<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement (Revised)
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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>
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
1030 SWABIA COURT
RESEARCH TRIANGLE PARK, NORTH CAROLINA 27709
January 6, 1997
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of
Shareholders of Wandel & Goltermann Technologies, Inc. to be
held at 10:00 a.m. on Wednesday, February 5, 1997 at the
Doubletree Guest Suites Hotel, 2515 Meridian Parkway, Durham,
North Carolina. The Board of Directors looks forward to
personally greeting those who are able to attend.
The Notice of Annual Meeting of Shareholders and Proxy
Statement, which describe the formal business to be conducted at
the meeting, follows this letter. It is important that your
shares be represented at the meeting, whether or not you plan to
attend. Accordingly, please take a moment now to sign, date and
mail the enclosed proxy in the envelope provided.
Following completion of the formal portion of the Annual
Meeting, management will comment on the Company's affairs. A
question and answer period will follow.
We look forward to seeing you at the Annual Meeting.
Sincerely,
[Gerry Chastelet sig. here]
GERRY CHASTELET
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
1030 SWABIA COURT
RESEARCH TRIANGLE PARK, NORTH CAROLINA 27709
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF WANDEL & GOLTERMANN TECHNOLOGIES, INC.:
The Annual Meeting of Shareholders of Wandel & Goltermann Technologies,
Inc. will be held at the Doubletree Guest Suites Hotel, 2515 Meridian Parkway,
Durham, North Carolina on Wednesday, February 5, 1997 at 10:00 a.m., Eastern
Standard Time, for the following purposes:
1. To elect seven directors for a one year term, and, in each case, until
their successors are elected and qualified;
2. To approve an amendment to the Company's Amended and Restated Articles
of Incorporation to increase the number of authorized shares of Wandel &
Goltermann Technologies, Inc. Common Stock from 20,000,000 to
50,000,000;
3. To approve the Omnibus Stock Plan Amendment to increase the number of
shares reserved for issuance thereunder from 775,000 to 1,175,000, to
allow employees of the Company's parent companies to participate in the
plan, and to allow non-employee directors to participate in the plan;
4. To approve the Employee Stock Purchase Plan Amendment to increase the
number of shares reserved for issuance thereunder from 100,000 to
200,000;
5. To approve the Outside Directors' Stock Plan Amendment to increase the
annual stock option grant to Outside Directors from 1,000 shares to
2,000 shares;
6. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending September 30,
1997; and
7. To transact such other business as may properly come before the meeting
or any reconvened session thereof.
The Board of Directors has fixed the close of business on December 2, 1996,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting and at any reconvened session thereof.
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU HOLD
ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT, YOU ARE
REQUESTED TO DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE
THAT IS PROVIDED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME, AND THE GIVING OF
YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
This notice is given pursuant to direction of the Board of Directors.
[Adelbert Kuthe sig. here]
ADELBERT KUTHE
SECRETARY
Research Triangle Park, North Carolina
January 6, 1997
<PAGE>
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
1030 SWABIA COURT
RESEARCH TRIANGLE PARK, NORTH CAROLINA 27709
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 5, 1997
The accompanying proxy is solicited by the Board of Directors of Wandel &
Goltermann Technologies, Inc. (the "Company"), for use at the Annual Meeting of
Shareholders to be held at 10:00 a.m. on Wednesday, February 5, 1997, at the
Doubletree Guest Suites Hotel, 2515 Meridian Parkway, Durham, North Carolina and
at any reconvened session thereof. When such proxy is properly executed and
returned, the shares it represents will be voted at the meeting. If a choice has
been specified by the shareholder as to any matter referred to on the proxy, the
shares will be voted accordingly. If no choice is indicated on the proxy, the
shares will be voted in favor of the election of the seven nominees named herein
and in favor of each of the other proposals. A shareholder giving a proxy has
the power to revoke it at any time before it is voted. Presence at the meeting
of a shareholder who has signed a proxy does not alone revoke that proxy; the
proxy may be revoked by a later dated proxy or by notice to the Secretary at the
meeting. At the meeting, votes will be counted by written ballot.
At the Annual Meeting shareholders will be asked to:
1. Elect seven directors for a one year term, and, in each case, until
their successors are elected and qualified;
2. Approve an amendment to the Company's Amended and Restated Articles of
Incorporation to increase the number of authorized shares of Wandel &
Goltermann Technologies, Inc. Common Stock from 20,000,000 to
50,000,000;
3. Approve the Omnibus Stock Plan Amendment to increase the number of
shares reserved for issuance thereunder from 775,000 to 1,175,000, to
allow employees of the Company's parent companies to participate in the
plan, and to allow non-employee directors to participate in the plan;
4. Approve the Employee Stock Purchase Plan Amendment to increase the
number of shares reserved for issuance thereunder from 100,000 to
200,000;
5. Approve the Outside Directors' Stock Plan Amendment to increase the
annual stock option grant to Outside Directors from 1,000 shares to
2,000 shares;
6. Ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending September 30,
1997; and
7. Transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The representation in person or by proxy of a majority of the votes
entitled to be cast is necessary to provide a quorum at the Annual Meeting.
Provided a quorum is present, directors are elected by a plurality of the votes
cast. With respect to the election of directors, votes may be cast in favor of
nominees or withheld. Withheld votes and shares not voted are not treated as
votes cast and, therefore, will have no effect on the proposal to elect
directors. Approval of the increase in authorized shares of the Company, the
Omnibus Stock Plan Amendment, the Employee Stock Purchase Plan Amendment, the
Outside Directors' Stock Plan Amendment, ratification of the appointment of the
Company's independent public accountants and the approval of any other business
which properly comes before the Annual Meeting requires the affirmative vote of
the holders of a majority of the shares of Common Stock voted. Abstentions and
shares not voted are not treated as votes cast and, therefore, will have no
effect on the vote for any such proposal.
Only shareholders of record as of the close of business on December 2,
1996, will be entitled to vote at the Annual Meeting. The approximate date on
which this proxy statement and form of proxy were first sent or given to
shareholders is December 20, 1996.
1
<PAGE>
OUTSTANDING VOTING SECURITIES
The Board of Directors has set the close of business on December 2, 1996,
as the record date for determining shareholders of the Company entitled to
notice of and to vote at the Annual Meeting. As of December 2, 1996, the Company
had outstanding 5,182,952 shares of its Common Stock, par value $0.01 per share
(the "Common Stock"), all of which are entitled to vote with respect to all
matters to be acted upon at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of December 2, 1996 by: (i) each
person known to the Company to beneficially own more than 5% of the Common
Stock; (ii) each director and nominee for director of the Company; (iii) each
executive officer named in the Summary Compensation Table; and (iv) all
directors and executive officers of the Company as a group. Except as otherwise
indicated in the footnotes to the table, each shareholder named has sole voting
and investment power with respect to such shareholder's shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME BENEFICIAL OWNERSHIP COMMON STOCK
<S> <C> <C>
Wandel & Goltermann Management Holding GmbH (1).......................................... 2,961,000 57.1%
Wandel & Goltermann GmbH & Co. E.M. (3).................................................. -- --
Wandel & Goltermann Vertriebsholding GmbH (3)............................................ -- --
Hathaway & Associates (2)................................................................ 300,000 5.8%
Herbert Bayer............................................................................ 3,000 *
Richard E. Pospisil (4).................................................................. 17,000 *
Gerry Chastelet (5)...................................................................... 17,333 *
Rolf Schmid (1) (3)...................................................................... -- --
Joachim Simmross (6)..................................................................... -- --
Sidney Topol (7)......................................................................... 25,900 *
Peter Wagner (1) (3)..................................................................... -- --
Albrecht Wandel (1) (3).................................................................. -- --
K. David Brame (8)....................................................................... 2,880 *
Robert D. Hockman (8).................................................................... 2,000 *
Adelbert Kuthe (9)....................................................................... 9,639 *
Ralph D. Smith (10)...................................................................... 2,000 *
All Executive Officers and Directors as a Group (17 persons) (11)........................ 88,954 1.7%
</TABLE>
* Less than 1%
(1) The address of Wandel & Goltermann Management Holding GmbH ("WGG"), Messrs.
Bayer, Schmid, Wagner and Wandel is Box 1262, D-72795 Eningen u.A., Federal
Republic of Germany. WGG is a German limited liability company formed in
March 1995. WGG owns and controls Wandel & Goltermann GmbH & Co. E. M.
("WGR") which, in turn, owns and controls Wandel & Goltermann
Vertriebsholding GmbH ("WGV"). Prior to March 1995, WGV was known as Wandel
& Goltermann Management Holding GmbH. WGG directly owns 2,950,000 shares of
common stock, and WGV directly owns 11,000 shares of common stock. The
officers of WGG are Mr. Wandel who serves as the President, Chief Executive
Officer and Managing Director, Mr. Wagner who serves as the Executive Vice
President, Chief Operating Officer and Managing Director, and Mr. Schmid
who serves as a Managing Director. These same three individuals effectively
manage WGR and WGV and, accordingly, WGG and WGR may be deemed to be
beneficial owners of shares held by WGV. In their capacities with WGG, any
two of Messrs. Wandel, Wagner, and Schmid, acting together, share voting
and investment power over the shares of Common Stock held directly and
beneficially by WGG, WGR and WGV and, accordingly, may be deemed to share
beneficial ownership of such shares. Messrs. Wandel, Wagner and Schmid
disclaim individual beneficial ownership of the shares of Common Stock held
directly and beneficially by WGG, WGR and WGV.
(2) The address of Hathaway & Associates is 119 Rowayton Drive, Rowayton, Conn.
06853. Information as to the shares of Common Stock held by Hathaway &
Associates has been provided by Hathaway & Associates.
(3) Excludes shares of Common Stock attributed to WGG. See (1) above.
(4) Includes 17,100 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
2
<PAGE>
(5) Includes 17,333 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
(6) Mr. Simmross, a nominee for the Board of Directors of the Company, is a
director of Hannover Finanz GmbH and is a member of the Advisory Board of
WGG. Hannover Finanz GmbH owns a material interest in WGG. In his positions
with Hannover Finanz and WGG, Mr. Simmross does not share voting or
investment power over the shares of Common Stock held directly or
beneficially by WGG. Mr. Simmross disclaims individual beneficial ownership
of the shares of Common Stock held directly or beneficially by WGG.
(7) Includes 2,100 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
(8) Includes 2,000 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
(9) Includes 8,000 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
(10) Includes 2,000 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
(11) Includes 59,633 shares that may be acquired within 60 days of December 2,
1996 upon exercise of stock options.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors consists of seven directors. Directors are elected
annually and serve until the next Annual Meeting of Shareholders and their
successors are elected and qualified. Seven directors are to be elected at this
Annual Meeting for one year terms ending in 1998, and, in each case, until their
successors are elected and qualified. Each of the nominees except Mr. Simmross
is a current member of the Board of Directors.
Herbert Bayer has served as a director of the Company since 1996 and as
Chairman of the Board of Directors since July 1995. Mr. Bayer is retiring from
the Board of Directors effective as of the election of directors at the
Company's Annual Meeting of Shareholders.
The following table provides certain information with respect to the
Company's nominees for director. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" ALL OF THE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE POSITION WITH THE COMPANY AGE SINCE
<S> <C> <C> <C>
Richard E. Pospisil Vice Chairman of the Board of Directors 65 1994
Gerry Chastelet Director, President and Chief Executive Officer 49 1995
Rolf Schmid Director 61 1994
Joachim Simmross -- 55 --
Sidney Topol Director 71 1994
Peter Wagner Director 43 1995
Albrecht L. Wandel Director 52 1992
</TABLE>
RICHARD E. POSPISIL has served as a director of the Company since May 1994
and was named Vice Chairman in September 1995. Mr. Pospisil also served as
Acting Chief Executive Officer of the Company from September to November 1995.
Mr. Pospisil is currently the President and Chief Executive Officer of OASys
Group, Inc., a developer of networking software. He served as President and
Chief Executive Officer of T3plus Networking, Inc., a developer and manufacturer
of switching and network equipment, from 1990 to 1994. Mr. Pospisil is currently
a director of OASys Group, Inc. and Auto Entry, Inc..
GERRY CHASTELET was elected as a director of the Company and was named
President and Chief Executive Officer in December 1995. From 1993 to 1995, he
served as Vice President Sales, Marketing and Service-Americas and Asia Pacific
for Network Systems Corporation. From 1989 to 1993, he was Vice President Sales,
Marketing and Service for Gandalph Systems Corporation.
ROLF SCHMID has served as a director of the Company since January 1994. Mr.
Schmid has served as Chief Financial Officer of WGG since 1985 and has also
served as Managing Director-Finance and Controlling since 1990. He is a citizen
and resident of the Federal Republic of Germany.
JOACHIM SIMMROSS is a new nominee to the Board of Directors. Mr. Simmross
has served as a director of Hannover Finanz GmbH since 1984 and has served as a
member of the Advisory Board of WGG since 1995. Hannover Finanz owns a material
interest in WGG. Mr. Simmross is a citizen and resident of the Federal Republic
of Germany.
SIDNEY TOPOL has served as a director of the Company since May 1994. Mr.
Topol was the Chairman of the Board of Scientific-Atlanta, Inc. from 1978 to
1990 and Chief Executive Officer from 1975 to 1987. Since 1990, he has been
President
3
<PAGE>
of Topol Group, Inc., a consulting and investment firm. Mr. Topol is a director
of Scientific-Atlanta, Inc., Alpha Industries, Inc., Prime Star Partners and the
Public Broadcasting System.
PETER WAGNER has served as a director of the company since July 1995. Mr.
Wagner has served as Executive Vice President, Chief Operating Officer and
Managing Director of WGG since March 1995. From 1990 to 1995, he was General
Manager of the Line Transmission Systems Division of Alcatel. Mr. Wagner is a
citizen and resident of the Federal Republic of Germany.
ALBRECHT L. WANDEL has served as a director of the Company since 1992.
Since 1974, Mr. Wandel has served as a Managing Director, and, since 1990, he
has served as President and Chief Executive Officer of WGG. Mr. Wandel is a
citizen and resident of the Federal Republic of Germany.
During the fiscal year ended September 30, 1996, the Board of Directors of
the Company held seven meetings. During that period, the Audit Committee of the
Board held four meetings and the Compensation Committee of the Board held four
meetings. During their period of service in the fiscal year ended September 30,
1996, no director attended fewer than 75% of the total number of meetings (i) of
the Board of Directors and (ii) of all the committees of the Board on which such
director was serving.
The members of the Audit Committee during the fiscal year ended September
30, 1996 were Messrs. Topol, Pospisil and Schmid. The principal functions of the
Audit Committee include: recommending to the Board, subject to shareholder
approval, the retention of independent public accountants; discussing and
reviewing the scope of the prospective annual audit and reviewing the results
thereof with the independent public accountants; reviewing non-audit services of
the independent public accountants; reviewing compliance with the accounting and
financial policies of the Company; reviewing the adequacy of the financial
organization of the Company; reviewing management's procedures and policies
relative to the adequacy of the Company's internal accounting controls and
compliance with federal and state laws relative to accounting practices; and
reviewing transactions with affiliated parties.
The members of the Compensation Committee during the fiscal year ended
September 30, 1996 were Messrs. Bayer, Topol and Pospisil. The principal
functions of the Compensation Committee are to review and recommend annual
salaries and bonuses for all corporate officers and management personnel, review
and recommend to the Board of Directors modifications in employee benefit plans
and administer the Company's Omnibus Stock Plan and Employee Stock Purchase
Plan.
The Company does not presently have a Nominating Committee.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company earn directors' fees of
$17,000 per year, payable quarterly. Directors who are not employees of the
Company or WGG also receive $1,500 per day for attending special Board or Board
committee meetings. In addition, the Company reimburses all directors for
ordinary and necessary out-of-pocket expenses incurred in connection with
attending meetings of the Board of Directors or its committees. For the fiscal
year ended September 30, 1996, Messrs. Bayer, Schmid, Wagner and Wandel each
earned $17,000, Messrs. Pospisil and Topol each earned $30,500. In September
1995, Mr. Pospisil was asked by the other directors to fill the role of Acting
Chief Executive Officer while a new permanent Chief Executive Officer of the
Company was recruited. Mr. Pospisil served in this acting role until November
30, 1995. The other directors agreed to compensate Mr. Pospisil a total of
$140,000 for his services as Acting Chief Executive Officer and for his services
during the transition of management to the new Chief Executive Officer. In
addition, the Company paid Mr. Pospisil $25,000 in technical and managerial
consulting fees during the year ended September 30, 1996.
Directors who are not employees of the Company (excluding any person
employed by or affiliated with WGG and its affiliates) are entitled to
participate in the Company's 1994 Outside Directors' Stock Option Plan (the
"Directors' Plan"). Upon their reelection to the Board of Directors in February
1996, the Company granted options to purchase 2,000 shares of Common Stock under
the Directors' Plan to each of Messrs. Pospisil and Topol at an exercise price
of $9.25 per share, subject to shareholder approval of the Outside Directors'
Stock Plan Amendment. See "Executive Compensation -- Benefit Plans -- Outside
Directors' Stock Option Plan." The Company also granted Richard Pospisil options
to purchase 15,000 shares of Common Stock under the Omnibus Stock Plan at an
exercise price of $11.125 per share, subject to shareholder approval of the
Omnibus Stock Plan Amendment. See "Executive Compensation -- Benefit
Plans -- Omnibus Stock Plan."
4
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company and their respective ages and
positions as of December 2, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Gerry Chastelet 49 President and Chief Executive Officer
Ralph D. Smith 43 Senior Vice President-Operations
E. Jay Bowers 64 Vice President-Product Development
K. David Brame 51 Vice President-Sales
John T. Goehrke 39 Vice President-Marketing
Robert D. Hockman 43 Vice President-Core Technology Engineering
James K. Kiefer 47 Vice President-Customer Support Services
Adelbert Kuthe 54 Vice President-Finance and Secretary
Daniel I. Hunt 32 Assistant Secretary and Controller
Matthew W. Weitz 36 Personnel Director
</TABLE>
RALPH D. SMITH joined the Company in 1990 as Manufacturing Manager. From
1991 to 1993, Mr. Smith served as Director of Operations. From 1993 to 1994, Mr.
Smith was Vice President-Operations. In 1994, he assumed the position of Senior
Vice President-Operations.
E. JAY BOWERS joined the Company in September 1996 as Vice
President-Product Development. From 1991 until he joined the Company, Mr. Bowers
was General Manager of the Advanced Software Construction Center for the
Operation System Software Division of Lucent Technologies.
K. DAVID BRAME joined the Company in 1994 as Vice President-Sales. From
1985 until he joined the Company, he was a National Sales Manager for Teradyne,
Inc., a test equipment manufacturer, with responsibilities for sales and field
service for the U.S. telecommunications market.
JOHN T. GOEHRKE joined the Company in July 1996 as Vice
President-Marketing. From 1993 to 1996, Mr. Goehrke worked for Memorex Telex
Corporation, serving as Vice President of Strategic Marketing in his latest
role. From 1988 to 1993 he worked for Data Switch Corporation in various
marketing and sales management positions.
ROBERT D. HOCKMAN joined the Company in 1988 as Lead Software Engineer for
Digital Data Products. From 1993 to 1996, Mr. Hockman served as Vice
President-Marketing and as Director of Product Marketing from 1991 to 1993. He
assumed the position of Vice President-Core Technology Engineering in 1996.
JAMES K. KIEFER joined the Company in March 1996 as Vice President-Customer
Support Services. From 1995 to 1996, Mr. Kiefer was Director of the Central
Support Organization of Network Systems Corporation where he was responsible for
that company's worldwide customer service business. From 1994 to 1995, Mr.
Kiefer served as Director of Customer Service for Network Systems Corporation's
North American operations. From 1992 to 1994, Mr. Kiefer was Senior Product
Manager-Professional Services for ATT Paradyne.
ADELBERT KUTHE joined the Company in 1979. Mr. Kuthe assumed the position
of Vice President-Finance of the Company in 1981. He has served as Secretary of
the Company since 1991.
DANIEL I. HUNT joined the Company in 1993 as Controller and assumed the
position of Assistant Secretary in 1995. From 1991 to 1993, he was a manager in
the Audit and Business Advisory practice of Arthur Andersen LLP.
MATTHEW W. WEITZ joined the Company in 1984 serving in various personnel
administration positions until he assumed his current position in 1991. From
1989 to 1991, Mr. Weitz served as Personnel Manager.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation for each of the last three fiscal years of the Company's President
and Chief Executive Officer and the Company's four other most highly compensated
executive officers (the "Named Executive Officers") during the year or employed
at September 30:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
NUMBER OF
SECURITIES ALL OTHER
ANNUAL COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($) (1)
<S> <C> <C> <C> <C> <C>
Gerry Chastelet 1996 $ 174,462 $ 137,142 90,000 $ 3,775
President and Chief 1995 -- -- -- --
Executive Officer 1994 -- -- -- --
Richard E. Pospisil 1996 -- -- 17,000 197,000
Acting Chief Executive Officer 1995 -- -- 1,000 47,000
October 1 to November 30, 1995 1994 -- -- 2,000 11,500
Ralph D. Smith 1996 130,101 54,273 10,500 6,944
Senior Vice President -- Operations 1995 123,318 -- 5,000 5,888
1994 107,303 30,000 10,000 5,967
K David Brame 1996 130,000 68,077 10,500 5,312
Vice President -- Sales 1995 130,000 65,000 5,000 3,204
1994 20,000 -- -- --
Adelbert Kuthe 1996 116,632 23,910 10,500 5,023
Vice President -- Finance 1995 110,552 -- 5,000 7,063
and Secretary 1994 105,488 24,000 10,000 5,664
Robert D. Hockman 1996 99,218 20,340 8,850 4,746
Vice President -- Core Technology 1995 94,045 -- 5,000 5,549
Engineering 1994 92,378 17,000 10,000 5,184
</TABLE>
(1) For fiscal 1996, consists of (i) matching contributions to the Company's
401(k) Plan in the amounts of $2,856, zero, $6,543, $4,103, $4,037 and
$4,465 respectively, for each Named Executive Officer; and (ii) life
insurance premiums in the amounts of $919, zero, $401, $1,209, $986 and
$281, respectively, paid on behalf of each Named Executive Officer.
6
<PAGE>
STOCK OPTIONS GRANTED DURING THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
The following table provides certain information concerning grants of
options to purchase shares of Common Stock made during the fiscal year ended
September 30, 1996 to the Named Executive Officers. All grants were made under
the Omnibus Stock Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
% OF TOTAL
NUMBER OF OPTIONS POTENTIAL REALIZABLE VALUE
SECURITIES GRANTED TO AT ASSUMED ANNUAL RATES OF
UNDERLYING EMPLOYEES STOCK PRICE APPRECIATION
OPTIONS IN FISCAL EXERCISE EXPIRATION FOR OPTION TERM
NAME GRANTED (#) (1) YEAR (2) PRICE ($/SH) DATE 5% ($) (3) 10% ($) (4)
<S> <C> <C> <C> <C> <C> <C>
Gerry Chastelet 80,000 15% $ 9.75 12/1/05 $ 490,538 $ 1,243,119
10,000 2 14.31 7/29/06 89,995 228,065
Richard E. 15,000 3 11.13 12/4/05 104,872 265,881
Pospisil 2,000 * 9.25 2/5/06 11,635 29,484
Ralph D. Smith 5,000 1 9.25 2/5/06 29,086 73,711
5,500 1 14.31 7/29/06 49,497 125,436
K. David Brame 5,000 1 9.25 2/5/06 29,086 73,711
5,500 1 14.31 7/29/06 49,497 125,436
Adelbert Kuthe 5,000 1 9.25 2/5/06 29,086 73,711
5,500 1 14.31 7/29/06 49,497 125,436
Robert D. Hockman 5,000 1 9.25 2/5/06 29,086 73,711
3,850 1 14.31 7/29/06 34,648 87,805
</TABLE>
* Less than 1%
(1) All of the above options with the exception of 2,000 options granted to Mr.
Pospisil are subject to the terms of the Company's Omnibus Stock Plan (the
"Omnibus Plan"). With the exception of 80,000 options granted to Mr.
Chastelet, the options granted under the Omnibus Plan to each officer vest
and become exercisable in equal annual increments over a five (5) year
period provided the optionee continues to be employed by the Company. The
80,000 options granted to Mr. Chastelet vest and become exercisable 20% on
the first anniversary of the grant and the remainder in equal monthly
increments over the following four (4) year period, provided Mr. Chastelet
continues to be employed by the Company. The 15,000 options granted to Mr.
Pospisil under the Omnibus Plan vest six months after the grant date. The
2,000 options granted to Mr. Pospisil under the Outside Directors' Stock
Option Plan become exercisable cumulatively in installments of 40% on the
first anniversary and 30% on the second and third anniversaries of the date
of grant.
(2) All options were granted at an exercise price equal to the fair market
values of the Company's Common Stock.
(3) Potential realizable values are net of exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only, based on the Securities and Exchange Commission rules. No
gain to an optionee is possible without an increase in stock price, which
will benefit all shareholders commensurably. A zero percent gain in stock
price will result in zero dollars for the optionee. Actual realizable
values, if any, on stock option exercises are dependent on the future
performance of the Common Stock, overall market conditions and the
optionholders' continued employment through the vesting period.
7
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES FOR FISCAL YEAR ENDED SEPTEMBER 30, 1996
The following table provides certain information concerning the number of
securities underlying unexercised options held by each of the Named Executive
Officers and the value of such officers' unexercised options at September 30,
1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
NUMBER OF SECURITIES OPTIONS AT
SHARES UNDERLYING UNEXERCISED FISCAL
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END YEAR-END
EXERCISE REALIZED (#) ($) (1)
(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE
<S> <C> <C> <C> <C> <C>
Gerry Chastelet................................ -- -- -- 90,000 $--
Richard E. Pospisil............................ -- -- 1,800 18,200 14,058
Ralph D. Smith................................. -- -- 3,000 20,500 21,810
K. David Brame................................. -- -- 1,000 14,500 3,810
Adelbert Kuthe................................. -- -- 5,000 20,500 39,810
Robert D. Hockman.............................. -- -- 3,000 18,850 21,810
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
OPTIONS AT
FISCAL
YEAR-END
($) (1)
UNEXERCISABLE
<S> <C>
Gerry Chastelet................................ $ 786,900
Richard E. Pospisil............................ 146,172
Ralph D. Smith................................. 143,785
K. David Brame................................. 89,785
Adelbert Kuthe................................. 143,785
Robert D. Hockman.............................. 136,047
</TABLE>
(1) The value of the unexercised in-the-money options is based on the closing
sales price of the Common Stock on September 30, 1996 of $19.00 per share.
EMPLOYMENT AGREEMENTS
Mr. Chastelet joined the Company on December 1, 1995 as President and Chief
Executive Officer. Mr. Chastelet entered into an employment agreement with the
Company which provides for an annual base salary of $230,000 and a bonus ranging
up to $110,000 based on the attainment of quantitative and qualitative
objectives in fiscal 1997. Pursuant to his employment agreement, the Company
paid Mr. Chastelet a $15,000 sign-on bonus and agreed to grant options to
purchase 80,000 shares of Common Stock under the Omnibus Stock Plan. The Company
provides Mr. Chastelet with the use of a Company-owned car and pays the premiums
on a term life insurance policy with a benefit equal to his base salary. Mr.
Chastelet's employment agreement may be terminated at any time and provides Mr.
Chastelet a payment of one-year's salary upon termination.
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK.
The resolution to be considered by the shareholders at the meeting reads as
follows:
"RESOLVED, that Article 2 of the Amended and Restated Articles of
Incorporation of Wandel & Goltermann Technologies, Inc. should be amended
and restated to read in full as follows:
The total number of shares that the Corporation is authorized to
issue is Fifty-Two Million (52,000,000), divided into Fifty Million
(50,000,000) Common shares and Two Million (2,000,000) Preferred Shares,
each with a par value of $0.01. The preferences, limitations and
relative rights of each class and series of shares are as follows:
a. Common Shares
The common shares shall be entitled to one vote per share and to all
other rights of shareholders subject only to any rights granted to
Preferred Shares under Subparagraph b. of this Article 2.
b. Preferred Shares
The Preferred Shares may be issued in one or more series with such
designations, preferences, limitations, and relative rights as the
Board of Directors may determine from time to time in accordance with
applicable law.
FURTHER RESOLVED, that the proper officers of Wandel & Goltermann
Technologies, Inc. are hereby authorized and directed, after shareholder
approval of the proposed amendment, to execute, under its corporate seal,
Articles of Amendment to the Articles of Incorporation and to file such
Articles of Amendment with the North Carolina Secretary of State.
8
<PAGE>
FURTHER RESOLVED, that the Board of Directors of Wandel & Goltermann
Technologies, Inc. may, notwithstanding approval by the shareholders of
Wandel & Goltermann Technologies, Inc., at any time prior to the filing of
the Articles of Amendment with the North Carolina Secretary of State,
terminate the proposed amendment and all transactions contemplated by or
incident thereto."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED ARTICLES OF INCORPORATION.
DISCUSSION
Under Wandel & Goltermann Technologies, Inc.'s Amended and Restated
Articles of Incorporation, the Company is authorized to issue up to 20,000,000
shares of Common Stock and 2,000,000 shares of Preferred Stock. On November 15,
1996, the Board of Directors approved an Amendment to the Company's Articles of
Incorporation that increases this maximum number of authorized shares of Common
Stock by 30,000,000 shares to a total of 50,000,000 shares, subject to approval
by the shareholders of Wandel & Goltermann Technologies, Inc.. If the
shareholders do not approve the Amendment, then the number of authorized shares
of the Company's Common Stock will remain at 20,000,000.
The purpose of the proposed Amendment is to provide sufficient shares for
corporate purposes, including possible future acquisitions, benefit plans,
recapitalizations, stock splits and other corporate purposes, although no such
use currently is planned. Once authorized, the additional shares of Common Stock
may be issued by the Board of Directors without further action by the
shareholders, unless such action is required by law or applicable stock exchange
requirements. Accordingly, this solicitation may be the only opportunity for the
shareholders to take action in connection with such acquisitions, benefit plans,
recapitalizations and other corporate actions. As of December 2, 1996, 5,182,952
shares of Common Stock were issued and 1,312,048 shares were reserved for
issuance under benefit plans subject to approval of Proposals 3 and 4. Thus, of
the 20,000,000 shares of Common Stock currently authorized, approximately
13,505,000 shares would be unissued and unreserved if the Amendment is not
approved.
BENEFIT PLANS
PROPOSAL 3
APPROVAL OF OMNIBUS STOCK PLAN AMENDMENT
The Board of Directors of the Company, on the recommendation of the
Company's Compensation Committee, proposes that the shareholders approve the
Omnibus Stock Plan Amendment to increase the number of shares reserved for
issuance thereunder (the "Plan Shares") from 775,000 to 1,175,000, to allow
employees of the Company's parent companies to participate in the plan, and to
allow non-employee directors to participate in the plan. As of December 2, 1996,
options to purchase 842,140 Plan Shares had been granted under the Omnibus Stock
Plan (the "Omnibus Plan") subject to approval of the Omnibus Stock Plan
Amendment. On the same date, the closing price of the Common Stock on the NASDAQ
National Market was $22.25. The Board believes that it is in the best interest
of the Company and its shareholders to approve the Omnibus Stock Plan Amendment
because it enables the Company to continue to grant options in the future to
secure and retain the services of key employees and its Directors. Moreover, the
Board believes the additional financial incentive is an important factor in
attracting and retaining officers, key employees and Directors of superior
ability and is beneficial to the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE OMNIBUS STOCK PLAN AMENDMENT.
OMNIBUS PLAN DESCRIPTION
The Company's Omnibus Plan is intended to encourage high levels of
performance by the Company's officers and key employees and to enable the
Company to recruit, reward, retain and motivate employees of experience and
ability on a basis competitive with industry practices. The Omnibus Plan is
administered by the Board of Directors. Eligibility for awards under the Omnibus
Plan and the amount of those awards are determined solely by the Board of
Directors. An aggregate of 375,000 shares of Common Stock was initially reserved
for issuance under the Omnibus Plan. The plan was amended in February 1996 to
increase the shares reserved for issuance thereunder to 775,000. The Omnibus
Stock Plan Amendment would increase the aggregate number of Plan Shares to
1,175,000, subject to adjustment for stock dividends, stock splits and certain
other changes in the Company's capitalization. As of the end of fiscal 1996, all
employees, including officers of the Company, its subsidiaries and its parent
companies as well as members of the Company's Board of Directors, were eligible
to receive options under the Omnibus Plan, as amended.
9
<PAGE>
Awards under the Omnibus Plan may include incentive stock options or
non-qualified stock options, stock appreciation rights, restricted stock,
performance awards or other stock-based awards. The Board of Directors also
retains sole discretion to determine the terms and conditions of such awards,
including the vesting schedule. The option price for incentive stock options
issued under the Omnibus Plan may not be less than the fair market value of the
Common Stock on the date of grant; however, the Board of Directors may exercise
discretion as to the exercise price per share of any non-qualified option
awarded under the Omnibus Plan. The incentive stock options presently
outstanding under the Omnibus Plan generally vest over five years and expire in
ten years.
The exercise price of options granted under the Omnibus Plan is payable in
cash or, at the discretion of the Board of Directors, in shares of Common Stock
owned by the optionee having a fair market value equal to the exercise price, or
through a combination of cash and shares of Common Stock. Option grants will
require the withholding of any applicable taxes required to be withheld upon the
exercise of an option.
While the Omnibus Stock Plan, as amended, will allow the Board of Directors
to grant nonqualified stock options to its members, such transactions remain
subject to the prohibitions of the North Carolina Business Corporation Act with
respect to conflict of interest transactions.
A parent company is defined in the Omnibus Stock Plan, as amended, as any
business entities (other than the Company), in an unbroken chain of business
entities ending with the Company in which each of the business entities owns
stock or interests possessing 50% or more of the total combined voting power of
all classes of stock or interests in one of the other business entities in the
chain.
In the event of a Change of Control of the Company, in addition to any
action required or authorized by the terms of an award agreement, the Board of
Directors may, at its discretion take any of the following actions as a result
of, or in anticipation of, any such event: (i) accelerate time periods for
purposes of vesting in, or realizing gain from, any outstanding award made
pursuant to the Omnibus Plan; (ii) offer to purchase any outstanding award made
pursuant to the Omnibus Plan from the holder for its equivalent cash value, as
determined by the Board of Directors, as of the date of the Change of Control;
or (iii) make adjustments or modifications to outstanding awards as the Board of
Directors deems appropriate.
Under the Omnibus Plan, a "Change of Control" is defined as the earliest
date on which either of the following events occur: (i) an individual, entity,
or group (other than Albrecht Wandel, Frank Goltermann, or any of their
affiliates) acquires after the date the Omnibus Plan was approved by the Board,
otherwise than directly from the Company, beneficial ownership of 20% or more of
the outstanding Common Stock or voting power of the Company, provided that no
such individual, entity or group shall be deemed to beneficially own any
securities held by (a) the Company or any of its subsidiaries or (b) any
employee benefit plan of the Company or any of its subsidiaries; or (ii) the
persons who were directors of the Company on the date 30 days after the
effective date of the Omnibus Plan, together with those who subsequently became
directors of the Company and whose election, or nomination for election by the
Company's shareholders, was approved by the vote of at least a majority of the
directors who were directors on the date 30 days after the effective date of the
Omnibus Plan, or directors whose nomination or election was approved as provided
above (the "Continuing Directors"), shall cease to constitute a majority of the
Board or of its successor by merger, consolidation or sale of assets. However, a
majority of the Continuing Directors may approve any such event and determine
that, for purposes of the Omnibus Plan, a Change of Control has not occurred.
In the event any change is made in the Company's capitalization, such as a
stock split or stock dividend, which results in a change in the Common Stock or
an increase or decrease in the number of outstanding shares of Common Stock, the
Board of Directors may make appropriate adjustments in the Omnibus Plan and the
then outstanding awards. The Board of Directors may amend the Omnibus Plan at
any time and in any respect; provided, however, no amendment may be made without
the approval of the shareholders of the Company if approval of such amendment is
required in order that transactions in Company securities under the Omnibus Plan
be exempt from the operation of Section 16(b) of the Exchange Act and if such
amendment would (i) increase the number of shares of Common Stock which may be
issued under the Omnibus Plan other than as a result of a change in
capitalization; (ii) materially modify the requirements as to eligibility for
participation; (iii) materially increase the benefits accruing to participants
under the Omnibus Plan; or (iv) extend the duration of the Omnibus Plan beyond
the date approved by the shareholders. The Board of Directors may terminate or
suspend the Omnibus Plan and any or all awards thereunder at any time and for
any reason to the extent permitted by law.
10
<PAGE>
The following table sets forth certain information regarding the options
granted under the Omnibus Plan through December 2, 1996 subject to shareholder
approval of the Omnibus Stock Plan Amendment:
PLAN BENEFITS
OMNIBUS STOCK PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE SECURITIES UNDERLYING
NAME ($) (1) OPTIONS (#)
<S> <C> <C>
Gerry Chastelet.................................................... $ 1,129,400 115,000
Richard E. Pospisil................................................ 166,800 15,000
Ralph D. Smith..................................................... 288,470 36,500
K. David Brame..................................................... 157,470 22,250
Adelbert Kuthe..................................................... 288,470 36,500
Robert D. Hockman.................................................. 273,369 33,850
All Current Executive Officers
as a Group....................................................... 3,112,560 381,250
All Employees Other Than Current Executive Officers
as a Group....................................................... 3,519,349 460,890
</TABLE>
(1) Represents gain before taxes based on the closing stock price of $22.25 on
the Record Date as compared to the option price.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary only of the general tax principles applicable to
awards under the Omnibus Stock Plan under federal law as in effect on the date
of this Proxy Statement.
OPTIONS. There are no tax consequences to the optionee upon the grant of a
qualified option pursuant to the Omnibus Plan or the Directors' Plan. There are
no tax consequences to the optionee upon exercise of a stock option, except that
the amount by which the fair market value of the shares at the time of exercise
exceeds the option exercise price is a tax preference item possibly giving rise
to alternative minimum tax. If the shares of Common Stock acquired are not
disposed of within two years from the date the option was granted and within one
year after the shares are transferred to the optionee, any gain realized upon
the subsequent disposition of the shares will be characterized as long-term
capital gain and any loss will be characterized as long-term capital loss. If
all requirements other than the above described holding period requirements are
met, a "disqualifying disposition" occurs and gain in an amount equal to the
lesser of (i) the fair market value of the shares on the date of exercise minus
the option exercise price or (ii) the amount realized on disposition minus the
option exercise price (except for certain "wash" sales, gifts or sales to
related persons), is taxed as ordinary income and the Company will be entitled
to a corresponding deduction in an amount equal to the optionee's ordinary
income at that time. The gain in excess of this amount, if any, will be
characterized as long-term capital gain if the optionee held the shares for more
than one year.
NON-QUALIFIED STOCK OPTIONS. There are no tax consequences to the optionee
upon the grant of a non-qualified option pursuant to the Omnibus Plan. Upon the
exercise of a non-qualified stock option, taxable ordinary income will be
recognized by the holder in an amount equal to the excess of the fair market
value of the shares purchased at the time of such exercise over the aggregate
option price. The Company will be entitled to a corresponding federal income tax
deduction. Upon any subsequent sale of the shares, the optionee will generally
recognize a taxable capital gain or loss based upon the difference between the
per share fair market value at the time of exercise and the per share selling
price at the time of the subsequent sale of the shares.
STOCK APPRECIATION RIGHTS. There are no tax consequences to the employee
upon the grant of a stock appreciation right ("SAR") pursuant to the Omnibus
Plan. Upon the exercise of an SAR, the holder will realize taxable ordinary
income on the amount of cash received and the Company will be entitled to a
corresponding federal income tax deduction.
RESTRICTED STOCK. Unless a participant makes the election described below,
a participant receiving a grant of Restricted Stock will not recognize income
and the Company will not be allowed a deduction at the time such shares of
Restricted Stock are granted. While the restrictions on the shares are in
effect, a participant will recognize compensation income equal to the amount of
dividends received and the Company will be allowed a deduction in a like amount.
When the restrictions on the shares are removed or lapse, the excess fair market
value of the shares on the date the restrictions are removed or lapse over the
amount paid by the participant for the shares will be ordinary income to the
participant and will be allowed as a deduction
11
<PAGE>
for federal income tax purposes to the Company. Upon disposition of the shares,
the gain or loss realized by the participant will be taxable as capital gain or
loss. However, by filing a Section 83(b) election with the Internal Revenue
Service within 30 days after the date of grant, a participant's ordinary income
will be determined as of the date of grant. In such case, the amount of ordinary
income recognized by such a participant and deductible by the Company will be
equal to the excess of the fair market value of the shares as of the date of
grant over the amount paid by the participant for the shares. If such election
is made and a participant thereafter forfeits his or her stock, no deduction
will be allowed for the amount previously included in such participant's income.
GENERAL TAX LAW CONSIDERATIONS. The preceding paragraphs are intended to be
merely a summary of the most important federal income tax consequences
concerning the grant of awards under the Omnibus Stock Plan and the
corresponding disposition of shares of Common Stock issued thereunder in
existence as of the date of this Proxy Statement. Therefore, participants in the
plan should review the current tax treatment with their individual tax advisors
at the time of the grant, exercise, purchase or any other transaction relating
to any award, purchase or underlying stock issued under the plan.
PROPOSAL 4
APPROVAL OF AMENDMENT TO THE WANDEL & GOLTERMANN TECHNOLOGIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
The Wandel & Goltermann Technologies, Inc. Employee Stock Purchase Plan
(the "Purchase Plan") provides for the purchase of the Company's Common Stock by
employees of the Company. The Board of Directors and shareholders adopted and
approved the Purchase Plan in January 1994. Currently, a maximum of 100,000
shares of Common Stock may be issued to eligible employees pursuant to the
Purchase Plan. Of that number, as of September 30, 1996 a total of 41,162 shares
had been issued under the Purchase Plan and 58,838 shares remained available for
future purchase. To provide an adequate reserve of shares for continued
operation of the Purchase Plan, the Board of Directors has amended the plan,
subject to approval by the shareholders, to increase the maximum aggregate
number of shares of Common Stock issuable under the Purchase Plan by 100,000 to
a total of 200,000 shares.
The Board of Directors believes that the Purchase Plan is an important
factor in attracting and retaining qualified employees essential to the success
of the Company and that an adequate reserve of shares available for issuance
under the Purchase Plan is therefore in the best interests of the Company and
the shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE EMPLOYEE STOCK PURCHASE PLAN AMENDMENT.
PURCHASE PLAN DESCRIPTION
The following summary of the Purchase Plan is qualified in its entirety by
the specific language of the Purchase Plan, a copy of which will be made
available to any stockholder upon written request.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under section 423 of the Internal Revenue Code. Each participant in the
Purchase Plan is granted at the beginning of each offering under the plan (an
"Offering") the right to purchase shares of Common Stock of the Company through
accumulated payroll deductions at a price per share equal to 85% of the lower of
the fair market value of a share of Common Stock as of the first or last day of
the offering period. The Purchase Right is automatically exercised on the last
day of the Offering unless the participant has withdrawn from participation in
the Offering or in the Purchase Plan prior to such date.
The Purchase Plan is administered by the Board of Directors or a duly
appointed committee of the Board (hereinafter referred to as the "Board").
Subject to the provisions of the Purchase Plan, the Board determines the terms
and conditions of Purchase Rights granted under the plan. The Board will
interpret the Purchase Plan and Purchase Rights granted thereunder, and all
determinations of the Board will be final and binding on all persons having an
interest in the Purchase Plan or any Purchase Rights.
As amended, an aggregate of up to 200,000 of the authorized but unissued
shares of the Company's Common Stock may be issued under the Purchase Plan,
subject to adjustment in the event of a stock dividend, stock split, reverse
stock split, recapitalization, combination, reclassification or similar change
in the Company's capital structure or in the event of any merger, sale of assets
or other reorganization of the Company.
Any employee of the Company and its subsidiary corporations, including any
officer or director who is also an employee, is eligible to participate in the
Purchase Plan on the first offering date following completion of one hour of
service
12
<PAGE>
as an employee. No person who owns or holds options to purchase or who, as a
result of participation in the Purchase Plan, would own or hold options to
purchase 5% or more of the Common Stock of the Company or of any parent or
subsidiary corporation of the Company is entitled to participate in the Purchase
Plan. As of September 30, 1996, all employees, including executive officers, are
eligible to participate in the Purchase Plan.
The Purchase Plan permits eligible employees to purchase shares of Common
Stock of the Company through payroll withholding. Generally, each offering of
Common Stock under the Purchase Plan is for a period of 12 months (an "Offering
Period"), and a new Offering Period commences on January 1 of each year.
However, the Purchase Plan authorizes the Board to establish a different term or
different beginning or ending dates for one or more Offerings.
Participation in an Offering under the Purchase Plan is limited to eligible
employees who authorize payroll deductions prior to the start of the Offering. A
participating employee's payroll withholding may not exceed 6% of that
employee's base compensation during any pay period. No participant may purchase
shares with a fair market value (determined on the first day of the Offering
Period) exceeding $25,000 for each calendar year in which the participant
participates in the Purchase Plan. Generally, upon termination of participation
in the Purchase Plan, all amounts withheld on behalf of an employee for a
current Offering Period are refunded to the employee. Interest is paid on
amounts withheld.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
Purchase Plan and does not attempt to describe all possible federal or other tax
consequences of such participation or tax consequences based on particular
circumstances.
Generally, there are no tax consequences to an employee of either becoming
a participant in the Purchase Plan or purchasing shares under the Purchase Plan.
The tax consequences of a disposition of shares vary depending on the period
such stock is held before its disposition. If a participant disposes of shares
within two years after the Offering Date or within one year after the Purchase
Date on which the shares are acquired (a "disqualifying disposition"), the
participant recognizes ordinary income in the year of disposition in an amount
equal to the difference between the fair market value of the shares on the
Purchase Date and the purchase price. Such income may be subject to withholding
of tax. Any additional gain or resulting loss recognized by the participant from
the disposition of the shares is a capital gain or loss. If the participant
disposes of shares at least two years after the Offering Date and at least one
year after the Purchase Date on which the shares are acquired, the participant
recognizes ordinary income in the year of disposition in an amount equal to the
lesser of (i) the difference between the fair market value of the shares on the
date of disposition and the purchase price or (ii) 15% of the fair market value
of the shares on the Offering Date. Any additional gain recognized by the
participant on the disposition of the shares is a capital gain. If the fair
market value of the shares on the date of disposition is less than the purchase
price, there is no ordinary income, and the loss recognized is a capital loss.
If the participant owns the shares at the time of the participant's death, the
lesser of (i) the difference between the fair market value of the shares on the
date of death and the purchase price or (ii) 15% of the fair market value of the
shares on the Offering Date is recognized as ordinary income in the year of the
participant's death.
If the exercise of a Purchase Right does not constitute an exercise
pursuant to an "employee stock purchase plan" under section 423 of the Code, the
exercise of the Purchase Right will be treated as the exercise of a nonstatutory
stock option. The participant would therefore recognize ordinary income on the
Purchase Date equal to the excess of the fair market value of the shares
acquired over the purchase price. Such income is subject to withholding of
income and employment taxes. Any gain or loss recognized on a subsequent sale of
the shares, as measured by the difference between the sale proceeds and the sum
of (i) the purchase price for such shares and (ii) the amount of ordinary income
recognized on the exercise of the Purchase Right, will be treated as a capital
gain or loss, as the case may be.
A capital gain or loss will be long-term if the participant holds the
shares for more than 12 months and short-term if the participant holds the
shares for 12 months or less. Both long-term and short-term capital gains are at
present generally subject to the same tax rates as ordinary income, except that
long-term capital gains are currently subject to a maximum tax rate of 28%.
If the participant disposes of the shares in a disqualifying disposition,
the Company should be entitled to a deduction equal to the amount of ordinary
income recognized by the participant as a result of the disposition, except to
the extent such deduction is limited by applicable provisions of the Code or the
regulations thereunder. In all other cases, no deduction is allowed the Company.
13
<PAGE>
PROPOSAL 5
APPROVAL OF AMENDMENT OF THE OUTSIDE DIRECTORS' STOCK OPTION PLAN
The Board and shareholders adopted and approved the Outside Directors'
Stock Option Plan (the "Directors Plan") in January 1994. The Directors Plan
provides for the automatic grant of nonqualified stock options to directors of
the Company who are not employees of the Company. Currently, a maximum of 25,000
shares of the Company's Common Stock may be issued under the Directors Plan. Of
that number, as of September 30, 1996, options to purchase 10,000 shares were
outstanding, and 15,000 shares remained available for future automatic grants
under the Directors Plan. In recognition of the valuable services rendered to
date by the Company's outside directors, the Board of Directors has amended the
plan, subject to approval by the shareholders, to increase the automatic annual
grant under the plan upon reelection of an outside director to the Board from
1,000 shares to 2,000 shares. The Board believes this additional financial
incentive is an important factor in attracting and retaining outside directors
of superior ability.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE OUTSIDE DIRECTORS' STOCK PLAN AMENDMENT.
DIRECTORS PLAN DESCRIPTION
The following summary of the Directors Plan is qualified in its entirety by
the specific language of the Directors Plan, a copy of which will be made
available to any stockholder upon written request.
The Directors Plan provides for the automatic grant of nonqualified stock
options to nonemployee directors of the Company and is intended to qualify as a
"formula plan" within the meaning of Rule 16b-3 under the Securities Exchange
Act of 1934. While the Directors Plan is intended to operate automatically
without discretionary administration, to the extent administration is necessary,
it will be performed by the Board or a duly appointed committee of the Board.
However, the Board has no discretion to select the nonemployee directors of the
Company who are granted options under the Directors Plan, to set the exercise
price of such options, to determine the number of shares for which or the time
at which particular options are granted or to establish the duration of such
options. The Board is authorized to interpret the Directors Plan and options
granted thereunder, and all determinations of the Board will be final and
binding on all persons having an interest in the Directors Plan or any option.
A maximum of 25,000 shares of the authorized but unissued shares of the
Common Stock of the Company may be issued upon the exercise of options granted
under the Directors Plan. Upon any stock dividend, stock split, reverse stock
split, recapitalization, combination, reclassification, or similar change in the
capital structure of the Company, appropriate adjustments will be made to the
shares subject to the Directors Plan, to the terms of the automatic option
grants described below, and to outstanding options. To the extent that any
outstanding option under the Directors Plan expires or terminates prior to
exercise in full or if shares issued upon the exercise of an option are
repurchased by the Company, the shares of Common Stock for which such option is
not exercised or the repurchased shares are returned to the plan and become
available for future grants.
Only directors of the Company who are not employees of the Company or any
present or future parent and/or subsidiary corporations of the Company (the
"Outside Directors") are eligible to participate in the Directors Plan.
Currently, the Company has three Outside Directors. As amended, the Directors
Plan provides that each Outside Director upon initial election to the Board will
receive an automatic one-time grant of an option to purchase 2,000 shares. Each
Outside Director is automatically granted an additional option to purchase 2,000
shares upon reelection to the Board of Directors.
The exercise price of any option granted under the Directors Plan must
equal the fair market value, as determined pursuant to the plan, of a share of
the Company's Common Stock on the date of grant. Generally, the fair market
value of the Common Stock will be the mean between the high and low prices per
share on the date of grant as reported on the Nasdaq National Market. No option
granted under the Directors Plan is exercisable after the expiration of 10 years
after the date such option is granted, subject to earlier termination in the
event the optionee's service with the Company ceases or in the event of a
Transfer of Control of the Company, as discussed below. Options granted under
the Directors Plan become exercisable cumulatively in installments of 40% on the
first anniversary and 30% on the second and third anniversaries of the date of
grant subject to the continued service of the optionee.
Options may be exercised by payment of the exercise price in cash, by check
or in cash equivalent. During the lifetime of the optionee, the option may be
exercised only by the optionee. An option may not be transferred or assigned,
except by will or the laws of the descent and distribution. Options expire 10
years after the date of grant.
14
<PAGE>
If an optionee ceases to be a director of the Company for any reason,
except death or disability, the optionee may exercise his or her options (to the
extent exercisable on the date of termination) within three months after the
date of termination, but in any event not later than the date of termination of
the option. If an optionee ceases to be a director of the Company due to death
or disability, the optionee (or his or her legal representative) may exercise
the option (to the extent exercisable on the date of termination) within six
months after the date of termination, but in any event not later than the date
of termination of the option. The portion of an option which is unexercisable as
of the date of termination will be canceled.
FEDERAL INCOME TAX CONSEQUENCES
For a description of the United States federal income tax consequences
under current law of nonqualified stock options granted under the Directors
Plan, please see the discussion shown above under "Approval of Amendment to the
Omnibus Stock Plan -- Federal Income Tax Consequences."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Compensation Committee of the Board of Directors
was composed of Messrs. Bayer, Pospisil and Topol, none of whom was an officer
or employee of the Company during the fiscal year or at any time prior to the
fiscal year.
Mr. Wandel has an ownership interest in, and Messrs. Bayer, Schmid, Wagner
and Wandel are executive officers of WGG. In fiscal 1996, the Company engaged in
certain transactions with WGG and WGG affiliates. See "Certain Transactions."
CERTAIN TRANSACTIONS
A WGG affiliate ("the Processing Affiliate") provided certain order
processing, billing, currency conversion and collection services to the Company.
For these services, the Company pays the Processing Affiliate a quarterly fee of
1.25% of the net wholesale price of products manufactured and sold
internationally by the Company and 0.7% of products sold by the Company in the
United States. The Company also pays WGG a license fee of 2.25% of the net sales
price of products manufactured and sold by the Company for the right to use
certain WGG trademarks. The Company incurred expenses of $1,570,000 in fiscal
1996 related to these services and license fees.
The Company sells products internationally only to distributors affiliated
with WGG. The Company's revenues from sales to WGG affiliates were $25,900,000
in fiscal 1996. The Company also purchases products manufactured by WGG
affiliates for resale in the U.S. The Company purchased $7,207,000 of products
from WGG affiliates in fiscal 1996.
The Company has a marketing office in Berne, Switzerland, which is leased
from a WGG affiliate and staffed by employees of several WGG affiliates. The
Company paid such WGG affiliates an aggregate of $712,000 in fiscal 1996 for
rent and reimbursement of employee costs associated with this office. The
Company pays certain WGG affiliates license fees for products developed by such
affiliates and manufactured by the Company. The Company incurred $11,000 of such
license fees in fiscal 1996.
In addition, the Company leases its corporate offices and manufacturing
facilities from W&G Associates, a North Carolina general partnership owned by a
beneficial shareholder of WGG and certain members of his family. The Company
paid rent of $1,015,000 in fiscal 1996.
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
GENERAL
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"), the members
of which are the three directors set forth at the end of this report who are
neither employees nor officers of the Company. The goals of the Company's
executive compensation program are to pay competitively and to establish
compensation levels that will enable the Company to attract, motivate, reward
and retain qualified executives whose contributions are critical to the
Company's long-term success. The program is also designed to focus and direct
the energies and efforts of key executives toward achieving individual, Company,
revenue and profit objectives. To achieve these goals, the Company has
established an executive compensation program consisting of three principal
components: base salary, cash bonuses and stock options. In addition, executive
officers may elect to participate in the Company's 401(k) plan, employee stock
purchase plan, group medical plan and other benefit plans available to employees
generally.
To ensure that compensation is competitive, the Company participates in
regional and national surveys (the "Industry Surveys") which obtain data on pay
ranges for executives of companies of comparable size and industry type. As a
result of the Company's participation in the Industry Surveys, the Company's
Human Resources Department is provided with reports which are used to evaluate
the competitiveness of the Company's executive compensation program. Although
there is minimal overlap between the companies included in the Industry Surveys
and the companies included in the Hambrecht & Quist Index for Technology
Companies used in the Performance Graph, the Company believes that the survey
companies accurately reflect the market in which the Company competes for
executive skills.
The following discussion regarding base salaries and bonus awards for the
Company's Named Executive Officers excludes the Chief Executive Officer whose
base salary and bonus award are governed by the terms of his employment
agreement with the Company.
BASE SALARY
Each of the Company's Named Executive Officers receives a base salary that
is generally adjusted annually to reflect changes in market conditions, the
Company's performance and individual responsibilities. The base salaries for the
Company's Named Executive Officers are targeted to be at the level necessary to
attract and retain qualified executive talent. Base salaries generally range
from the fiftieth to the ninetieth percentile of salaries of similar positions
at the companies included in the Industry Surveys. In addition to comparisons
with the Industry Surveys, an individual's overall evaluation reflects a
subjective review of performance by the Chief Executive Officer and the
attainment of business and financial objectives, with no specified weight being
given to any of these factors. The Chief Executive Officer's recommendations are
submitted directly to the Committee, which makes the final decisions with
respect to base salaries.
BONUS AWARDS
The Company does not have an established bonus plan, and annual cash
incentive awards are discretionary. To reward superior performance and
contributions made by key executives, the Company awards bonuses annually based
on Company, department and individual performance, with no specified weight
being given to any factor. For fiscal 1996, the Company's Named Executive
Officers (other than the Chief Executive Officer) received discretionary bonuses
which ranged from 21% to 52% of base salary. These bonuses were awarded by the
Company based on the subjective recommendations of the Chief Executive Officer
to the Committee.
OMNIBUS STOCK PLAN
Pursuant to the Company's Omnibus Stock Plan, the Company may award its
executive officers incentive stock options, nonqualified stock options, stock
appreciation rights, restricted stock, performance awards or other stock-based
awards. In fiscal 1996, grants of stock options were made upon the
recommendation of the Chief Executive Officer based on his subjective evaluation
of each individual's performance, including a recommendation respecting options
to be granted to himself. The Chief Executive Officer makes recommendations with
respect to the number of options to be granted and the recipients thereof based
on his subjective evaluation of the individual's performance. Options granted to
the Chief Executive Officer are based on the recommendation of the Committee. In
fiscal 1996, options to purchase 521,900 shares of Common Stock were granted to
employees and directors, including options to purchase 147,350 shares awarded to
Named Executive Officers of which 90,000 were awarded to the Chief Executive
Officer. Options granted in fiscal 1996 generally become exercisable in
cumulative installments of 20% per year commencing on the grant date, and expire
in ten years.
16
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
The cash compensation of the Company's Chief Executive Officer is
determined pursuant to the terms of his employment agreement with the Company.
See "Executive Compensation -- Employment Agreement." For fiscal 1996, Mr.
Chastelet's employment agreement provided for a base annual salary and an
incentive bonus based on the Company's growth in revenues and pre-tax profit as
a percentage of the Company's revenues.
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION
Certain non-performance based executive compensation which is in excess of
$1.0 million is not deductible by the Company. No executive officer of the
Company received in fiscal 1996 compensation in excess of this limit, and, at
this time, the Company does not expect that any executive officer of the Company
will receive compensation in excess of this limit in fiscal 1997. Accordingly,
the Committee was not obligated to take any action to comply with the limit. The
Committee will continue to monitor this situation, however, and will take
appropriate action if it is warranted in the future.
BOARD OF DIRECTORS
Herbert Bayer, CHAIRMAN
Richard E. Pospisil
Sidney Topol
17
<PAGE>
PERFORMANCE GRAPH
The following line graph compares cumulative total return on the Common
Stock ("WGTI") with a performance indicator of the overall stock market, the
Nasdaq Composite Index ("Nasdaq"), and a nationally recognized industry index,
the Hambrecht & Quist Index for Technology Companies ("H & Q") for the period
commencing April 8, 1994 and ending on September 30, 1996.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG WANDEL & GOLTERMANN TECHNOLOGIES, INC.
NASDAQ COMPOSITE INDEX AND INDUSTRY GROUP INDEX
FROM APRIL 8, 1994 THROUGH SEPTEMBER 30, 1996 (1) (2)
[Graph appears here]
<TABLE>
<CAPTION>
4/8/94 9/30/94 9/30/95 9/30/96
<S> <C> <C> <C> <C>
WGTI.......................................... $100.00 $109.09 $ 93.18 $172.73
Nasdaq........................................ $100.00 $103.84 $139.38 $163.87
H&Q........................................... $100.00 $104.14 $163.78 $203.31
</TABLE>
(1) The Common Stock was registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), on April 8, 1994.
(2) Assumes that $100.00 was invested in the Common Stock and each index on
April 8, 1994 and that all dividends were reinvested. No dividends have been
declared on the Common Stock. Shareholder returns over the indicated period
should not be considered indicative of future shareholder returns.
18
<PAGE>
PROPOSAL 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company, on the recommendation of the
Company's Audit Committee, has selected Arthur Andersen LLP as the independent
public accountants to audit the financial statements of the Company for the
fiscal year ending September 30, 1997. A representative of Arthur Andersen LLP
is expected to be present at the annual meeting with the opportunity to make a
statement if the representative desires to do so, and is expected to be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1997.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than ten percent of the Common Stock to file
initial reports of ownership and reports of changes in ownership of the Common
Stock with the Securities Exchange Commission (the "Commission"). Officers,
directors and greater than ten percent shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on its review of the copies of
such reports received by the Company, all Section 16(a) filing requirements
applicable to the Company's officers, directors and greater than ten percent
shareholders were complied with, except that: (i) WGG was late in reporting one
acquisition transaction in which it had a beneficial interest; (ii) WGR was late
in reporting one acquisition transaction in which it had a beneficial interest;
and (iii) WGV was late in reporting one acquisition transaction.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
A shareholder intending to present a proposal at the 1998 Annual Meeting of
Shareholders must deliver the proposal in writing to the Company's Secretary at
the Company's principal offices at P. O. Box 13585, Research Triangle Park,
North Carolina 27709 no later than August 23, 1997.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment or postponement thereof, it is the intention of
the persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgment.
The cost of preparing, printing and mailing this proxy statement to
shareholders will be borne by the Company. In addition to the use of mail,
employees of the Company may solicit proxies personally and by telephone at
nominal cost to the Company. ADP Proxy Services has been retained by the Company
on behalf of the Board of Directors to assist in the solicitation of proxies
from brokers and nominees for a fee of approximately $500 plus reimbursement of
reasonable out-of-pocket expenses. The Company may request banks, brokers and
other custodians, nominees and fiduciaries to forward copies of the proxy
materials to their principals and to request authority for the execution of
proxies.
By Order of the Board of Directors,
[Adelbert Kuthe sig. here]
ADELBERT KUTHE
SECRETARY
January 6, 1997
19
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APPENDIX
<PAGE>
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF WANDEL & GOLTERMANN TECHNOLOGIES, INC.
The undersigned hereby appoints Gerry Chastelet and Adelbert Kuthe, and each
of them, proxies, with full power of substitution, to represent the undersigned
at the Annual Meeting of Shareholders of Wandel & Goltermann Technologies, Inc.
(the "Company"), to be held at 10:00 a.m., Eastern Standard Time, on February 5,
1997 at the Doubletree Guest Suite Hotel, 2515 Meridian Parkway, Durham, North
Carolina, and at any adjournments thereof, to vote the number of shares which
the undersigned would be entitled to vote if present in person in such manner as
such proxies may determine, and to vote on the following proposals as specified
below by the undersigned.
(1) Election of Directors:
[] VOTE FOR all nominees listed below [] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary nominees listed below.
below).
PETER WAGNER ALBRECHT L. WANDEL JOACHIM SIMMROSS ROLF SCHMID
GERRY CHASTELET RICHARD E. POSPISIL SIDNEY TOPOL
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
(2) Proposal to approve an amendment to the Company's Amended and Restated
Articles of Incorporation to increase the number of authorized shares of
Wandel & Goltermann Technologies, Inc. Common Stock from 20,000,000 to
50,000,000;
FOR [] AGAINST [] ABSTAIN []
(3) Proposal to approve the Omnibus Stock Plan Amendment to increase the number
of shares reserved for issuance thereunder from 775,000 to 1,175,000, to
allow employees of the Company's parent companies to participate in the
plan, and to allow non-employee directors to participate in the plan;
FOR [] AGAINST [] ABSTAIN []
(4) Proposal to approve the Employee Stock Purchase Plan Amendment to increase
the number of shares reserved for issuance thereunder from 100,000 to 200,000;
FOR [] AGAINST [] ABSTAIN []
(5) Proposal to approve the Outside Directors' Stock Plan Amendment to increase
the annual stock option grant to Outside Directors from 1,000 shares to
2,000 shares; FOR [] AGAINST [] ABSTAIN []
(6) Proposal to ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending September 30, 1997:
FOR [] AGAINST [] ABSTAIN []
PLEASE SIGN AND DATE ON THE OTHER SIDE
<PAGE>
Annual Meeting of Shareholders
of
WANDEL & GOLTERMANN TECHNOLOGIES, INC.
P.O. Box 13585
Research Triangle Park, NC 27709-3585
Please date, sign exactly as name(s) appear below and return promptly in the
enclosed envelope.
This proxy when properly executed will
be voted in the manner directed herein
by the undersigned shareholder. IN THE
ABSENCE OF SPECIFIED DIRECTIONS, THIS
PROXY WILL BE VOTED IN FAVOR OF THE
ELECTION OF ALL NOMINEES NAMED IN THIS
PROXY, IN FAVOR OF THE PROPOSAL TO
APPROVE AN AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED ARTICLES OF
INCORPORATION, IN FAVOR OF THE PROPOSAL
TO APPROVE THE OMNIBUS STOCK PLAN
AMENDMENT, IN FAVOR OF THE PROPOSAL TO
APPROVE THE EMPLOYEE STOCK PURCHASE
PLAN AMENDMENT, IN FAVOR OF THE
PROPOSAL TO APPROVE THE OUTSIDE
DIRECTORS' STOCK PLAN AMENDMENT AND IN
FAVOR OF THE PROPOSAL TO RATIFY THE
APPOINTMENT OF THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS. The
proxies are also authorized to vote in
their discretion upon such other
matters as may properly come before the
meeting or any adjournment thereof.
If signing as attorney, administrator,
executor, guardian, trustee or as a
custodian for a minor, please add your
title as such. If a corporation, please
sign in full corporate name and
indicate the signer's office. If a
partner, please sign in the
partnership's name.
X____________________________________
X____________________________________
Dated:_______________________________
