, agency or tribunal that directly or indirectly challenges the making of the offer, the acquisition of some or all of the returned options, the issuance of new options, or otherwise relates to the offer or that, in our reasonable judgment, could materially and adversely affect our business, condition (financial or other), income, operations or prospects or materially impair the benefits we believe we will receive from the offer; o any action is threatened, pending or taken, or any approval is withheld, by any court or any authority, agency or tribunal that, in our reasonable judgment, would or might directly or indirectly: o make it illegal for us to accept some or all of the eligible options or to issue some or all of the new options or otherwise restrict or prohibit consummation of the offer or otherwise relate to the offer; o delay or restrict our ability, or render us unable, to accept the eligible options for exchange and cancellation or to issue new options for some or all of the exchanged eligible options; o materially impair the benefits we believe we will receive from the offer; or o materially and adversely affect our business, condition (financial or other), income, operations or prospects; o there is: o any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market; o the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, whether or not mandatory; or o the decline of the Dow Jones Industrial Average, the NASDAQ National Market or the Standard and Poor's Index of 500 Companies by an amount in excess of 10% measured during any time period after the close of business on May 20, 2002; A-15 o another person publicly makes or proposes a tender or exchange offer for some or all of our common stock, or an offer to merge with or acquire us, or we learn that: o any person, entity or "group," within the meaning of section 13(d)(3) of the Securities Exchange Act, has acquired or proposed to acquire beneficial ownership of more than 5% of the outstanding shares of our common stock, or any new group shall have been formed that beneficially owns more than 5% of the outstanding shares of our common stock, other than any such person, entity or group that has filed a Schedule 13D or Schedule 13G with the SEC on or before May 20, 2002; o any such person, entity or group that has filed a Schedule 13D or Schedule 13G with the SEC on or before May 20, 2002 has acquired or proposed to acquire beneficial ownership of an additional 2% or more of the outstanding shares of our common stock; or o any person, entity or group shall have filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 indicating that it intends to acquire us or any of our assets or securities or otherwise shall have made a public announcement that it intends to acquire us or any of our assets or securities; o any change or changes occur in our business, condition (financial or other), assets, income, operations, prospects or stock ownership that, in our reasonable judgment, is or may be material to us; or o there shall have occurred any change in generally accepted accounting standards which could or would require us for financial reporting purposes to record compensation expense against our earnings in connection with the offer other than with respect to options granted to optionees who elect to participate in the exchange and who were granted options within the period beginning six months prior to commencement of the exchange period and concluding at least six months and one day following the date we cancel the options accepted for exchange. The conditions to the offer are for our benefit. We may assert them in our discretion before the expiration date and we may waive them at any time and from time to time, whether or not we waive any other condition to the offer. Our failure to exercise any of these rights is not a waiver of any of these rights. The waiver of any of these rights with respect to particular facts and circumstances is not a waiver with respect to any other facts and circumstances. Any determination we make concerning the events described in this Section 6 will be final and binding upon everyone. 7. PRICE RANGE OF COMMON STOCK. Our common stock is quoted on the Nasdaq National Market under the symbol "ANAD." The following table shows, for the periods indicated, the high and low sales prices per share of our common stock as reported by the Nasdaq National Market. A-16 Quarter ended High Low ------------- ---- --- Calendar Year 2002: June 30, 2002 (through May 16, 2002).................... $13.61 $ 8.25 March 31, 2002.......................................... 16.29 9.40 Calendar Year 2001: December 31, 2001....................................... 21.05 11.15 September 30, 2001...................................... 21.90 10.22 June 30, 2001........................................... 25.38 10.62 March 31, 2001.......................................... 19.69 10.50 Calendar Year 2000: December 31, 2000....................................... 25.75 13.31 September 30, 2000...................................... 42.88 19.50 June 30, 2000........................................... 80.13 25.13 March 31, 2000.......................................... 112.13 27.67 As of May 16, 2001, the last reported sale price of our common stock, as reported by the Nasdaq National Market, was $11.58 per share. We recommend that you obtain current market quotations for our common stock before deciding whether to elect to exchange your options. 8. SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF NEW OPTIONS. Consideration. Each new option will be exercisable for the number of shares equal to the number of shares covered by the eligible options returned to us, as adjusted for any stock splits, stock dividends and similar events. The exact number of option shares that you now have under all of your options is set forth in the attachment to the enclosed Letter of Transmittal. In order to cancel any options, you will be required to indicate on that attachment which options you intend to cancel by initialing the canceled options. You may only cancel eligible options. If you cancel any options granted to you on a particular date, you must cancel all eligible options granted to you on that date. If we receive and accept the return of all outstanding eligible options, we will grant new options to purchase a total of 966,018 shares of our common stock. The common stock issuable upon exercise of the new options will equal approximately 3.6% of the total shares of our common stock outstanding as of March 31, 2002. Terms of New Options. Each new option will be issued under the same Plan as the option for which it has been exchanged and a new option agreement will be executed between each option holder who accepts the offer and ANADIGICS. Except with respect to the date that vesting and exercisability begin, the vesting period (which will expire one year after the date of grant in the case of all new options), the expiration date, and as otherwise specified in this offer, the terms and conditions of the new options will be substantially the same as the terms and conditions of the eligible options. The terms and conditions of the new options will be substantially similar to one another. The issuance of new options under this offer will not create any contractual or other right of the recipients to receive any future grants of stock options or benefits in lieu of stock options. Assuming that the conditions described above are satisfied and the optionee's exchange of eligible options has been accepted, the optionee will have the right to receive the new options on the grant date if: o the optionee remains an employee of ANADIGICS or its subsidiaries as of the grant date; and A-17 o no "Extraordinary Event" has occurred on or before the grant date. For purposes of this offer, the term "Extraordinary Event" shall mean: o a merger, consolidation or other business combination involving ANADIGICS in which the stockholders of ANADIGICS immediately prior to such transaction do not own, after such transaction, at least 50% of ANADIGICS or the corporation or other entity controlling ANADIGICS; o a sale of all or substantially all of the assets of ANADIGICS; o the liquidation or dissolution of ANADIGICS; or o the filing of a voluntary petition by us in a bankruptcy proceeding or the filing of an involuntary bankruptcy petition against us which is not dismissed within sixty days after the filing date. The following description of the Plan is a summary and is not complete. Complete information about the Plan is included in the Plan summary previously circulated to you. Please contact the Stock Option Exchange, c/o ANADIGICS, Inc. to request a copy of the Plan. A copy will be provided promptly and at our expense. General. The Plan provides for the granting of stock options, stock appreciation rights, restricted shares and other share based awards to eligible employees. Options granted under the Plan become exercisable in varying amounts determined at the time of the option grants. To date, no stock appreciation rights or restricted shares have been granted under the Plan. Although the Plan provides for the grant of both "incentive stock options" (as such phrase is defined in the Internal Revenue Code) and non-qualified stock options, to date we have not granted any incentive stock options. As of March 31, 2002, stock options covering 148,169 shares were available for grant under the Plan and stock options to purchase 4,321,260 shares were outstanding. If any stock options granted under the Plan expire or terminate for any reason before they have been exercised in full, the shares subject to those expired or terminated options will again be available for issuance pursuant to the Plan. Administration. The Plan is administered by the Compensation Committee of our Board of Directors. The Plan provides, in general, that the Compensation Committee will have full authority to: o award stock options and other benefits to persons designated by the Committee; o set the terms, conditions and restrictions of the options awarded under the Plan, their exercise and all related rights; o accelerate the date on which previously granted options may be exercised; o prescribe the form of agreements awarding and governing the stock options granted under the Plan; o interpret the Plan; o establish rules and regulations relating to the Plan; and A-18 o make all other determinations for the proper administration of the Plan. Term. The term of each option granted under the Plan is fixed by the Compensation Committee at the time of grant. The new options to be granted under the Offer to Exchange will have a term that expires ten years after the date of grant, subject to earlier termination in accordance with the provisions of the Plan. Termination. Under the Plan, termination of service is covered under stock option agreements furnished at or about the time of the option grant. In general, under those agreements: o in the event that an optionee's employment or service with ANADIGICS is terminated due to the optionee's death, total disability or retirement from ANADIGICS on or after reaching age 65, all of his or her options will become fully exercisable and may be exercised at any time within a period up to the sooner of 12 months after such termination or the expiration date of such options (at the end of which period, all such options will lapse), by such decedent's executors or personal administrators or by such disabled optionee; o in the event that an optionee's employment or service with ANADIGICS is terminated due to the optionee's retirement from ANADIGICS on or after reaching age 55 and before reaching age 65, all options owned by such optionee will be exercisable, but only to the extent exercisable on the date of termination of employment, by such optionee for a period of up to the sooner of 12 months after such termination or the expiration date of such options (at the end of which period, all such options will lapse); and o in the event that an optionee's employment or service with ANADIGICS is terminated by ANADIGICS or by an optionee for any reason other than such optionee's death, retirement on or after reaching age 55 or total disability, all options owned by such optionee will be exercisable, but only to the extent exercisable on the date of termination of employment, by such optionee for a period of up to the sooner of 90 days after the termination of employment and the expiration date of such options (at the end of which period, all such options will lapse). Change in Control. Under the Plan, stock option agreements furnished at or about the time of the option grant set forth the effect on options of a change in control of ANADIGICS. In general, under those agreements options become immediately exercisable upon a change in control of ANADIGICS. For this purpose, a change in control of ANADIGICS is deemed to have occurred if: (i) any "Person" as such term is used in Section 13 (d) and 14 (d) of the Securities Exchange Act, other than ANADIGICS, any trustee or other fiduciary holding securities under an employee benefit plan of ANADIGICS, or any corporation owned, directly or indirectly, by the stockholders of ANADIGICS in substantially the same proportions as their ownership of stock of ANADIGICS, is or becomes the "beneficial owner", as defined in Rule 13d-3 under the Securities Exchange Act, directly or indirectly, of securities of ANADIGICS representing 50% or more of the combined voting power of ANADIGICS then outstanding securities; (ii) during any 12-month period (not including any period prior to the execution of the respective stock option agreement), individuals who at the beginning of such period constitute the board of directors of ANADIGICS, and any new director, other than a director designated by a person who has entered into an agreement with ANADIGICS to effect a transaction described in clauses (i), (iii) or (iv), whose election by the board of directors or nomination for election by ANADIGICS stockholders was approved by a vote of at least 66 2/3% of the members of the board of directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the board of directors; A-19 (iii) ANADIGICS' stockholders approve a merger or consolidation of ANADIGICS with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of ANADIGICS outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of ANADIGICS or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of ANADIGICS (or similar transaction) in which no Person as such term is used in Section 13 (d) and 14 (d) of the Securities Exchange Act, acquires more than 50% of the combined voting power of ANADIGICS then outstanding securities; or (iv) the stockholders of ANADIGICS approve a plan of complete liquidation of ANADIGICS or an agreement for the sale or disposition by ANADIGICS of all or substantially all of its assets. Exercise Price. The exercise price of each option granted under the Plan is determined by the Compensation Committee at the time of grant. The new options will have an exercise price equal to the closing sale price of one share of our common stock on the National Market System of the National Association of Securities Dealers, Inc. on the close of business on the grant date of the new options or on the first day thereafter on which such a closing sale price is made available to the public. Tax Consequences. You should refer to Section 13 for a discussion of the U.S. federal income tax consequences of the new options and the eligible options, as well as the consequences of accepting or rejecting the new options under this offer to exchange. If you are an optionee based outside of the United States, we recommend that you consult with your own tax and other advisors to determine the tax and other consequences of this transaction under the laws of the country in which you live and work. Registration of Option Shares. All shares of common stock issuable upon exercise of options under the Plan, including the shares that will be issuable upon exercise of all new options, have been registered under the Securities Act on a registration statement on Form S-8 filed with the SEC. Unless you are considered an "affiliate" of ANADIGICS, you will be able to sell your option shares free of any transfer restrictions under applicable securities laws. 9. INFORMATION ABOUT ANADIGICS, INC. ANADIGICS designs and manufactures radio frequency integrated circuit (RFIC) solutions for the growing wireless and broadband communications markets. Our high frequency RFIC products enable manufacturers of communications equipment to enhance overall system performance, and reduce manufacturing cost and time to market. ANADIGICS was incorporated in 1984 in the state of Delaware. Our principal corporate offices are located in Warren, New Jersey. ANADIGICS completed its initial public offering in April 1995, and our common stock is listed on the Nasdaq National Market under the symbol "ANAD." Set forth below is selected consolidated historical financial and other data as of and for the five years ended December 31, 2001 and as of and for the three months ended March 31, 2001 and March 30, 2002. The selected consolidated historical financial and other data as of December 31, 2000 and 2001 and for each of the five years in the period ended December 31, 2001 were derived from our consolidated financial statements and related notes audited by Ernst & Young LLP, independent auditors. The selected consolidated historical financial and other data as of and for the three months ended March 31, 2001 and March 30, 2002 have been derived from our unaudited consolidated historical financial statements and, in the opinion of our management, have been prepared on a basis consistent with our historical consolidated financial statements and include all adjustments (which consist of normal recurring accruals) that are considered by management to be necessary for fair presentation of such financial information. Operating results for the three months ended March 30, 2002 are not necessarily indicative of the results that may be expected for future periods. The selected consolidated historical financial and other data presented below should be read in conjunction with our historical consolidated financial statements and notes thereto. A-20 0
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED -------------------------------------------------------------------- ------------------------------- 1997 1998 1999 2000 2001 March 30, 2002 March 31, 2001 ------------ ------------ ------------ ------------ ------------ -------------- -------------- (unaudited) (unaudited) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) STATEMENT OF OPERATIONS: Net sales ................... $ 102,536 $ 86,075 $ 131,159 $ 172,268 $ 84,765 $ 19,521 $ 28,520 Cost of sales ............... 56,093 66,228 75,820 89,471 87,697 19,005 21,205 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Gross profit (loss) ......... 46,443 19,847 55,339 82,797 (2,932) 516 7,315 Research and development expenses ...... 16,765 18,824 29,658 39,799 37,764 7,578 10,051 Selling and administrative expenses .................. 12,139 12,926 19,092 26,202 27,282 5,279 6,640 Restructuring and other charges ............. - 2,616 (441) - 3,775 5,959 - Asset impairment charges .... - 4,510 - - 10,433 - - Purchased in-process R&D .... - - - - 3,800 - - ------------ ------------ ------------ ------------ ------------ ------------ ------------ Operating income (loss) ..... 17,539 (19,029) 7,030 16,796 (85,986) (18,300) (9,376) Interest expense ............ 155 79 369 300 627 1,442 61 Interest income ............. 3,384 2,382 3,637 10,821 6,931 1,681 2,423 Impairment of investments ... - - - - 3,061 - - Other (expense) income ...... - (7) 25 1,279 (39) 2 (60) Provision for litigation settlement ................ - - 6,925 - - - - ------------ ------------ ------------ ------------ ------------ ------------ ------------ Income (loss) before income taxes .............. 20,768 (16,733) 3,398 28,596 (82,782) (18,059) (7,074) Provision (benefit) for income taxes .............. 5,439 (7,175) 810 9,704 24,338 - (2,476) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net income (loss) ........... $ 15,329 $ (9,558) $ 2,588 $ 18,892 $ (107,120) $ (18,059) $ (4,598) ============ ============ ============ ============ ============ ============ ============ Basic earnings (loss) per share ................. $ 0.72 $ (0.43) $ 0.11 $ 0.64 $ (3.54) $ (0.59) $ (0.15) ============ ============ ============ ============ ============ ============ ============ Weighted average common shares outstanding ........ 21,419,936 22,085,912 23,602,799 29,712,879 30,248,476 30,570,828 30,063,509 Diluted earnings (loss) per share ................ $ 0.68 $ (0.43) $ 0.10 $ 0.60 $ (3.54) $ (0.59) $ (0.15) ============ ============ ============ ============ ============ ============ ============ Weighted average common and dilutive securities outstanding ............... 22,595,819 22,085,912 25,203,882 31,519,889 30,248,476 30,570,828 30,063,509
A-21
AT DECEMBER 31, Three months ended -------------------------------------------------- ------------------------------ 1997 1998 1999 2000 2001 March 30, 2002 March 31, 2001 -------- -------- -------- -------- -------- -------------- -------------- (unaudited) (unaudited) (IN THOUSANDS) (IN THOUSANDS) BALANCE SHEET DATA: Working capital............................. $ 65,061 $ 57,123 $176,322 $179,987 $132,062 132,519 167,212 Total assets................................ 168,084 154,098 317,610 352,473 346,914 330,894 344,283 Capital lease obligations: current maturities........................ 425 229 151 250 94 38 140 long-term portion......................... 389 183 32 - - - - Current maturities of long-term debt........ - 1,000 1,000 1,000 244 179 1,000 Long-term debt, less current portion........ - 4,000 3,000 2,000 100,000 100,000 1,750 Total stockholders' equity.................. 146,463 137,807 276,649 328,832 226,636 207,608 325,016
A-22 We acquired Telcom Devices Corp. on April 2, 2001 and accounted for that transaction as a purchase. Accordingly, their results of operations are included in ANADIGICS' consolidated results of operations from the date of purchase. The balance sheet data reflects our issuance of $100 million aggregate principal amount of senior convertible notes on November 27, 2001. As of March 30, 2002, our book value per share of common stock was $6.79. 10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS ABOUT THE OPTIONS. A list of our directors and executive officers is attached to this Offer to Exchange as Schedule A. As of April 30, 2002, our executive officers and non-employee directors (9 persons) as a group held options outstanding under our option plans to purchase a total of 2,147,861 shares of our common stock. None of those options are eligible for exchange under this offer. 11. STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES OF THE OFFER. Eligible options that we acquire in connection with the offer will be canceled and the shares of common stock that may be purchased under those options will be returned to the pool of shares available for grants of new awards or options under the Plan and for issuance upon exercise of the new options without further stockholder action, except as required by applicable law or the rules of the Nasdaq National Market or any other securities quotation system or any stock exchange on which our common stock is then quoted or listed. Except as described below, we do not believe that we will record any compensation expense as a result of the offer because: (a) we will not grant any new options until a business day that is at least six months and one day after the date that we accept and cancel options tendered for exchange; and (b) the exercise price of all new options will equal the market value of the common stock on the date we grant the new options. We may incur compensation expense, however, if we grant any options having an exercise price less than the exercise price of the tendered option to any tendering option holder within the period beginning six months prior to commencement of the exchange period and concluding at least six months and one day following the date we cancel the options accepted for exchange. Our grant of those options to the tendering option holder would be treated for financial reporting purposes as a variable award to the extent that the number of shares subject to the newly granted options is equal to or less than the number of the option holder's tendered option shares. In this event, we would be required to record as compensation expense the amount by which the market value of the shares subject to the newly granted options exceeds the exercise price of those shares. This compensation expense would accrue as a charge to ANADIGICS' earnings until such options are exercised, forfeited or expire unexercised. We would adjust this compensation expense periodically based on increases or decreases in the market value of the shares subject to the newly granted options. At present, we do not intend to grant any stock options to any tendering option holder at any time before the scheduled new option grant date. 12. LEGAL MATTERS; REGULATORY APPROVALS. A-23 We are not aware of any license or regulatory permit that appears to be material to our business that might be adversely affected by the offer, or of any approval or other action by any government or regulatory authority or agency that is required for the acquisition or ownership of the options as described in the offer. If any other approval or action should be required, we presently intend to seek the approval or take the action. This could require us to delay the acceptance of options returned to us. We cannot assure you that we would be able to obtain any required approval or take any other required action. Our failure to obtain any required approval or take any required action might result in harm to our business. Our obligation under the offer to accept exchanged eligible options and to issue new options is subject to the conditions described in Section 6. 13. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES. The following is a general summary of the material U.S. federal income tax consequences of the exchange of options under the offer. This discussion is based on the Internal Revenue Code, its legislative history, Treasury Regulations and administrative and judicial interpretations as of the date of the offer, all of which may change, possibly on a retroactive basis. This summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to apply in all respects to all categories of option holders. This summary reflects the fact that none of the options granted under the Plan to date are, and none of the new options to be granted pursuant to the offer will be, incentive stock options under the Internal Revenue Code. If you exchange outstanding stock options for new options, you will not recognize income for federal income tax purposes as a result of the exchange. We believe that the exchange will be treated as a non-taxable exchange. At the date of grant of the new options, you will not recognize income for federal income tax purposes as a result of the exchange. When you exercise a new option, the difference between the exercise price of the option and the fair market value of the shares subject to the option, determined as of the date of exercise, will be treated as taxable compensation income to you, and you will be subject to withholding of income and employment taxes at that time. We will be entitled to a deduction equal to the amount of compensation income taxable to you if we comply with applicable information reporting requirements. If you exchange shares of ANADIGICS common stock in payment of part or all of the exercise price of a non-incentive stock option, no gain or loss will be recognized with respect to the shares exchanged and you will be treated as receiving an equivalent number of shares pursuant to the exercise of the option in a nontaxable exchange. The tax basis of the shares exchanged will be treated as the substituted tax basis for an equivalent number of shares received, and the new shares will be treated as having been held for the same holding period as the holding period that expired with respect to the transferred shares. The difference between the aggregate exercise price and the aggregate fair market value of the shares received pursuant to the exercise of the option will be taxed as ordinary income, just as if you had paid the exercise price in cash. The subsequent sale of the shares acquired pursuant to the exercise of a non-incentive stock option generally will give rise to capital gain or loss equal to the difference between the sale price and the sum of the exercise price paid for the shares and the ordinary income recognized with respect to the shares. The capital gain or loss will be treated as long term capital gain or loss if you have held the shares for more than one year following the exercise of the option. A-24 WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER. 14. EXTENSION OF OFFER; TERMINATION; AMENDMENT. We may, at any time and from time to time, extend the period of time during which the offer is open and delay accepting any options surrendered or exchanged by publicly announcing the extension and giving oral or written notice of the extension to the option holders. Prior to the expiration date, we may postpone accepting and canceling any eligible option if any of the conditions specified in Section 6 occur. In order to postpone accepting or canceling, we must publicly announce the postponement and give oral or written notice of the postponement to the option holders. Our right to delay accepting and canceling eligible options is limited by Rule 13e-4(f)(5) under the Securities Exchange Act, which requires that we must return the surrendered options promptly after we terminate or withdraw the offer. As long as we comply with any applicable laws, we may amend the offer in any way, including decreasing or increasing the consideration offered in the offer to option holders or by decreasing or increasing the number of eligible options to be exchanged or surrendered in the offer. We may amend the offer at any time by publicly announcing the amendment. If we extend the length of time during which the offer is open, the amendment must be issued no later than 9:00 a.m., New York City Time, on the next business day after the last previously scheduled or announced expiration date. Any public announcement relating to the offer will be sent promptly to option holders in a manner reasonably designed to inform option holders of the change, for example, by issuing a press release. If we materially change the terms of the offer or the information about the offer, or if we waive a material condition of the offer, we will extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Securities Exchange Act. Under these rules, the minimum period an offer must remain open following material changes in the terms of the offer or information about the offer, other than a change in price or a change in percentage of securities sought, will depend on the facts and circumstances. If we decide to take any of the following actions, we will publish notice of the action: o we increase or decrease what we will give you in exchange for your options; or o we increase or decrease the number of options eligible to be exchanged in the offer. If the offer is scheduled to expire within ten business days from the date we notify you of such an increase or decrease, we will also extend the offer for a period of ten business days after the date the notice is published. 15. FEES AND EXPENSES. We will not pay any fees or commissions to any broker, dealer or other person for asking option holders to exchange eligible options under this offer to exchange. 16. ADDITIONAL INFORMATION. This Offer to Exchange is a part of a Tender Offer Statement on Schedule TO that we have filed with the SEC. This Offer to Exchange does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that you review the Schedule TO, including its exhibits, and the following materials that we have filed with the SEC before making a decision on whether to exchange your options: A-25 (a) our annual report on Form 10-K for our fiscal year ended December 31, 2001, filed with the SEC on March 29, 2002, including the information incorporated by reference in the Form 10-K from our definitive proxy statement for our 2002 annual meeting of stockholders, filed with the SEC on April 23, 2002; (b) our quarterly report on Form 10-Q for the quarterly period ended March 30, 2002 filed with the SEC on April 26, 2002; (c) the description of our common stock included in our registration statement on Form 8-A, which was filed with the SEC on March 8, 1995, including any amendments or reports we file for the purpose of updating that description; and (d) the description of the preferred stock purchase rights associated with our common stock, included in our registration statement on Form 8-A12G/A, which was filed with the SEC on September 9, 1999, as modified by our current report on Form 8-K, disclosing an amendment to our Rights Agreement with Chase Mellon Shareholder Services L.L.C., as Rights Agent, which current report was filed with the SEC on December 4, 2000. The SEC file number for these filings is 0-25662. These filings, our other annual, quarterly and current reports, our proxy statements and our other SEC filings may be examined, and copies may be obtained, at the following SEC public reference rooms: 450 Fifth Street, N.W. 500 West Madison Street Room 1024 Suite 1400 Washington, D.C. 20549 Chicago, Illinois 6066 You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public on the SEC's Internet site at http://www.sec.gov. Our common stock is quoted on the Nasdaq National Market under the symbol "ANAD" and our SEC filings can be read at the following Nasdaq address: Nasdaq Operations 1735 K Street, N.W. Washington, D.C. 20006 We will also provide without charge to each person to whom we deliver a copy of this Offer to Exchange, upon their written or oral request, a copy of any or all of the documents to which we have referred you, other than exhibits to these documents (unless the exhibits are specifically incorporated by reference into the documents). Requests should be directed to: ANADIGICS, Inc. Attn: Investor Relations 141 Mt. Bethel Road, Warren, New Jersey 07059 A-26 or by telephoning us at (908) 668-5000 on weekdays between the hours of 9:00 a.m. and 5:00 p.m., New York City Time. As you read the documents listed in Section 16, you may find some inconsistencies in information from one document to another. Should you find inconsistencies between the documents, or between a document and this Offer to Exchange, you should rely on the statements made in the most recent document. The information contained in this Offer to Exchange about ANADIGICS should be read together with the information contained in the documents to which we have referred you. 17. FORWARD LOOKING STATEMENTS; MISCELLANEOUS. Our SEC reports referred to above include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" consist of all non-historical information regarding ANADIGICS. In addition, the words "could", "expects", "anticipates", "objective", "plans", "may affect", "may depend", "believes", "estimates", "projects" and similar words and phrases are also intended to identify such forward-looking statements. Actual results could differ materially from those projected in our forward-looking statements due to numerous known and unknown risks and uncertainties, including, among other things, order rescheduling or cancellation, changes in customer's forecasts of product demand, timely product and process development, individual product pricing pressure, variation in production yield, changes in estimated product lives, difficulties in obtaining components and assembly services needed for production of integrated circuits and changes in economic conditions of the various markets we serve, as well as the other risks detailed from time to time in ANADIGICS' reports filed with the SEC, including our annual report on Form 10-K for the year ended December 31, 2001 filed with the SEC on March 29, 2002. All such forward-looking statements are current only as of the date on which such statements were made. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events. The safe harbor afforded by the Private Securities Litigation Reform Act of 1995 to certain forward-looking statements does not extend to statements made by ANADIGICS in connection with our offer. If, at any time, we become aware of any jurisdiction where the making of this offer violates the law, we will make a good faith effort to comply with the law. If, we cannot comply with the law, the offer will not be made to, nor will exchanges be accepted from or on behalf of, the option holders residing in that jurisdiction We and our Board recognize that the decision to accept our offer is an individual one that should be based on a variety of factors. You should consult your personal advisors if you have questions about your financial or tax situation. The information about this offer from ANADIGICS is limited to this document, the accompanying cover letter and the enclosed Letter of Transmittal. WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS PURSUANT TO THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT, THE ACCOMPANYING COVER LETTER AND THE RELATED LETTER OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU SHOULD NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US. A-27 ANADIGICS, INC. May 20, 2002 A-28 SCHEDULE A INFORMATION ABOUT THE DIRECTORS AND EXECUTIVE OFFICERS OF ANADIGICS, INC. The directors and executive officers of ANADIGICS, Inc., their ages and their positions and offices as of May 17, 2002 and the number of shares of common stock covered by all options that they owned as of May 17, 2002 are set forth in the following table: - --------------------- ------- ------------------------------------- ------------ Name Age Positions with ANADIGICS Number of ------------------------ Options - --------------------- ------- ------------------------------------- ------------ Bami Bastani 48 President & Chief Executive Officer 875,000 - --------------------- ------- ------------------------------------- ------------ Ronald Rosenzweig 64 Chairman of the Board 215,000 - --------------------- ------- ------------------------------------- ------------ Charles Huang 54 Executive Vice President 495,361 - --------------------- ------- ------------------------------------- ------------ Thomas Shields 43 Sr. VP, CFO & Secretary 213,750 - --------------------- ------- ------------------------------------- ------------ Paul Bachow 50 Director 114,750 - --------------------- ------- ------------------------------------- ------------ David Fellows 49 Director 114,750 - --------------------- ------- ------------------------------------- ------------ Harry Rein 57 Director 114,750 - --------------------- ------- ------------------------------------- ------------ Lewis Solomon 68 Director 72,000 - --------------------- ------- ------------------------------------- ------------ Dennis Strigl 56 Director 52,500 - --------------------- ------- ------------------------------------- ------------ None of the above options are eligible for exchange under this offer. The address of each director and executive officer is: c/o ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059 and the telephone number at such address for each such director and executive officer is 908-668-5000. A-29 OFFER TO EXCHANGE OUTSTANDING OPTIONS TO PURCHASE COMMON STOCK, PAR VALUE $.01 PER SHARE, HAVING AN EXERCISE PRICE OF AT LEAST $21.00 PER SHARE OF ANADIGICS, INC. Any questions or requests for assistance or additional copies of any documents referred to in the offer to exchange may be directed to the Stock Option Exchange hotline at (908) 791-6060 or stockoptionexchange@anadigics.com. May 20, 2002 A-30 EX-99.(A)(2) 4 b318576_exa2.txt FORM OF LETTER OF TRANSMITTAL Exhibit (a)(2) LETTER OF TRANSMITTAL TO TENDER OPTIONS TO PURCHASE SHARES OF COMMON STOCK HAVING AN EXERCISE PRICE OF AT LEAST $21.00 PER SHARE FOR NEW OPTIONS UNDER THE ANADIGICS, INC. 1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN FOR EMPLOYEES PURSUANT TO THE OFFER TO EXCHANGE DATED MAY 20, 2002 THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 18, 2002, UNLESS THE OFFER IS EXTENDED. To: Stock Option Exchange ANADIGICS, Inc. 141 Mt. Bethel Road, Warren, New Jersey 07059 Telephone: (908) 791-6060 Facsimile: (908) 412-5942 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. Pursuant to the terms and subject to the conditions of the Offer to Exchange dated May 20, 2002 and this Letter of Transmittal, unless I have checked the box below indicating that I reject such Offer, I hereby tender the options to purchase shares of common stock ("Option Shares") that I have initialed on the attachment to this Letter of Transmittal. The options that I have initialed, if any, are outstanding under the ANADIGICS, Inc. 1997 Long Term Incentive and Share Award Plan for Employees, as amended (hereinafter, the "Plan") and have an exercise price of AT LEAST $21.00 per share (to validly tender such options or portions thereof you must initial the attachment in accordance with instructions 2 and 3 on page 5 of this Letter of Transmittal): If you desire to exchange less than all of the options listed for you on the attachment to this Schedule, please note that once you select an option grant for exchange, you must also select for exchange all other eligible options granted to you on the same date. B-1 To ANADIGICS, Inc.: Upon the terms and subject to the conditions set forth in the Offer to Exchange dated May 20, 2002 (the "Offer to Exchange"), my receipt of which I hereby acknowledge, and in this Letter of Transmittal (this "Letter" which, together with the Offer to Exchange and the cover letter accompanying the Offer to Exchange, as they may be amended from time to time, constitutes the "Offer"), I, the undersigned, hereby tender to ANADIGICS, Inc., a Delaware corporation (the "Company"), the options to purchase shares ("Option Shares") of common stock of the Company (the "Common Stock") initialed by me on the attachment to this Letter (the "Options") in exchange for "New Options," which are new options to purchase shares of Common Stock equal in number to the number of Option Shares subject to the Options that I tender hereby, as adjusted for any stock splits, stock dividends and similar events. All New Options will be subject to the terms of the same option plan as the option plan that governed my exchanged options and to a new option agreement between the Company and me. Subject to, and effective upon, the Company's acceptance for exchange of the Options tendered herewith in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), I hereby sell, assign and transfer to, or upon the order of, the Company all right, title and interest in and to all of the Options that I am tendering hereby. I acknowledge that the Company has advised me to consult with my own advisors as to the consequences of participating or not participating in the Offer. I agree that this Letter is an amendment to the option agreement or agreements to which the Options I am tendering hereby are subject. I hereby represent and warrant that I have full power and authority to tender the Options tendered hereby and that, when and to the extent such Options are accepted for exchange by the Company, such Options will be free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, other than pursuant to the applicable option agreement, and such Options will not be subject to any adverse claims. Upon request, I will execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the exchange of the Options I am tendering hereby. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive, my death or incapacity, and all of my obligations hereunder shall be binding upon my heirs, personal representatives, successors and assigns. Except as stated in the Offer, this tender is irrevocable. By execution hereof, I understand that tenders of Options pursuant to the procedure described in Section 3 of the Offer to Exchange and in the instructions to this Letter will constitute my acceptance of the terms and conditions of the Offer. The Company's acceptance for exchange of Options tendered pursuant to the Offer will constitute a binding agreement between the Company and me upon the terms and subject to the conditions of the Offer. I acknowledge that the New Options that I will receive (1) will not be granted until on or about the later of December 20, 2002, or the first business day that is at least six months and one day after the date the Options tendered hereby are accepted for exchange and canceled, (2) will be subject to the terms and conditions set forth in a new option agreement between the Company and me that will be forwarded to me promptly after the close of business on the grant date for the New Options and (3) will not vest for one year after the grant date. I also acknowledge that I must be an employee of the Company or one of its subsidiaries from the date I tender Options through the date the New Options are granted and otherwise be eligible under the Plan on the date the New Options are granted in order to receive the New Options. I further acknowledge that, if I do not remain as an employee, I will not receive any New Options or any other consideration for the Options that I tender and that are accepted for exchange pursuant to the Offer. I further acknowledge that in the event of a merger or similar transaction, the Company may take any actions it deems necessary or appropriate to complete a transaction that the Board of Directors believes is in the best interest of the Company and its stockholders. This could include steps which would preclude me from being eligible to receive new options on the grant date. If the Company were to take such steps in connection with such a transaction, I understand that optionees who have tendered options for cancellation pursuant to the Offer would not receive options to purchase securities of the acquiror or any other consideration for their tendered options. B-2 The name of the registered holder of the Options tendered hereby appears below exactly as the information appears on the option agreement or agreements representing such Options. I understand that I may tender each Option granted to me under the Plan having an exercise price of at least $21.00 per share and that I am not required to tender any of such options in the Offer. I also understand that all of such Options properly tendered prior to the "Expiration Date" (as defined in the following sentence) and not properly withdrawn will be exchanged for New Options, upon the terms and subject to the conditions of the Offer described in Section 6 of the Offer to Exchange. The term "Expiration Date" means 5:00 p.m., New York City Time, on June 18, 2002, unless and until the Company, in its discretion, has extended the period of time during which the Offer will remain open, in which event the term "Expiration Date" refers to the latest time and date at which the Offer, as so extended, expires. I recognize that, under certain circumstances set forth in the Offer to Exchange, the Company may terminate or amend the Offer and postpone its acceptance and cancellation of any Options tendered for exchange. In any such event, I understand that the Options delivered herewith but not accepted for exchange will be returned to me at the address indicated below. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS OF OPTIONS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. All capitalized terms used in this Letter but not defined shall have the meaning ascribed to them in the Offer to Exchange. I have read, understand and agree to all of the terms and conditions of the Offer. * * * B-3 HOLDER PLEASE SIGN BELOW (See Instructions 1 and 4) You must complete and sign the following exactly as your name appears on the option agreement or agreements evidencing the Options you are tendering. If the signature is by a trustee, executor, administrator, guardian, attorney-in-fact or another person acting in a fiduciary or representative capacity, please set forth the signer's full title and include with this Letter proper evidence of the authority of such person to act in such capacity. SIGNATURE OF OWNER X ----------------------------------------------------------------- (Signature of Holder or Authorized Signatory Date: ,2002 - ---- ----- Name: - ----- (Please Print) Capacity: - --------- Address: - -------- (Please include ZIP code) Telephone No. (with area code): - ------------------------------- Tax ID/Social Security No.: - --------------------------- B-4 *************** IF YOU DESIRE TO REJECT THE COMPANY'S OFFER, PLEASE SO INDICATE BY CHECKING THE BOX BELOW AND SIGNING THIS LETTER BELOW. [ ] I hereby reject the Company's offer described in the above-mentioned Offer to Exchange. Print Name: ------------------------ Signature: ------------------------ B-5 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Delivery of Letter of Transmittal. A properly completed and duly executed original of this Letter (or a facsimile thereof), and any other documents required by this Letter, must be received by the Company at its address set forth on the front cover of this Letter on or before the Expiration Date in order for an optionee to accept the Company's Offer. THE METHOD BY WHICH YOU DELIVER ANY REQUIRED DOCUMENTS IS AT YOUR OPTION AND RISK, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE COMPANY. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY. Tenders of Options made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. If the Offer is extended by the Company beyond that time, you may withdraw your tendered options at any time until the extended expiration of the Offer. In addition, unless the Company accepts your tendered Options before 5:00 p.m., New York City Time, on June 18, 2002, you may withdraw your tendered Options at any time until the extended expiration of the offer. To withdraw tendered Options you must deliver a letter of withdrawal explaining whether you are withdrawing as to all tendered Options or as to certain tendered Options, or a facsimile thereof; such withdrawal must be delivered to the Company while you still have the right to withdraw the tendered Options. Withdrawals may not be rescinded and any Options withdrawn will thereafter be deemed not properly tendered for purposes of the Offer unless such withdrawn Options are properly re-tendered prior to the Expiration Date by following the procedures described above. The Company will not accept any alternative, conditional or contingent tenders. All tendering Option Holders, by execution of this Letter (or a facsimile of it), waive any right to receive any notice of the acceptance of their tender, except as provided for in the Offer to Exchange. 2. Rejections. You will be deemed to have rejected the Company's Offer if you either return this Letter of Transmittal with the acknowledgment that you reject the Offer or fail to submit a properly completed and signed Letter of Transmittal accepting the Offer prior to 5:00 p.m., New York City Time on the date on which the Offer expires. 3. Tenders. If you intend to tender options pursuant to the Offer, you must initial the options that you intend to exchange on the attachment to this Letter of Transmittal. You may not tender options granted at an exercise price less than $21.00 per share. If you select a particular option for exchange, you must also exchange all other options granted to you by ANADIGICS on the same date as the date of the selected option. 4. Signatures on This Letter of Transmittal. If this Letter is signed by the holder of the Options, the signature must correspond with the name as written on the face of the option agreement or agreements to which the Options are subject without alteration, enlargement or any change whatsoever. If this Letter is signed by a trustee, executor, administrator, guardian, attorney-in-fact or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Company of the authority of such person to so act must be submitted with this Letter. 5. Requests for Assistance or Additional Copies. Any questions or requests for assistance, as well as requests for additional copies of the Offer to Exchange or this Letter, may be directed to ANADIGICS, Inc., Attn: Stock Option Exchange at the address and telephone number given on the front cover of this Letter. Copies will be furnished promptly at the Company's expense. B-6 6. Irregularities. All questions as to the number of Option Shares subject to Options to be accepted for exchange, and the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Options will be determined by the Company in its discretion, which determinations shall be final and binding on all parties. The Company reserves the right to reject any or all tenders of Options the Company determines not to be in proper form or the acceptance of which may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Options, and the Company's interpretation of the terms of the Offer (including these instructions) will be final and binding on all parties. No tender of Options will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. Neither the Company nor any other person is or will be obligated to give notice of any defects or irregularities in tenders, and no person will incur any liability for failure to give any such notice. IMPORTANT: THIS LETTER (OR A FACSIMILE COPY THEREOF) TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE COMPANY, ON OR PRIOR TO THE EXPIRATION DATE. 7. Important Tax Information. You should refer to Section 13 of the Offer to Exchange, which contains important tax information. 8. Steps to Take if You Intend to Accept the Company's Offer. If you intend to accept the Company's Offer, initial the options that you are exchanging on the attachment to this Letter of Transmittal, sign this Letter of Transmittal on page 4, complete the other information required on page 4 and return this Letter of Transmittal, with the attachment, to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attn: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. B-7 EX-99.(A)(3) 5 b318576_exa3.txt FORM OF LETTER TO ELIGIBLE HOLDERS Exhibit (a)(3) [LETTERHEAD OF ANADIGICS, INC.] May 20, 2002 Dear option holder: Due to today's difficult market and business conditions, you hold stock options with an exercise price that exceeds the current market price of our common stock. Because our board of directors recognizes that the Company's option plans may not currently be providing performance incentives for its valued employees, the board has considered a number of ways to provide you with the benefit of options that over time may have a greater potential to increase in value. As a result, I am pleased to announce that ANADIGICS will offer to exchange your outstanding options under our 1997 Long Term Incentive and Share Award Plan for Employees, as amended, (hereinafter, the "Plan") with an exercise price of at least $21.00 per share for new options we will grant under the Plan. You may exchange one or more of your options. If you select a particular option for exchange, you must also exchange all other eligible options granted to you by ANADIGICS on the same date as the date on which the selected option was granted. You also have the right to choose not to tender any of your options. The number of shares of common stock subject to the new options will be equal to the number of shares subject to the options that you tender and we accept for exchange, as adjusted for any stock splits, stock dividends and similar events. We will grant the new options on or about the later of December 20, 2002 or the first business day which is at least six months and one day following the date we accept and cancel the tendered options. You must be an employee of the Company or one of its subsidiaries from the date you tender options through the date we grant the new options in order to receive new options. If you do not remain an employee of the Company or one of its subsidiaries, you will not receive any new options or any other consideration for the options tendered by you and canceled by the Company. The terms and conditions of the new options will be substantially the same as the terms and conditions of your current options, except in three respects: o the per share exercise price of all new options will equal the closing sale price of our common stock on the Nasdaq National Market on the date we grant the new options or on the first day thereafter on which a selling price is made available to the public; o your options will expire (in the absence of an earlier termination) ten years from the new grant date; and o your options will vest one year after the grant date. The Company's offer is being made under the terms and subject to the conditions of an offer to exchange and a related letter of transmittal that are enclosed with this letter. You should carefully read the entire offer to exchange and letter of transmittal before you decide whether to tender any of your options. A tender of options involves risks, which are discussed in the offer to exchange. C-1 To tender options, you will be required to properly complete and return to us the letter of transmittal and any other documents specified in that letter by the expiration date of the Company's offer. Specifically, if you desire to exchange any of your options, you should follow the following steps: o Review the attachment to the letter of transmittal. The attachment describes each option that has been granted to you that remains outstanding. o Initial those option grants on the attachment that you wish to exchange. Remember that: o You may only select options that have an exercise price of at least $21.00 per share. o If you select an option granted on a particular date, you must also select all other eligible options granted to you on that date; o Sign the letter of transmittal and complete the information required to be answered on page 4. o Return the letter of transmittal, with the attachment, to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attn: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. If you do not intend to exchange any of your options, please check the box on page 5 of the letter of transmittal, sign the letter of transmittal on page 5, and return the letter of transmittal to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attn: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. If you have any questions about the offer, please call the Stock Option Exchange hotline at (908) 791-6060 or send an email message at stockoptionexchange@anadigics.com. I thank you for your continued efforts on behalf of ANADIGICS. ANADIGICS, INC. By: /s/ Bami Bastani Dr. Bami Bastani, President and CEO Enclosures C-2 EX-99.(A)(4) 6 b318576_exa4.txt FORM OF LETTER TO TENDERING OPTION HOLDERS Exhibit (a)(4) [LETTERHEAD OF ANADIGICS INC.] June 18, 2002 Dear option holder: On behalf of ANADIGICS, Inc. (the "Company"), I am writing to provide you with the results of the Company's recent offer to exchange (the "Offer") certain outstanding options granted under the Company's 1997 Long Term Incentive and Share Award Plan for Employees, as amended, (hereinafter, the "Plan") with an exercise price of at least $21.00 per share (the "Options") for new options the Company will grant under the Plan (the "New Options"). All capitalized terms used in this letter which are not defined herein have the meanings given to those terms in the letter of transmittal (the "Letter of Transmittal") accompanying the Company's offer to exchange dated May 20, 2002 (the "Offer of Exchange"). The Offer expired at 5:00 p.m., New York City Time, on June 18, 2002. Promptly following the expiration of the Offer and pursuant to the terms and conditions of the Offer of Exchange, the Company accepted for exchange Options tendered to it for a total of [____________] shares of Common Stock and canceled all such Options. The Company has accepted for exchange and canceled the number of Options tendered by you equal to the number of Option Shares set forth on Attachment A to this letter. In accordance with the terms and subject to the conditions of the Offer, you will have the right to receive New Options under the Plan for the number of shares of Common Stock which is equal to the number of Option Shares set forth on Attachment A, as adjusted for any stock splits, stock dividends and similar events. Also in accordance with the terms of the Offer, the terms and conditions of the New Options will be substantially the same as the terms and conditions of the Options you tendered for exchange, except in three respects: o the per share exercise price of all new options will equal the closing sale price of our common stock on the Nasdaq National Market on the date we grant the new options or on the first day thereafter on which a selling price is made available to the public; o your options will expire (in the absence of an earlier termination) ten years from the new grant date; and o your New Options will vest on the one year anniversary of the grant date. Pursuant to the terms of the Offer, the Company will grant you the New Options on a date determined by the Board of Directors, anticipated to be on or about December 20, 2002. At that time, as described in the Offer to Exchange, you will receive a new option agreement executed by the Company. In accordance with the terms of the Offer, and as provided in the Plan, you must be an employee of the Company or one of its subsidiaries from the date you tendered options through the New Option grant date in order to receive your New Options. If you do not remain an employee , you will not receive a New Option or any other consideration for the Options tendered by you and canceled by the Company. D-1 If you have any questions about your rights in connection with the grant of New Options, please call the Stock Option Exchange hotline at (908) 791-6060 or at stockoptionexchange@anadigics.com. ANADIGICS, INC. By: /s/ Bami Bastani Dr. Bami Bastani, President and CEO Attachment D-2 Attachment A Number of Shares Covered by Vesting (Assumes a December 20, 2002 the New Options Grant Date) - --------------------------- ------------------------------------- D-3 EX-99.(A)(5) 7 b318576_exa5.txt FORM OF E-MAIL LETTER TO ANADIGICS EMPLOYEES Exhibit (a)(5) [THE FOLLOWING WILL BE DELIVERED VIA EMAIL] May 20, 2002 ANNOUNCEMENT OF OFFER TO EXCHANGE OUTSTANDING OPTIONS UNDER THE ANADIGICS, INC. 1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN FOR EMPLOYEES The following offer is being made under the terms and subject to the conditions of an offer to exchange and related documents that are being mailed to the home address of employees who have been identified as eligible to participate in this program. If you do not receive a mailing within one week and think you should have, or if you have questions relating to the offer after you receive your documents by mail, please contact the Stock Option Exchange hotline at (908) 791-6060 or stockoptionexchange@anadigics.com. Due to today's difficult market and business conditions, you may hold stock options with an exercise price that exceeds the current market price of our common stock. Because our board of directors recognizes that the Company's option plans may not currently be providing performance incentives for its valued employees, the board has considered a number of ways to provide you with the benefit of options that over time may have a greater potential to increase in value. As a result, ANADIGICS will offer to exchange your outstanding options under its 1997 Long Term Incentive and Share Award Plan for Employees, as amended, (hereinafter the "Plan") with an exercise price of at least $21.00 per share for new options we will grant under the Plan. You may exchange one or more of your options. If you select a particular option for exchange, you must also exchange all other eligible options granted to you by ANADIGICS on such date. The number of shares of common stock subject to the new options will be equal to the number of shares subject to the options that you tender and we accept for exchange, as adjusted for any stock splits, stock dividends and similar events. We will grant the new options on or about the later of December 20, 2002 or the first business day which is at least six months and one day following the date we accept and cancel the tendered options. You must be an employee of the Company or one of its subsidiaries from the date you tender options through the date we grant the new options in order to receive new options. If you do not remain an employee of the Company or one of its subsidiaries, you will not receive any new options or any other consideration for the options tendered by you and canceled by the Company. The terms and conditions of the new options will be substantially the same as the terms and conditions of your current options, except in three respects: o the per share exercise price of all new options will equal the closing sale price of our common stock on the Nasdaq National Market on the date we grant the new options or on the first day thereafter on which a selling price is made available to the public; E-1 o your options will expire (in the absence of an earlier termination) ten years from the new grant date; and o your options will vest one year after the grant date. The Board of Directors makes no recommendation as to whether you should tender or refrain from tendering your options in the offer. You must make your own decision whether to tender your options. The Company's offer is being made under the terms and subject to the conditions of an offer to exchange and a related letter of transmittal which you should receive within the next week. You should carefully read the entire offer to exchange and letter of transmittal before you decide whether to tender all or any portion of your options. A tender of options involves risks which are discussed in the offer to exchange. To tender options, you will be required to properly complete and return to us the letter of transmittal and any other documents specified in that letter by the expiration date of the Company's offer. Specifically, if you desire to exchange any of your options, you should follow the following steps: o Review the attachment to the letter of transmittal. The attachment describes each option that has been granted to you that remains outstanding. o Initial those option grants on the attachment that you wish to exchange. Remember that: o You may only select options that have an exercise price of at least $21.00 per share. o Once you select an option, you must also select all other eligible options granted to you on the same date as the selected option. o Sign the letter of transmittal and complete the other information required to be answered on page 4. o Return the letter of transmittal, with the attachment, to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attn: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. If you do not intend to exchange any of your options, please check the box on page 5 of the letter of transmittal, sign the letter of transmittal on page 5, and return the letter of transmittal to ANADIGICS, Inc., 141 Mt. Bethel Road, Warren, New Jersey 07059, Attn: Stock Option Exchange, before 5:00 p.m., New York City Time, on June 18, 2002. If you have any questions about the offer, please contact the Stock Option Exchange hotline at (908) 791-6060 or stockoptionexchange@anadigics.com. We thank you for your continued efforts on behalf of ANADIGICS. E-2 EX-99.(D)(1) 8 b318576_exd1.txt LONG TERM INCENTIVE & SHARE AWARD PLAN Exhibit (d)(1) ANADIGICS, INC. - -------------------------------------------------------------------------------- 1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN FOR EMPLOYEES as amended May 24, 2000, December 9, 2000 and October 18, 2001 - -------------------------------------------------------------------------------- ANADIGICS, INC. - -------------------------------------------------------------------------------- 1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN FOR EMPLOYEES as amended May 24, 2000, December 9, 2000 and October 18, 2001 - -------------------------------------------------------------------------------- Section Page - ------- ---- 1. Purposes...................................................... 1 2. Definitions................................................... 1 3. Administration................................................ 2 4. Shares Subject to the Plan.................................... 2 5. Specific Terms of Awards...................................... 2 6. Certain Provisions Applicable to Awards....................... 2 7. General Provisions............................................ 2 -i- ANADIGICS, INC. - -------------------------------------------------------------------------------- 1997 LONG TERM INCENTIVE AND SHARE AWARD PLAN FOR EMPLOYEES as amended May 24, 2000, December 9, 2000 and October 18, 2001 - -------------------------------------------------------------------------------- 1. Purposes. The purposes of the 1997 Long Term Incentive and Share Award Plan for Employees are to advance the interests of ANADIGICS, Inc. and its shareholders by providing a means to attract, retain, and motivate employees of the Company upon whose judgment, initiative and efforts the continued success, growth and development of the Company is dependent. 2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth below: a. "Affiliate" means any entity other than the Company and its Subsidiaries that is designated by the Board or the Committee as a participating employer under the Plan, provided that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity. b. "Award" means any Option, SAR, Restricted Share, Restricted Share Unit, Performance Share, Performance Unit, Dividend Equivalent, or Other Share-Based Award granted to an Eligible Employee under the Plan. c. "Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award. d. "Beneficiary" means the person, persons, trust or trusts which have been designated by such Eligible Employee in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under this Plan upon the death of the Eligible Employee, or, if there is no designated Beneficiary or surviving designated Beneficiary, then the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits. e. "Board" means the Board of Directors of the Company. f. "Code" means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions thereto and regulations thereunder. -2- g. "Committee" means the Compensation Committee of the Board, or such other committee as may be designated by the Board to administer the Plan. h. "Company" means ANADIGICS, Inc., a corporation organized under the laws of Delaware, or any successor corporation. i. "Dividend Equivalent" means a right, granted under Section 5(g), to receive cash, Shares, or other property equal in value to dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award, and may be paid currently or on a deferred basis. j. "Eligible Employee" means any employee of the Company or its Subsidiaries and Affiliates who is not a director or officer of the Company. k. "Fair Market Value" means, with respect to Shares or other property, the fair market value of such Shares or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee in good faith, the Fair Market Value of Shares as of any given date prior to the existence of a public market for the Company's Shares shall mean the Company's book value. Thereafter, unless otherwise determined by the Committee in good faith, the Fair Market Value of Shares shall mean the closing price per Share on the immediately preceding date (or, if the Shares were not traded on that day, the next preceding day that the Shares were traded) on the principal exchange on which the Shares are traded, as such prices are officially quoted on such exchange. l. "NQSO" means any Option that is not an incentive stock option within the meaning of Section 422 of the Code. m. "Option" means a right granted under Section 5(b) to purchase Shares. n. "Other Share-Based Award" means a right, granted under Section 5(h), that relates to or is valued by reference to Shares. o. "Participant" means an Eligible Employee who has been granted an Award under the Plan. p. "Performance Share" means a performance share granted under Section 5(f). -3- q. "Performance Unit" means a performance unit granted under Section 5(f). r. "Plan" means this 1997 Long Term Incentive and Share Award Plan for Employees. s. "Restricted Shares" means an Award of Shares under Section 5(d) that may be subject to certain restrictions and to a risk of forfeiture. t. "Restricted Share Unit" means a right, granted under Section 5(e), to receive Shares or cash at the end of a specified deferral period. u. "SAR" or "Share Appreciation Right" means the right, granted under Section 5(c), to be paid an amount measured by the difference between the exercise price of the right and the Fair Market Value of Shares on the date of exercise of the right, with payment to be made in cash, Shares, or property as specified in the Award or determined by the Committee. v. "Shares" means common stock, $.01 par value per share, of the Company. w. "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns shares possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. 3. Administration. a. Authority of the Committee. The Plan shall be administered by the Committee, and the Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan: (i) to select Eligible Employees to whom Awards may be granted; (ii) to designate Affiliates; (iii) to determine the type or types of Awards to be granted to each Eligible Employee; -4- (iv) to determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, and any bases for adjusting such exercise, grant or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, exercisability, or settlement of an Award, and waiver or accelerations thereof, and waivers of performance conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award; (v) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be cancelled, forfeited, exchanged, or surrendered; (vi) to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Eligible Employee; (vii) to prescribe the form of each Award Agreement, which need not be identical for each Eligible Employee; (viii) to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan; (ix) to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder; (x) to accelerate the exercisability or vesting of all or any portion of any Award or to extend the period during which an Award is exercisable; and (xi) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan. -5- b. Manner of Exercise of Committee Authority. The Committee shall have sole discretion in exercising its authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all persons, including the Company, Subsidiaries, Affiliates, Eligible Employees, any person claiming any rights under the Plan from or through any Eligible Employee, and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any Subsidiary or Affiliate the authority, subject to such terms as the Committee shall determine, to perform administrative functions and to perform such other functions as the Committee may determine. c. Limitation of Liability. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any Subsidiary or Affiliate, the Company's independent certified public accountants, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, nor any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation. -6- 4. Shares Subject to the Plan. a. Subject to adjustment as provided in Section 4(c) hereof, the total number of Shares reserved for issuance in connection with Awards under the Plan shall be 5,100,000. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares previously issued under the Plan, exceeds the number of Shares reserved under the preceding sentence. If any Awards are forfeited, cancelled, terminated, exchanged or surrendered or such Award is settled in cash or otherwise terminates without a distribution of Shares to the Participant, any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture, settlement, termination, cancellation, exchange or surrender, again be available for Awards under the Plan. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised. Subject to adjustment as provided in Section 4(c) hereof, the maximum number of Shares with respect to which options or SARs may be granted during a calendar year to any Eligible Employee under this Plan shall be 100,000 Shares. b. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or treasury Shares including Shares acquired by purchase in the open market or in private transactions. c. In the event that the Committee shall determine that any dividend in Shares, recapitalization, Share split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Eligible Employees under the Plan, then the Committee shall make such equitable changes or adjustments as it deems appropriate and, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares which may thereafter be issued under the Plan, (ii) the number and kind of shares, other securities or other consideration issued or issuable in respect of outstanding Awards, and (iii) the exercise price, grant price, or purchase price relating to any Award. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria and performance objectives included in, Awards in recognition of unusual or non-recurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in applicable laws, regulations, or accounting principles. -7- 5. Specific Terms of Awards. a. General. Awards may be granted on the terms and conditions set forth in this Section 5. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 7(d)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of termination of employment by the Eligible Employee. b. Options. The Committee is authorized to grant Options, which shall be NQSOs, to Eligible Employees on the following terms and conditions: (i) Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Committee, and the Committee may, without limitation, set an exercise price that is based upon achievement of performance criteria if deemed appropriate by the Committee. (ii) Time and Method of Exercise. The Committee shall determine at the date of grant or thereafter the time or times at which an Option may be exercised in whole or in part (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), the methods by which such exercise price may be paid or deemed to be paid (including, without limitation, broker-assisted exercise arrangements), the form of such payment (including, without limitation, cash, Shares, notes or other property), and the methods by which Shares will be delivered or deemed to be delivered to Eligible Employees. c. SARs. The Committee is authorized to grant SARs (Share Appreciation Rights) to Eligible Employees on the following terms and conditions: (i) Right to Payment. An SAR shall confer on the Eligible Employee to whom it is granted a right to receive with respect to each Share subject thereto, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine in the case of any such right, the Fair Market Value of one Share at any time during a specified period before or after the date of exercise) over (2) the exercise price of the SAR as determined by the Committee as of the date of grant of the SAR (which, in the case of an SAR granted in tandem with an option, shall be equal to the exercise price of the underlying Option). -8- (ii) Other Terms. The Committee shall determine, at the time of grant or thereafter, the time or times at which an SAR may be exercised in whole or in part, the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Eligible Employees, whether or not an SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Unless the Committee determines otherwise, an SAR granted in tandem with an NQSO may be granted at the time of grant of the related NQSO or at any time thereafter. d. Restricted Shares. The Committee is authorized to grant Restricted Shares to Eligible Employees on the following terms and conditions: (i) Issuance and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose at the date of grant or thereafter, which restrictions may lapse separately or in combination at such times, under such circumstances (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), in such installments, or otherwise, as the Committee may determine. Except to the extent restricted under the Award Agreement relating to the Restricted Shares, an Eligible Employee granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon. (ii) Forfeiture. Except as otherwise determined by the Committee, at the date of grant or thereafter, upon termination of employment during the applicable restriction period, Restricted Shares and any accrued but unpaid dividends or Dividend Equivalents that are at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Shares. -9- (iii) Certificates for Shares. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Eligible Employee, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Company shall retain physical possession of the certificate. (iv) Dividends. Dividends paid on Restricted Shares shall be either paid at the dividend payment date, or deferred for payment to such date as determined by the Committee, in cash or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends. Shares distributed in connection with a Share split or dividend in Shares, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed. e. Restricted Share Units. The Committee is authorized to grant Restricted Share Units to Eligible Employees, subject to the following terms and conditions: (i) Award and Restrictions. Delivery of Shares or cash, as the case may be, will occur upon expiration of the deferral period specified for Restricted Share Units by the Committee (or, if permitted by the Committee, as elected by the Eligible Employee). In addition, Restricted Share Units shall be subject to such restrictions as the Committee may impose, if any (including, without limitation, the achievement of performance criteria if deemed appropriate by the Committee), at the date of grant or thereafter, which restrictions may lapse at the expiration of the deferral period or at earlier or later specified times, separately or in combination, in installments or otherwise, as the Committee may determine. (ii) Forfeiture. Except as otherwise determined by the Committee at date of grant or thereafter, upon termination of employment (as determined under criteria established by the Committee) during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Share Units), or upon failure to satisfy any other conditions precedent to the delivery of Shares or cash to which such Restricted Share Units relate, all Restricted Share Units that are at that time subject to deferral or restriction shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Share Units. -10- f. Performance Shares and Performance Units. The Committee is authorized to grant Performance Shares or Performance Units or both to Eligible Employees on the following terms and conditions: (i) Performance Period. The Committee shall determine a performance period (the "Performance Period") of one or more years and shall determine the performance objectives for grants of Performance Shares and Performance Units. Performance objectives may vary from Eligible Employee to Eligible Employee and shall be based upon such performance criteria as the Committee may deem appropriate. Performance Periods may overlap and Eligible Employees may participate simultaneously with respect to Performance Shares and Performance Units for which different Performance Periods are prescribed. (ii) Award Value. At the beginning of a Performance Period, the Committee shall determine for each Eligible Employee or group of Eligible Employees with respect to that Performance Period the range of number of Shares, if any, in the case of Performance Shares, and the range of dollar values, if any, in the case of Performance Units, which may be fixed or may vary in accordance with such performance or other criteria specified by the Committee, which shall be paid to an Eligible Employee as an Award if the relevant measure of Company performance for the Performance Period is met. (iii) Significant Events. If during the course of a Performance Period there shall occur significant events as determined by the Committee which the Committee expects to have a substantial effect on a performance objective during such period, the Committee may revise such objective. (iv) Forfeiture. Except as otherwise determined by the Committee, at the date of grant or thereafter, upon termination of employment during the applicable Performance Period, Performance Shares and Performance Units for which the Performance Period was prescribed shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in an individual case, that restrictions or forfeiture conditions relating to Performance Shares and Performance Units will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Performance Shares and Performance Units. -11- (v) Payment. Each Performance Share or Performance Unit may be paid in whole Shares, or cash, or a combination of Shares and cash either as a lump sum payment or in installments, all as the Committee shall determine, at the time of grant of the Performance Share or Performance Unit or otherwise, commencing as soon as practicable after the end of the relevant Performance Period. g. Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to Eligible Employees. The Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares, or other investment vehicles as the Committee may specify, provided that Dividend Equivalents (other than freestanding Dividend Equivalents) shall be subject to all conditions and restrictions of the underlying Awards to which they relate. h. Other Share-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Employees such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, unrestricted shares awarded purely as a "bonus" and not subject to any restrictions or conditions, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the performance of specified Subsidiaries or Affiliates. The Committee shall determine the terms and conditions of such Awards at date of grant or thereafter. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 5(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, notes or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 5(h). -12- 6. Certain Provisions Applicable to Awards. a. Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted to Eligible Employees either alone or in addition to, in tandem with, or in exchange or substitution for, any other Award granted under the Plan or any award granted under any other plan or agreement of the Company, any Subsidiary or Affiliate, or any business entity to be acquired by the Company or a Subsidiary or Affiliate, or any other right of an Eligible Employee to receive payment from the Company or any Subsidiary or Affiliate. Awards may be granted in addition to or in tandem with such other Awards or awards, and may be granted either as of the same time as or a different time from the grant of such other Awards or awards. The per Share exercise price of any Option, grant price of any SAR, or purchase price of any other Award conferring a right to purchase Shares which is granted, in connection with the substitution of awards granted under any other plan or agreement of the Company or any Subsidiary or Affiliate or any business entity to be acquired by the Company or any Subsidiary or Affiliate, shall be determined by the Committee, in its discretion. b. Terms of Awards. The term of each Award granted to an Eligible Employee shall be for such period as may be determined by the Committee. c. Form of Payment Under Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Shares, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The Committee may make rules relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments. d. Nontransferability. Awards (except for vested Shares) shall not be transferable by an Eligible Employee except by will or the laws of descent and distribution (except pursuant to a Beneficiary designation) and shall be exercisable during the lifetime of an Eligible Employee only by such Eligible Employee or his guardian or legal representative. An Eligible Employee's rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to claims of the Eligible Employee's creditors. -13- 7. General Provisions. a. Compliance with Legal and Trading Requirements. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan and any Award Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the issuance or delivery of Shares under any Award until completion of such stock exchange or market system listing or registration or qualification of such Shares or other required action under any state or federal law, rule or regulation as the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed to obligate the Company to register any Shares under federal or state law. b. No Right to Continued Employment or Service. Neither the Plan nor any action taken thereunder shall be construed as giving any employee or director the right to be retained in the employ or service of the Company or any of its Subsidiaries or Affiliates, nor shall it interfere in any way with the right of the Company or any of its Subsidiaries or Affiliates to terminate any employee's or director's employment or service at any time. c. Taxes. The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to an Eligible Employee, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Eligible Employees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of an Eligible Employee's tax obligations. d. Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of shareholders of the Company or Participants; provided, however, that, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may impair the rights or, in any other manner, adversely affect the rights of such Participant under any Award theretofore granted to him or her. -14- e. No Rights to Awards; No Shareholder Rights. No Eligible Employee or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Employees and employees. No Award shall confer on any Eligible Employee any of the rights of a shareholder of the Company unless and until Shares are duly issued or transferred to the Eligible Employee in accordance with the terms of the Award. f. Unfunded Status of Awards. The Plan is intended to constitute an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. g. Nonexclusivity of the Plan. The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. h. Not Compensation for Benefit Plans. No Award payable under this Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees or directors unless the Company shall determine otherwise. i. No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated. j. Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be determined in accordance with the laws of New York without giving effect to principles of conflict of laws. -15- k. Effective Date; Plan Termination. The Plan shall become effective as of January 1, 1997 (the "Effective Date"). The Plan shall terminate as to future awards on the date which is ten (10) years after the Effective Date. l. Titles and Headings. The titles and headings of the sections in the Plan are for convenience of reference only. In the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. -----END PRIVACY-ENHANCED MESSAGE-----