NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
{PCD LOGO APPEARS HERE}
Dear Stockholder:
You are invited to attend the 1998 annual meeting of
stockholders of PCD Inc. This year the annual meeting will be
held at PCD's headquarters, 2 Technology Drive, Centennial Park,
Peabody, MA 01960-7977, on Friday, June 5, 1998, at 10:00 a.m.,
local time.
The attached notice and proxy statement describe the business
to be conducted at the meeting, including the election of two
directors. Nominees for three-year terms on our Board are Mr. C.
Wayne Griffith and Mr. John E. Stuart. We are also seeking
stockholder approval for the 1998 Employee Stock Purchase Plan.
Please carefully read the descriptions included in the Proxy
Statement before completing, signing and returning the
accompanying proxy in the postage paid envelope provided for that
purpose.
Thank you for your prompt attention to these important
matters.
Very truly yours,
/s/ John L. Dwight, Jr.
John L. Dwight, Jr.
Chairman of the Board
{PCD LOGO APPEARS HERE}
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1998
TO THE STOCKHOLDERS OF
PCD INC. :
Notice is hereby given that the annual meeting of the
stockholders of PCD Inc., a Massachusetts corporation, will be
held at PCD's Headquarters, 2 Technology Drive, Centennial Park,
Peabody, MA 01960-7977, on Friday, June 5, 1998, at 10:00 a.m.,
local time, for the purpose of considering and acting upon the
following:
1. The election of two members of the Board of Directors for
a three-year term.
2. The approval of the Company's 1998 Employee Stock
Purchase Plan covering 80,000 shares of the Company's
Common Stock, as described in the Proxy Statement.
3. Such other matters that may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on
April 7, 1998 as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting and
any adjournments thereof.
By order of the Board of Directors
PCD Inc.
/s/ John L. Dwight, Jr.
John L. Dwight, Jr.
Chairman of the Board
Peabody, Massachusetts
May 4, 1998
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
---------------
PROXY STATEMENT
---------------
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD JUNE 5,
1998
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of PCD Inc.
(the "Company"). Such proxies will be voted at the annual meeting
of stockholders of the Company to be held on Friday, June 5,
1998, and any adjournments or postponements thereof (the "Annual
Meeting"), at the time and place and for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders
dated May 4, 1998. The address of the Company's principal
executive office is 2 Technology Drive, Centennial Park, Peabody,
MA 01960-7977. The approximate date on which this Proxy
Statement and the enclosed form of proxy are first sent or given
to stockholders is May 4, 1998. Stockholders of record at the
close of business on April 7, 1998 (the record date) are entitled
to notice of and to vote at said meeting and any adjournments or
postponements thereof, each share being entitled to one vote.
On April 7, 1998 the Company had 6,050,682 outstanding shares
of Common Stock, $0.01 par value, constituting the only class of
voting securities of the Company. A majority of the shares
entitled to vote and either present in person or represented by a
properly signed and returned proxy will constitute a quorum for
the transaction of business at the Annual Meeting. Abstentions
are counted as present for purposes of determining the existence
of a quorum, have no effect on the outcome of the election of
directors and have the effect of a vote against the approval of
the Company's 1998 Employee Stock Purchase Plan.
Under the rules of the National Association of Securities
Dealers (NASD) that govern brokers using the Nasdaq National
Market (Nasdaq), brokers who hold shares in street name generally
do not have the authority to vote on any items unless they have
received instructions from beneficial owners. If the broker is
also a member of a national securities exchange, however, NASD
rules permit the broker to vote shares held in street name in
accordance with the rules of the exchange. Under the rules of
the New York Stock Exchange, a broker who does not receive
instructions is entitled to vote on the election of directors and
to approve the Company's 1998 Employee Stock Purchase Plan.
When a broker is not entitled to vote with respect to a
certain proposal, this results in what is known as a broker "non-
vote" on such proposal. In the event of a broker non-vote with
respect to any proposal coming before the Annual Meeting, the
proxy will be counted as present for purpose of determining the
existence of a quorum, but the shares covered by the broker non-
vote will not be considered voted as to that proposal.
Accordingly, a broker non-vote will have no effect on the outcome
of the election of directors and will have no effect on the
approval of the Company's 1998 Employee Stock Purchase Plan
(other than to reduce the number of affirmative votes required to
achieve a majority for such approval by reducing the total number
of shares from which the majority is calculated).
With regard to the election of directors, under Massachusetts
law and the Company's By-laws, each nominee for election as a
director shall be elected if he or she receives the affirmative
vote of a plurality of the votes cast by stockholders entitled to
vote and either present in person or represented by proxy at the
Annual Meeting. Votes may be cast in favor of or withheld from
the nominees; votes that are withheld will be excluded entirely
from the vote and will have no effect. Stockholders are not
entitled to cumulative voting in the election of directors.
Any proxy given pursuant to this solicitation may be revoked
in writing by the person giving it at any time before it is
exercised. Under the laws of the Commonwealth of Massachusetts,
attendance at the annual meeting by a stockholder who has given a
proxy does not have the effect of revoking such proxy unless the
stockholder files at any time prior to the voting of the proxy a
written notice of revocation with the corporate Clerk at the
Company's principal executive offices set forth above or at the
annual meeting, including but not limited to the timely filing of
a duly executed proxy bearing a later date or the voting of the
shares subject to the proxy by written ballot cast at the annual
meeting. All shares represented by valid proxies received by the
Board of Directors pursuant to this solicitation in time to be
voted and not revoked will be voted. If the proxy indicates a
choice with respect to any matter to be acted upon, the shares
will be voted in accordance with the direction made therein.
Except as otherwise set forth above with respect to brokers, if
no direction is made, the shares will be voted as to each
proposal in accordance with the recommendations of the Board of
Directors.
I. ELECTION OF DIRECTORS
NOMINEE AND CONTINUING DIRECTORS
The Company's By-laws provide that the number of directors
shall not be less than the minimum number of individuals
permitted by law and shall be determined from time to time by
majority vote of the Board of Directors. In accordance with the
By-laws, the Board of Directors has fixed the number of directors
at five. The Board is divided into three classes, with the terms
of office of each class ending in successive years. Two
directors of the Company are to be elected at the Annual Meeting,
to hold office, subject to the By-laws, until the Annual Meeting
of stockholders in 2001 or until his respective successor has
been elected and qualified. Certain information with respect to
the nominees for election as directors proposed by the Company
and the other directors whose terms of office as directors will
continue after the annual meeting is set forth below. Should the
nominee be unable or unwilling to serve (which is not expected),
the proxies (except proxies marked to the contrary) will be voted
for such other person as the Board of Directors of the Company
may recommend.
Nominee, Age, Principal Occupation Served as
or Position, Other Directorships Director Since
- ---------------------------------- --------------
TO CONTINUE IN OFFICE UNTIL 2001
C. Wayne Griffith, 64.......................................... 1980
Senior Executive Vice President, Kessler Financial Services
John E. Stuart, 56............................................. *
Director of Marketing and Communications, Europay International
TO CONTINUE IN OFFICE UNTIL 2000
Harold F. Faught, 73........................................... 1983
Consultant
TO CONTINUE IN OFFICE UNTIL 1999
John L. Dwight, Jr., 53 ....................................... 1980
Chairman, Chief Executive Officer and President of the Company
Theodore C. York, 55 .......................................... 1994
President, Highland Group
* Mr. Stuart is being nominated for the first time.
2
Mr. Griffith has served as a director of the Company since
1980. Mr. Griffith is Senior Executive Vice President of Kessler
Financial Services and has held that position since 1994.
Previously, he held the positions of Chairman, Chief Executive
Officer and President of Digitec, Inc. and Chairman, Chief
Executive Officer and President of Xylogics, Inc. Mr. Stuart is
Director of Marketing and Communications and has served on the
Executive Committee of Europay International since 1997. From
1995 to 1997, Mr. Stuart was Senior Vice President - Business
Development for Rural/Metro Corporation. Previously, Mr. Stuart
was with American Express for 15 years in the Europe/Middle
East/Africa (EMEA) Region where he served as General Manager of
Northern Europe, President and General Manager of the United
Kingdom and Ireland, and as Senior Vice President of Marketing
for EMEA region.
Mr. Faught has served as a director of the Company since 1983.
From 1973 to 1993, when he retired, Mr. Faught served as an
officer, most recently Senior Vice President -- Technology, of
Emerson Electric Co. Since retiring, he has served Emerson in a
consulting capacity.
Mr. Dwight has served as Chairman of the Board, Chief
Executive Officer, President and a director of the Company since
November 1980, when Mr. Dwight purchased a controlling interest
in PCD. Mr. Dwight was previously Vice President -- International
of Burndy Company, an electronic connector manufacturer. Mr.
Dwight has 25 years of management and operating experience in the
connector industry.
Mr. York has served as a director of the Company since 1994.
Mr. York has been President of the Highland Group, a consulting
firm, since February 1997. From 1995 through February 1997, Mr.
York was President of Saber Equipment Corporation, a
petrochemical equipment company On February 14, 1997, Saber
Equipment Corporation filed a Chapter 11 bankruptcy petition,
which, at Saber's request, was converted into a Chapter 7
bankruptcy proceeding on February 24, 1997. A trustee has been
appointed by the bankruptcy court, and the sale of Saber's assets
concluded in July 1997. From 1984 to 1994, Mr. York was President
of Burndy Corporation. From 1992 to 1994, he was also Executive
Vice President of Framatome Connectors International, a
manufacturer of electrical and electronic connectors and tools.
He is currently a director of Robroy Industries, Inc.
Although the Board of Directors does not contemplate that the
nominees for election as directors will be unable to serve, in
the event that a vacancy in the original slate of nominees is
occasioned by death or other unexpected occurrence, shares of
stock represented by proxies (except proxies marked to the
contrary) shall be voted for the election of such other nominee
as may be designated by the Board of Directors.
THE BOARD OF DIRECTORS AND COMMITTEES
There were seven meetings of the Board of Directors during
1997. All of the members of the Board of Directors attended at
least 75% of the meetings of the Board and the committees on
which they served. Directors who are employees of the Company do
not receive any compensation for service as director. Each non-
employee director is currently paid $750 for each Board meeting
attended plus an annual retainer fee in the amount of $5,000.
For 1997, each director, other than Mr. Dwight, received a total
of $7,500 for his services.
The 1996 Eligible Directors Stock Plan of the Company (the
"Directors Stock Plan") was approved by the Board of Directors on
January 30, 1996 and thereafter by the Company's stockholders.
Under the Directors Stock Plan, commencing with the 1997 annual
meeting of stockholders, each director who is not an officer or
employee of the Company or any subsidiary of the Company (an
"Outside Director") who has not previously been granted an option
to purchase shares of Common Stock will be granted, on the
thirtieth day after such meeting or any subsequent annual meeting
of stockholders, an option to purchase 3,000 shares of Common
3
stock at an exercise price equal to the fair market value on the
date of grant. In addition, on the thirtieth day after re-
election, commencing with the 1997 annual meeting of
stockholders, each Outside Director will be granted an option at
each annual meeting of the stockholders to purchase 1,500 shares
of Common Stock at an exercise price equal to the fair market
value on the date of grant. A total of 36,000 shares of Common
Stock are available for awards under the Directors Stock Plan.
Each option granted under the Directors Stock Plan vests six
months after, and expires 10 years from, the date of grant of
such option. No options may be granted under the Directors Stock
Plan after January 29, 2006.
The Board of Directors has two standing committees: the Audit
Committee and the Compensation Committee. The Audit Committee
reviews the Company's accounting practices, internal accounting
controls and financial results and oversees the engagement of the
Company's independent auditors. The members of the Audit
committee will be Mr. Stuart, upon his election, and Mr. York.
The Compensation Committee reviews and recommends to the Board of
Directors the salaries, bonuses and other forms of compensation
for executive officers of the Company and administers various
compensation and benefit plans, including the 1992 Stock Option
Plan and the 1996 Stock Plan. The members of the Company's
Compensation Committee are Mr. Faught and Mr. Griffith.
None of the members of the Audit Committee or the Compensation
Committee is a past or current officer or employee of the
Company. The Board of Directors does not maintain a nominating
committee or a committee performing similar functions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Mr.
Faught and Mr. Griffith. Except for Mr. Dwight, the Company's
Chairman of the Board, Chief Executive Officer and President, no
officer or employee of the Company has participated in
deliberations of the Board of Directors concerning executive
officer compensation. No executive officer of the Company serves
as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as
a member of the Company's Board of Directors or Compensation
Committee.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
The following report is provided by the Compensation Committee
of the Board of Directors. The Committee supervises the Company's
Executive Compensation Program (the "Program") and is directly
responsible for compensation actions affecting the Chairman,
President and Chief Executive Officer (the "Chief Executive
Officer"), other executive officers and other senior executives
of the Company. The Committee, which consists entirely of
non-employee directors, met one time in 1997.
EXECUTIVE COMPENSATION PHILOSOPHY
The Program is designed and administered to relate executive
compensation to four basic objectives:
COMPETITIVE POSITION: The Program is designed to pay
competitive compensation so the Company can attract and retain
highly qualified executives. To assist it in determining
competitive compensation practices, the Committee frequently
utilizes information about compensation levels of other
companies, including information provided by qualified
independent surveys.
4
COMPANY PERFORMANCE: The Program is designed to reflect the
overall performance of the Company, with appropriate
consideration of conditions that exist in the industry. In
determining compensation levels and compensation changes, the
Committee considers the Company's overall performance in
meeting both short-term and long-term objectives. The
Committee considers achievement of operating objectives in
areas such as sales, earnings, entered orders and cash
management, as well as progress toward long-term strategic
objectives.
STOCKHOLDER RETURN: The Program has been designed to establish
a direct link between the interests of the Company's
executives and its stockholders by allocating a portion of
senior management compensation to stock option plans.
INDIVIDUAL PERFORMANCE: In addition to the above factors, the
Committee considers the executive's individual performance and
contributions to the Company's results in determining
appropriate compensation levels.
THE EXECUTIVE COMPENSATION PROGRAM
Three general components of executive compensation are used to
achieve the principles set forth above: base salary, a management
incentive plan and a long-term incentive plan. PCD's Chief
Executive Officer, Mr. Dwight, is evaluated and his compensation
administered in the same general fashion as the other executive
officers.
BASE SALARY: The base salary of each executive is reviewed
annually by the Committee. Salary changes reflect the overall
performance of the Company, pay competitiveness and the
individual's performance. The targeted percentage of cash
compensation represented by base salary varies based on the
level of the position, with a target of approximately 60% for
the Chief Executive Officer and approximately 70% for the
other executive officers. 1997 base salaries for the Chief
Executive Officer and the other executive officers are shown
in the summary compensation table. Effective January 1,
1998, Mr. Dwight's annual base salary was increased 8% to
$220,393. In setting Mr. Dwight's base salary, the committee
took into account his leadership and direct contributions to
the Company which resulted in the Company's strong financial
performance for the year ended 1997.
ANNUAL MANAGEMENT INCENTIVE PLAN: The Company's Chief
Executive Officer and other executive officers are eligible
for annual cash bonuses. Payments of bonuses are based upon
achievement of specified financial objectives determined by
the Board of Directors at the beginning of each year.
Financial objectives are based on the Company's budget and
results of operations. Mr. Dwight's bonus was determined by
comparing PCD's financial results to the financial goals
described above. Mr. Dwight was awarded a cash bonus of
$80,000, which was 39.2% of his base salary for 1997.
LONG-TERM INCENTIVE PLAN: To ensure that management's
interests are directly tied to stockholder return, a portion
of senior executive total compensation is provided through
stock-based, long-term incentive plans. To place emphasis on
stockholder return, the Company has implemented two stock
option plans. Awards and payments to executive officers under
these plans are included in the accompanying tables. The 1992
and 1996 Stock Option Plans provide for the award of incentive
stock options and non-qualified stock options.
The Company does not have an employment agreement with the
Chief Executive Officer or any of its other executive officers
providing for their employment for any specific term.
No specific actions have been taken with respect to the $1
million compensation deduction limit under section 162(m) of
the Internal Revenue Code because the Company's compensation
levels have never exceeded the limits and are not expected to
exceed the limit by a material amount over the next several
years.
5
SUMMARY
The Committee believes the Company's compensation program has
been designed and managed by the Committee to directly link the
compensation of the Company's executives to the performance of
the Company, individual performance and Stockholder return. The
current levels of compensation for the Company's senior
executives are generally below market levels for similar
electronic connector companies. The Committee expects to address
these compensation levels over time, consistent with Company and
individual performance, and will continue to emphasize
performance-based and stock-based compensation linking management
and stockholder interests.
The Compensation Committee
H.F. Faught
C.W. Griffith
6
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION (2)
----------------
NUMBER OF
SHARES
ANNUAL COMPENSATION(1) UNDERLYING
NAME AND ---------------------- OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS ($)(3) GRANTED(#) COMPENSATION($)(4)
- ------------------ ---- --------- ------------ ---------- -------------------
John L. Dwight, Jr. 1997 $204,068 $ 80,000 -- $ 8,189
Chairman of the 1996 188,313 100,000 -- 7,712
Board, Chief 1995 177,647 80,000 -- 7,737
Executive Officer
and President
Michael S. Cantor.. 1997 122,000 48,000 -- 10,125
Vice President 1996 116,019 35,000 -- 8,787
and General 1995 111,649 30,000 -- 9,649
Manager, Industrial
/Avionics Division
Jeffrey A.
Farnsworth........ 1997 113,577 12,000 -- 10,026
Vice President 1996 103,474 60,000 -- 9,663
and General 1995 98,061 40,000 -- 8,429
Manager,
Wells - CTI
Phoenix
Mary L. Mandarino.. 1997 92,426 32,000 -- 10,996
Chief Financial 1996 84,584 32,000 5,000 7,850
Officer, Vice 1995 77,494 30,000 -- 8,879
President, Finance
and Administration
and Treasurer
Roddy J. Powers.... 1997 111,833 45,000 -- 7,694
Vice President, 1996 106,163 37,000 -- 7,029
Operations 1995 101,109 30,000 -- 6,884
- ----------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or ten percent of the total
annual salary and bonus reported for the executive officer during the
years reported.
(2) The Company did not grant any restricted stock awards or stock
appreciation rights during the years reported. The Company does not have
any long term incentive plan.
(3) The Company's officers are eligible for annual cash bonuses under the
terms of the Company's Management Incentive Plan, adopted each year.
Payments of bonuses are based upon achievement of specified individual
and Company objectives determined by the Board of Directors at the
beginning of each year.
(4) Includes amounts awarded pursuant to the Company's 401(k) Salary Savings
Plan, life insurance premium remainders and automobile allowances. For
1997, such amounts were, respectively, Mr. Dwight, $4,750, $470 and
$2,969; Mr. Cantor, $4,750, $416 and $4,959; Mr. Farnsworth, $4,430, $165
and $5,431; Ms. Mandarino, $3,941, $105 and $6,950; and Mr. Powers,
$4,750, $303 and $2,641.
7
OPTION GRANTS IN THE LAST YEAR
No options or stock appreciation rights ("SARs") were granted to the Named
Executive Officers during 1997. On December 26, 1997, in connection with his
appointment as Vice President and President, Wells-CTI Division, the Company
granted to Richard J. Mullin an incentive stock option to purchase 50,000
shares of Common Stock at an exercise price of $23.25 per share. The
following tables set forth certain information regarding stock options
exercised during 1997, and non-exercised options held as of December 31, 1997,
by each of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST YEAR
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($)(1)
---- --------------- ---------------
John L. Dwight, Jr......... 10,000 $181,042
Michael S. Cantor.......... 49,000 746,229
Jeffrey A. Farnsworth...... 2,000 34,417
Mary L. Mandarino.......... 2,500 32,135
Roddy J. Powers............ 37,400 613,683
- ----------------
(1) The values in this column represent the last reported sale price of the
Company's Common Stock on the Nasdaq National Market on the exercise
date, less the respective option exercise price.
Aggregated Year-End Option Values
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
John L. Dwight, Jr.... 52,000 - $1,162,417 $ -
Michael S. Cantor..... 70,000 - 1,564,792 -
Jeffrey A. Farnsworth. 130,000 12,000 2,892,543 260,500
Mary L. Mandarino..... 80,500 2,500 1,772,375 28,125
Roddy J. Powers....... 86,600 - 1,935,871 -
- ----------------
(1) Solely for purposes of this table, the values in these columns have been
calculated on the basis of the price of $23.50 per share, the fair market
value of the Common Stock on December 31, 1997, less the option exercise
price.
8
PERFORMANCE GRAPH
The graph set forth below provides comparisons of the
quarterly change in the cumulative total shareholder return on
PCD's Common Stock with the cumulative return of the Nasdaq Stock
Market and a Peer Group Index from March 26, 1996 (the effective
date of PCD's initial public offering) through December 31, 1997.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN (a)
CRSP
Measurement Period Total Return Peer
(Fiscal Quarter Covered) PCD Inc. Index for Nasdaq(b) Group (c)
- ------------------------ -------- ------------------- ---------
As at 3/26/96 100 100 100
QE - 3/96 108 101 99
QE - 6/96 120 110 98
QE - 9/96 109 113 109
QE - 12/96 118 119 108
QE - 3/97 143 113 103
QE - 6/97 150 133 123
QE - 9/97 223 156 151
QE - 12/97 214 145 137
(a) Assumes $100 invested on March 26, 1996 in PCD Common Stock,
the Nasdaq Stock Market and the Peer Group Index, as defined
below in footnote (c), and the reinvestment of all dividends.
(b) Cumulative returns are calculated using data from the Nasdaq
Stock Market Total Return Index, maintained by the Center for
Research in Security Prices (CRSP) at the University of
Chicago.
(c) The Peer Group is comprised of all independent "electronic
connector" companies which are traded on the New York Stock
Exchange or listed by The Nasdaq Stock Market (seven
companies excluding PCD). The electronic connector companies
are: Amphenol Company; AMP Incorporated; Berg Electronics
Corp.; Methode Electronics, Inc.; Molex Inc.; Robinson
Nugent, Inc.; and Thomas & Betts Company.
9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 7, 1998, certain
information with respect to the security ownership of the Common
Stock by officers and directors of the Company:
Amount and Nature
of Beneficial
Ownership(1) Percent
----------------- -------
Directors and Executive Officers
John L. Dwight, Jr. (2).................... 953,500 15.6%
Bruce E. Elmblad (3)....................... 57,960 1.0
Harold F. Faught (4) ...................... 37,500 *
C. Wayne Griffith (5) ..................... 82,300 1.4
Theodore C. York (6) ...................... 37,500 *
Michael S. Cantor (7) ..................... 95,000 1.6
Jeffrey A. Farnsworth (8) ................. 130,000 2.1
Mary L. Mandarino (9) ..................... 88,250 1.4
Richard J. Mullin (10) .................... 8,435 *
Roddy J. Powers (11) ...................... 94,000 1.5
All directors and executive
officers as a group (10 persons)(12)...... 1,584,445 24.2
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment
power with respect to the shares. Stock subject to options currently
exercisable or exercisable within 60 days following April 7, 1998 are
deemed outstanding for the purpose of completing the share ownership and
percentage of the person holding such options, but are not deemed
outstanding for the purpose of computing the percentage of any other
person.
(2) John L. Dwight, Jr.'s beneficial ownership of Common Stock of the
Company, consists of 924,500 shares over which he has both sole voting
and dispositive powers and 29,000 shares over which he has shared voting
and dispositive powers. Mr. Dwight disclaims beneficial ownership with
respect to the 29,000 shares held by his children. Also includes 52,000
shares issuable upon exercise of stock options.
(3) Includes 1,500 shares issuable upon exercise of stock options. Mr.
Elmblad disclaims beneficial ownership with respect to 20,460 shares held
by his spouse. Mr. Emblad will retire from the Company's Board of
Directors effective June 5, 1998.
(4) Comprised of 37,500 shares issuable upon exercise of stock options.
Does not include 2,068,080 shares which are beneficially held by Emerson
Electric Co., of which Mr. Faught was an officer from 1973 to 1993, when
he retired, and which he has since served in a consulting capacity.
(5) Includes 37,500 shares issuable upon exercise of stock options.
(6) Comprised of 37,500 shares issuable upon exercise of stock options.
(7) Includes 45,000 shares issuable upon exercise of stock options.
(8) Comprised of 130,000 shares issuable upon exercise of stock options.
(9) Includes 75,500 shares issuable upon exercise of stock options.
(10) Includes 8,335 shares issuable upon exercise of stock options.
(11) Includes 86,600 shares issuable upon exercise of stock options.
(12) Includes 511,435 shares issuable upon exercise of stock options.
10
PRINCIPAL STOCKHOLDERS
As of April 7, 1998, the only persons known to management to own
beneficially 5% or more of the outstanding Common Stock of the Company are
named below:
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent
- ------------------------------------ ------------------------ -------
Emerson Electric Co................... 2,068,080(2) 33.2%
8000 West Florissant Avenue
St. Louis, MO 63136
John L. Dwight, Jr..................... 953,500(3) 15.6%
c/o PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
Thomson Hortsman & Bryant Inc.......... 413,000(4) 6.8%
Park 80 West Plaza Two
Saddle Brook, NJ 07663
T. Rowe Price Associates, Inc.......... 363,000(5) 6.0%
100 E. Pratt Street
Baltimore, MD 21202
Fleet Financial Group, Inc............. 346,530(6) 5.7%
One Federal Street
Boston, MA 02211
____________________
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment
power with respect to the shares. Stock subject to options currently
exercisable or exercisable within 60 days following April 7, 1998 are
deemed outstanding for the purpose of completing the share ownership and
percentage of the person holding such options, but are not deemed
outstanding for the purpose of computing the percentage of any other
person.
(2) Includes 1,138,800 shares owned by Emerson Electric Co. and 743,280
shares owned by its wholly-owned subsidiary InnoVen III Company and over
which it has both sole voting and dispositive power. Also includes
36,000 shares issuable upon exercise of stock options held by Harold F.
Faught, a director of the Company and a consultant to Emerson Electric
Co. Also includes 150,000 shares issuable upon exercise of the Emerson
Warrant.
(3) John L. Dwight, Jr.'s beneficial ownership of Common Stock of the Company
consists of 924,500 shares over which he has both sole voting and
dispositive powers and 29,000 shares over which he has shared voting and
dipositive powers. Mr. Dwight disclaims beneficial ownership with
respect to the 29,000 shares held by his children. Also includes 52,000
shares issuable upon exercise of stock options.
(4) Thomson Hortsman & Bryant Inc.'s beneficial ownership of Common Stock of
the Company, consists of 290,200 shares over which it has sole voting
power, 2,600 shares over which it has shared voting power. Thomson
Horstmann & Bryant, Inc. has sole dispositive power over all such shares.
Shares of Common Stock beneficially owned by Thomson, Horstmann & Bryant,
Inc. are owned by a variety of investment advisory clients of Thomson,
Horstmann & Bryant, Inc.. No such client is known to have an interest in
more than 5% of the Common Stock.
(5) T. Rowe Price Associates, Inc.'s beneficial ownership of Common Stock of
the Company, consists of 46,000 shares over which it has sole voting
power, no shares over which it has shared voting power, 363,000 shares
over which it has sole dispositive power and no shares over which it has
shared dipositive power. T. Rowe Price Associates, Inc. disclaims
beneficial ownership of such securities.
11
(6) Fleet Financial Group, Inc.'s beneficial ownership of Common Stock of the
Company, consists of 346,530 shares over which it has sole voting power,
no shares over which it has shared voting power, 346,530 shares over
which it has sole dispositive power, and no shares over which it has
shared dispositive power.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, executive officers and persons who own
beneficially ten percent or more of any class of equity security
in the Company to file with the Securities and Exchange
Commission initial reports of such ownership and reports of
changes in such ownership. Such officers, directors and
beneficial owners are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all
Section 16(a) filings made by them.
Based solely upon a review of the copies of such filings
furnished to the Company, the absence of a Form 3 or a Form 5 and
each executive officer's written representation that no Form 5
was required, the Company believes that during the year 1997, its
executive officers, directors and ten percent or greater
beneficial owners complied with all applicable Section 16(a)
filing requirements except that a Form 3 for an executive
officer, Mr. Mullin, was inadvertently filed three days late. The
late filing was made promptly upon discovery of the oversight.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 26, 1997, the Company entered into a Subordinated
Debenture and Warrant Purchase Agreement (the "Purchase
Agreement") with Emerson Electric Co. ("Emerson"), the Company's
largest stockholder. Pursuant to the Purchase Agreement, the
Company issued to Emerson a Subordinated Debenture (the
"Debenture") with a principal amount of $25 million at an annual
rate of interest of 10% and a Common Stock Purchase Warrant (the
"Emerson Warrant") for the purchase of up to 525,000 shares of
PCD Common Stock at a purchase price of $1.00 per share. The
Debenture was paid in full on April 22, 1998 from proceeds of a
public offering of the Company's Common Stock. As a result, the
Emerson Warrant is exercisable only to the extent of 150,000
shares of Common Stock. The combined effective interest rate for
the Debenture, the exercisable portion of the Emerson Warrant and
the prepayment penalty is 55.2% as the Debenture was repaid
approximately four months after the date of issuance. The
individual components of this effective interest rate are (i) 10%
per annum direct interest expense; (ii) 35.4% effective interest
expense associated with the value of the Emerson Warrant; and
(iii) 9.8% of effective interest expense due to prepayment
penalties. Prepayment of the principal amount under the Debenture
was subject to a penalty, due at the time of prepayment, in an
amount equal to 3.25% of the principal sum prepaid. The total
purchase price paid by Emerson for the Debenture and the Warrant
was $25 million. The proceeds from the sale of the Debenture and
the Warrant were applied in full to the purchase price paid by
the Company in connection with the Wells acquisition.
In connection with the Purchase Agreement, the Company granted
registration rights to Emerson pursuant to a Registration Rights
Agreement dated as of December 26, 1997.
In connection with the Purchase Agreement, certain directors
and executive officers (Mr. Dwight, Ms. Mandarino, Mr. Cantor,
Mr. Powers, Mr. Elmblad, Mr. Griffith) (collectively, the
"Stockholders") entered into a Voting Agreement and Power of
Attorney (the "Voting Agreement"), dated as of December 26, 1997,
with Emerson. The Voting Agreement provided that each of the
Stockholders will vote his or her shares of Common Stock for
approval of the terms of the Debenture and the Warrant, if such
approval is required by the rules of the Nasdaq Stock Market,
Inc. The Voting Agreement terminated on April 22, 1998 upon
payment of the Debenture.
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The Company has a policy that all material transactions
between the Company and its officers, directors and other
affiliates must (i) be approved by a majority of the members of
the Company's Board of Directors and by a majority of the
disinterested members of the Company's Board of Directors and
(ii) be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties. In addition, this
policy requires that any loans by the Company to its officers,
directors or other affiliates be for bona fide business purposes
only.
II. APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
On April 24, 1998, the Board of Directors of the Company
adopted the PCD Inc. 1998 Employee Stock Purchase Plan (the
"Plan") and directed that the Plan be submitted to the
stockholders of the Company for their approval. The purpose of
the Plan is to provide a method whereby employees of the Company
and its subsidiaries will have an opportunity to acquire a
proprietary interest in the Company through the purchase of
shares of the Company's Common Stock and thereby advance the best
interests of the Company and all stockholders.
Below is a summary of the principal provisions of the Plan.
The summary is not necessarily complete and reference should be
made to the full text of the Plan, which is attached to this
Proxy Statement as Appendix A.
The Plan will be administered by the Board of Directors of the
Company or a committee named by the Board. The administrator has
full power to adopt, amend and rescind any rules appropriate for
the administration of the Plan and to construe and interpret the
Plan. The Board may appoint appropriate individuals or
organizations to carry out administrative functions under the
Plan. The Company has contracted with A.G. Edwards & Sons, Inc.
to carry out certain administrative functions for the Plan.
The maximum aggregate number of shares of Common Stock which
may be issued by the Company under the Plan is 80,000 shares,
subject to adjustment upon changes in capitalization as described
below. The number of shares authorized for issuance under the
Plan shall be adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or
reclassification of the Common Stock or any other increase or
decrease in the number of shares of Common Stock effected without
receipt of consideration by the Company.
Under the Plan, any employee who customarily works more than
20 hours per week for the Company and has had continuous status
as an employee for at least 12 months as of the Offering Date of
a given Offering Period is eligible to participate in such
Offering Period, subject to the limitations imposed by Section
423(b) of the Internal Revenue Code of 1986, as amended (the
"Code"). As of April 7, 1998, there were 291 employees eligible
to participate in the Plan.
The Plan will be implemented by a series of Offering Periods
commencing on or about January 1 and July 1 of each year. Each
eligible employee electing to participate will be granted an
option to purchase shares of the Company's Common Stock by
delivering an application and authorization for payroll
deductions to the Company. Payroll deductions will commence on
the payroll following the Offering Date and end on the last
payroll prior to the Exercise Date. On each Offering Date, each
eligible employee participating in such Offering Period will be
granted an option to purchase on the Exercise Date a number of
shares of Common Stock determined by dividing the employee's
contributions by an exercise price of eighty-five percent (85%)
of the lower of the fair market value of the Company's Common
Stock on (i) the Offering Date or (ii) the Exercise Date.
The Plan is intended to qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Code. Under these provisions, no
income will be taxable to a participant at the time of the grant
of the option or purchase of shares under the Plan. Upon sale or
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other disposition of the shares the participant will be subject
to tax and the amount of tax will depend on the length of time
the shares were held. Generally, if the shares are disposed of at
any time after expiration of two years from the applicable
Offering Date and one year from the applicable Exercise Date, or
if the employee dies at any time while holding the shares, the
employee will be treated for federal income tax purposes as
having received compensation income only to the extent of an
amount equal to the lesser of (a) the excess, if any, of the fair
market value of the shares at the time of such disposition over
the purchase price for the shares under the option, or (b) the
excess of the fair market value of the shares on the Offering
Date over the offering price for such shares as of the Offering
Date. The remainder of the gain or loss, if any, recognized on
such disposition will be treated as capital gain or loss. If,
for any reason other than the employee's death, the shares are
disposed of before the expiration of two years from the
applicable Offering Date and one year from the applicable
Exercise Date, the employee will recognize ordinary income
measured as the excess of the fair market value of the shares on
the Exercise Date over the purchase price for the shares under
the option.
The Board of Directors may at any time amend or terminate the
Plan. No amendment may make any changes in an option granted
prior thereto which adversely affects the rights of any
participant without the consent of such participant. No
amendment may be made to the Plan without prior approval of the
shareholders of the Company if such approval is required by the
tax or securities laws.
The affirmative vote of a majority of the shares of the
Company's Common Stock represented in person or by proxy at the
Annual Meeting and entitled to vote and voting on the matter
(provided that such majority shall be at least a majority of the
number of shares required to constitute a quorum for action on
such matter) will be required to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE COMPANY'S 1998 EMPLOYEE STOCK PURCHASE PLAN,
WHICH IS ITEM NO. 2 ON THE PROXY CARD.
III. INDEPENDENT ACCOUNTANTS
The selection of Coopers & Lybrand L.L.P. as the independent
accountants of the Company for previous years has been reaffirmed
for 1998. Coopers & Lybrand L.L.P. has no financial interest,
direct or indirect, in the Company or any of its subsidiaries.
A representative of Coopers & Lybrand L.L.P. will attend the
Annual Meeting with the opportunity to make a statement if he
desires to do so and to answer questions that may be asked of him
by the stockholders.
IV. OTHER GOVERNANCE INFORMATION
Any stockholder, whether of record or a beneficial owner,
desiring to submit a proposal for consideration to appear in the
Company's Proxy Statement for the annual meeting of stockholders
of the Company to be held in 1999 shall submit such proposal,
typewritten or printed, addressed to the Clerk of the Company on
or before January 5, 1999. Such proposal must identify the name
and address of the stockholder, the number of the Company's
shares held of record or beneficially, the dates upon which the
stockholder acquired such shares and documentary support for a
claim of beneficial ownership. Proposals should be sent by
certified mail - return receipt requested to the attention of the
Clerk of the Company, PCD Inc., 2 Technology Drive, Centennial
Park, Peabody, MA 01960-7977.
In addition to the foregoing procedure for inclusion of a
stockholder proposal in the Company's Proxy Statement, the
Company will consider other items of business and nominations for
election as director of the Company that are properly brought
14
before an annual meeting by a stockholder. To be properly
brought before an annual meeting, items of business must be
appropriate subjects for stockholder consideration, timely
notice thereof must be given in writing to the Clerk of the
Company, and other applicable requirements must be met. In
general, such notice is timely if it is received at the principal
executive offices of the Company at least 60 days in advance of
the anniversary date of the previous year's annual meeting,
provided that if the annual meeting is to be held on a date prior
to the date the annual meeting was held in the previous year and
if less than 70 days notice is given of the date of the meeting,
a stockholder will have ten days from the notice of the date of
the meeting to give notice of the proposals for stockholder
consideration. The By-laws of the Company specify the
information to be included in the stockholder's notice.
Stockholders may nominate persons for election to the Board by
complying with the notice provisions set forth in the By-laws.
In general, such notice is timely if it is received by the Clerk
of the Company at least 60 days in advance of the anniversary
date of the previous year's annual meeting, provided that if the
annual meeting is to be held on a date prior to the date the
annual meeting was held in the prior year and if less than 70
days notice is given of the date of this meeting, a stockholder
will have ten days from the notice of the date of the meeting to
give notice of the planned nomination. The By-laws of the
Company specify the information to be included in the
stockholder's notice of nomination.
Interested stockholders can obtain full copies of the By-laws
by making a written request therefor to the Clerk of the Company.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies will be paid by the
Company. Proxies may be solicited personally, or by telephone,
by employees of the Company, but the Company will not pay any
compensation for such solicitations. The Company will reimburse
brokers, banks and other persons holding shares in their names or
in the names of nominees for their expenses for sending material
to principals and obtaining their proxies.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's annual report on Form 10-K for the
year ended December 31, 1997, as filed with the Securities and
Exchange Commission, excluding exhibits thereto, may be obtained
without charge by contacting Mary L. Mandarino, PCD Inc., 2
Technology Drive, Centennial Park, Peabody, Massachusetts 01960-
7977.
The Board of Directors of
PCD Inc.
/s/ John L. Dwight, Jr.
John L. Dwight, Jr.
Chairman
Dated: May 4, 1998
15
APPENDIX A
PCD 1998 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1998 Employee
Stock Purchase Plan of PCD Inc.
1. PURPOSE. The purpose of the Plan is to provide employees
of the Company and its Subsidiaries with an opportunity to
purchase Common Stock of the Company. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Code. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of
that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the
Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "COMMON STOCK" shall mean the Common Stock, $0.01 par
value, of the Company.
(d) "COMPANY" shall mean PCD Inc., a Massachusetts
corporation.
(e) "COMPENSATION" shall mean all base pay, salary,
bonuses and commissions, including payments for overtime and
sales commissions.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the
absence of any interruption or termination of service as an
Employee. Continuous Status as an Employee shall not be
considered interrupted in the case of (i) a leave of absence
either (I) agreed to in writing by the Company, provided that
such leave is for a period of not more than 90 days, or (II) if
reemployment upon the expiration of such leave is guaranteed by
contract or statute and provided further that the Employee
returns to service upon the expiration of such leave; or (ii) a
single interruption in service for any other reason of up to 30
days.
(g) "CONTRIBUTIONS" shall mean all amounts credited to the
account of a participant pursuant to the Plan.
(h) "EMPLOYEE" shall mean any person, including an
officer, who is an employee of the Company or one of its
Subsidiaries, as determined pursuant to Treasury Regulation
Section 1.421-7(h) or any successor thereto.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
(j) "EXERCISE DATE" shall mean the last business day of
each Offering Period of the Plan.
(k) "OFFERING DATE" shall mean the first business day of
each Offering Period of the Plan.
(l) "OFFERING PERIOD" shall mean a period of six (6)
months.
(m) "PLAN" shall mean this Employee Stock Purchase Plan.
(n) "SUBSIDIARY" shall mean a corporation, domestic or
foreign, defined as such in Section 424(f) of the Code, whether
or not such corporation now exists or is hereafter organized or
acquired by the Company or a Subsidiary.
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3. ELIGIBILITY.
(a) SERVICE REQUIREMENT. Any Employee who (i) customarily
works more than twenty (20) hours per week for the Company and
(ii) has had Continuous Status as an Employee for at least twelve
(12) months as of the Offering Date of a given Offering Period
shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the
limitations imposed by Section 423(b) of the Code.
(b) RESTRICTIONS ON ELIGIBILITY. Any provisions of the
Plan to the contrary notwithstanding, no Employee shall be
granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the
Code) would own stock and/or hold outstanding options to purchase
stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or
of any subsidiary of the Company, or (ii) if such option would
permit his or her rights to purchase stock under all employee
stock purchase plans (described in Section 423 of the Code) of
the Company and its Subsidiaries to accrue at a rate which
exceeds Twenty-Five Thousand Dollars ($25,000) of fair market
value of such stock (determined at the time such option is
granted) for each calendar year in which such option is
outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by a
series of Offering Periods, with new Offering Periods commencing
on or about January 1 and July 1 of each year (or at such other
time or times as may be determined by the Board). The first
Offering Period shall commence July 1, 1998 or on such other date
the Board shall determine. The Plan shall continue until
terminated in accordance with Section 19 hereof. The Board shall
have the power to change the duration and/or the frequency of
Offering Periods with respect to future offerings without
stockholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first
Offering Period to be affected.
5. PARTICIPATION.
(a) SUBSCRIPTION AGREEMENTS; RANGE OF CONTRIBUTIONS. An
eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the
Company and filing it with the Company's Human Resources
Department prior to the applicable Offering Date, unless a later
time for filing the subscription agreement is set by the Board
for all eligible Employees with respect to a given offering. The
subscription agreement shall set forth the percentage of the
participant's Compensation (which shall be not less than the
percentage that will result in a minimum Contribution of 150.00
per Offering Period and not more than 10% of the Employee's
Compensation) to be paid as Contributions pursuant to the Plan.
(b) ENTRY DATE; TERMINATION. Payroll deductions shall
commence on the first payroll on or following the Offering Date
and shall end on the last payroll paid on or prior to the
Exercise Date of the offering to which the subscription agreement
is applicable, unless sooner terminated by the participant as
provided in Section 10.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) PAYROLL DEDUCTIONS. Subject to the limitations of
Section 423(b) of the Code and Section 3(b) herein and subject to
the terms and conditions of the subscription agreement referred
to in Section 5(a) above, the participant shall elect to have
payroll deductions made on each payday during the Offering Period
in any amount permitted pursuant to the Subscription Agreement.
All payroll deductions made by a participant shall be credited to
his or her account under the Plan. A participant may not make
any additional payments into such account.
(b) CHANGES IN CONTRIBUTION RATE. A participant may
discontinue his or her participation in the Plan as provided in
Section 10, or, on one occasion only during the Offering Period,
may increase or decrease the rate of his or her Contributions
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during the Offering Period by completing and filing with the
Company a new subscription agreement. The change in rate shall
be effective as of the beginning of the calendar quarter
following the date of filing of the new subscription agreement.
(c) APPLICATION OF $25,000 ANNUAL LIMIT. Notwithstanding
the foregoing, to the extent necessary to comply with Section
423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions shall be decreased to 0% at such time during
any Offering Period which is scheduled to end during the current
calendar year that the aggregate of all payroll deductions
accumulated with respect to such Offering Period and any other
Offering Period ending within the same calendar year equal
$25,000. Payroll deductions shall re-commence at the rate
provided in such participant's subscription agreement at the
beginning of the first Offering Period which is scheduled to end
in the following calendar year, unless terminated by the
participant as provided in Section 10.
7. GRANT OF OPTION; OPTION PRICE.
(a) GRANT OF OPTION; NUMBER OF OPTION SHARES. On the
Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option
to purchase on the Exercise Date a number of shares which shall
be determined by dividing such Employee's Contributions
accumulated prior to such Exercise Date and retained in the
participant's account as of the Exercise Date by the option price
per share of the shares of Common Stock offered in the Offering
Period, determined as provided in Section 7(b); provided however,
that such purchase shall be subject to the limitations set forth
in Sections 3(b) and 12. The fair market value of a share of the
Company's Common Stock shall be determined as provided in
Section 7(b).
(b) DETERMINATION OF OPTION PRICE; FAIR MARKET VALUE.
The option price per share of the shares offered in a given
Offering Period shall be the lower of: (i) 85% of the fair market
value of a share of the Common Stock of the Company on the
Offering Date; or (ii) 85% of the fair market value of a share of
the Common Stock of the Company on the Exercise Date. The fair
market value of the Company's Common Stock on a given date shall
be determined by the Board based on (i) the average of the high
and low prices of the Common Stock on such date on the principal
national securities exchange on which the Common Stock is traded,
if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price of the Common
Stock on the Nasdaq National Market System on such date, if the
Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price or the average of bid
prices last quoted on such date by an established quotation
service for over-the-counter securities, if the Common Stock is
not reported on the Nasdaq National Market System or on a
national securities exchange. If the Common Stock is not
publicly traded at the time a right is granted under this Plan,
"fair market value" shall mean the fair market value of the
Common Stock as determined by the Board in its discretion after
taking into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of
the Common Stock in private transactions negotiated at arm's
length.
8. EXERCISE OF OPTION. Unless a participant withdraws from
the Plan as provided in Section 10, his or her option for the
purchase of shares will be exercised automatically on the
Exercise Date of the Offering Period, and the number of full
shares subject to option (but in no event more than the maximum
amount permitted pursuant to Section 7(a) and the other
provisions of the Plan, subject to adjustment as provided in
Section 18(a) hereof) will be purchased at the applicable option
price with the accumulated Contributions in the participant's
account. The shares purchased upon exercise of an option
hereunder shall be deemed to be transferred to the participant on
the Exercise Date. During his or her lifetime, a participant's
option to purchase shares hereunder is exercisable only by him or
her.
9. DELIVERY. As promptly as practicable after the Exercise
Date of each Offering Period, the Company shall arrange the
delivery to each participant, as appropriate, of a certificate
representing the shares purchased upon exercise of his or her
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option. Any cash remaining to the credit of a participant's
account under the Plan after a purchase by him or her of shares
at the termination of each Offering Period, or which is
insufficient to purchase a full share of Common Stock of the
Company, shall be returned to said participant, without interest.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) VOLUNTARY WITHDRAWAL. A participant may withdraw all
but not less than all the Contributions credited to his or her
account under the Plan at any time prior to the Exercise Date of
the Offering Period by giving written notice to the Company. All
of the participant's Contributions credited to his or her account
will be paid without interest to him or her promptly after
receipt of his or her notice of withdrawal and his or her option
for the current period will be automatically terminated, and no
further Contributions for the purchase of shares will be made
during the Offering Period.
(b) TERMINATION OF EMPLOYMENT. Upon termination of the
participant's Continuous Status as an Employee prior to the
Exercise Date of the Offering Period for any reason, including
retirement, disability or death, the participant's option shall
terminate and the Contributions credited to his or her account
will be returned without interest to him or her or, in the case
of his or her death, to his or her designated beneficiary
hereunder (or as otherwise provided in Section 14(b) herein).
(c) RESUMPTION OF PARTICIPATION IN SUBSEQUENT OFFERING
PERIODS. A participant's withdrawal from an offering will not
have any effect upon his or her eligibility to participate in a
succeeding offering or in any similar plan which may hereafter be
adopted by the Company except to the extent set forth in
Rule 16b-3 under the Exchange Act.
11. INTEREST. No interest shall accrue on the Contributions of
a participant in the Plan.
12. STOCK.
(a) AGGREGATE LIMITATION ON OPTIONS: PRO-RATA
ALLOCATIONS. The maximum number of shares of the Company's
Common Stock which shall be made available for sale under the
Plan shall be eighty thousand (80,000) shares, subject to
adjustment upon changes in capitalization of the Company as
provided in subsection 18(a) hereof. If the total number of
shares which would otherwise be subject to options granted
pursuant to Section 7(a) on the Offering Date of an Offering
Period exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been
exercised or are then outstanding), the Company shall make a pro
rata allocation of the shares remaining available for option
grant in as uniform a manner as shall be practicable and as it
shall determine to be equitable and consistent with the
requirements of Section 423(b)(5) of the Code. In such event,
the Company shall give written notice of such reduction of the
number of shares subject to the option to each Employee affected
thereby and shall similarly reduce the rate of Contributions, if
necessary.
(b) STATUS OF OPTIONED SHARES. The participant will have
no interest or voting right in shares covered by his or her
option until such option has been exercised.
(c) REGISTRATION OF PURCHASED SHARES. Shares to be
delivered to a participant under the Plan will be registered in
the name of the participant or in the name of the participant and
his or her spouse, at the participant's election.
13. ADMINISTRATION. The Board, or a committee named by the
Board, shall supervise and administer the Plan and shall have
full power to adopt, amend and rescind any rules deemed desirable
and appropriate for the administration of the Plan and not
inconsistent with the Plan, to construe and interpret the Plan,
and to make all other determinations necessary or advisable for
the administration of the Plan. The composition of any such
committee shall be in accordance with the requirements to obtain
or retain any available exemption from the operation of Section
16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated
thereunder.
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14. DESIGNATION OF BENEFICIARY.
(a) MANNER AND EFFECT OF DESIGNATION. A participant may
file a written designation of a beneficiary who is to receive any
shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the
end of the Offering Period but prior to delivery to him or her of
such shares and cash.
(b) CHANGES IN BENEFICIARIES; EFFECT OF NO BENEFICIARY.
Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or
to any one or more dependents or relatives of the participant, or
if no spouse, dependent or relative is known to the Company, then
to such other person as the Company may designate. To the extent
of any such delivery of shares and/or cash hereunder, the
Company's obligation under the Plan with respect to the
participant shall be discharged.
15. TRANSFERABILITY. Neither Contributions credited to a
participant's account nor any rights with regard to the exercise
of an option or to receive shares under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other
than by will, the laws of descent and distribution, or as
provided in Section 14) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an
election to withdraw funds in accordance with Section 10.
16. USE OF FUNDS. All Contributions received or held by the
Company under the Plan may be used by the Company for any
corporate purpose, and the Company shall not be obligated to
segregate such Contributions.
17. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to
participating Employees promptly following the Exercise Date,
which statements will set forth the amounts of Contributions, the
per share purchase price, the number of shares purchased and the
remaining cash balance, if any.
18. ADJUSTMENTS.
(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The
number of shares of Common Stock covered by each option under the
Plan which has not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under the
Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of
stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of Common Stock subject to an option.
(b) EFFECT OF DISSOLUTION, LIQUIDATION, SALE OF ASSETS OR
MERGER OF THE COMPANY. In the event of the proposed dissolution
or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action,
the options granted during such Offering Period shall terminate
and each participant's contributions shall be returned, unless
otherwise provided by the Board. In the event of a proposed sale
A-5
of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each
option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, to shorten the Offering Period
then in progress by setting a new Exercise Date (the "New
Exercise Date"). If the Board shortens the Offering Period then
in progress in lieu of assumption or substitution in the event of
a merger or sale of assets, the Board shall notify each
participant in writing, at least ten (10) days prior to the New
Exercise Date, that the Exercise Date for his or her option has
been changed to the New Exercise Date and that his or her option
will be exercised automatically on the New Exercise Date, unless
prior to such date he or she has withdrawn from the Offering
Period as provided in Section 10. For purposes of this
paragraph, an option granted under the Plan shall be deemed to be
assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of option stock
subject to the option immediately prior to the sale of assets or
merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger
by holders of Common Stock for each share of Common Stock held on
the effective date of the transaction (and if such holders were
offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration
received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in
Section 424(e) of the Code), the Board may, with the consent of
the successor corporation, provide for the consideration to be
received upon exercise of the option to be solely common stock of
the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of
Common Stock in the sale of assets or merger.
(c) OTHER ADJUSTMENTS. The Board may, if it so determines
in the exercise of its sole discretion but subject to the
requirements of Section 423 of the Code, also make provision for
adjusting the Reserves, as well as the price per share of Common
Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of
its outstanding Common Stock not covered by subsection (a)
hereof, and in the event of the Company being consolidated with
or merged into any other corporation.
19. AMENDMENT OR TERMINATION.
(a) RIGHT OF COMPANY TO AMEND OR TERMINATE PLAN;
LIMITATIONS. The Board may at any time terminate or amend the
Plan. Except as provided in Section 18, no such termination may
affect options previously granted, nor may an amendment make any
change in any option theretofore granted which adversely affects
the rights of any participant without the written consent of such
participant. In addition, to the extent necessary to comply with
Rule 16b-3 under the Exchange Act or Section 423 of the Code (or
any successor rules or provisions or any other applicable laws or
regulations), the Company shall obtain stockholder approval in
such a manner and to such a degree as so required.
(b) ADDITIONAL RIGHTS OF THE COMPANY. Without stockholder
consent and without regard to whether any participant rights may
be considered to have been adversely affected, the Board (or its
committee) shall be entitled to change the duration of future
Offering Periods (subject to Section 4 hereof), limit the
frequency and/or number of changes in the amount withheld during
an Offering Period, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld
from the participant's Compensation, and establish such other
limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent
with the Plan.
A-6
20. NOTICES. All notices or other communications by a
participant to the Company under or in connection with the Plan
shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES.
(a) COMPLIANCE WITH LAW. Shares shall not be issued with
respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with
respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the
exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of
any such exercise that the shares are being purchased only for
investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the
Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become
effective upon the earlier to occur of its adoption by the Board
or its approval by the stockholders of the Company. It shall
continue in effect for a term of ten (10) years unless sooner
terminated under Section 19.
23. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and
conditions of options granted hereunder to, and the purchase of
shares by, persons subject to Section 16 of the Exchange Act
shall comply with the applicable provisions of Rule 16b-3. This
Plan shall be deemed to contain, and such options shall contain,
and the shares issued upon exercise thereof shall be subject to,
such additional conditions and restrictions as may be required by
Rule 16b-3 to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
A-7
New Election ______
Change of Election ______
PCD Inc.
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
________________________, hereby elect to participate in the
PCD Inc. 1998 Employee Stock Purchase Plan (the "Plan") for the
Offering Period ________________, ______ to ______________,
________ and for all subsequent Offering Periods under the Plan,
and subscribe to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of ___% of my
Compensation, as those terms are defined in the Plan, applied to
this purchase. I understand that this amount must be not less
than the percentage that will result in Contributions of at least
$150.00 per Offering Period and not more than 10% of my
Compensation during the Offering Period.
3. I hereby authorize payroll deductions from each paycheck
during the Offering Period at the rate stated in Section 2 of
this Subscription Agreement. I understand that all payroll
deductions made by me shall be credited to my account under the
Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be
accumulated for the purchase of shares of Common Stock at the
applicable purchase price determined in accordance with the Plan.
I understand that, except as otherwise set forth in the Plan,
shares will be purchased for me automatically on the Exercise
Date of the Offering Period unless I withdraw from the Plan by
giving written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the
Exercise Date my participation in the Plan as provided in
Section 10 of the Plan. I also understand that on one occasion
only during the Offering Period I may increase or decrease the
rate of my Contributions during the Offering Period by completing
and filing with the Company a new Subscription Agreement. The
change in rate shall be effective as of the beginning of the
calendar quarter following the date of filing of the new
Subscription Agreement.
5. I have received a copy of the Company's most recent
description of the Plan and a copy of the complete Plan document.
I understand that my participation in the Plan is in all respects
subject to the terms of the Plan.
6. Shares purchased for me under the Plan should be issued in
the name(s) of (name of employee or employee and spouse only):
__________________________________
__________________________________
7. In the event of my death, I hereby designate the following
as my beneficiary(ies) to receive all payments and shares due to
me under the Plan:
NAME: (Please print) __________________________________
(First) (Middle) (Last)
___________________________ __________________________________
(Relationship) (Address)
__________________________________
A-8
8. I understand that if I dispose of any shares received by me
pursuant to the Plan within 2 years after the Offering Date (the
first day of the Offering Period during which I purchased such
shares) or within 1 year after the last day of the Offering
Period, I will be treated for federal income tax purposes as
having received ordinary compensation income at the time of such
disposition in an amount equal to the excess of the fair market
value of the shares at the time such shares were transferred to
me over the price which I paid for the shares, regardless of
whether I disposed of the shares at a price less than their fair
market value at transfer. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital
gain or loss.
I hereby agree to notify the Company in writing within 30
days after the date of any such disposition, and I will make
adequate provision for federal, state or other tax withholding
obligations, if any, which arise upon the disposition of the
Common Stock. The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to the sale or early disposition of Common
Stock by me.
9. If I dispose of such shares at any time after expiration of
the 2-year and 1-year holding periods, I understand that I will
be treated for federal income tax purposes as having received
compensation income only to the extent of an amount equal to the
lesser of (a) the excess, if any, of the fair market value of the
shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (b) the
difference between the fair market value of the shares on the
Offering Date and the Option Price on the Offering Date. The
remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.
I understand that this tax summary is only a summary and is
subject to change.
10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Plan.
SIGNATURE:_______________________
SOCIAL SECURITY #:_______________ DATE:______________________
A-9
PCD Inc.
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, __________________, hereby elect to withdraw my
participation in the PCD Inc. 1998 Employee Stock Purchase Plan
(the "Stock Purchase Plan") for the Offering Period ending
_________________. The withdrawal covers all Contributions
credited to my account and is effective on the date designated
below.
I understand that all Contributions credited to my account
will be paid to me without interest within ten (10)business days
of receipt by the Company of this Notice of Withdrawal and that
my option for the current period will automatically terminate,
and that no further Contributions for the purchase of shares can
be made by me during the Offering Period.
I understand that my withdrawal from this Offering will not
affect my eligibility to participate in a succeeding Offering
Period or in any similar plan that may hereafter be adopted by
the Company. I understand and agree, however, that I will be
eligible to participate in succeeding Offering Periods only by
delivering to the Company a new Subscription Agreement.
Dated:___________________ __________________________________
Signature of Employee
__________________________________
Social Security Number
A-10
APPENDIX B
FRONT OF PROXY CARD
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, Massachusetts 01960-7977
Annual Meeting of Stockholders - June 5, 1998
Proxy Solicited on Behalf of the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints John L. Dwight,
Jr. and Thomas C. Chase, as Proxies, with full power of substitution to
each, to vote for and on behalf of the undersigned at the 1998 Annual Meeting
of Stockholders of PCD Inc. to be held at the offices of the Company, 2
Technology Drive, Centennial Park, Peabody, Massachusetts 01960-7977, on
Friday, June 5, 1998 at 10:00 a.m., and at any adjournment or adjournments
thereof. The undersigned hereby directs the said proxies to vote in
accordance with their judgement on any matters which may properly come before
the Annual Meeting, all as indicated in the Notice of Annual Meeting, receipt
of which is hereby acknowledged, and to act upon the following matters set
forth in such notice as specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees, custodians, and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who should
indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ ______________________________
BACK SIDE OF PROXY CARD
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
With-
____________________ 1. Election of Director For hold
PCD Inc. C. Wayne Griffith [ ] [ ]
____________________ John E. Stuart [ ] [ ]
2. To approve the Company's
Mark box at 1998 Employee Stock For Against Abstain
right if an Purchase Plan covering
address change 80,000 shares of the [ ] [ ] [ ]
or comment has [ ] Company's Common Stock,
been noted on as described in the
the reverse of Proxy Statement.
this card
3. In their discretion, the proxies are
authorized to vote upon any other
RECORD DATE SHARES: business that may properly come
before the meeting or at any
adjournment(s) thereof.
----------------
Please be sure to sign and date this Proxy. |Date |
- ------------------------------------------------------------
| |
| |
- - --- Stockholder sign here --- Co-owner sign here ---------
DETACH CARD DETACH CARD
PCD Inc.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and operation
of your Corporation that require your immediate attention and approval. These
are discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, June
5, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
PCD Inc.