<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- - --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to [Section]240.14a-11(c) or
[Section]240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DYNATECH CORPORATION
(Name of Registrant as Specified In Its Charter)
DYNATECH CORPORATION
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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> 2
[LOGO] DYNATECH
CORPORATION
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
Burlington, Massachusetts
June 27, 1996
To the Stockholders of
Dynatech Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Dynatech
Corporation will be held at the offices of Hale and Dorr, 26th Floor, 60 State
Street, Boston, Massachusetts on Tuesday, July 30, 1996 at 10:00 a.m. for the
following purposes:
1. To fix the number of Directors at eight and to elect a class of two
Directors to serve for a three-year term and until their successors are
duly elected and qualified;
2. To consider and act upon a proposal to approve the adoption by the Board
of Directors of the 1996 Employee Stock Purchase Plan; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on June 7, 1996 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
ROBERT H. HERTZ
Clerk
- - --------------------------------------------------------------------------------
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
- - --------------------------------------------------------------------------------
<PAGE> 3
DYNATECH CORPORATION
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 30, 1996
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Dynatech Corporation (the "Company"). The enclosed
proxy, if properly executed and returned, may be revoked at any time before it
is exercised by delivering to the Clerk of the Company a duly executed written
notice of revocation, by delivering a duly executed proxy bearing a later date,
or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke a proxy.
Stock transfer books will not be closed, but the Board of Directors has
fixed the close of business on June 7, 1996 as the record date for determining
the stockholders entitled to notice of, and to vote at, this Annual Meeting and
any adjournment thereof. On that date there were outstanding and entitled to
vote 17,663,839 shares of the Company's Common Stock, par value $.20 per share
("Common Stock"). Each share of Common Stock is entitled to one vote.
The Corporate Headquarters of the Company are located at 3 New England
Executive Park, Burlington, Massachusetts 01803-5087. This proxy statement and
the enclosed proxy are first being mailed to stockholders on or about June 27,
1996.
The Company's Annual Report for the fiscal year ended March 31, 1996,
containing financial statements for that year and prior periods, is being mailed
to stockholders concurrently with this statement.
PROPOSAL NO. 1
ELECTION OF A CLASS OF DIRECTORS
Stockholders will be asked to fix the number of directors at eight. The
Board of Directors is divided into three classes, with the Directors in each
class serving for a term of three years and until their successors are duly
elected and qualified. As the term of one class expires, a successor class is
elected at each annual meeting of stockholders.
At the Annual Meeting, a class of two Directors will be elected to serve
for three years until the 1999 annual meeting and until their successors are
duly elected and qualified. The Board of Directors has nominated William R. Cook
and Robert G. Paul as a class of Directors (the "Nominees"). Each of the
Nominees is currently serving as a Director of the Company. The Board of
Directors anticipates that each of the Nominees will stand for election and will
serve, if elected, as a Director. However, if any person nominated by the Board
of Directors fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other person or persons as the
Board of Directors may recommend. When a quorum is present, a plurality of the
votes cast of the Common Stock represented in person or by proxy and entitled to
vote at the Annual Meeting is required for the election of Directors. The
holders of a majority in interest of all stock outstanding and entitled to vote
at the Annual Meeting shall constitute a quorum.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES.
<PAGE> 4
INFORMATION REGARDING NOMINEES AND DIRECTORS
<TABLE>
The following table sets forth certain information, as of May 1, 1996, with respect
to the Nominees and those Continuing Directors of the Company whose terms expire at the
annual meetings of stockholders in 1997 and 1998, based upon information furnished by
them.
<CAPTION>
NOMINEES FOR ELECTION AT 1996 ANNUAL MEETING
(CLASS WITH TERM EXPIRING IN 1999)
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR AT LEAST THE PAST FIVE YEARS AGE SINCE
-------------------------------- --- --------
<S> <C> <C>
William R. Cook (C) 52 1994
Chairman, President, and Chief Executive Officer of Betz
Laboratories, Inc. of Trevose, Pennsylvania, a chemical company,
since 1994; President and Chief Operating Officer from 1990 to
1993. Mr. Cook is also a Director of Betz Laboratories, Inc. and
the Chemical Manufacturers Association. He is a Trustee of the
Academy of Natural Sciences.
Robert G. Paul (C) 54 1994
President and Chief Executive Officer of The Allen Group Inc.,
manufacturer and marketer of electronics and other products for
the wireless communications industry, in Beachwood, Ohio since
1991; President and Chief Operating Officer prior to 1991. Mr.
Paul is also a Director of The Allen Group Inc.
</TABLE>
<TABLE>
CONTINUING DIRECTORS
(CLASS WITH TERM EXPIRING IN 1997)
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR AT LEAST THE PAST FIVE YEARS AGE SINCE
-------------------------------- --- --------
<S> <C> <C>
John F. Reno (E) 57 1993
President and Chief Executive Officer of the Company since
January 1993; President and Chief Operating Officer from July
1991 to January 1993; Executive Vice President and Chief
Operating Officer prior to July 1991. Mr. Reno is also a Director
of Millipore Corporation.
L. Dennis Kozlowski (A) 49 1995(1)
Chairman of the Board of Tyco International Ltd. since 1993;
Chief Executive Officer since 1992; President and Chief Operating
Officer since 1989. President of Grinnell Corporation, a
subsidiary of Tyco International, since 1984. Mr. Kozlowski is
also a Director of Thiokol Corp., Applied Power Inc., and
Raytheon Company.
Peter van Cuylenburg (B) 48 1996(2)
Consultant for Xerox Corporation since January 1996. Executive
Vice President of Xerox from July 1993 to December 1995. From
April 1992 to May 1993, Mr. van Cuylenburg was President of NeXT
Computer, Inc., a manufacturer of computer systems, and from
December 1989 to April 1992, he was a Group Director for Cable &
Wireless plc. Mr. van Cuylenburg is also a Director of Mitel
Corporation.
</TABLE>
2
<PAGE> 5
<TABLE>
CONTINUING DIRECTORS
(CLASS WITH TERM EXPIRING IN 1998)
<CAPTION>
NAME AND PRINCIPAL OCCUPATION DIRECTOR
FOR AT LEAST THE PAST FIVE YEARS AGE SINCE
-------------------------------- --- --------
<S> <C> <C>
Ronald L. Bittner (A)(E) 54 1995
Chairman, CEO, President, and Director of Frontier Corporation, a
national telecommunications company in Rochester, NY since 1993;
President and Chief Executive Officer since 1992. Prior to 1992,
Mr. Bittner served as President of Telecom Group.
O. Gene Gabbard (C)(E) 56 1994
Consultant and entrepreneur who works with high technology
start-up companies since February 1993. Prior to that, Mr.
Gabbard was an Executive Vice President and Chief Financial
Officer of MCI Communications Corporation. Mr. Gabbard is also a
Director of InterCel, Inc., Adtran, Inc., and MindSpring
Enterprises, Inc.
Richard K. Lochridge (A)(B)(E) 52 1986
President and Chief Executive Officer of Lochridge and Company,
Inc., Boston, Massachusetts, a management consulting firm since
April 1986. Prior to that, Mr. Lochridge was a Vice President of
the Boston Consulting Group, Boston, Massachusetts and a member
of the Management Committee of the Boston Consulting Group, Inc.
Mr. Lochridge is also a Director of Hannaford Brothers Food, Inc.
<FN>
- - ---------------
(A) Member of the Audit Committee.
(B) Member of the Board Governance Committee.
(C) Member of the Compensation Committee.
(E) Member of the Executive Committee.
(1) Mr. Kozlowski was elected a Director of the Company in September 1995.
(2) Mr. van Cuylenburg was elected a Director of the Company in January 1996.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has Executive, Audit, Compensation, and Board Governance
Committees of the Board of Directors.
The Board of Directors met eight times during fiscal year 1996. Each
Director attended at least 75 percent of the aggregate number of meetings of the
Board of Directors and the committees on which he served.
The Executive Committee, which met two times in fiscal year 1996, is vested
with the authority of the Board of Directors in most matters between meetings of
the Board of Directors.
The Audit Committee, whose Chairman is Ronald L. Bittner, met on three
occasions in fiscal year 1996. The Audit Committee recommends to the Board of
Directors the appointment of the independent public accountants, reviews the
scope and budget for the annual audit, and reviews the results of the
examination of the Company's financial statements by the independent public
accountants. The Audit Committee also periodically reviews the job performance
of the Chief Financial Officer. The Company's financial personnel and
independent public accountants have free access to the Audit Committee.
The Compensation Committee, whose Chairman is O. Gene Gabbard, reviews the
Company's executive compensation and benefit policies as further described in
the Compensation Committee Report on Executive
3
<PAGE> 6
Compensation included in this proxy statement. The Compensation Committee met
four times during fiscal year 1996. The Company is not aware of any Compensation
Committee interlocks.
The Board Governance Committee, whose Chairman is Richard K. Lochridge, was
established in 1994 as the Nominating Committee and was renamed the Board
Governance Committee in June 1995. The Board Governance Committee did not
formally meet in fiscal year 1996. The Board Governance Committee consists of
Directors who are not officers or employees of the Company or any subsidiary of
the Company. The Board Governance Committee is charged with the responsibility
of evaluating the Board of Directors' structure, personnel, and processes so as
to permit the Board of Directors to discharge successfully its fiduciary duties
and to consider the needs of the Company's stockholders. In this connection, the
Board Governance Committee typically recommends to the Board of Directors the
slate of nominees for election as Director at each annual meeting of
stockholders. The Board Governance Committee will consider the recommendation of
any stockholder with respect to nominees for election to the Board of Directors.
Any such recommendation should be accompanied by all relevant information,
including information required by the applicable rules of the Securities and
Exchange Commission (the "Commission") and any other industry experience. To
make a recommendation, a stockholder should send the nominee's name and
supporting information to the Clerk of the Company at the Company's principal
executive office. In order to permit the Board Governance Committee to give fair
consideration to any such recommendation, the information should be received by
the date specified under the applicable rules of the Commission relating to
stockholder proposals.
Moreover, the Company's By-laws provide that, in order to be considered at
an annual meeting, any nomination for a candidate for election as a Director,
other than those made by, or at the direction of, the Board of Directors, must
be delivered to, or mailed and received by, the Company not less than 75 days
nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting (the "Anniversary Date"); provided, however, that in
the event the annual meeting is scheduled to be held on a date more than 30 days
before or more than 60 days after the Anniversary Date, notice must be so
delivered not later than the close of business on the later of (i) the 75th day
prior to the scheduled date of such annual meeting or (ii) the 15th day after
public disclosure of the date of such meeting. To make such a nomination, a
stockholder should send the nominee's name and appropriate supporting
information, as set forth in the Company's By-laws, to the Company at its
principal executive office.
COMPENSATION OF DIRECTORS
Compensation of Non-Employee Directors ("Non-Employee Directors") of the
Company is at the rate of $1,500 for each Board of Directors or committee
meeting attended ($500 for each committee meeting held directly before or after
a meeting of the Board of Directors), $750 for a meeting held over the
telephone, plus a quarterly retainer fee paid at the rate of 400 shares of
Dynatech Common Stock per quarter. The Chairman of the Board was paid an
additional $15,000 quarterly during fiscal year 1996, but will no longer receive
this amount starting with the quarter beginning on July 1, 1996. Chairmen of all
Committees other than the Executive and Board Governance Committees received an
additional 100 shares of Dynatech Common Stock per quarter, but this amount is
being reduced to 50 shares starting with the quarter beginning on July 1, 1996.
Starting in July 1996, the Chairman of the Board Governance Committee will
receive 50 shares of Dynatech Common Stock per quarter. All non-employee members
of the Executive Committee received an additional 200 shares of Dynatech Common
Stock per quarter. This payment of 200 shares will stop with the quarter
beginning July 1, 1996. In addition, the Dynatech Corporation 1994 Stock Option
and Incentive Plan (the "Stock Incentive Plan") provides for the automatic grant
of stock options to Non-Employee Directors of the Company. Each Non-Employee
Director is entitled to receive an option to purchase 10,000 shares of Common
Stock upon initial election to the Board of Directors and an additional option
to purchase 3,000 shares of Common Stock after each Annual Meeting of
Stockholders. Moreover, certain one-time grants of
4
<PAGE> 7
stock options were awarded under the Stock Incentive Plan to Non-Employee
Directors on June 16 and July 1, 1994. Non-Employee Directors who have served on
the Board for at least five years are also entitled to receive an annual
retirement benefit equal to $16,000. Such retirement benefit is payable
following the later of the Non-Employee Director's 60th birthday or retirement
from the Board (or such later date as the Director shall elect) for a period
equal to the number of full years of service on the Board, up to a maximum of
ten years.
<TABLE>
PRINCIPAL STOCKHOLDERS
Based upon information contained in the most recent Schedule 13D, Schedule
13G, or other information available to the Company, the following entities
beneficially owned more than five percent (5%) of the Company's Common Stock as
of May 1, 1996:
<CAPTION>
SHARES
NAME OWNED PERCENTAGE(1)
---- ------ -------------
<S> <C> <C>
FMR Corp.................................................. 2,385,900 12.8%
82 Devonshire Street
Boston, MA 02109
Trimark Investment Management Inc......................... 1,401,000 7.5%
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario
Canada M5X 1E5
First Chicago NBD Corporation............................. 1,069,200 5.7%
1 First National Plaza
Chicago, IL 48226
State of Wisconsin Investment Board....................... 1,015,000 5.5%
P. O. Box 7842
Madison, WI 53707
<FN>
- - ---------------
(1) Based on 18,605,298 shares of Common Stock outstanding as of May 1, 1996.
</TABLE>
5
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
The following table sets forth certain information as of May 1, 1996, with respect to the shares of
Common Stock of the Company beneficially owned by each Director of the Company, each of the executive
officers named in the Summary Compensation Table contained herein, and by all Directors and executive
officers of the Company as a group.
<CAPTION>
AMOUNT AND OPTION SHARES DEFERRED PERCENTAGE
NATURE OF SUBJECT TO STOCK OF COMMON
NAME OF INDIVIDUAL BENEFICIAL OWNERSHIP(1) VESTING(2) SHARES(3) STOCK(4)
- - ------------------ ----------------------- ------------- --------- ----------
<S> <C> <C> <C> <C>
William R. Cook........................ 4,800 13,000 0 *
Robert G. Paul......................... 7,400 13,000 0 *
L. Dennis Kozlowski.................... 1,200 10,000 0 *
Peter van Cuylenburg................... 800 10,000 0 *
Ronald L. Bittner...................... 0 13,000 0 *
O. Gene Gabbard........................ 4,900 13,000 0 *
Richard K. Lochridge................... 6,000 18,000 163 *
James B. Hangstefer.................... 36,000(5) 33,000 0 *
John F. Reno........................... 130,254(6) 260,400 0 *
John R. Peeler......................... 50,170(7) 108,000 2,132 *
George A. Merrick...................... 8,500(8) 51,000 0 *
Robert H. Hertz........................ 23,965(9) 63,800 4,599 *
Roger C. Cady.......................... 7,500(10) 40,400 4,700 *
All Directors and Executive Officers
(16 persons)......................... 294,000(11) 700,600 11,594 1.6%
<FN>
- - ---------------
* Less than 1%
(1) Represents shares of Common Stock beneficially owned on May 1, 1996 based upon information supplied
by the persons listed. Unless otherwise noted, each person has sole voting and investment power with
respect to such shares.
(2) Represents shares of Common Stock underlying stock options already granted but which are not yet
vested or exercisable within 60 days of May 1, 1996.
(3) Represents shares of Common Stock payable but receipt of which has been voluntarily deferred
pursuant to the terms of the Non-Employee Directors' Stock Compensation Plan and 1994 Stock Option
and Incentive Plan.
(4) Based upon 18,605,298 shares of Common Stock outstanding as of May 1, 1996. Common Stock includes all
shares of outstanding Common Stock plus, as required for the purpose of determining beneficial
ownership (in accordance with Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934,
as amended), all shares of Common Stock subject to any right of acquisition by such person, through
exercise or conversion of any security, within 60 days of May 1, 1996.
(5) Includes 6,000 shares owned by Mr. Hangstefer's spouse, as to which Mr. Hangstefer disclaims any
beneficial ownership. Mr. Hangstefer's term as Director will terminate effective July 30, 1996.
(6) Includes 2,000 shares owned by Mr. Reno's spouse and 11,050 shares owned by a relative for which Mr.
Reno has power of attorney. Includes 76,400 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of May 1, 1996.
(7) Includes 30,400 shares of Common Stock issuable upon exercise of stock options which are exercisable
within 60 days of May 1, 1996.
(8) Includes 8,000 shares of Common Stock issuable upon exercise of stock options which are exercisable
within 60 days of May 1, 1996.
</TABLE>
6
<PAGE> 9
(9) Includes 8,000 shares owned by Mr. Hertz's spouse. Includes 11,200 shares
of Common Stock issuable upon exercise of stock options which are
exercisable within 60 days of May 1, 1996.
(10) Includes 200 shares owned by Mr. Cady's spouse. Includes 4,000 shares of
Common Stock issuable upon exercise of stock options which are exercisable
within 60 days of May 1, 1996.
(11) Includes 141,500 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of May 1, 1996. Excludes
shares which may become vested and exercisable upon a Change in Control as
defined in the stock option plan pursuant to which such options were
granted.
EXECUTIVE COMPENSATION
<TABLE>
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information concerning compensation
awarded to, earned by, or paid to (i) the Company's Chief Executive Officer and (ii) four highest
compensated executive officers who were serving as executive officers at the end of fiscal 1996
(collectively, the "Named Executive Officers") for services rendered in all capacities with respect
to the Company's fiscal years ended March 31, 1994, 1995, and 1996.
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION(2)
------------------------------- --------------- ALL OTHER
NAME AND FISCAL SALARY BONUS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#) ($)(3)
------------------ ------ ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
John F. Reno.................. 1996 435,000 372,836 62,000 25,533
President and 1995 385,000 420,609 144,000 5,571
Chief Executive Officer 1994 370,000 26,492 0 3,907
John R. Peeler................ 1996 225,042 293,128 28,000 15,939
Corporate Vice President-- 1995 213,000 305,790 64,000 5,519
Communications Test Division 1994 200,000 120,804 0 3,882
George A. Merrick(4).......... 1996 204,667 196,798 19,000 7,253
Corporate Vice President-- 1995 116,667 75,000 40,000 0
Display Business 1994 - - - -
Robert H. Hertz............... 1996 216,625 133,633 19,000 11,672
Treasurer and Chief 1995 200,000 170,244 30,000 5,571
Financial Officer 1994 195,000 9,372 0 3,907
Roger C. Cady(5).............. 1996 208,207 99,898 14,000 10,815
Corporate Vice President-- 1995 202,500 145,825 13,000 5,362
Business Development 1994 200,000 0 20,000 0
<FN>
- - ---------------
(1) Perquisites and other personal benefits paid to each Named Executive Officer in each instance
aggregated less than 10% of the total annual salary and bonus set forth in the columns
entitled "Salary" and "Bonus" for each named executive officer, and accordingly, are therefore
omitted from the table as permitted by the rules of the Securities and Exchange Commission.
(2) The Company did not grant any restricted stock awards or stock appreciation rights to any of the
Named Executive Officers during the years shown. The Company does not have any long-term
incentive plan.
(3) Figures in this column represent the Company's contributions on behalf of each of the Named
Executive Officers under the Company's 401(k) plan.
(4) Mr. Merrick joined the Company in September 1994.
(5) Mr. Cady joined the Company in March 1993, and became Corporate Vice President in April 1993.
</TABLE>
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
The following table sets forth information concerning individual grants of stock options to the Named
Executive Officers during the fiscal year ended March 31, 1996.
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL
% OF REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OPTIONS ANNUAL RATES OF
OF SECURITIES GRANTED STOCK PRICE
UNDERLYING TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#) YEAR (%) ($/SH)(1) DATE 5%($) 10%($)
---- ------------- --------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Reno.............. 62,000 9.2% $20.25 * $789,577 $2,000,944
John R. Peeler............ 28,000 4.2 20.25 * 356,583 903,652
George A. Merrick......... 19,000 2.8 20.25 * 241,967 613,192
Robert H. Hertz........... 19,000 2.8 20.25 * 241,967 613,192
Roger C. Cady............. 14,000 2.1 20.25 * 178,292 451,826
<FN>
- - ---------------
* Options vest annually in five equal installments beginning on the anniversary date of grant. The options in
this table expire 10 years after grant.
The table also shows the value of the options granted at the end of the
option terms if the price of the Common Stock were to appreciate annually by 5%
and 10%, respectively. There is no assurance that the stock price will
appreciate at the rates shown in the table. If the stock price appreciates, the
value of stock held by all stockholders will increase.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
<TABLE>
The following table sets forth certain information regarding stock option exercises by the
Named Executive Officers during the fiscal year ended March 31, 1996, and stock options held by
the Named Executive Officers at March 31, 1996.
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTION AT
FY-END(#) FY-END(2)($)
VALUE ------------- ---------------
SHARES ACQUIRED REALIZED(1) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
John F. Reno............... 21,200 320,400 76,400/260,400 878,400/2,168,700
John R. Peeler............. 0 0 30,400/108,000 377,600/1,001,000
George A. Merrick.......... 0 0 8,000/ 51,000 105,000/ 481,750
Robert H. Hertz............ 13,400 210,250 11,200/ 63,800 142,350/ 631,150
Roger C. Cady.............. 0 0 2,600/ 44,400 33,800/ 375,700
<FN>
- - ---------------
(1) Calculated on the basis of the fair market value of the Common Stock on the date of exercise,
less the option exercise price.
(2) Calculated on the basis of the fair market value of the Common Stock on March 29, 1996
($23.50), less the option exercise price.
</TABLE>
8
<PAGE> 11
SPECIAL TERMINATION AGREEMENTS
Each of the persons named in the compensation table set forth above as well
as other key employees have entered into Special Termination Agreements with the
Company. These Agreements provide that if there is a "Change in Control" of the
Company (as defined in the Agreements), and if during the two-year period
following such Change in Control the officer's employment is terminated for any
reason other than on account of death or for "cause," or the officer terminates
his or her own employment following a demotion, reduction in compensation, or
similar event, the officer will be entitled to receive a lump sum payment from
the Company within 15 days after the date of termination and continuance of
fringe benefits. Under the Agreements, the amount of the severance payment is
based on an officer's length of service with the Company, ranging incrementally
from one times the officer's average annual cash compensation to three times the
officer's average annual cash compensation after fifteen years of service.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1996, Dynatech paid Lochridge and Company, Inc., a
management consulting firm based in Boston, Massachusetts, aggregate fees of
$85,000 for professional services done by their Technology Practice area. The
Company anticipates that it will retain Lochridge and Company, Inc. to provide
management consulting services in fiscal year 1997. Richard K. Lochridge, a
Director of the Company, is President and Chief Executive Officer of Lochridge
and Company, Inc. The Company believes that the terms of its arrangements with
Lochridge and Company, Inc. are at least as favorable to the Company as those
the Company could negotiate with unrelated third parties.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was established in
1979 and is comprised solely of independent, Non-Employee Directors. The
Compensation Committee reviews and approves all compensation plans, benefit
programs, and perquisites for executives and other employees. The Compensation
Committee sets the salary of the Chief Executive Officer (CEO), sets relative
relationships between the CEO salary and salary of other key executives, and
recommends to the Board the compensation program for Directors. The Compensation
Committee reviews and approves management recommendations for stock option
grants under the Company's stock option plan. The Compensation Committee
periodically reviews the job performance of the Chief Executive Officer.
The Company's executive compensation program has been designed to attract
and retain exceptional executives who seek a long-term association with the
Company and who enjoy the challenge of pay for performance. The basic program
consists of two cash compensation components: base salary and a performance
based annual bonus. A third component, ownership-linked stock options, is used
for executive retention, to attract new key people, to recognize accomplishments
under individually tailored business growth programs, and to align the long-term
interests of eligible executives with those of the stockholders.
Base salary for the CEO is set annually taking into consideration Company
sales and profit growth, overall job performance, and mid-range pay levels for
CEOs of corporations of a similar size. The Committee utilizes, as a reference,
up-to-date information on compensation practices of other companies from several
independent sources. Base salary is then set so as to represent no more than 40%
of total attainable compensation, the majority of which is fully contingent upon
the achievement of both qualitative and quantitative levels of performance and
stockholder return. Mr. Reno's base salary was increased to $450,000 on January
1, 1996 from $430,000. His prior increase as Chief Executive Officer of the
Company was on January 1, 1995. Mr. Reno's base salary is considered to be at
approximately the median base compensation level paid to chief executive
officers of corporations of a similar size and complexity to the Company.
9
<PAGE> 12
The Company's pay for performance annual bonus program is considered the
most significant cash-based compensation component. Executives in this program
earn a bonus set by growth in profit and return on assets from either their
particular business unit or the Company as a whole. The plan is formula-based
using weighted average three year (current and two trailing) performance and is
designed so that consistently good individual performance over the three years
provides the executive with the highest payout. The intent is to encourage
investment decisions in undertakings that will provide the best medium term
(three year) financial results. With consistently outstanding profit growth, an
executive can earn a bonus of several times the executive's annual salary; or,
with no profit growth and return on assets below standard, no bonus at all. For
fiscal year 1996, Mr. Reno's bonus, earned as a result of current and prior
years' performance, was $372,836 and represents approximately 82.9% of his
current base salary. This compares to fiscal year 1995 when his bonus,
calculated under the same formula, was $420,609 and represented 97.8% of his
base salary.
The third compensation component is an ownership-linked stock option
program, which provides long-term incentives to executives that are aligned with
the interests of the Company's stockholders. Stock options, granted at market
price, typically vest annually in 20% increments over five years. A longer term
perspective is established by sequential grants. The stock option program
requires specified levels of continued stock ownership for senior executives
based on position and years of participation in the program. The program is
designed to encourage senior executives to be long-term stockholders and to have
owner concern and care for the Company as a whole. The intent of the option
program is to provide an executive with the opportunity for financial gain which
is larger than cumulative annual bonuses but which takes much longer to achieve;
and which requires meaningful long-term growth in the market price of the
Company's Common Stock for the gain to be realized.
The size and frequency of option grants are based on level of
responsibility, performance of the Company as a whole, the performance of the
executive's business unit, and the executive's personal performance. Annually
both financial and non-financial specific goals are set aimed at building future
marketplace strengths, intercompany cooperation and alliances, achieving
corporate success factors, and, when appropriate, restructuring issues. For
senior executives, option grants may be subject to reduction and/or elimination
in proportion to the executive's ownership position relative to ownership levels
required by the plan. Other option grants may be made based upon management's
specific recommendations, and review and approval by the Compensation Committee.
Grants are made from a Compensation Committee defined pool of shares. In fiscal
year 1996, Mr. Reno was granted an option to purchase 62,000 shares of common
stock.
Section 162(m) of the Internal Revenue Code (the "Code"), which became
effective on January 1, 1994, generally limits the Company's ability to deduct
compensation expense in excess of $1 million paid to the Company's Chief
Executive Officer or other executive officers named in the Summary Compensation
Table contained in this proxy statement. The Committee's policy with respect to
Section 162(m) is to make every reasonable effort to insure that compensation is
deductible to the extent permitted while simultaneously providing Company
executives with appropriate rewards for their performance. Towards this end, the
Company's 1994 Stock Option and Incentive Plan has been drafted in a manner that
will qualify stock options as performance-related compensation not subject to
the cap on deductibility imposed by Section 162(m).
O. Gene Gabbard, Chairman
William R. Cook
Robert G. Paul
10
<PAGE> 13
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
The graph that follows compares the five-year cumulative total return of
the Common Stock with the S&P 500 Composite Stock Price Index and the S&P High
Tech Composite Index. It assumes an investment of $100 on March 31, 1991 in the
Common Stock of the Company, and the stocks comprising the S&P 500 and the S&P
High Tech Composite Index.
[GRAPH]
<CAPTION>
Measurement Period DYNATECH S&P HIGH TECH S&P 500
(Fiscal Year Covered) CORP. COMPOSITE INDEX
<S> <C> <C> <C>
Mar91 100 100 100
Mar92 97.53 102.33 111.04
Mar93 132.10 112.44 127.95
Mar94 91.36 132.25 129.84
Mar95 155.56 167.36 150.05
Mar96 232.10 225.95 198.22
</TABLE>
This total stockholders return model assumes reinvested dividends.
11
<PAGE> 14
PROPOSAL NO. 2
APPROVAL OF THE COMPANY'S
1996 EMPLOYEE STOCK PURCHASE PLAN
In order to encourage stock ownership by employees of the Company, on April
19, 1996, the Board of Directors of the Company adopted, subject to stockholder
approval, the 1996 Employee Stock Purchase Plan (the "1996 Stock Purchase Plan")
covering 600,000 shares of the Company's Common Stock. It is intended that
employees' rights to purchase shares under the 1996 Stock Purchase Plan will be
options granted pursuant to an "employee stock purchase plan" as defined in
Section 423 of the Code. Because participation in the 1996 Stock Purchase Plan
is at the election of the Company's employees, the benefits to be received by
any particular current executive officer, by all current executive officers as a
group or by non-executive officer employees as a group cannot be determined by
the Company at this time.
The 1996 Stock Purchase Plan is summarized below. This summary is qualified
in all respects by reference to the full text of the 1996 Stock Purchase Plan,
attached as Exhibit A to this Proxy Statement.
GENERAL
The 1996 Stock Purchase Plan consists of one or more six month offerings.
The Board of Directors or a committee thereof may, at its discretion, choose a
different offering period of 12 months or less. The first offering under the
1996 Stock Purchase Plan will commence on October 1, 1996 and will end on March
31, 1997. Under the 1996 Stock Purchase Plan, employees may purchase stock in
the Company through payroll deductions.
ELIGIBILITY
All employees, including officers and directors who are employees of the
Company, and all employees of any subsidiary of the Company, who are employed on
the date that an offering commences under the 1996 Stock Purchase Plan are
eligible to participate in the 1996 Stock Purchase Plan. However, no person will
be eligible to participate in the 1996 Stock Purchase Plan if he or she
possesses at least 5% of the voting power of the Company's Common Stock
immediately after the grant of an option under the 1996 Stock Purchase Plan. As
of March 31, 1996, approximately 2,100 employees of the Company were eligible to
participate.
An employee may elect to have up to 10% deducted from his or her
compensation (as defined in the 1996 Stock Purchase Plan) for the purpose of
purchasing stock under the 1996 Stock Purchase Plan. The price at which the
employee may purchase the stock is the lower of 85% of the closing price of the
Common Stock on the Nasdaq National Market as reported in the Wall Street
Journal on the day the offering commences or on the day that the offering
terminates. No employee may receive shares of Common Stock under the 1996 Stock
Purchase Plan and any other stock purchase plan of the Company in any calendar
year that are valued in excess of $25,000, as determined on the first day of the
applicable offering period. If the Company receives requests from employees to
purchase more than the number of shares available during any offering, the
available shares will be allocated on a pro rata basis to subscribing employees.
AMENDMENTS AND TERMS; ADMINISTRATION
The Board of Directors of the Company may at any time terminate or amend
the 1996 Stock Purchase Plan. No such amendment shall be made without approval
of the stockholders of the Company if such approval is required by Section 423
of the Code or Rule 16b-3 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). No amendment shall be effected which would cause the 1996
Stock Purchase Plan to fail to comply with Section 423 of the Code or Rule 16b-3
of the Exchange Act.
12
<PAGE> 15
The 1996 Stock Purchase Plan will be administered by the Compensation
Committee of the Board of Directors, which is authorized to make rules and
regulations for the administration and interpretation of the 1996 Stock Purchase
Plan.
FEDERAL INCOME TAX CONSEQUENCES
The 1996 Stock Purchase Plan is intended to be an "employee stock purchase
plan" as defined in Section 423 of the Code, which provides that the employee
does not have to pay federal income tax with respect to shares purchased under
the 1996 Stock Purchase Plan until he or she sells such shares. At the time of
such sale, the employee is required to pay federal income tax on the difference,
if any, between the price at which he or she sold the shares and the price he or
she paid for them.
If the employee has owned the shares for more than one year and disposes of
them at least two years after the day the offering commenced, he or she will be
taxed as follows: If the market price of the shares on the date they are sold is
less than the price paid for the shares under the 1996 Stock Purchase Plan, the
employee will have a long-term capital loss equal to the price paid over the
sale price. If the sale price is higher than the price paid under the 1996 Stock
Purchase Plan, the employee will have to recognize ordinary income in an amount
equal to the lesser of (a) the market price of the shares on the date the
offering commenced over the price paid or (b) the excess of the sale price over
the price paid. Any additional gain is treated as long-term capital gain.
If the employee sells the shares before he or she has owned them for more
than one year or before the expiration of a two-year period commencing on the
day the offering commenced, the employee will have to recognize ordinary income
in the amount of the difference between the employee's purchase price and the
fair market value of the shares on the date of purchase, and the Company will
receive an expense deduction for the same amount. The employee will recognize a
capital gain or loss for the difference between the sale price and the fair
market value on the date of purchase. The Company will generally not be entitled
to a tax deduction upon the purchase or sale of shares under the 1996 Stock
Purchase Plan.
STOCKHOLDERS' VOTE
The 1996 Stock Purchase Plan will become effective upon approval by the
holders of a least a majority of the shares of Common Stock present or
represented at and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS BELIEVES THAT THE ADOPTION AND APPROVAL OF THE 1996
STOCK PURCHASE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND, THEREFORE, RECOMMENDS A VOTE FOR THIS PROPOSAL.
SELECTION OF AUDITORS
The Board of Directors has selected the accounting firm of Coopers &
Lybrand L.L.P. to serve as the Company's principal accountant for the fiscal
year ending March 31, 1997. Coopers & Lybrand L.L.P. acted as principal
accountant for the fiscal year ended March 31, 1996. A representative of Coopers
& Lybrand L.L.P. will be present at the Annual Meeting, available to respond to
appropriate questions, and given the opportunity to make a statement if the
representative so desires.
PROPOSALS BY STOCKHOLDERS
In order for a proposal of a stockholder to be included in the Board of
Directors' proxy statement for the Company's 1997 Annual Meeting, it must be
received at the principal executive office of the Company on or before March 2,
1997, pursuant to Rule 14a-8 under the Exchange Act. Such a proposal must comply
with the
13
<PAGE> 16
requirements as to form and substance established by the Securities and Exchange
Commission in order to be included in the proxy statement.
In addition, the Company's By-laws provide that any stockholder of record
wishing to have a stockholder proposal considered at an annual meeting, other
than a stockholder proposal included in the Company's proxy statement pursuant
to Rule 14a-8 under the Exchange Act, must provide written notice of such
proposal and appropriate supporting documentation, as set forth in the By-laws,
to the Company at its principal executive office not less than 75 days nor more
than 120 days prior to the anniversary date of the immediately preceding annual
meeting (the "Anniversary Date"); provided, however, that in the event the
annual meeting is scheduled to be held on a date more than 30 days before or
more than 60 days after the Anniversary Date, notice must be so delivered not
later than the close of business on the later of (i) the 75th day prior to the
scheduled of such annual meeting or (ii) the 15th day after public disclosure of
the date of such meeting.
VOTING AND SOLICITATION OF PROXIES
The persons named in the enclosed proxy will vote as directed in the proxy,
and in the absence of such direction will vote for the election of the
applicable nominees for Director named herein and for each of the proposals
described herein. The presence, either in person or by duly executed proxy, of
the holders of a majority of outstanding shares of Common Stock entitled to vote
at a meeting is necessary to constitute a quorum. Shares that reflect
abstentions or "broker non-votes" (i.e., shares held by brokers that are
represented at the meeting but as to which such brokers have not received
instructions from the beneficial owners and, with respect to one or more but not
all issues, such brokers do not have discretionary voting power to vote such
shares) will be counted for purposes of determining whether a quorum is present
for the transaction of business at the meeting but will not be counted as votes
on any proposals at the meeting. Accordingly, with respect to Proposal 1,
Election of a Class of Directors, abstentions and broker non-votes will have no
impact on the outcome of the vote. With respect to Proposal 2, Approval of the
Company's 1996 Employee Stock Purchase Plan, which proposal relates to
stock-based compensation plans qualifying for exemption under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, abstentions will be treated as
votes cast against such proposals while broker non-votes, if any, will have no
impact on the outcome of the votes.
The cost of soliciting proxies will be borne by the Company. The
solicitation of proxies by mail may be followed by solicitation of certain
stockholders by officers, Directors, or employees of the Company by telephone or
in person. The Company also has retained MacKenzie Partners, Inc. to assist in
the solicitation of proxies at an estimated cost of $5,000 plus reasonable
expenses.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
which may come before the meeting. It is the intention of the persons named in
the enclosed proxy to vote the proxy in accordance with their best judgment if
any other matters should properly come before the meeting, including voting for
election of a Director in place of any person named in the proxy who may not be
available for election.
IF YOU MAY NOT BE PRESENT AT THE MEETING, IT WOULD BE APPRECIATED IF YOU
WOULD COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
Burlington, Massachusetts
June 27, 1996
14
<PAGE> 17
EXHIBIT A
DYNATECH CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
APRIL 19, 1996
The purpose of this Plan is to provide eligible employees of DYNATECH
CORPORATION (the "Company") and certain of its subsidiaries with opportunities
to purchase shares of the Company's common stock, $.20 par value (the "Common
Stock"), commencing on October 1, 1996. Six Hundred Thousand (600,000) shares of
Common Stock in the aggregate have been approved for this purpose.
1. Administration. The Plan will be administered by the Company's Board
of Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has authority to make rules and
regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. Eligibility. Participation in the Plan will neither be permitted nor
denied contrary to the requirements of Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations promulgated thereunder. All
employees of the Company, including Directors who are employees, and all
employees of any subsidiary of the Company (as defined in Section 424(f) of the
Code) designated by the Board or the Committee from time to time (a "Designated
Subsidiary"), are eligible to participate in any one or more of the offerings of
Options (as defined in Section 9) to purchase Common Stock under the Plan
provided that they are employees of the Company or a Designated Subsidiary on
the first day of the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary. For
purposes of the preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of an employee, and all
stock which the employee has a contractual right to purchase shall be treated as
stock owned by the employee.
3. Offerings. The Company will make one or more offerings ("Offerings")
to employees to purchase stock under this Plan. Offerings will begin each
October 1 and April 1, or the first business day thereafter (the "Offering
Commencement Dates"); the first Offering shall begin on October 1, 1996. Each
Offering Commencement Date will begin a six (6) month period (a "Plan Period")
during which payroll deductions will be made and held for the purchase of Common
Stock at the end of the Plan Period. The Board or the Committee may, at its
discretion, choose a different Plan Period of twelve (12) months or less for
subsequent Offerings.
4. Participation. An employee eligible on the Offering Commencement Date
of any Offering may participate in such Offering by completing and forwarding a
payroll deduction authorization form to the employee's appropriate payroll
office at least 30 days (or such other period as may be established by the Board
or the Committee) prior to the applicable Offering Commencement Date. The form
will authorize a regular payroll deduction from the Compensation received by the
employee during the Plan Period. Unless an employee files a new form or
withdraws from the Plan, his deductions and purchases will continue at the same
rate for future Offerings under the Plan as long as the Plan remains in effect.
The term "Compensation" means the amount of money reportable on the employee's
Federal Income Tax Withholding Statement, excluding overtime, shift premium,
incentive or bonus awards, allowances and reimbursements for expenses such as
relocation allowances for travel expenses, income or gains on the exercise of
Company stock options or stock appreciation rights, and similar items, whether
or not shown on the employee's Federal Income Tax
A-1
<PAGE> 18
Withholding Statement, but including, in the case of salespersons, sales
commissions to the extent determined by the Board or the Committee.
5. Deductions. The Company will maintain payroll deduction accounts for
all participating employees. With respect to any Offering made under this Plan,
an employee may authorize a payroll deduction of a percentage of the
Compensation he or she receives during the Plan Period or such shorter period
during which deductions from payroll are made, which percentage shall be a whole
number from one through ten.
No employee may be granted an Option (as defined in Section 9) which
permits his rights to purchase Common Stock under this Plan and any other stock
purchase plan of the Company and its subsidiaries, to accrue at a rate which
exceeds $25,000 of the fair market value of such Common Stock (determined at the
Offering Commencement Date of the Plan Period) for each calendar year in which
the Option is outstanding at any time.
6. Deduction Changes. An employee may decrease or discontinue his payroll
deduction once during any Plan Period, by filing a new payroll deduction
authorization form. However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be paid on any employee accounts, except
to the extent that the Board or the Committee, in its sole discretion, elects to
credit employee accounts with interest at such per annum rate as it may from
time to time determine.
8. Withdrawal of Funds. An employee may at any time prior to the close of
business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee,
except that employees who are also directors or officers of the Company within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules promulgated there under may not participate
again for a period of at least six (6) months as provided in Rule 16b3(d)(2)(i)
or any successor provision.
9. Purchase of Shares. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, such number of whole shares of Common Stock of the Company
reserved for the purposes of the Plan determined by dividing 10% of such
employee's Compensation for the immediately prior six-month period by the price
determined in accordance with the formula set forth in the following paragraph
but using the closing price on the Offering Commencement Date of such Plan
Period and rounding the result of such calculation down to the nearest whole
share.
The purchase price for each share purchased will be 85% of the closing
price of the Common Stock on (i) the first business day of such Plan Period or
(ii) the Exercise Date, whichever closing price shall be less. Such closing
price shall be (a) the closing price on any national securities exchange on
which the Common Stock is listed, (b) the closing price of the Common Stock on
the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
The Wall Street Journal. If no sales of Common Stock were made on such a day,
the price of the Common
A-2
<PAGE> 19
Stock for purposes of clauses (a) and (b) above shall be the reported price for
the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on the Exercise
Date shall be deemed to have exercised his Option at the Option Price on such
date and shall be deemed to have purchased from the Company the number of full
shares of Common Stock reserved for the purpose of the Plan that his accumulated
payroll deductions on such date will pay for pursuant to the formula set forth
above (but not in excess of the maximum number determined in the manner set
forth above).
Any balance remaining in an employee's payroll deduction account at the end
of a Plan Period will be automatically refunded to the employee, except that any
balance which is less than the purchase price of one share of Common Stock will
be carried forward into the employee's payroll deduction account for the
following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. Issuance of Certificates. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship, or (in the Company's sole discretion) in the street
name of a brokerage firm, bank, or other nominee holder designated by the
employee.
11. Rights on Retirement, Death, or Termination of Employment. In the
event of a participating employee's termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be taken from any pay
due and owing to an employee and the balance in the employee's account shall be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purposes of this Plan.
12. Optionees Not Stockholders. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. Rights Not Transferable. Rights under this Plan are not transferable
by a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.
14. Application of Funds. All funds received or held by the Company under
this Plan may be combined with other corporate funds and may be used for any
corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In the event of
a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for this Plan, and the
share limitation set forth in Section 9, shall be increased proportionately, and
such other adjustment shall be made as may be deemed equitable by the Board or
the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. Merger. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to
A-3
<PAGE> 20
hold at least 80% by voting power of the capital stock of the surviving
corporation ("Continuity of Control"), the holder of each Option then
outstanding will thereafter be entitled to receive at the next Exercise Date
upon the exercise of such Option for each share as to which such Option shall be
exercised the securities or property which a holder of one share of the Common
Stock was entitled to upon and at the time of such merger, and the Committee
shall take such steps in connection with such merger as the Committee shall deem
necessary to assure that the provisions of Paragraph 15 shall thereafter be
applicable, as nearly as reasonably may be, in relation to the said securities
or property as to which such holder of such Option might thereafter be entitled
to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating
employees; or (c) all outstanding Options may be cancelled by the Board or the
Committee as of the effective date of any such transaction, provided that notice
of such cancellation shall be given to each holder of an Option, and each holder
of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the
Board or the Committee, which date shall not be less than ten (10) days
preceding the effective date of such transaction.
17. Amendment of the Plan. The Board may at any time, and from time to
time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the shareholders of the Company is required by Section 423 of
the Code or by Rule 16b3 under the Exchange Act, such amendment shall not be
effected without such approval, and (b) in no event may any amendment be made
which would cause the Plan to fail to comply with Section 16 of the Exchange Act
and the rules promulgated thereunder, as in effect from time to time, or Section
423 of the Code.
18. Insufficient Shares. In the event that the total number of shares of
Common Stock specified in elections to be purchased under any Offering plus the
number of shares purchased under previous Offerings under this Plan exceeds the
maximum number of shares issuable under this Plan, the Board or the Committee
will allot the shares then available on a pro rata basis.
19. Termination of the Plan. This Plan may be terminated at any time by
the Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. Governmental Regulations. The Company's obligation to sell and
deliver Common Stock under this Plan is subject to listing on a national stock
exchange or quotation on the Nasdaq National Market and the approval of all
governmental authorities required in connection with the authorization, issuance
or sale of such stock.
The Plan shall be governed by Massachusetts law except to the extent that
such law is preempted by federal law.
The Plan is intended to comply with the provisions of Rule 16b3 promulgated
under the Securities Exchange Act of 1934, as amended. Any provision
inconsistent with such Rule shall to that extent be inoperative and shall not
affect the validity of the Plan.
21. Issuance of Shares. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.
A-4
<PAGE> 21
22. Notification upon Sale of Shares. Each employee agrees, by entering
the Plan, to promptly give the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the Option pursuant to which such shares were purchased.
23. Effective Date and Approval of Shareholders. The Plan shall take
effect on April 19, 1996 subject to approval by the shareholders of the Company
as required by Rule 16b3 under the Exchange Act and by Section 423 of the Code,
which approval must occur within twelve months of the adoption of the Plan by
the Board.
Adopted by the Board of Directors
on April 19, 1996
A-5
<PAGE> 22
PROXY
DYNATECH CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN F. RENO and PETER B. TARR, and each
of them, proxies with full power of substitution to vote as set forth below and
in their discretion upon such other matters as may properly come before the
meeting, for and on behalf of the undersigned all the shares of common stock of
DYNATECH CORPORATION held of record by the undersigned at the close of business
on June 7, 1996, at Hale and Dorr, 26th Floor, 60 State Street, Boston,
Massachusetts, on Tuesday, July 30, 1996 at 10:00 a.m., and at any adjournments
or postponements thereof, hereby granting full power and authority to act on
behalf of the undersigned at said meeting or any adjournments or postponements
thereof.
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED AS SPECIFIED BUT IF NO
SPECIFICATION IS MADE IT WILL BE VOTED FOR PROPOSAL 1, THE ELECTION OF ALL
NOMINEES LISTED ON THE REVERSE SIDE, FOR PROPOSAL 2, THE APPROVAL OF THE 1996
EMPLOYEE STOCK PURCHASE PLAN, AND IN THE DISCRETION OF THE PERSONS NAMED AS
PROXIES AS TO SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
------------
SEE REVERSE
PLEASE DATE AND SIGN ON REVERSE SIDE AND MAIL YOUR PROXY SIDE
CARD PROMPTLY IN THE ENCLOSED ENVELOPE ------------
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
- - --------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
- - --------------------------------------------
<TABLE>
<S> <C>
1. To fix the number of Directors at eight and to 2. To approve the 1996 Employee Stock Purchase Plan FOR AGAINST ABSTAIN
elect Directors for a term expiring in (as set forth in the Proxy Statement). / / / / / /
1999 (as set forth in the Proxy Statement).
Nominees: William R. Cook and Robert G. Paul The undersigned hereby revokes any proxy previously given and
FOR WITHHELD acknowledges receipt of the Notice of Annual Meeting, Proxy Statement,
ALL FROM ALL and 1996 Annual Report of the Company which either accompanied or
NOMINEES ALL NOMINEES preceded this proxy. This proxy may be revoked at any time before it is
/ / / / exercised.
______________________________________________________ MARK HERE MARK HERE
For, except vote withheld from the above nominee(s). FOR ADDRESS / / IF YOU PLAN / /
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Sign exactly as name appears in stencil. When signing as Executor,
Administrator, Trustee, or Guardian, etc., please add full title.
This proxy votes all shares held in all capacities.
Signature: __________________________________________ Date ___________
Signature: __________________________________________ Date ___________
Title:_______________________________________________
</TABLE>
