SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or
Section 240.14a-12
WESTELL TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
WESTELL TECHNOLOGIES, INC.
750 NORTH COMMONS DRIVE
AURORA, ILLINOIS 60504
(630) 898-2500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 15, 1999
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Westell Technologies, Inc., a
Delaware corporation (the "Company"), will be held at the Company's Corporate
Headquarters, 750 North Commons Drive, Aurora, Illinois on Wednesday, September
15, 1999 at 10:00 a.m.
Central Daylight Time for the following purposes:
1. To elect six directors;
2. To approve the issuance of shares of Class A Common Stock issuable
upon conversion of $20,000,000 aggregate principle amount of our 6% Secured
Subordinated Convertible Debentures Due 2004 (the "Convertible Debentures") and
upon exercise of Warrants to purchase 909,091 shares of Class A Common Stock at
an exercise price of $8.9208 per share; and
3. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 30, 1999
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors
Nicholas C. Hindman, Sr.
Acting Vice President,
Secretary, Treasurer and Chief Financial Officer
August 20, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE FOR MAILING IN
THE UNITED STATES. A PROMPT RESPONSE IS HELPFUL, AND YOUR COOPERATION WILL BE
APPRECIATED.
<PAGE>
WESTELL TECHNOLOGIES, INC.
750 North Commons Drive
Aurora, Illinois 60504
-----------
Proxy Statement
Annual Meeting of Stockholders to be held September 15, 1999
-----------
To the Stockholders of
WESTELL TECHNOLOGIES, INC.:
This Proxy Statement is being mailed to stockholders on or about August
20, 1999 and is furnished in connection with the solicitation by the Board of
Directors of Westell Technologies, Inc., a Delaware corporation (the "Company"),
of proxies for the Annual Meeting of Stockholders to be held on September 15,
1999 for the purpose of considering and acting upon the matters specified in the
Notice of Annual Meeting of Stockholders accompanying this Proxy Statement. If
the form of Proxy which accompanies this Proxy Statement is executed and
returned, it will be voted. A Proxy may be revoked at any time prior to the
voting thereof by written notice to the Secretary of the Company.
A majority of the outstanding shares entitled to vote at this meeting
and represented in person or by proxy will constitute a quorum. With a quorum
present at the meeting, the affirmative vote of the holders of a plurality of
the shares entitled to vote and represented in person or by proxy at this
meeting is required for the election of directors. Neither the nonvoting of
shares nor withholding authority will affect the election of Directors.
With regard to Proposal No. 2 and any other proposal submitted to a
vote, approval requires the affirmative vote of a majority of the shares
entitled to vote and represented in person or by proxy at the meeting. Shares
represented by proxies which are marked "abstain" or to deny discretionary
authority on any matter will be treated as shares present and entitled to vote,
which will have the same effect as a vote against any such matters. Broker
"non-votes" will be treated as not represented at the meeting as to matters for
which a non-vote is indicated on the broker's proxy and will not affect the
determination of the outcome of the vote on any proposal to be decided at the
Annual Meeting. Broker "non-votes" and the shares as to which stockholders
abstain are included for purposes of determining whether a quorum of shares is
present at a meeting. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.
Expenses incurred in the solicitation of proxies will be borne by the
Company. Officers of the Company may make additional solicitations in person or
by telephone.
The Annual Report to Stockholders for fiscal year ended March 31, 1999
("fiscal 1999") accompanies this Proxy Statement. If you did not receive a copy
of the report, you may obtain one by writing to the Secretary of the Company.
As of July 9, 1999, the Company had outstanding 16,947,030 shares of
Class A Common Stock and 19,527,569 shares of Class B Common Stock
(collectively, the "Common Stock"), and such shares are the only shares entitled
to vote at the Annual Meeting. Each share of Class A Common Stock is entitled to
one vote and each share of Class B Common Stock is entitled to four votes on
each matter to be voted upon at the Annual Meeting.
<PAGE>
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings (and the
percentages of outstanding shares represented by such beneficial holdings) as of
July 9, 1999, of (i) each person (including any "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act")) known by
the Company to own beneficially more than 5% of its outstanding Common Stock,
(ii) directors, (iii) each Named Executive Officer (as defined below), and (iv)
all directors and executive officers as a group. Except as otherwise indicated,
the Company believes that the beneficial owners of the Common Stock listed
below, based on information provided by such owners, have sole investment and
voting power with respect to such shares, subject to community property laws
where applicable. Under Rule 13d-3 of the Exchange Act, persons who have the
power to vote or dispose of Common Stock of the Company, either alone or jointly
with others, are deemed to be beneficial owners of such Common Stock.
<TABLE>
<CAPTION>
Stockholders, Number of Number of Percent of
Named Executive Class A Class B Total Voting
Officers and Directors Shares (1)(2) Shares(2) Power(3)
- ---------------------- ------------------ ----------- ------------
<S> <C> <C> <C>
Robert C. Penny III..................................... -- 19,296,404 (4) 81.2%
Melvin J. Simon......................................... 245,164 (5) 19,557,404 (4)(6) 82.6%
Robert H. Gaynor........................................ 272,475 -- *
J. William Nelson....................................... 352,351 -- *
Marc J. Zionts.......................................... 86,500 -- *
William J. Noll......................................... 58,000 -- *
Marcus H. Hafner, Sr.................................... 62,500 -- *
Paul A. Dwyer........................................... 89,407 -- *
John W. Seazholtz....................................... 7,513 -- *
Ormand J. Wade.......................................... 93,298 -- *
All directors and executive
officers as a group (____12 persons)................... %
- -------------------
* Less than 1%
(1) Includes options to purchase shares that are exercisable within 60 days
of July 9, 1999 as follows: Mr. Simon: 17,534 shares; Mr. Gaynor:
30,867 shares; Mr. Nelson: 76,000 shares; Mr. Zionts: 86,500 shares;
Mr. Noll: 58,000 shares; Mr. Hafner: 62,500 shares; Mr., Dwyer: 89,407
shares; Mr. Seazholtz: 7,013 shares; Mr. Wade: 7,013 shares; and all
directors and officers as a group: ___________ shares.
(2) Holders of Class B Common Stock have four votes per share and holders
of Class A Common Stock have one vote per share. Class A Common Stock
is freely transferable and Class B Common Stock is transferable only to
certain transferees but is convertible into Class A Common Stock on a
share-for-share basis.
(3) Percentage of beneficial ownership is based on 16,947,030 shares of
Class A Common Stock and 19,527,569 shares of Class B Common Stock
outstanding as of July 9, 1999.
(4) Includes 19,296,404 shares of Class B Common Stock held by Messrs.
Penny and Simon, as Trustees pursuant to a Voting Trust Agreement dated
February 23, 1994, as amended (the "Voting Trust"), among Robert C.
Penny III and Melvin J. Simon, as trustees (the "Trustees"), and
certain members of the Penny family and the Simon family. The Trustees
have joint voting and dispositive power over all shares in the Voting
Trust. Messrs. Penny and Simon each disclaim beneficial ownership with
respect to all shares held in the Voting Trust in which they do not
have a pecuniary interest. The Voting Trust contains 5,891,635 shares
held for the benefit of Mr. Penny and 546,817 shares held for the
benefit of Mr. Simon. The address for Messrs. Penny and Simon is Melvin
J. Simon & Associates, Ltd., 4343 Commerce Court, Suite 114, Lisle,
Illinois 60532.
(5) Includes 233,164 shares held for the benefit of Melvin J. Simon's
daughters for which Natalie Simon, Mr. Simon's wife, is custodian and
has sole voting and dispositive power, and 10,000 shares held by Mr.
Simon's daughters. Also includes 2,000 shares held in trust for the
benefit of Makayla G. Penny, Mr. Penny's daughter, for which Mr. Simon
is trustee and has sole voting and dispositive power; Mr. Simon
disclaims beneficial ownership of these shares.
(6) Includes 261,000 shares held in trust for the benefit of Makayla G.
Penny, Mr. Penny's daughter, for which Mr. Simon is trustee and has
sole voting and dispositive power. Mr. Simon disclaims beneficial
ownership of these shares.
</TABLE>
<PAGE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the Annual Meeting, six directors, constituting the entire Board of
Directors of the Company, are to be elected to hold office until the next annual
meeting of stockholders or until their successors are elected and qualified. In
fiscal 1999, Stefan Abrams and Michael Brunner resigned from their positions as
directors of the Company. In June 1999, the Bylaws of Westell Technologies, Inc.
were amended to provide that not less than six nor more than ten directors shall
constitute the board of directors.
It is intended that the proxies (except proxies marked to the contrary)
will be voted for the nominees listed below. It is expected that the nominees
will serve, but if any nominee declines or is unable to serve for any unforeseen
cause, the proxies will be voted to fill any vacancy so arising in accordance
with the discretionary authority of the persons named in the proxies.
NOMINEES
The following table sets forth certain information with respect to the
nominees, all of whom are current members of the present Board of Directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE SINCE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ------------------------ ----- -------------------------------------------------------------------------------
<S> <C> <C>
Robert H. Gaynor (75) 1990 Robert H. Gaynor has served as Chairman of the Board since December 1997. Mr.
Gaynor has served as Vice Chairman of the Board of Directors of the Company
from December 1991 to December 1997, and as a director of the Company since
October 1990. For four years, Mr. Gaynor served as Chairman of the Rockhill
Workshop, an international executive conference at the University of Missouri,
Kansas City. From 1958 to 1986, Mr. Gaynor held a variety of executive officer
positions at AT&T.
Melvin J. Simon (54) 1992 Melvin J. Simon has served as Assistant Secretary and Assistant Treasurer of
the Company since July 1995 and as a Director of the Company since August
1992. From August 1992 to July 1995, Mr. Simon served as Secretary and
Treasurer of the Company. A Certified Public Accountant, Mr. Simon founded and
has served as President of Melvin J. Simon & Associates, Ltd., a public
accounting firm, since May 1980.
Paul A. Dwyer (65) 1996 Paul A. Dwyer has served as a director of the Company since January 1996 and
as a director of Westell, Inc., a subsidiary of the Company, since November
1995. Mr. Dwyer has served as Vice President -- Finance of Henry Crown and
Company, a private investment firm, since February 1981, and Vice
President-Administration of Longview Management Group, LLC, a registered
investment advisor, since October, 1998
Ormand J. Wade (60) 1994 Ormand J. Wade has served as a director of the Company since December 1994.
From February 1987 to December 1992, Mr. Wade served as Vice Chairman of
Ameritech Corp. and from January 1982 to February 1987, as President and Chief
Executive Officer of Illinois Bell Telephone Company. Mr. Wade currently
serves as a director of ITW Corporation, a manufacturer of precision
engineered products, Andrew Corporation, a manufacturer of microwave and
peripheral equipment, and Northwestern Memorial Hospital, and serves as a
member of the Visiting Board of the University of Maine.
John W. Seazholtz (62) 1997 John W. Seazholtz has served as director of the Company since December 1997.
Mr. Seazholtz has served as President and Chief Executive Officer of telesoft
america, inc., since May 1998. In April 1998, Mr. Seazholtz retired as Chief
Technology Officer - Bell Atlantic where he served since June 1995 and
previously served as Vice President Technology and Information Services - Bell
Atlantic since June 1993. Mr. Seazholtz currently serves as a director of
Odetics, Inc., a supplier of digital data management products for the
security, broadcast and computer storage markets, and for ASC - Advanced
Switching Communications, an ATM network equipment developer.
Robert C. Penny III (46) 1998 Robert C. Penny III has served as managing partner of P F Management Co., a
private investment company, since May 1980.
</TABLE>
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES:
The Board of Directors held 18 meetings during fiscal 1999. All
directors attended at least 75% of the aggregate number of such meetings and of
meetings of Board committees on which they served in fiscal 1999.
The Board of Directors has established six standing committees: the
Audit Committee, the Compensation Committee, the Stock Incentive Committee, the
Executive Committee, the Technology Committee and the Finance Committee.
The Audit Committee (comprised of Messrs. Dwyer (Chair), Wade and
Seazholtz,) met twice in fiscal 1999. The functions of the Audit Committee
consist of recommending the appointment of auditors and overseeing the
accounting and audit functions of the Company. Mr. Dwyer replaced Mr. Brunner as
Chair on Feburary 26, 1999.
The Compensation Committee (comprised of Messrs. Wade (Chair), Dwyer
and Simon) met twice in fiscal 1999. The functions of the Compensation Committee
consist of determining executive officers' salaries and bonuses.
The Stock Incentive Committee (comprised of Messrs. Wade (Chair),
Gaynor and Dwyer) met five times in fiscal 1999. The functions of the Stock
Incentive Committee consist of administering and determining awards to be
granted under the Company's 1995 Stock Incentive Plan and the Employee Stock
Purchase Plan.
The Executive Committee (comprised of Messrs. Gaynor (Chair), Wade and
Simon) met three times in fiscal 1999. The Executive Committee has the authority
to take all actions that the Board of Directors as a whole would be able to
take, except as limited by applicable law.
The Technology Committee, formed on October 2, 1998, (comprised of
Messrs. Seazholtz (Chair) and Wade) met ___times in fiscal 1999. Messrs. J.
Nelson and William Noll are advisory members of the Technology Committee, The
Technology Committee________________________.
The Finance Committee (comprised of Messrs. Dwyer (Chair), and Simon)
met three times in fiscal 1999. The functions of the Finance Committee consist
of making recommendations to the Board of Directors as to financial matters and
as to such matters as shall be referred to it by the Board of Directors. The
Finance Committee also periodically reviews the investment policies and
performance of the Company.
Directors who are not employees of the Company each receive $20,000 per
year for services rendered as directors, except Mr. Gaynor who receives $100,000
per year as Chairman and Chief Executive Officer of the Company. In December
1997, outside directors were granted stock options that vest monthly over five
years as follows for the following amount of shares: Mr. Gaynor: 50,000 shares;
Mr. Simon: 50,000 shares; Mr. Abrams: 20,000 shares; Mr. Brunner: 20,000 shares;
Mr. Dwyer: 20,000 shares; Mr. Wade: 20,000 shares and Mr. Seazholtz: 20,000
shares. In April 1998, for his services as Chief Executive Officer, Mr. Gaynor
was granted an option to purchase 50,000 shares with vesting monthly over two
years. In addition, all directors may be reimbursed for certain expenses
incurred in connection with attendance at Board and committee meetings. Other
than with respect to reimbursement of expenses and the granting of stock
options, directors who are employees of the Company do not receive additional
compensation for service as directors. In November 1995, Mr. Dwyer was granted
an option to purchase 89,900 shares of Class A Common Stock at an exercise price
of $6.50 per share. Mr. Dwyer's options vest at a rate of 1,872 shares per month
commencing January 1, 1996. In addition, Mr. Simon also receives $1,250 each
quarter for his services as a director of Conference Plus, Inc., a subsidiary of
the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES.
<PAGE>
PROPOSAL NO. 2: APPROVAL OF ISSUANCE OF
CLASS A COMMON STOCK ISSUABLE UPON CONVERSION
OF THE CONVERTIBLE DEBENTURES AND WARRANTS
The stockholders are being asked to approve the issuance of shares of
Class A Common Stock issuable upon conversion of $20,000,000 aggregate principal
amount of the 6% Subordinated Secured Convertible Debentures due April 15, 2004
and upon exercise of warrants to purchase 909,091 shares of Class A Common Stock
at an exercise price of $8.9208 per share ("Proposal Two"). The Convertible
Debentures and the Warrants were sold on April 16, 1999 in a private offering
pursuant to Regulation D of the Securities Act of 1933, as amended (the "Private
Placement"). Gross proceeds to the Company pursuant to the Private Placement
were $20,000,000.
Stockholder approval of this Proposal Two would remove certain
limitations under the rules of the National Association of Securities Dealers,
Inc. (the "NASD"), which limit the number of shares of Class A Common Stock
issuable upon conversion of the Convertible Debentures and the exercise of
Warrants to an aggregate of 7,291,107 shares. The Company agreed in connection
with the Private Placement to use its best efforts to seek stockholder approval
of this Proposal Two. Assuming no limitations on the conversion of the
Convertible Debentures and exercise of the Warrants, the Convertible Debentures
are currently convertible into approximately _____________ shares of Class A
Common Stock, and the Warrants are exercisable for 909,091 shares of Class A
Common Stock, or _____________ shares of Class A Common Stock in the aggregate.
The rights, preferences and privileges of the outstanding Convertible
Debentures are summarized as follows:
RATE
The Convertible Debentures accrue interest at the rate of 6% per year,
but the interest rate of the Convertible Debentures shall increase to 8% per
year if the conversion price for the Convertible Debentures at any time is equal
to or less than $4.4604 per share. Interest payments are payable in cash and may
be paid in Convertible Debentures or Class A Common Stock at the Company's
option if (a) no Event of Failure (as described below) has occurred or is
continuing, (b) the resale registration statement is effective and available for
use by the holders of the Convertible Debenture, (c) the Class A Common Stock is
listed on the Nasdaq National Market, and (d) a sufficient amount of shares of
Class A Common Stock are available for conversion of the Convertible Debentures.
The number of shares of Class A Common Stock issued as interest shall be
determined by dividing the interest amount by the average of the Class A Common
Stock closing price for each of the five business days prior to the interest
payment date.
CONVERSION PRICE
The Convertible Debentures are convertible into shares of Class A
Common Stock at the election of the holder after September 16, 1999. The
conversion price is the lower of:
(a) the variable conversion price, which is initially $6.372
per share, but will be adjusted on April 16, 2000 and April 16, 2001 to
be the greater of (i) the weighted average sales price of the Class A
Common Stock for the ten trading days immediately preceding the
adjustment date and (ii) $4.4604; and
(b) the floating market price of our Class A Common Stock at
time of conversion which is calculated by taking the lowest average of
the Class A Common Stock closing bid price over any five consecutive
trading days during the ten trading day period ending the day
immediately prior to the conversion date.
The variable conversion price can not be less than $4.4604 or greater than
$6.372 per share. If the ten day average closing sale price of the Class A
Common Stock on April 16, 2000 is $9.5625 or greater, then the market conversion
price may not be used after that date to determine the conversion price as long
as certain events materially adverse to the Company have not occurred. The
conversion price will also be adjusted to the benefit of the holders of the
Convertible Debentures during the period in which the Company has restricted the
use of the resale registration statement.
If the Company is suspended from trading or is no longer listed on the
Nasdaq National Market or the New York Stock Exchange, then (i) the conversion
price shall be reduced by 10% and the market conversion price shall be available
for use in calculating the conversion price, and (ii) as long as the suspension
or delisting continues, the Company will make monthly payments to the holders
equal to 1.25% times the outstanding principal amount of the Convertible
Debentures plus accrued and unpaid interest.
REGISTRATION RIGHTS
In connection with the sale and issuance of the Convertible Debentures
and Warrants, the Company filed a resale registration statement on Form S-3 to
permit the public sale of shares of Class A Common Stock issuable upon
conversion of the Convertible Debentures and upon exercise of the Warrants. This
resale registration statement must remain effective until the earlier of (i) the
date that all Class A Common Stock issuable upon conversion of the Convertible
Debentures or upon exercise of the Warrants has been sold pursuant to the resale
registration statement or (ii) the date that all Class A Common Stock issuable
upon conversion of the Convertible Debentures or upon exercise of the Warrants
may be immediately sold to the public without registration and without regard to
the amount to be sold by the holder of such securities.
REDEMPTION AT COMPANY'S OPTION
If after April 16, 2000 the weighted average sales price of the Class A
Common Stock is equal to or greater than 200% of the average variable conversion
price over a specified time period, then the Company may redeem the Convertible
Debentures at a price equal to 115% of the face amount of the Convertible
Debentures plus accrued and unpaid interest. Upon receipt of a redemption notice
from the Company, the holders of Convertible Debentures may convert all or any
of their Convertible Debentures at the conversion price then in effect. The
Company may not redeem the Convertible Debentures under certain circumstances,
including during any "Event of Failure" described below or if such redemption
would cause a holder of Convertible Debentures to own in excess of 4.9% of the
Class A Common Stock, assuming that all Convertible Debentures were converted
prior to the redemption by the holders.
Upon satisfaction of certain conditions, the Company may elect to
exchange Convertible Debentures for which conversion has been requested for
debentures with the same face amount but which accrue interest at a rate of 12%
per annum and mature one year from issuance. The amount that can be exchanged is
equal the amount of Convertible Debentures held by the holder requesting
conversion that represents such holder's pro rata amount that is convertible
into the portion of Class A Common Stock issuable upon conversion of the
Convertible Debentures that exceeds 20% of the outstanding voting power of the
Company.
REDEMPTION AT HOLDER'S OPTION
Upon the occurrence of certain "Events of Failure," (i) the Convertible
Debentures are redeemable at the election of the holders of the Convertible
Debentures; or (ii) the holder may demand the Company pay damages equal to 1% of
the outstanding principal amount of the Convertible Debentures for each day of
the Event of Failure (but not to exceed 135% of the outstanding amount).
The redemption price shall equal $1,150 for each Convertible Debenture
being redeemed, plus accrued and unpaid interest, if certain "Events of Failure"
occur, including the following (i) the Company becomes bankrupt or suffers
certain other bankruptcy events, (ii) an event of default occurs under the
Company's existing loan agreements with LaSalle National Bank (the "Loan
Agreement"), (iii) the Company breaches any agreement with respect to
indebtedness of $500,000 or more, (iv) the Company's accountants deliver a
"going concern" qualification or exception with respect to the Company's
financial statements, (v) the Company suffers a $500,000 judgment that is not
discharged within sixty days, or (vi) an event of default occurs under the
debentures issued by the Company in exchange for the Convertible Debentures.
For other "Events of Failure," the redemption price shall equal the
greater of (i) $1,350 for each Convertible Debenture being redeemed plus accrued
and unpaid interest, or (ii) the product of (A) the highest price at which the
Class A Common Stock is traded from the date of the Event of Failure to the
redemption divided by the lowest conversion price in effect during such period
(assuming the market conversion price is in effect) and (B) the principal amount
of the Convertible Debentures plus accrued and unpaid interest. Such other
"Events of Failure" include: (i) the Company's failure to deliver in a timely
manner Class A Common Stock upon submission by such investors of a notice of
conversion, (ii) the Company fails to reserve the amount of Class A Common Stock
required under the terms of the Convertible Debentures, (iii) the resale
registration statement is not declared effective by the SEC or cannot otherwise
be used by the holders of the Convertible Debentures for certain time periods or
is not amended as required under the terms of the Private Placement documents,
(iv) the Class A Common Stock is suspended from trading on the Nasdaq National
Market for five days in any nine (9) month period; (v) the Company's failure to
remove restrictive legends on its Common Stock when required pursuant to the
Private Placement documents, (vi) the Company commits an uncured breach of a
material provision of any Private Placement document, (vii) any representation
or warranty of the Company made in any of the Private Placement documents is
false or misleading in any material respect, (viii) the Company's announcement
of its intention not to issue Class A Common Stock upon conversion of the
Convertible Debentures or exercise of the warrants, (ix) the Company's material
breach, as a result of performance under the Private Placement documents, of any
agreement to which it is or becomes a party, and (x) the Company's failure to
obtain stockholder approval to issue more than 20% of the voting power of the
Company on conversion of the Convertible Debentures and upon exercise of the
Warrants.
SUBORDINATED SECURITY INTEREST
The Convertible Debentures are subordinate in right of cash payments to
certain permitted senior indebtedness of the Company. "Permitted Senior
Indebtedness" includes: (i) the obligations of the Company pursuant to the Loan
Agreement and certain extensions, amendments and replacements of the Loan
Agreement, (ii) capitalized leases of the Company in existence as of the date
hereof or for certain capital expenditures permitted under the Private Placement
documents, (iii) existing purchase money financing and purchase money financing
for certain capital expenditures and (iv) financing for certain acquisitions
permitted under the Private Placement documents. The Convertible Debentures are
secured by substantially all of the assets of the Company, except its shares of
Conference Plus.
PROTECTIVE PROVISIONS
The Company has agreed that it will not, without the consent of a
majority of the holders of the Convertible Debentures, (i) alter or change the
rights of any capital stock so as to adversely affect the Convertible
Debentures, (ii) redeem or declare or pay any cash dividend on any common stock
or other securities junior to the Convertible Debentures, or (iii) do any act
not contemplated by the terms of the Convertible Debentures that would result in
any taxation under Section 305 of the Internal Revenue Code of 1986, as amended.
The conversion price shall also be adjusted to the benefit of the
holders if certain events or transactions occur, including the following: (i)
the announcement by the Company of certain types of sales of the Company, or an
announcement of a merger or a tender offer for 50% or more of the Common Stock
of the Company, (ii) the Company declares a dividend or makes a distribution of
assets, Common Stock or other securities, (iii) the Company issues securities
that are convertible into or exchangeable for Class A Common Stock at a
conversion price based upon a discount from the market price of the Class A
Common Stock or the variable conversion price then in effect, (v) a sale by any
executive officer or director of more than 10% of their Class A Common Stock
during the six month period commencing on the date that the resale registration
statement is declared effective, (vi) the Company restricts the use of the
resale registration statement, and (vii) certain other transactions that would
have a dilutive effective on the Convertible Debentures or materially and
adversely affect a investment in the Convertible Debentures.
CHANGE OF CONTROL
If the Company merges into, sells substantially all of its assets to,
or incurs a change of control with respect to, a company meeting certain market
liquidity and similar tests, then the holders of the Convertibles Debentures
shall receive the consideration they would have received in such transaction had
they converted their Convertible Debentures the day before the public
announcement of the merger. The Company is, however, permitted to acquire other
companies without having to provide special consideration to the holders of the
Convertible Debentures if the Company does not issue more than 20% of its Common
Stock as merger consideration. If the Company merges into, sells substantially
all of its assets to, or incurs a change of control with respect to, a company
that does not meet certain market liquidity and similar tests, then the holders
shall have the option, in lieu of the consideration set forth above, of
receiving 125% of the principal amount of the Convertible Debentures in cash.
The holders of the warrants are entitled to similar rights in the event of the
Company's merger or consolidation with another company and would have the right
to receive approximately 94% of the Black Scholes valuation of the Warrants.
WARRANTS
The Warrants are exercisable until April 16, 2004. The exercise price
for the Class A Common Stock underlying the Warrants is $_______________ per
share (subject to adjustment). If the Company merges or consolidates with any
other company, the Warrant holders are entitled to similar choices as to the
consideration they will receive in such transaction as the holders of the
Convertible Debentures or retain the Warrants which would then become
exercisable for the new company's common stock. In addition, the number of
shares issuable upon exercise of the Warrants is subject to anti-dilution
adjustment if the Company sells Common Stock or securities convertible into or
exercisable for Common Stock (excluding certain issuances such as Common Stock
issued under employee, director or consultant benefit plans) at a price per
share less than the market price.
STOCKHOLDER APPROVAL
The issuance of the Company's Class A Common Stock upon conversion of
the Convertible Debentures and upon exercise of the Warrants that is in excess
of 7,291,107 shares is subject to stockholder approval pursuant to the rules of
the NASD. Rule 4460(i)(1)(D) of the National Association of Securities Dealers
(the "20% Rule") requires companies that are listed on the Nasdaq National
Market to obtain stockholder approval prior to issuing common stock (or
securities convertible into or exercisable for common stock) in a private
financing at a price less than the market value of the common stock, where the
amount of common stock to be issued exceeds 20% of either the common stock
outstanding or voting power outstanding immediately prior to the issuance.
Because the conversion rate of the Convertible Debentures will vary
with the trading price of the Class A Common Stock, the number of shares of
Class A Common Stock issuable upon conversion of Convertible Debentures and upon
exercise of the Warrants may exceed 7,291,107 shares. Therefore, conversion of
all of the Convertible Debentures and the exercise of all of the Warrants may be
conditioned on the approval of this Proposal Two by the Company's stockholders.
Assuming no limitations on the conversion of the Convertible Debentures and
exercise of the Warrants, $_____ million Convertible Debentures are currently
convertible into approximately __________ shares of Class A Common Stock, and
the outstanding Warrants are exercisable for __________ shares of Class A Common
Stock, or __________ shares of Class A Common Stock in the aggregate.
CONSEQUENCES IF STOCKHOLDER APPROVAL IS NOT OBTAINED
If stockholder approval for Proposal Two is not obtained, then the
Company will be prohibited by the 20% Rule from issuing 20% or more of its Class
A Common Stock in connection with the Private Placement. If the approval sought
hereby is not granted by the stockholders, the Company will be obligated to
redeem all Convertible Debentures at a price equal to a cash payment equal to
the greater of (i) $1,350 plus accrued and unpaid interest; or (ii) a
predetermined redemption formula based on the average of the closing bid prices
for the Company's Class A Common Stock. See "Redemption at Holders Option."
There can be no assurance that the Company will have available the cash
resources to satisfy its redemption obligations or that it would be able to
effectuate the redemption in compliance with applicable law. If the stockholder
approval for Proposal Two is not obtained, then compliance with the redemption
obligation would likely have a material adverse effect on the Company's
financial condition and ability to implement its business strategy. In addition,
any delay in payment will cause such redemption amount to accrue default
interest at the rate of 15% per annum until paid.
In addition, the Company agreed to use its best efforts to obtain
stockholder approval of the conversion and exercise of those securities.
Therefore, if Proposal Two is not approved, this agreement could require the
Company to continue to seek stockholder approval of the conversion and exercise
of those securities, which could be expensive for the Company. Messrs. Penny and
Simon, the trustees of the Voting Trust and members of the Board, who
collectively control over ____% of the voting power of the Company, have
indicated that they will vote for Proposal Two.
REASONS FOR THE FINANCING AND USE OF PROCEEDS
The Company entered into the Private Placement to raise capital for
operating activities, and currently intends to use the proceeds of the financing
for working capital, purchases of capital equipment and to pay the costs of the
Private Placement.
FURTHER INFORMATION
The terms of the Convertible Debentures and Warrants are complex and
are only briefly summarized in this Proxy Statement. Stockholders wishing
further information concerning the rights, preferences and terms of the
Convertible Debentures and Warrants are referred to the full description thereof
contained in the Company's Current Report on Form 8-K and exhibits thereto filed
with the Securities and Exchange Commission on April 20, 1999, which may be
viewed in the public reading rooms maintained by the Commission at Securities
Exchange Commission, Public Reference Branch, Stop 1-2, 450 Fifth Street, NW,
Washington, DC, 20549-1004, or viewed on the web site maintained by the SEC at
http://www.sec.gov. The description of terms, preferences and rights of the
Convertible Debentures and the Warrants contained herein is qualified in its
entirety by reference to the complete description of these preferences, rights
and terms set forth in the Company's Current Report on Form 8-K. [In addition,
the description is qualified in its entirety by the more detailed information
set forth in the forms of Securities Purchase Agreement that is included as
Annex A, which is attached to this proxy statement. Stockholders are urged to
review such information.]
The affirmative vote of a majority of the total votes cast on the
proposal in person or by proxy at the Annual Meeting is required to approve this
Proposal Two. Messrs. Penny and Simon, the trustees of the Voting Trust and
members of the Board, who collectively control over ____% of the voting power of
the Company, have indicated that they will vote for Proposal Two.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that the stockholders
vote "FOR" the issuance of the Convertible Debentures and Warrants, and the
related issuance of Class A Common Stock upon the exercise or conversion of the
Convertible Debenture and Warrants.
<PAGE>
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the
current executive officers of the Company. Please refer to the information
contained above under the heading "Directors" for biographical information of
executive officers who are also directors of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------------- --- --------------------------------------------------------------------------------------
<S> <C> <C>
Robert H. Gaynor..................... 75 Chairman of the Board of Directors, and Chief Executive Officer
Marc J. Zionts ...................... 37 Chief Executive Officer - Westell, Inc.
J. William Nelson.................... 46 President and Chief Operating Officer-Westell, Inc.
Richard P. Riviere................... 44 Senior Vice President of Transaction Services and President and Chief Executive Officer
- Conference Plus, Inc.
Melvin J. Simon...................... 54 Assistant Secretary, Assistant Treasurer and Director
Nicholas C. Hindman, Sr.............. 47 Acting Vice President, Secretary, Treasurer and Chief Financial Officer
William J. Noll...................... 57 Senior Vice President of Product Development and Chief Technology Officer - Westell,
Inc.
Marcus H. Hafner, Sr. ............... 42 Executive Vice President Business Development and Corporate Strategy - Westell, Inc.
</TABLE>
Marc J. Zionts has served as Chief Executive Officer of Westell, Inc
since December 1997. Mr. Zionts also served as Senior Vice President of DSL
System Sales of Westell, Inc. from March 1997 to December 1997. Mr. Zionts
joined the Company in April 1996 as Vice President and General Manager of DSL
Sales and Marketing in the United States. Prior to joining the Company, Mr.
Zionts was a founder and Executive Vice President of Communicate Direct, Inc., a
systems integrator and developer of imaging technologies, from August 1987 to
April 1996. Prior to August 1987, Mr. Zionts held a variety of marketing and
sales positions with GTE.
J. William Nelson has served as President - Westell, Inc. since March
1997 and assumed the role of Chief Operating Officer of Westell, Inc. in
December 1997. Mr. Nelson served as President of U.S. Operations from April 1996
to March 1997 and as Executive Vice President and Chief Customer Satisfaction
Officer of Westell, Inc. since July 1993. Mr. Nelson also has served as Senior
Vice President and Chief Customer Satisfaction Officer of the Company from May
1991 to June 1993. Prior to joining the Company, Mr. Nelson held a variety of
management positions, including Director of Large Account Sales and Director of
Customer Service, at MCI Communications, Inc. from April 1986 to May 1991.
Richard P. Riviere has served as Vice President of Transaction Services
for the Company since July 1995 and as President and Chief Executive Officer of
Conference Plus since October 1988.
Nicholas C.Hindman, Sr., a Certified Public Accountant, has served as
Acting Vice President, Treasurer, Secretary and Chief Financial Officer since
April , 1999. Since October, 1997, Mr. Hindman has been a General Partner of MFI
Holdings, LLC, a manufacturer of hearth industry products. From 1992 through
September 1997, Mr. Hindman operated an auditing and consulting firm
specializing in initial public offerings, private placement of securities and
business turnarounds.
William J. Noll has served as Senior Vice President of Research and
Development and Chief Technology Officer of Westell, Inc. since May 1997. Prior
to joining the Company, Mr. Noll was Vice President and General Manager of
Residential Broadband at Northern Telecom from October 1995 to May 1997. Mr.
Noll held other various Vice President and Assistant Vice President positions at
Northern Telecom from June 1988 to October 1996, and was Vice President Network
Systems at Bell Northern Research from November 1986 to June 1988.
Marcus H. Hafner, Sr. has served as Executive Vice President for
Business Development and Corporate Strategy of Westell, Inc. since December
1997. Mr. Hafner served as Senior Vice President of Business Development from
April 1996 to December 1997 and as Business Development Vice President of the
Company from May 1995 to March 1996. Prior to joining the Company, Mr. Hafner
was President and Chief Operating Officer of On-Demand Technologies, Inc., a
broadband equipment network systems provider, from April 1992 to April 1995.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years ended
March 31, 1997, 1998 and 1999, with respect to all compensation paid or earned
for services rendered to the Company by the Company's Chief Executive Officers
and the Company's four other most highly compensated executive officers who were
serving as executive officers at March 31, 1999 (together, the "Named Executive
Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (SHARES) ($)
- ------------------------------- ------ -------- -------- ------------- -------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Gaynor 1999 100,000 100,000 -
Chairman of the Board 1998 30,000 - - 50,000 -
and Chief Executive 1997 30,000 - - - -
Officer
Marc J. Zionts 1999 233,654 298,080 290,000 3,277
Chief Executive Officer- 1998 154,808 144,000 - 250,000 1,834
Westell, Inc. 1997 114,583 46,500 - 40,000 27
J. William Nelson 1999 233,654 298,080 250,000 7,624
President and Chief 1998 180,385 144,000 - 210,000 3,503
Operating 1997 160,000 49,000 27,116 (3) 40,000 2,284
Officer-Westell, Inc.
William J. Noll 1999 228,893 177,225 145,000 4,001
Senior Vice President of 1998 159,211 67,500 -
Research & Development 1997 - -
and Chief Technology
Officer
Marcus H. Hafner, Sr. 1999 216,191 149,040 195,000 2,492
Executive Vice President 1998 140,419 72,000
Business Development 1997 - -
And Corporate Strategy
- ---------------------------
(1) Stock options granted during fiscal 1999 were non-qualified stock
options of Class A Common Stock and were issued under the 1995 Stock
Incentive Plan of the Company. Includes stock options originally
granted in prior years and repriced in fiscal 1999. For additional
information regarding option grants and repricings, see "Executive
Compensation - "Option Grants in Last Fiscal Year" and "Ten-Year Option
Repricing."
(2) Includes matching contributions under the Company's 401(k) Profit
Sharing Plan and life insurance premiums, for fiscal 1999 as follows:
Mr. Zionts: $3,257 and $ 20, respectively; Mr. Nelson: $ 7,570 and $
54, respectively; Mr. Noll $ 3,911 and $ 90, respectively; and, Mr.
Hafner $ 2,471 and $ 21, respectively.
(3) Includes promotion award watch valued at $15,215 and the related
reimbursement for the tax gross-up of $10,355 on the award.
</TABLE>
<PAGE>
The following tables set forth the number of stock options granted to
each of the Named Executive Officers during fiscal 1999 and the stock option
exercises and exercisable and unexercisable stock options held by the Named
Executive Officers as of March 31, 1999. For purposes of table computations the
current fair market value at March 31, 1999was equal to $____________ per share.
<TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------- -------------------------
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE OR STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES BASE PRICE EXPIRATION FOR OPTION TERM (3)
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SH)(2) DATE 5%($) 10%($)
- --------------------- ------------- ----------------- ------------ ------------- ---------- ----------
<S> <C> <C> <C>
Robert H Gaynor 50,000(2) 4/20/03
6.2188
Marc J. Zionts
William J. Noll 50,000(2) $6.2188 4/20/09
Marcus H. Hafner
- -------------------
(1) Based on ___________ total options granted to employees, including the
Named Executive Officers, in fiscal 1999. Such totals includes
___________ previously outstanding options that were repriced in fiscal
1999 and deemed to be new grants under applicable rules of the
Securities and Exchange Commission (the "SEC"). See "Stock Incentive
Committee Report on Repricing of Options." Excluding repriced options,
____________ total new options were granted to employees, including the
Named Executive Officers, in fiscal 1999.
(2) Options were repriced on August 6, 1998 at the then current market price
of $6.2188.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciate stock price.
(4) Option vests in five equal annual installments beginning on the first
anniversary of the option grant.
</TABLE>
<TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL YEAR
SHARES YEAR END(#) END ($)
ACQUIRED ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE # REALIZED ($)(1) UNEXERCISABLE) UNEXERCISABLE)(2)
- --------------------- ----------------- --------------- -------------------------------------------------
<S> <C> <C>
Robert H Gaynor - -
Marc J. Zionts - -
J. William Nelson - -
William J. Noll - -
Marcus H. Hafner, Sr. - -
- -----------------------
(1) Value is calculated by subtracting the exercise price per share from the
fair market value at the time of exercise and multiplying this amount by
the number of shares exercised pursuant to the stock option.
(2) Value is calculated by subtracting the exercise price per share from
$__________, the fair market value at March 31, 1999, and multiplying such
amount by the number of shares subject to the option.
</TABLE>
<PAGE>
EXECUTIVE OFFICER AGREEMENTS
In June 1998, the Company entered into Severance Agreements with each
Named Executive Officer and certain other executive officers of the Company (the
"Severance Agreements"). The Severance Agreements provide that in the event such
officer is terminated without Cause (as defined therein) or such officer resigns
for Good Reason (as defined therein), the Company shall pay to such officer
severance payments equal to such officer's salary and bonus for the fiscal year
in which the termination occurs, and the Severance Agreements also provide for
the payment of certain amounts upon the occurrence of certain events. The
executive officers entering into the Severance Agreements agreed not to compete
with the Company for one year in the event that their of termination entitles
them to severance payments and not to solicit any Company employees for a period
of one year after a termination of such officer's employment with the Company.
The Company's severance payment obligations and an officer's right to this
additional bonus shall terminate upon such officer's death, resignation without
Good Reason, retirement or termination for Cause.
Pursuant to an agreement dated September 13, 1988 between the Company and
Richard Riviere, the Vice President of Transaction Services of the Company and
President of Conference Plus, Inc., a subsidiary of the Company ("Conference
Plus"), Mr. Riviere receives an annual base salary of not less than $75,000
during his employment with the Company. This agreement also provides Mr. Riviere
with a right of first refusal with respect to the Company's interest in
Conference Plus in the event the Company decides to sell such interest. In
addition, after his employment with the Company terminates, Mr. Riviere has
agreed not to compete with the Company for a period of two years.
<PAGE>
COMPENSATION AND STOCK INCENTIVE COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
the Company's executive compensation policies. It annually determines the
compensation to be paid to the executive officers of the Company. The
Compensation Committee has two outside directors. The Stock Incentive Committee
administers and determines the awards to be granted under the Company's 1995
Stock Incentive Plan and the Employee Stock Purchase Plan.
OVERVIEW AND PHILOSOPHY
The executive compensation program is intended to provide overall
levels of compensation for the executive officers which are competitive for the
industries and the geographic areas within which they operate, the individual's
experience, and contribution to the long-term success of the Company. A leading
consulting firm provides for the Compensation Committee's consideration
information regarding executive compensation of companies that operate in
similar industries. The Hambrecht & Quist Communications Index (see the
Performance Graph) includes some of the companies which the Compensation
Committee considers. The Compensation Committee believes that its task of
determining fair and competitive compensation is ultimately judgmental.
The executive compensation program is composed of base salary, annual
incentive compensation, equity based incentives, and other benefits generally
available to all employees.
BASE SALARY
The base salary for each executive is intended primarily to be
competitive with companies in the industries and geographic areas in which the
Company competes. Surveys from outside firms and consultants are used to help
determine what is competitive. In making annual adjustments to base salary, the
Compensation Committee also considers the individual's performance over a period
of time as well as any other information which may be available as to the value
of the particular individual's past and prospective future services to the
Company. This information includes comments and performance evaluations by the
Company's Chief Executive Officer. The Committee considers all such data; it
does not prescribe the relative weight to be given to any particular component.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation is ordinarily determined by a formula
which considers the financial goals and objectives of the Company.
LONG-TERM INCENTIVES
In general, both the Compensation Committee and the Stock Incentive
Committee believe that equity based compensation should form a part of an
executive's total compensation package. Stock options may be granted to
executives in order to directly relate a portion of the executive's earnings to
the stock price appreciation realized by the Company's stockholders over the
option period. Stock options also provide executives with the opportunity to
acquire an ownership interest in the Company. The number of shares covered by
each executive's option will be determined by factors similar to those
considered in establishing base salaries. In fiscal 1999, 100,000 stock options
were granted to executive officers
OTHER
Other benefits are generally those available to all other employees in
the Company, or a subsidiary, as appropriate.
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
The Compensation Committee and the Stock Incentive Committee apply the
same standards in establishing the compensation of the Company's Chief Executive
Officer as are used for other executives. However, there are procedural
differences. The Chief Executive Officer does not participate in setting the
amount and nature of his compensation. For fiscal 1999, Robert Gaynor received
options to purchase 50,000 shares of Class A Common Stock.
The Compensation Committee does not expect that Section 162(m) of the
Internal Revenue Code will limit the deductibility of compensation expected to
be paid by the Company in the foreseeable future.
This report is submitted by the Compensation Committee of the Board of
Directors.
Respectfully Submitted By:
The Compensation Committee
Ormand J. Wade (Chair)
Paul A. Dwyer
Melvin J. Simon
The Stock Incentive Committee
Ormand J. Wade (Chair)
Robert H. Gaynor
Paul A Dwyer
<PAGE>
STOCK INCENTIVE COMMITTEE REPORT ON REPRICING OF OPTIONS
The Company's 1995 Incentive Stock Option Plan is utilized to attract, retain
and incentivize officers and other key employees. In August, 1998, the Stock
Incentive Committee concluded that, as a result of the decline in the market
price of the Company's Class A Common Stock during the preceeding months,
previously granted options had lost much of their incentive value. The Stock
Incentive Committee viewed this as particularly problematic at a time when the
Company was implementing major changes in its sales, business and recruiting
models. As a result, the Stock Incentive Committee determined that it would be
in the best interests of the Company and its stockholders to restore the
incentive value of outstanding options. Accordingly, the Stock Incentive
Committee approved a repricing, effective August 6, 1998, pursuant to which all
options were cancelled and then regranted to reduce the exercise price to
$6.2188 per share (which was equal to the market price of the Company's Class A
Common Stock on that date). All other terms of the options remained the same.
The repricing was applicable for all employees of the Company, including the
Named Executive Officers.
Set forth below in the "Ten-Year Option Repricings" table is
information concerning option repricings with respect to the Named Executive
Officers who participated in the repricing program, as well as information with
respect to options repriced on behalf of executives in fiscal 1999.
Respectfully Submitted By:
The Stock Incentive Committee
Ormand J. Wade (Chair)
Robert H. Gaynor
Paul A Dwyer
<TABLE>
Ten-Year Option Repricings
<CAPTION>
Securities Length of
Underlying Market Price Original Term
Number of of Stock at Exercise Price Remaining at
Options Time of at Time of New Exercise Date of
Name Date Repriced Repricing Repricing Price Repricing
- ---- ---- -------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Gary Seamans 3/12/97 150,000 9.6875 22.0625 9.6875 9.61 yrs
Former Chairman of the
Board and Chief
Executive Officer
Robert H. Gaynor 8/6/98 50,000 6.2188 12.00 6.2188 4.70 yrs.
Chairman of the Board 8/6/98 50,000 6.2188 15.6875 6.2188 9.33 yrs.
and Chief Executive
Officer of Westell
Technologies, Inc.
Robert D. Faw 7/24/96 40,000 21.625 37.625 21.625 9.83 yrs
Former Chief Executive 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs
Officer-Westell, Inc.
J. William Nelson 7/24/96 40,000 21.625 37.625 21.625 9.83 yrs.
President and Chief 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
Operating Officer-Westell, 8/6/98 (2) 6.2188 9.6875 6.2188 7.96 yrs.
Inc. 8/6/98 50,000 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 100,000 6.2188 13.0625 6.2188 9.40 yrs.
8/6/98 60,000 6.2188 15.6875 6.2188 9.33 yrs.
Curtis L. Benton 7/24/96 20,000 21.625 37.625 21.625 9.83 yrs.
Former Executive Vice 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
President
Richard P. Riviere 7/24/96 12,000 21.625 37.625 21.625 9.83 yrs.
Senior Vice President 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
of Transaction Services 8/6/98 (2) 6.2188 9.6875 6.2188 7.96 yrs.
and Chief Executive 8/6/98 12,000 6.2188 15.6875 6.2188 9.33 yrs.
Officer-Conference
Plus, Inc.
Stephen J. Hawrysz 7/24/96 20,000 21.625 37.625 21.625 9.83 yrs.
Former Vice President, 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
Secretary, Treasurer 8/6/98 (2) 6.2188 9.6875 6.2188 7.96 yrs.
and Chief Financial 8/6/98 30,000 6.2188 12.5625 6.2188 8.65 yrs.
Officer 8/6/98 40,000 6.2188 15.6875 6.2188 9.33 yrs.
David B. Corey 7/24/96 40,000 21.625 37.625 21.625 9.83 yrs.
Former Senior Vice President 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
Global Marketing
Marcus H. Hafner, Sr. 7/24/96 40,000 21.625 37.625 21.625 9.83 yrs.
Executive Vice 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
President Business 8/6/98 (2) 6.2188 9.6875 6.2188 7.96 yrs.
Development and 8/6/98 27,500 6.2188 12.5625 6.2188 8.65 yrs.
Corporate Strategy - 8/6/98 2,500 6.2188 12.5625 6.2188 8.65 yrs.
Westell, Inc. 8/6/98 5,000 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 5,000 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 75,000 6.2188 13.0625 6.2188 9.40 yrs.
8/6/98 25,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
Neil J. Kreitman 7/24/96 40,000 21.625 37.625 21.625 9.83 yrs.
Former Senior Vice 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
President Manufacturing
and Global Sourcing
Marc J. Zionts 7/24/96 40,000 21.625 37.625 21.625 9.83 yrs.
Chief Executive 3/12/97 (1) 9.6875 21.625 9.6875 9.38 yrs.
Officer-Westell, Inc. 8/6/98 (2) 6.2188 9.6875 6.2188 7.96 yrs.
8/6/98 150,000 6.2188 10.75 6.2188 9.38 yrs.
8/6/98 35,000 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 5,000 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 2,500 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 2,500 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 5,000 6.2188 12.5625 6.2188 8.65 yrs.
8/6/98 30,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
William J. Noll
Senior Vice President of
Product Development 8/6/98 50,000 6.2188 12.00 6.2188 9.71 yrs.
and Chief Technology 8/6/98 25,000 6.2188 15.6875 6.2188 9.33 yrs.
Officer 8/6/98 7,500 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 7,500 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 5,000 6.2188 15.6875 6.2188 9.33 yrs.
8/6/98 45,000 6.2188 18.50 6.2188 8.76 yrs.
- -------------------
(1) Options were repriced on July 24, 1996 at the then current market
price, and were then subsequently repriced on March 12, 1997 at the
then current market price of $9.6875 per share.
(2) Options repriced on March 12, 1997 at the then current market price,
and were then subsequently repriced on August 6, 1998 at the then
current market price of $6.2188 per share.
</TABLE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Messrs. Wade
(Chair), Dwyer and Simon, the Assistant Secretary and Assistant Treasurer of the
Company. No interlocking relationship exists between the Company's Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company, nor has any such interlocking relationship
existed in the past.
Since 1984, Melvin J. Simon & Associates, Ltd. has provided accounting
and other financial services to the Company. Mr. Simon, a director and the
Assistant Secretary and Assistant Treasurer of the Company and Co-Trustee of the
Voting Trust, is the sole owner of Melvin J. Simon & Associates, Ltd. The
Company paid Melvin J. Simon & Associates, Ltd. approximately $44,000, $66,000
and $40,000 in fiscal 1997, 1998 and 1999, respectively, for its services. The
Company believes that these services are provided on terms no less favorable to
the Company than could be obtained from unaffiliated parties.
The Company has granted Robert C. Penny III and Melvin J. Simon, as
Trustees of the Voting Trust, certain registration rights with respect to the
shares of Common Stock held in the Voting Trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's officers
and directors, and persons who own more than ten percent of the Company's
outstanding stock, file reports of ownership and changes in ownership with the
Securities and Exchange Commission. During fiscal 1999, to the knowledge of the
Company, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were complied with
except that Mr. Seazholtz filed a Form 5 on June 4, 1999 reflecting a sale of
Class A Common Stock that should have been reported on a Form 4 by May 10, 1998.
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the quarterly percentage
change in the Company's cumulative total stockholder return on its Class A
Common Stock with the cumulative total return of the Nasdaq Stock Market--U.S.
Index and the Hambrecht & Quist Communications Index for the period commencing
December 1, 1995 (the first day of trading of the Class A Common Stock on the
Nasdaq National Market) and ending March 31, 1999. The stock price performance
shown in the performance graph is not indicative of future stock price
performance.
o $100 Invested on 12/01/95 in Stock or Index
o Including reinvestment of dividends.
o Fiscal year ending March 31.
<TABLE>
TOTAL RETURN - DATA SUMMARY
<CAPTION>
Cumulative Total Return
----------------------------------------
12/1/95 3/96 3/97 3/98 3/99
<S> <C> <C> <C> <C> <C> <C>
Westell Technologies Inc. WSTL 100 285 206 196 68
NASDAQ Stock Market (U.S.) INAS 100 105 116 176 237
H & Q Communications IHQC 100 98 86 124 193
</TABLE>
<PAGE>
ACCOUNTANTS
Selection of independent auditors is made by the Board of Directors
upon consultation with the Audit Committee. The Company's independent auditors
for fiscal 1999 were Arthur Andersen LLP. The Board of Directors will vote upon
the selection of auditors for the current fiscal year at a future Board meeting.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting
with the opportunity to respond to appropriate questions and to make a statement
if they desire to do so.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal to be included in the Company's proxy statement
and presented at the 1999 Annual Meeting must be received at the Company's
executive offices, 750 North Commons Drive Aurora, Illinois 60504 by no later
than April 23, 2000 for evaluation as to inclusion in the Proxy Statement in
connection with such meeting.
Stockholders wishing to nominate a director or bring a proposal before
the 1999 Annual Meeting (but not include the proposal in the Company's proxy
statement) must cause written notice of the proposal to be received by the
Secretary of the Company at the principal executive offices of the Company in
Aurora, Illinois, by no later than 60 days prior to the Annual Meeting date, as
well as comply with certain provisions of the Company's bylaws. In order for a
stockholder to nominate a candidate for director, such notice must describe
various matters regarding the nominee and the stockholder giving the notice,
including such information as name, address, occupation and shares held. In
order for a stockholder to bring other business before a stockholders meeting,
the notice for such meeting must include various matters regarding the
stockholder giving the notice and a description of the proposed business. These
requirements are separate from and in addition to the requirements a stockholder
must meet to have a proposal included in the Company's proxy statement.
FINANCIAL INFORMATION
The Company has furnished its financial statements to stockholders in
its 1999 Annual Report, which accompanies this Proxy Statement. In addition, the
Company will promptly provide, without charge to any stockholder, on the request
of such stockholder, an additional copy of the 1999 Annual Report and the
Company's most recent Form 10-K. Written requests for such copies should be
directed to Westell Technologies, Inc., Attention: Nicholas C. Hindman, Sr.,
Acting Vice President, Secretary, Treasurer and Chief Financial Officer, 750
North Commons Drive, Aurora, Illinois 60504; telephone number (630) 898-2500.
<PAGE>
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Company knows of no other business which
may come before the Annual Meeting. However, if any other matters are properly
presented to the Meeting, the persons named in the proxies will vote upon them
in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY
AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
NICHOLAS C. HINDMAN,SR.
Acting Vice President, Secretary, Treasurer and
Chief Financial Officer
Date: August 20, 1999
<PAGE>
PROXY
WESTELL TECHNOLOGIES, INC.
This Proxy is Solicited by the Board of Directors for the Annual Meeting of
Shareholders, on September 15, 1998, 10:00 a.m. local time, at the Westell
Corporate Headquarters, 750 N. Common Drive, Aurora, IL 60504.
The undersigned hereby appoints Robert H. Gaynor and Melvin J. Simon, and each
of them, proxies with the powers the undersigned would possess if personally
present, and will full power of substitution, to vote all Class A Common Stock
and/or Class B Common Stock held of record by the undersigned in Westell
Technologies, Inc., upon all subjects that may properly come before the Annual
Meeting, including the matters described in the proxy statement furnished
herewith, subject to any directions indicated on the reverse side of this card.
THE UNDERSIGNED HEREBY REVOKES ANY PROXY HERETOFORE GIVEN AND ACKNOWLEDGES
RECEIPT OF THE NOTICE AND PROXY STATEMENT FOR THE ANNUAL MEETING.
THIS PROXY WHEN PROPERY EXECUTED WILL BE VOTED IN THE MANNTER DIRECTED BY THE
UNDERSIGNED STOCHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below
/ / WITHHOLD AUTHORITY to vote (except as marked to the contrary) for all listed
below
NOMINEES: ROBERT H. GAYNOR
PAUL A. DWYER
ROBERT C. PENNY III
MELVIN J. SIMON
JOHN W. SEAZHOLTZ
ORMAND J. WADE
________________________________________________________________________
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided above. (Continued, and
to be signed on the other side)
2. APPROVAL OF THE ISSUANCE OF SHARES OF CLASS A COMMON STOCK ISSUABLE UPON
CONVERSION OF $20,000,000 AGGREGATE PRINCIPLE AMOUNT OF WESTELL TECHNOLOGIES,
INC.'S 6% SECURED SUBORDINATED CONVERTIBLE DEBENTURES DUE 2004 AND UPON EXERCISE
OF WARRANTS TO PURCHASE 909,091 SHARES OF CLASS A COMMON STOCK AT AN EXERCISE
PRICE OF $8.9208 PER SHARE.
/ / FOR
/ / AGAINST
/ / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof. Please sign exactly as name or names appear on this proxy, if stock is
held jointly, each holder should sign. If signing as attorney, trustee,
executor, administrator, custodian, guardian or corporate officer, please give
full title.
Date: ________________________________, 1999
_____________________________________________ Signature
_____________________________________________ Signature
VOTES MUST BE INDICATED (X) IN BLACK
